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- [Alex] Tyler, a lot of people
seem to be worried
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that the robots are coming:
Siri, Cortana,
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artificial intelligence, Watson.
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They're going to take our jobs.
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So, do you think robots,
are they going to take our jobs,
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and if they did,
would that be a bad thing?
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- [Tyler] I've written on this topic
and let me tell you,
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I'm worried
for at least three reasons.
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First, machines are encroaching
on human intelligence
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much more than ever before.
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It's not just brute physical labor.
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So machines now
can do medical diagnosis
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or legal research
or even write articles
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of journalism. Second...
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- We've heard
all these stories before
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as early as 1753...
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- That was brute physical labor...
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- People were smashing
the machines.
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- ...and people took jobs
with more intelligence.
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Now, the intelligence
is being competed away
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and what have we got left,
our beauty and charm?
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It's not going to get us that far,
but second reason.
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You look at the data,
labor force participation
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in the United States
has been going down for decades.
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So, we see it in the data
this is an actual problem.
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Third issue: Today,
we have more welfare
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and transfer payments
than ever before.
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So labor reallocates
much more slowly.
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What we see is a lot of people
lose their jobs
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and they simply stay out of work.
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- Labor force participation,
you say it's down,
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it's down mildly for some men,
it's huge uply for women.
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Women have entered the labor force
in incredible numbers.
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So, I don't see this
as a big trend caused by robots.
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I see this as societal change.
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- There's a big one-time increase
of women in the labor force
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due to the birth control pill
and women's liberation,
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but even since then women
have been slightly cutting back
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their participation
in the workforce.
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You look at elderly people
who used to work all the time.
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Now they collect a kind
of guaranteed annual income.
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Those jobs are done by machines.
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This is not
an apocalyptic scenario,
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but it's a slow, trickling away
of a lot of the jobs
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which make our lives meaningful.
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- Every time we see unemployment
goes up, we hear these fears.
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We just had the Great Recession,
and so people are all concerned
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about these fears.
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During the Great Depression,
unemployment went up.
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Even people like Einstein said,
"Oh, it's technology.
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Technology is taking our jobs."
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And yet, what we actually know
is that the problems
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of the Great Depression
had a lot more to do
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with monetary policy
than they did with technology,
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and I think the same thing
is going to be true today.
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- Today really is different.
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- So, Tyler, are you worried
about the Terminator scenario,
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that not only are the robots
going to take our jobs,
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they're also going
to take our lives?
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- No. The cash registers
are not going to be telling us
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what to do, but they're getting
more impressive very rapidly.
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So, computers can beat us at chess,
now they can beat us
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at the game of Go, and next in line
are the professions of law,
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medicine, and, dare I say it,
academic teaching.
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- That's not even
necessarily a problem.
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I think people have the wrong idea.
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They see that smart people
have higher wages,
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and they think “Oh, computers
are getting smarter
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and they're getting more prevalent,
therefore, the computers
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are going to take all the wages."
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But in fact, what economics says
is not that smart people
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have high wages.
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Economics says that wages
are determined
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by supply and demand.
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And everything we know
about computers
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is that the supply is huge.
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That's pushing down prices.
That's making software cheaper.
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So, we could easily
have a situation
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where the really smart computer
tells the maybe-not-so-smart human
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what to do, and the human earns
all of the wages.
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- Again, let's look at the data.
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What we see
over the last 20 to 30 years
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in most Western countries
is a higher share
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of the income going to capital
and a lower share going to labor.
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Right? So, there is a problem.
Wages have been stagnating.
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You have prime age working males
out of the labor force
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at higher rates
than in a long time.
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When you look
at what's actually happening,
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it seems the net effect
is fewer people working...
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- You can talk
about the great stagnation
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all you want, but look...
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- It's called talking
about the data all I want.
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- Okay. Let's talk more
about the numbers.
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- The numbers.
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- Why, if capital becoming
so much more important,
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why aren't interest rates going up?
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People should be demanding
lots of capital, but in fact,
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what we see around the world
is a savings glut.
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Capital seems to be everywhere.
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- Here's a simple way
of thinking about it.
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It's really smart labor
and smart capital
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versus passive labor
and passive capital.
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So both smart labor
and smart capital,
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they're earning much more --
look at Apple.
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It's an incredibly
profitable company,
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even though
other places have copied
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their smartphones, right?
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Now, smart labor and smart capital,
how much of the world is that?
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Ten percent, maybe, at most.
So, yes. There are huge gains.
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They're being captured
in a pretty concentrated fashion,
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and still, a lot of people
ought to be worried.
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- I don't see that the gains
are being captured at all.
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Sure, Apple has made
a lot of profit,
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but if you look at cell phones,
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some five or six billion people
today have a smartphone.
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That's incredible.
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A smartphone is more powerful
than a Cray-2 supercomputer
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of the 1990s.
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So, if anything, what we're seeing
is that this technology
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is incredibly widespread
and easily available and cheap,
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and the gains are going to people,
not to the robots.
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- Smartphones, they're great.
I have one, too.
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But when you measure gains
in real wages, and you add in
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and count the value of smartphones,
real wages are barely up
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for decades.
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That's part of the problem,
and part of the culprit
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is machines' automation,
information technology,
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and also, in some cases,
trade with other nations.
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- I think we all agree that capital
can substitute for labor,
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but there's a substitution effect
and there's an income effect.
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So, for example,
Jim Beschen has shown --
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look at the ATM machines.
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You would've thought
that the ATM machines
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would've unemployed
all of the bank tellers.
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But in fact, that didn't happen.
Well, why not?
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Well, at any individual bank,
an ATM machine substituted
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for a bank teller,
but that made it cheaper
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to produce more bank branches,
and with more branches,
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there was actually hiring
of more bank tellers.
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- But the last few years,
bank teller employment
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finally has gone down, and banks
are closing their branches.
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The branch I used to go to
on a Saturday, it's shuttered.
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Why? It's machines.
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- Look, it's not just
about bank tellers.
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That's just an example.
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The bigger point
is that these technologies
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make us rich,
and when people get rich,
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they spend more,
and when they spend more,
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you get entirely new jobs.
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Look, the jobs of today
were unheard of even 10 years ago.
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Think about all of the people
writing apps for those smartphones
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that we have.
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Those jobs were unheard of before.
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There'll be new jobs in the future
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that you and I can't even
imagine today.
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- People, people, people.
You talk about people.
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It will make some people rich.
It will make smart people rich.
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It will make owners
of intellectual property rich.
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It will help people
in poorer countries
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catch up to wealthier countries.
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And all that's fine,
but most middle class Americans
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are not seeing real wage gains.
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- So, Tyler, I'm shocked.
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What should we do then,
or should we smash the robots?
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I don't see you smashing
your smartphone.
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- We don't have
to smash the robots.
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There's probably no solution.
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What we need to do
is learn how to adapt.
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Here's a way to think about it.
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The Industrial Revolution,
we had manufacturing
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replace agriculture
starting in the middle
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of the 18th century.
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The amazing thing is, today,
we're still subsidizing farmers.
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Think how long that process
of adjustment took.
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So, what we're going to see
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is another equally traumatic
process of adjustment.
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We need to hold on
and be ready for it
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and understand what's coming
rather than deny it.
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- If anything, the shift
from agriculture
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to manufacturing shows precisely
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how beneficial
these disruptions can be.
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Yes, there were disruptions,
but people got new jobs,
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they got higher paying jobs,
they got better jobs.
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We saw, again, in the shift
from manufacturing to services,
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people got new jobs,
they got better jobs.
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After all, we look back today,
and we think,
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"Oh, how great it was
to be an auto worker
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on the assembly line.
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Ten hours a day with dirt
and oil and hard work.
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And how terrible it is
to be an office worker?”
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No, it's actually much nicer
to be an office worker today.
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And the future,
I think we'll see better jobs
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and we'll see nicer jobs
and higher paying jobs, as well.
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- You say the jobs
will make "us" rich,
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but that “us”,
it’s a tricky concept.
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I would say jobs
will make rich people
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who are really good at working
with information technology.
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And that's actually
a pretty demanding
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cognitive requirement.
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You need a lot of education.
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You also need to be able
to retrain yourself,
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because the technology
changes quickly.
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That's not most people.
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For most people,
information technology means
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that labor competes
against other labor
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and other parts of the world
more than ever before.
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And those others out there,
they're not so much better off.
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- Look, we agree education
is important
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and retraining is important,
but don't forget
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that these technologies
also help people
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to do precisely that.
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Online education makes education
more productive.
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And who knows
what we're going to see
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in the future
with genetic engineering,
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smart drugs,
biological enhancements.
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We're already tied
to our cell phones.
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We're practically cyborgs already.
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I don't see why we can't even extend
that even further.
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- Dreams, dreams, dreams.
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Someday, perhaps,
but look at education.
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High school graduation rates
in this country,
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they're pretty flat.
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Test scores, they're pretty flat,
maybe they're up a bit.
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It's hardly an impressive
performance.
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What I see is that working
with smart machines
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is so hard that most people
don't really even try to do it.
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They sit back,
they earn what they can.
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That's it, and there's a lot
of stagnation in the economy.
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- [Narrator] What do you think?
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If you'd like to hear more
from Tyler, click to find out
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how economics can help you
find a good job in a market
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filled with computers and robots.
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Or, if you'd like to see
previous episodes of Econ Duel,
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check out our playlist.
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