March 06, 2017

Why has the world not been duly informed about the impact on jobs of robots and dumb bank regulations?

Sir, I refer to your “incisive new global business columnist” Rana Foroohar writing, from a local perspective, that “Trump’s trade policies won’t help my town” March 6.

Let me for the umpteenth time comment on two issues 

Foroohar writes: “small and medium-sized businesses create about 60 per cent of jobs in America.” And it is precisely to “risky” SMEs that bank regulators have assigned among the largest risk-weights; which mean banks need to hold the most capital when lending to these; which means they have dis-incentivized bank lending the most, to what we most need to have access to credit. It is all so loony, especially considering that major bank crisis never result from excessive lending to this type of client… since these are perceived as risky.

Foroohar also writes: “Carrier recently cut a deal with the president to keep 1,000 jobs in Indiana rather than moving them to Mexico, only to come under fire from unions for outsourcing hundreds of others and replacing workers with robots… Those who might in the past have worked $25 an hour factory jobs now do $11-$13 an hour shifts at Walmart.”

That should indicate that our society has been surprised, unprepared, for a major event, namely that immense structural unemployment that might result from the use of robots and other variants of automation. How should we handle it? Do we not need decent and worthy unemployments? Should we at least not tax robots and cousins with any type of taxes we load on the employed so that these latter could at least compete fairly for jobs? There are hundreds of questions waiting to be answered but in this data world, we don’t find any data on for instance how many jobs were effectively taken over by robots and cousins during the last decade.

Of course, as Foroohar says, “when it comes to trade Mr Trump is fighting the last war”. But the main reason for that is that no one informed Trump or the rest that there was a new war going on”. Did anyone mention the insane bank regulations war on risk-taking, the oxygen of development? Did Hillary Clinton and Bernie Sanders talk of the robots coming? Was a Universal Basic Income possibility raised in any town-hall meeting? Who told Trump and the electorate that the building the Mexico Wall could itself represent the last decent job opportunities for many, on both sides of the wall? Sir, clearly the world has a lot of urgent catching up to do.