June 29, 2017
I suppose that is their natural state. After all, they completely missed the housing bubble and then somehow expected the economy would bounce right back even though there was nothing to replace the demand generated by the bubble. Anyhow, at least according to this NYT article, they are very confused about the course of technology.
There are two big issues that the piece implies the bankers are missing. First, contrary to the concern of massive job displacement by robots, productivity growth has actually been very slow in recent years. It has averaged just over 1.0 percent annually over the last decade. This compares to a 3.0 percent annual rate in the long post-war Golden Age from 1947 to 1973 and again from 1995 to 2005.
It is also worth noting that these periods of rapid job displacement due to technology were also periods of low unemployment and rapid wage growth. (The 2001 recession, following the collapse of the stock bubble, put an end to the late 1990s wage growth.) There is no reason to blame weak wage growth and high unemployment on rapid productivity growth. If there is a weak labor market the problem is with macroeconomic policy that is leading to insufficient demand. (Bizarrely, this piece never once mentions trade deficits, which are a major drain on demand.)
The other big issue missing here is attributing distribution effects to technology. The ownership of technology is determined by policy, specifically rules on patents and copyrights, it is not determined by the technology. If we are seeing an upward redistribution associated with trends in technology, it would indicate that patents and copyrights are too long and too strong.
That would be a strong argument for making these forms of protection shorter and weaker (policy has been going in the other direction). There is no indication this topic even came up at the meetings. This suggests the central bankers are once again very confused about the economy.
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