Who's Not Afraid of Robots: A Comparison of National Models for Navigating Automation and Globalization

This podcast episode delves into the profound economic and social implications of automation, digital networks, and globalization, particularly focusing on the future of work and varying national responses. Jillian Dest, Richard Baldwin, and Leif Pagrotsky discuss whether the current pace of technological change is unprecedented and if it poses a threat or an opportunity. Pagrotsky argues that while change is constant and rapid, it primarily offers opportunities for productivity and addressing issues like inequality, provided there's adequate political action and a robust social safety net. He emphasizes that fear of robots often stems from inadequate systems to support individuals through change, rather than the technology itself.

Richard Baldwin offers a nuanced perspective, agreeing on the long-term potential for job creation but expressing concern about short-to-medium term upheaval. He highlights that digital technology is increasingly designed to replace jobs, especially in the service sector, at a pace that outstrips human ingenuity in creating new ones. Both experts converge on the critical importance of social systems and active labor market policies, citing Scandinavian countries like Sweden and Denmark as exemplars. These nations, with strong safety nets and policies for re-education and mobility, have successfully adapted to significant globalization pressures, demonstrating rising real wages and employment despite increased competition.

Beyond domestic policies, the discussion extends to the evolving nature of globalization, particularly the rise of "telemigration" or "working from home when home is abroad." This phenomenon, enabled by digital platforms, allows emerging markets in Africa, Latin America, and Southeast Asia to leverage their comparative advantage in quality-adjusted low-cost labor directly, without needing traditional manufacturing exports. This shift is seen as a new wave of opportunity for these regions but also poses challenges for developed nations in managing job displacement and ensuring fair labor standards.

Finally, the conversation addresses the role and responsibility of tech companies, which are significant beneficiaries of these trends. While there's a consensus that these companies should contribute to adjustment costs, pessimism abounds regarding international taxation agreements due to political hurdles (e.g., EU unanimity rules). The potential for a "tech clash" or social backlash against large tech companies, driven by concerns over privacy, manipulation, and tax avoidance, is identified as a significant risk. The experts suggest that if direct taxation proves difficult, anti-monopoly regulations and stricter privacy/labor standards might be alternative avenues to ensure a more equitable distribution of the benefits from digital transformation.

"there has been remarkably little discussion about what is happening with digital networks with robots with all the automation innovations are coming in to reshape the workplace."

"I don't think we are in for a more spectacular rate of change than we have been in the past."

"I'm not afraid of robots I'm afraid of the non-robots the factories that stay out of the modern technology it's the old technology that is a threat to jobs not the modern technology."

"digital technology is now primarily being designed to replace jobs not create them."

"in the short run I'm worried about an upheaval but in the long run I'm quite sure that we'll have all the jobs we need."

"how you manage the future is more dependent upon the political agenda than the technological and industrial agenda."

"computers have developed a whole set of cognitive capacities since about 2016 that they never had before."

"working from home when home is abroad... they'll be able to exploit their comparative advantage directly."

"the people who say we can't slow it down that's not right we do have the tools to slow it down."

"if the blowback comes in in the United States for example the tech companies will be at the source of it at the heart of it."

"we can't take any decisions on taxes in Europe without total unanimity and that means that Ireland will forever defend the right of Google and Facebook to pay almost zero tax anywhere in Europe."

"the basic principle of taxation is you you pull out the feathers wherever they are and there's a lot of feathers in the tech company."