2021年4月13日 星期二

Learning from the Great Compression

How middle-class America happened, and how we lost it.
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By Paul Krugman

Opinion Columnist

I'm a Baby Boomer, which means that I grew up in a society with a much flatter income distribution than, I believe, younger generations can easily imagine. It was a society in which middle managers and well-paid blue-collar workers were more or less equal in financial terms, in which C.E.O.s of major companies were paid around 20 times as much as the average worker, compared with more than 200 to 1 today. It was by no means an equal society — especially if you were female or nonwhite or both; but it was a society in which extremes of both wealth and poverty seemed to have withered away.

And we took it for granted. A more or less middle-class society, almost everyone assumed, was the state toward which an advanced economy naturally evolved.

Not so much, we learned as the boomers turned middle-aged. The future of inequality wasn't what we expected it to be; America today has more or less returned to Gilded Age disparities in income and wealth.

But then, the past wasn't what we thought it had been either. That middle-class society I grew up in didn't evolve gradually and naturally. It was created by public policy over the course of just a few years in the 1940s, mainly during World War II.

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I've read many, many economics papers over the course of my adult life. Few have changed the way I see the world as much as a 1991 paper by Claudia Goldin and Robert Margo titled "The Great Compression," referring to an event I briefly referenced in today's column. Goldin and Margo showed, roughly speaking, that America went to bed in 1939 in the Gilded Age and woke up in 1945 as the middle-class nation of my childhood.

You can see the abruptness of the event and what followed in this figure, from a later paper by Goldin and Lawrence Katz, showing two measures of wage inequality (for white men, not because they're the only workers who matter, but as a way of focusing the question) from the '30s to 2005:

A sudden plunge in inequalityClaudia Goldin and Lawrence Katz

How did that happen? A lot of the compression of wages in the 1940s can be attributed to World War II, when the U.S. was largely a controlled economy, and wage increases were only allowed under rules that tended to give bigger increases in percentage terms to less well-paid workers. But why didn't things spring back to where they had been before once wage and price controls had been lifted?

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We don't fully understand the persistence of the Great Compression. But one factor, surely, was the rise of unions — also something that happened very quickly. Here's another figure, from a paper by Richard Freeman:

The rise and fall of unionsRichard Freeman

A strong union movement, it seems, was able to lock in the new wage norms created by the war for several decades after the war was over. And the rise of unions was clearly linked to politics: first the New Deal, then the war, created favorable environments for union organizing.

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What does this tell us about the future of inequality? On one side, it's encouraging: high inequality isn't something unavoidable, the necessary consequence of implacable technological forces: political action can create a much less unequal society. On the other side, both the politics of the New Deal and, even more so, the policy environment of World War II, were pretty unique. Progressives are, in general, delighted with how activist the Biden administration is proving; but despite Republican cries of "socialism," its actions are far more modest than what happened in the '30s and '40s.

The big question is how much of the Great Compression we can achieve through less dramatic policies, in a political environment where spending one percent of G.D.P. on infrastructure seems radical. No, I don't know the answer.

Quick Hits

The Biden stimulus and the Korean War.

Or maybe it will be like World War I, which boosted the economy but didn't lead to lasting transformation.

I'm shocked — shocked — to learn that corporate lobbying organizations oppose corporate tax hikes.

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On Tech: Can medical Alexas make us healthier?

Plus, hacking technology, with long distance operators.

Can medical Alexas make us healthier?

Ariel Davis

Are voice recognition technologies like Alexa helpful in medicine or are they hogwash? For now, the short answer is a little of both.

Microsoft on Monday said that it would spend roughly $16 billion to buy Nuance Communications, whose speech transcription software is used in health care.

Microsoft as well as other tech companies like Google and Amazon have big ambitions to transform the industry with artificial intelligence technologies, including in voice recognition programs and efforts to identify signs of illness and disease.

The big hope of technology in medicine is that it can help make us healthier and improve America's expensive and often ineffective and unjust health care system. The message that I have heard from medical experts is that there's potential there, but there is also a lot of hot air.

The hope of medical Alexas:

For years, doctors have used Nuance's transcription software to speak notes about patients and convert them into text for medical records. In theory, that frees doctors from having to do paperwork so they can spend more time treating us.

Nuance and other tech and health care providers want to do much more with our voices. One idea is that microphones might record (with permission) interactions between physicians and patients and log the relevant details into medical files — without much human involvement. Computers would also be smart enough to order any necessary tests and handle billing.

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This sounds cool and perhaps a little creepy. These ideas are still under development, and it's not clear how well these medical Alexas would work. But Dr. Eric J. Topol, a professor of molecular medicine at Scripps Research and the author of several books on technology in medicine, told me that voice recognition systems are one of the most consequential uses of artificial intelligence in health care, at least in the short term.

At Cedars-Sinai, a health system in Southern California, most hospital rooms have been outfitted with voice activated devices, said Darren Dworkin, the organization's chief information officer. For now, the devices are mostly used for relatively mundane interactions, such as a nurse asking a device to show a patient a video on preventing dangerous falls.

Dworkin said that he was most optimistic about using voice and other technologies to automate administrative work, such as authorizing insurance for medical treatments and sending tailored text messages to patients.

Dworkin said that those uses of technology might not be what many considered a wow factor, but that busywork was a huge cost and challenge in health care.

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"Not everything has to be state of the art," Dworkin said. "Don't let the simple stuff pass you by." (Another vote for the importance of boring technology!)

Where hope meets harsh reality:

Just about every technology used in health care — and many other fields — promises to reduce administrative work and costs. And yet, health care expenses and bureaucracy in the United States mostly continue to go up.

Dr. Dhruv Khullar, a physician and assistant professor of health policy and economics at Weill Cornell Medicine, said that he was optimistic that voice tech and artificial intelligence could reduce administrative burdens and help patients. But he said that his hope was not yet backed by rigorous proof.

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"There is not a lot of evidence at this point that A.I. reduces costs or improves health outcomes," Dr. Khullar told me. (I borrowed the "medical Alexas" line from him.)

I asked these health experts an overarching question: What role should technology play in tackling the root problems of American health care?

They largely agreed that advances in technology could help reduce costs and improve the quality of service in our health care system, but that it was not a silver bullet for our biggest problems.

"I would say, it's part of the answer but not a large part of it," Dr. Khullar said.

(And read more from DealBook: How has Microsoft mostly avoided the government's antitrust attention? My answer: Microsoft's essential technology is mostly dull. That is a good thing.)

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YOUR LEAD

Hacking technology, with long distance operators

Last week, I pointed to a terrific article about Indians adapting to expensive mobile phone calls by coming up with new ways to communicate that involved hanging up mid-ring. An On Tech reader, Morris Fried of Somerset, N.J., wrote to us about his family's missed call communications system from decades ago:

Your note about using missed calls for communications in India stirred old memories of the same technique in this country. (I will be 75 next month.)

When I was a child, we would drive back home to Philadelphia after visiting my grandmother in Brooklyn. My mother would then call the operator and request a person-to-person long distance call to her own name at my grandmother's phone number.

My grandmother would answer the phone and tell the operator that my mother was not there. My mother thereby succeeded in informing her mother that we had arrived home safely without incurring the then not-insignificant expense to us of a long distance telephone call.

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Before we go …

Hugs to this

"If you've always wanted your own haunted Victorian child in the body of a small dog that hates men and children …" I laugh-cried at this extremely detailed description of Prancer on Facebook and his MANY peculiar habits, posted by a New Jersey pet adoption league.

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