The (robot) elephant in the room with the auto titans

You snooze, you lose. Thus, Ed Kilgore of New York magazine was first to the plate in writing something I had been thinking: Donald Trump’s “economic strategy is looking more and more like a right-wing governor’s.” And hasn’t that worked out dandy for such basket cases as Kansas and Arizona.

Still, Trump has potential control over much of the powerful federal government. He might succeed in his promise to cut regulations by 75 percent or “maybe more.” He’s already shown he can bully corporate titans, especially with the threat of losing federal contracts or facing tariffs on imported goods. This is much more than handing out tax incentives for a few data center jobs. (How Americans will like living in a more polluted, less safe country and paying more at the cash register while getting Carl’s Jr. wages remains to be seen).

Which brings us to today’s bullying session at the White House with CEOs of the Big Three. According to Reuters, Trump said, “We have a very big push on to have auto plants and other plants — many other plants…It’s happening.” And the auto executives dutifully did their bit. Mary Berra, CEO of General Motors, talked about the “huge opportunity” to work with Trump’s Washington to “improve the environment, improve safety and improve the jobs creation.” (It sounds like the coded language of a prisoner of war, forced to read a confession).

Yet there’s no sense that Trump, proponent of “alternative facts,” aka lies, is even aware of the biggest threat to job creation in manufacturing (and elsewhere): automation. He can take us to Somalia-levels of environmental, health, safety and tax “burdens” on business and it won’t change this reality.

This is underscored by a new working paper from Daron Acemoglu of MIT and Pascual Restrepo of Boston University, examining whether aging populations and retiring boomers are or will slow economic growth. Their cautious conclusion is that robots can keep growth going fine. And that’s great if you’re Japan. If you’re an America hoping to jump in a time machine back to 1956, not so fine. It’s one more piece of evidence why the old labor-intensive manufacturing economy is not coming back…

…Unless Trump and the GOP Congress want to outlaw, or impose taxes on, automation. But that would get in the way of profits flowing to the wealthy. Based on history, that’s not a hard choice for the Republicans.

Was automation even discussed today? I doubt it. This was a photo-op for Gov. Trump, and a chance for the auto titans to look good and protect their interests (killing emissions standards, for example). Whatever hyped “jobs announcement” shows up in the coming weeks, pay attention to the aggregate numbers and wages over time — and the sweetheart deals for the 1 percent while most Americans fall behind.


Today’s Econ Haiku:

City tops in cranes

For some Seattleites it’s