Class 3: Globalization, technological change, and you

The jobs of the future

Welcome back to class. Today, I introduce issues that continue to be vigorously debated: the effects of globalization and technological change on widening inequality.

Just double-click on this video, and you’re in class.

Some background: Many policymakers regard both globalization and technological change as “inevitable” forces that improve economic efficiency — and that should not be altered by political decisions.

I remember discussions in the Clinton White House leading to NAFTA and China’s ascension to the World Trade Organization in which administration officials described both as “necessary” to the evolving global economy. New technologies such as supersonic jets, AI, and facial-recognition software have also been assumed to be beyond political debate or control.

But neither globalization nor the path of technological change is inevitable. Government decides on timing (how quickly should we globalize or should a new technology be introduced?). On what particular goods and services should be subject to globalization and technological change (more or less labor-intensive industries? technologies critical to national security?). On how these changes come about (trade or direct investment? public subsidies? regulations?). And on measures to help those who bear the costs and burdens of these changes (refundable tax credits? education and training?).

It’s called “industrial policy.” Arguably, the Biden administration has the most active industrial policy in more than half a century.

The questions we’ll be exploring today are: How have globalization and technological change widened inequality? Given their effects, what are the major job categories now and into the future? Why have low-wage “personal-service” jobs replaced higher-paying “routine production” jobs? Why are high-paying “symbolic analytic” jobs usually limited to college graduates? Why are all jobs becoming less stable? What are the consequences of these trends for politics?

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Recommended readings on globalization and inequality (just click on them):

• Rawi Abdelal, “Dignity, Inequality, and the Populist Backlash: Lessons from America and Europe for a Sustainable Globalization,” Harvard Business School Working Paper, June 1, 2020

• David Autor, “International Trade and U.S. Worker Welfare: Understanding the Costs and Benefits,” Washington Center for Economic Growth, October 31, 2016

Recommended readings on technological change and inequality:

• Peter Dizikes, “Study Finds Stronger Links Between Automation and Inequality,” MIT News Office, May 5, 2020

• Mishel, Shierholz, and Schmitt, Executive Summary of “Don’t Blame the Robots,” EPI-CEPR Working Paper, November 2013

QUESTION: Knowing what you now know about the effects of globalization and technological change, what do you think of a universal minimum income?

Please share, and thanks for joining me today!