President Obama: Next Wave of Economic Dislocations Will Come From Automation

President Obama used his final address to the nation to acknowledge how technology and automation are fueling rapid paced changes to the workforce and the looming threat to middle class jobs. It was a speech that was optimistic in the direction our economy is heading in the wake of the Great Recession, but also acknowledged some of the challenges it still faces. The issue of displaced wealth in our country that has left too many workers behind is what he called a “recipe for more cynicism and polarization in our politics,” which was made apparent in our election for his successor. In his speech, President Obama admitted that this is a complex issue with no quick fixes. That while trade should be fair and not just free, the next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation. That we need better education to guarantee all kids have a chance at getting a good paying job out of school and can unionize for better wages. The conversation of automation and artificial intelligence as the driving force behind the transformation of our economy and middle-class jobs has been something economists have been talking about for some time now, and the Obama administration has been listening. In October, the White House released a report Preparing for the Future of Artificial Intelligence, and was followed it up in December with a report on Artificial Intelligence, Automation, and the Economy. In the report, it suggests that policymakers should prepare for five primary economic effects:
  • Positive contributions to aggregate productivity growth;
  • Changes in the skills demanded by the job market, including greater demand for higher-level technical skills;
  • Uneven distribution of impact, across sectors, wage levels, education levels, job types, and locations;
  • Churning of the job market as some jobs disappear while others are created; and
  • The loss of jobs for some workers in the short-run, and possibly longer depending on policy responses.
And because the effects of AI-driven automation will be felt across the whole economy, and the areas of greatest impact may be difficult to predict, the report recommends that policy responses must be targeted to the whole economy and offers three broad strategies:
  1. Invest in and develop AI for its many benefits;
  2. Educate and train Americans for jobs of the future; and
  3. Aid workers in the transition and empower workers to ensure broadly shared growth.
The report concludes that more work remains to further explore the policy implications of AI, work the incoming Trump administration will need to address if they want to be the jobs-creating administration Trump pledged to be during his presidential campaign. You can read a transcript of this portion of Obama’s speech below. Click here watch his entire farewell address and read the full transcript. “Our economy doesn’t work as well or grow as fast when a few prosper at the expense of a growing middle class and ladders for folks who want to get into the middle class. (Applause.) That’s the economic argument. But stark inequality is also corrosive to our democratic ideal. While the top one percent has amassed a bigger share of wealth and income, too many families, in inner cities and in rural counties, have been left behind — the laid-off factory worker; the waitress or health care worker who’s just barely getting by and struggling to pay the bills — convinced that the game is fixed against them, that their government only serves the interests of the powerful — that’s a recipe for more cynicism and polarization in our politics. “But there are no quick fixes to this long-term trend. I agree, our trade should be fair and not just free. But the next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation that makes a lot of good, middle-class jobs obsolete. “And so we’re going to have to forge a new social compact to guarantee all our kids the education they need — (applause) — to give workers the power to unionize for better wages; to update the social safety net to reflect the way we live now, and make more reforms to the tax code so corporations and individuals who reap the most from this new economy don’t avoid their obligations to the country that’s made their very success possible. (Applause.)”