Economists have understood since the Victorian era that the main benefits of trade come from comparative advantage: the idea that people can specialize in what they're good at and then benefit from exchange. The principle is no more mysterious than specialization in the labor market.
Here's a startling fact: in the 45 years since the introduction of the automated teller machine, those vending machines that dispense cash, the number of human bank tellers employed in the United States has roughly doubled, from about a quarter of a million to a half a million.
The average worker in 2015 wanting to attain the average living standard in 1915 could do so by working just 17 weeks a year, one third of the time. But most people don't choose to do that. They are willing to work hard to harvest the technological bounty that is available to them. Material abundance has never eliminated perceived scarcity.
The end of the 'tech bubble' in the year 2000 is, of course, widely recognized, as the NASDAQ stock index erased three-quarters of its value between 2000 and 2003.
The Internet promises to open new channels for worker-firm communications. What are the consequences of this opening?
There's always new work to do. Adjusting to the rapid pace of technological change creates real challenges, seen most clearly in our polarized labor market and the threat that it poses to economic mobility. Rising to this challenge is not automatic. It's not costless. It's not easy. But it is feasible.
The long-term policies that will be most effective all have to do with investment: investing in ourselves, investing in opportunities, creating good schools, and creating situations where people can acquire skills that enable them to be successful.
The last 200 years, we've had an incredible amount of automation. We have tractors that do the work that horses and people used to do on farms. We don't dig ditches by hand anymore. We don't pound tools out of wrought iron. We don't do bookkeeping with books! But this has not, in net, reduced the amount of employment.
Manufacturing value chains are global. Many U.S.-made goods have foreign components. Slapping on tariffs will raise prices and slow imports, but it will make us poorer and impede growth.
There's a reason I write articles and go out for good dinners: because I'm better at research than cooking. And there are people who are much better at cooking than research, so it's mutually beneficial for us to specialize.
People tend to think about trade as if it's competition between companies - if Apple wins, Google loses. But that's false. Trade makes nations better off in general. Now, I want to be clear. I'm not saying that everything about trade is good and beneficial. Trade also has costs.
Jobs can change a lot without there being huge changes in employment rates.
Labor is getting a shrinking slice of a pie that's not growing very much.
Tax reform done right will improve incentives to invest in U.S. production and to repatriate profits.
Work is really wrapped up with identity. Work is not just money for most people.
Workers and jobs are naturally heterogeneous, and the quality of their interaction when paired is difficult to forecast.
In 1986, the space shuttle Challenger exploded and crashed down to Earth less than two minutes after takeoff. The cause of that crash, it turned out, was an inexpensive rubber O-ring in the booster rocket that had frozen on the launchpad the night before and failed catastrophically moments after takeoff.
The U.S. tends to export high-tech goods because we have strong comparative advantage there, and we tend to import labor-intensive and less skill-intensive goods that other countries can do more cheaply.
Our machines increasingly do our work for us. Why doesn't this make our labor redundant and our skills obsolete? Why are there still so many jobs?
China's rise is really a kind of a world historical event. This is the largest country in the world. It has caused a wholesale substantial contraction of U.S. manufacturing employment.
