December 11, 2012
WELCOME TO THE FRINGE, THE WATER'S FINE:
The robot economy and the new rentier class (Izabella Kaminska, Dec 10, 2012)
It seems more top-tier economists are coming around to the idea that robots and technology could be having a greater influence on the economy (and this crisis in particular) than previously appreciated. Paul Krugman being the latest. [...]Apart from a few fringe voices, the technology factor -- and its likely effect on the natural unemployment rate as society moves towards a more leisure-focused framework, since all the hard jobs are done by robots and computers -- became victim to a deathly silence in the world of serious economic thinking. [...]If you think about it, inequality is always going to be the natural consequence of a technologically-driven deflationary environment. Whereas in inflation, those with financial claims (a.k.a money) are impoverished as their purchasing power is eroded, while those in debt are enriched -- in deflation, those with financial claims (the result of increasing rentier flows, if Krugman's point is valid) become enriched as those in debt become increasingly impoverished.In that sense QE and any move to "debase" financial claims is a move to dilute the wealth effect on legacy claims, which now claim a disproportionate share of available output, at least compared to what they did when they were created.Low interest rates in many ways are thus only self-correction mechanism bringing the system back to balance -- trying to offset the growing power of the innovation-based capital rentier class.
Posted by Orrin Judd at December 11, 2012 4:39 AM