Donald Trump started looking past his big win and outlining his governing agenda in a short YouTube video released Monday night. He stated that his first executive priorities are to kick-start growth, improve cyber and border security, pull out of the Trans-Pacific Partnership trade deal, improve government ethics, and “restore our laws and bring back our jobs.”
Moving from Twitter to YouTube is a good start. Next he’ll need to provide details, with a more nuanced analysis of what’s causing people’s insecurity, and a thoughtful policy and legislative agenda to move the needle.
This is a historic moment; the stakes couldn’t be higher. Ivory tower leadership, navigated by its own meticulously self-reinforcing polls, is done. Social media enfranchises everyone, citizens and rogues, as “influencers” now, with an intense and immediate feedback loop. If the symptoms are misdiagnosed and prescriptions ineffective, there’s a material risk that by the next presidential election, we may be facing a lot more than blunt talk—a truly disruptive strain of uncertainty, insecurity, anxiety, and possibly social unrest. Safe to say, the decisions of the next few weeks might have consequences for generations to come.
Let’s focus on the economy: It’s not in good shape. Even the Beltway leadership class should know better when they see their own college-educated kids still living at home. While the unemployment rate is below the Fed’s 5% headline target, real unemployment is still nearly 10%.
Government spending on infrastructure would create new jobs, but there are also pressing social safety net and national security budgetary needs—and we can’t have it all. Trump seems to acknowledge this by focusing his infrastructure initiative on stimulating private investment.
While tax and regulatory reform would also help at the margins, they still miss what’s chronically challenging our jobs. So does blaming American job losses on China, Mexico, and other trading partners, as Trump no doubt realizes. The jobs left America for China and Mexico decades ago; that damage is done. And there’s no need to debate the benefits of free trade versus mercantilism; that war was fought even before jobs started migrating abroad.
The problem is structural. Jobs aren’t being replaced by cheaper ones somewhere else; they’re being eaten by microchips and smart software executing ever more sophisticated tasks without human intervention. And it’s not just blue collar robots: The latest “deep learning” artificial intelligence software fully anticipates and executes complex tasks, like driving, grading college assignments, autonomously flying drones, debugging new microprocessors, and even running entire telecommunications networks from the cloud. Applied artificial intelligence software is an equal opportunity consumer of jobs, across the spectrum of industries and abilities, from the factory floor to PhD labs.
The job-eater knows no borders. Just last week, Apple (already earning $2 million for every one of its mere 100,000 employees) announced that it may be about to relocate its highly automated iPhone production from China back home to the U.S. It’s the last stage of disruption for China’s robot supervisors, but don’t expect it to do much good for American workers: Using technology to reduce labor and other costs is great for corporate profits, shareholders, and hoodie-wearing young innovators, but not so much for millions of workers on the road to displacement.
Virtualization of human jobs has been the real cause of economic malaise since the Great Recession; it has no connection with the easier target: “greedy Wall Street speculators.” They’re being disrupted too, by the rapid advance of FinTech. Tech-created efficiencies do have the benefit of anesthetizing inflation. But even if a consumer dollar buys more, responsible people without jobs, and especially those without savings, don’t spend on nonessentials. Lower consumption means lower growth and thus turns the cycle, while the new real wealth of virtualization by definition benefits fewer people all the time. These pressures can be left to build for only so long.
The prescription? So far, our nation’s leading economists have more or less ignored the job-eating virus, just assuming that new jobs will simply appear, as they actually did in the last “technology-driven economic transitions,” from farms-to-factories and production-to-services. Really? Will there be enough service jobs to go around? President Obama talked about this huge question in a thoughtful speech at Osawatomie, Kansas five full years ago. Nothing much was done, though; responding to the professor-president’s brilliant analysis is a legacy left to our new commander-in-chief.
This is Donald Trump’s epochal economic opportunity: developing policies that reconfigure smart systems from viruses that threaten people’s well-being to enablers that liberate them from less interesting work routines to make more purposeful contributions to their families and communities. This is also likely to constitute the new president’s defining economic challenge, because while some people are losing, others (the efficiency-creating innovators and their clients and investors) are winning big, and the straightest, laziest establishment path for fixing that would probably have been Robin Hood’s—just take from the rich to help the poor.
Not so fast. What distinguishes America’s culture from pretty much everyone else’s is that we admire success and want the chance to get there ourselves, instead of taking it from someone else’s pocket. Voters seemed at some level to even embrace Trump’s boastful success and chutzpah, bluntness and all; many want to be like him. They also want him to “drain the swamp” of the barriers that a selfish political establishment has placed in front of their opportunities. Here’s where science, technology, engineering, and math (STEM) and entrepreneurship education, tax relief for small businesses, and tax breaks for grassroots initiatives can make a big difference.
Another idea for the new president’s first hundred days would be to commission a public/private task force on the future of employment—not the usual paper and study–fest, but an informal incubator of innovative ideas that includes a broad range of thinkers. He should give it a mandate to come up with some concrete answers, either by thinking through exactly what new types of jobs establishment economists assume will materialize in the virtualized economy or by developing appropriate options for keeping people purposefully occupied and putting money in their pockets—without unfair government redistribution. Some of the possibilities might include taxes narrowly targeting disruptive technologies, a VAT-funded universal basic income, or similar measures that have been raised at the edges of mainstream economic discussions.
The new president-elect has earned perhaps a larger responsibility at a more precarious moment in human history than even he might have realized. Donald Trump has the chance to be greatest dealmaker, on the most important stage, with the highest stakes, in generations. Let’s forget the hashtags now, and hope for his success—and our own prosperity and security.
Daniel J. Arbess is an investor and policy analyst, CEO of Xerion Investments; and co-founder of No Labels.
