Real Life Economics

This episode of Real Life Economics focuses on international trade theory, trade tariffs and trade war. Tariffs are a subject you can’t ignore these days, but what does that actually mean to you? International Trade Theory strongly suggests that trade is a win-win with economists like Adam Smith and David Ricardo pushing theories of absolute and comparative advantage, so why do countries impose trade barriers like trade tariffs? The reality is that they have been tools for development for many years, allowing developing nations to protect infant industries as well as allowing developed nations to protect strategically important industries. As a result, trade and currencies have become misaligned over the years and trade agreements have contributed to the growing inequality that is plaguing the globe. We discuss this issue with special guest Dr. Robert Scott, Senior Economist and Director of Trade and Manufacturing Policy Research at the Economic Policy Institute.

This episode of Real Life Economics focuses on automation and the impacts to job availability and wages. To properly understand automation, one must understand factors of production: Labor, Land, Capital and Entrepreneurship, or as we translate them: Materials, Machines, Management and Workers, and how these feed into the economy. Armed with that basic knowledge, we wade into the deep end of a long conversation that has been going on since the 1800’s about what impact technology and innovation has on workers. Thanks to Moravec’s Paradox, where robots find difficult things easy and easy things difficult, robots tend to displace higher skilled workers, forcing them to seek lower paid work and suppressing wage earning power and feeding inequality. At the more extreme end, some economists lay out a case where automation results in such extreme inequality that a tiny group of capital owners can command an army of working poor. However, in an interview with Dr. Indranil Ghosh, CEO of Tiger Hill Capital and author of the forthcoming book, “Seven Principals of Prosperity,” Dr. Ghosh explains that up until now, technology has amplified humans by more efficiently carrying out tasks that humans can do. He argues that we have to turn that relationship on it’s head and orient ourselves as a society such that humans amplify technology by focusing on skills sets that computers, robots and artificial intelligence are less able to carry out. But, he warns that the march of progress means that we humans, must dedicate ourselves to life long learning to stay in the game. He also examines tax policy and how it creates an incentive to invest in robots and machinery through deductions while penalizes investments in labor by creating additional burden through benefits costs. Solid food for thought as we think about what is really feeding the inequality problem in the US and how to fix that problem.

This episode of Real Life Economics focuses on immigration and the impacts it has on the U.S. as well as experiences from other countries. To properly understand its impacts, we explain the mechanics of labor market theory as well the mechanics of long term trend growth. With that primer, we discuss Professor George Borjas work on immigration economics which strongly suggests that there is a heavy redistribution effect when immigrants first join the workforce which drives prices down and increases profits for corporations. However, in an interview with Michael Clemens economist at the Center for Global Development highlights that a blue-ribbon panel of economics on this subject do not uniformly subscribe to that view. In fact, Clemens points out that it is not a zero-sum game. In fact, immigration has significant positive benefits that are often ignored in the basic research. Listen in to hear the full discussion.