1. Professor Daron Acemoglu of MIT has written extensively on development economics. His
current research addresses the plight of American manufacturing workers. In a preliminary
paper, “Robots and Jobs: Evidence from US Labor Markets,” he analyzes the effect of the increase
of industrial robots (automation) on specific local US labor markets in the years (1990-2007).
He finds, “…by regressing the change in employment and wages on change in exposure to
robots in each local labor market…large and robust negative effects of robots on employment and wages.
We show that commuting zones most affected by robots in the post - 1990 era were on similar trends to
others before 1990, and that the impact of robots is distinct and only weakly correlated with the
prevalence of routine jobs, the impact of imports from China, and overall capital utilization.”
In this 1/7/17 Boston Review article he suggests three other responses, rather than targeting
the current account deficit directly, that we quote:
a) A social safety net and redistribution via the fiscal system can ensure a more equitable
distribution from gains from automation, offshoring, and trade.
b) Investing in work force skills so people can take advantage of new opportunities and
shield themselves from the adverse consequences and change.
c) Technology is not a force entirely out of our control; it doesn’t act upon a passive
society. It is shaped by institutions, policies, and the choices of government
officials, scientists, entrepreneurs, and business people. The United States has poured
considerable resources into technologies that automate the jobs of its middling
workers and raise the productivity of the most highly paid.…It was and remains possible
to support new technologies that generate employment opportunities and increase
the productivity of workers, rather than just replacing them.
This third suggestion might be immediately useful. Another possibility is a moderate
general increase in tariffs in order to somewhat reduce the trade deficit in goods and
services and to benefit the U.S. economy from the positive spillover effects of
Using a direct, rather than an econometric analysis of U.S. manufacturing employment, a
study by Indiana’s Ball State University estimates that 88% of job losses in manufacturing
between 2000 and 2010 was due to productivity growth (and only 12% was due to imports
and other causes).
1a Bureau of Labor Statistics data (2005 YE-2013 YE), All Employees Manufacturing.
2. Python is a pithy computer language popular in Silicon Valley because it is versatile and
lends itself easily to building web applications. On 1/17, Stanford Continuing Education
gave four sold-out classes in this language.
3. What computers do is to compute. One thing they do is to match patterns. As we have
demonstrated, the stock market is at the intersection of many events and forces, the Fed
policy rate being the major one. Other phenomena are likely simpler and more
4. Tyler Cowan; “The Average Is Over”; Penguin; New York; 2013; p. 55.
5. Ibid., p. 258.
6. Thomas Friedman; “Thank You for Being Late”; Farrar, Straus and Giroux; 2016 ; p. 359.
7. In the Federalist Papers, Madison, Hamilton and Jay lay down the blueprint for the United
States government. The main goal of the founders was to preserve American freedom against
British rule and human nature. In Federalist No. 51, Madison saw diversity as the main
protection against self-interested factionalism:
“Whilist all authority in (the federal republic) will be derived from and dependent on the
the society, the society itself will be broken into so many parts, interests and classes of
citizens, that the rights of individuals or of the minority, will be in little danger from
interested combinations of the majority. In a free government, the security of civil rights must
be the same as for religious rights.”
Diversity not only protects Freedom; but as we have shown, it is also (when combined with
the public spirit) a source of economic dynamism in the society. Particularly in a world of
accelerating change, the U.S. needs not a monoculture, but a diverse and resilient economic