THERE have been a number of stimulating blog posts in response to this unusually stimulating Paul Krugman column about which classes of workers can and cannot be replaced by soulless automatons, and the implications this has for policy. Mr Krugman is correct that more diplomas for all won't restore "broadly shared prosperity". Instead, Mr Krugman advises direct interventions to more equitably spread the wealh. "We need to restore the bargaining power that labor has lost over the last 30 years," Mr Krugman argues, "so that ordinary workers as well as superstars have the power to bargain for good wages."

To which Tyler Cowen sensibly retorts:

Trade unions, even if they could become strong again (which is hard to see), would likely accelerate this process of substituting capital for labor, rather than counteracting it. A one-time union wage premium, even if it does not come at the expense of other workers, will put only a small dent in the long-term trend.

Mr Cowen's comment jostled loose a thought I had meant to share in our earlier, riveting discussions of the distributional role of unions. One important factor in the decline of private-sector unions is the increasing automation of heavily-unionised manufacturing jobs. American manufacturing output has grown robustly while the portion of the workforce employed in manufacturing has plummeted. Thanks robots! Now, this strikes me as sort of obvious, but I rarely see it mentioned, so I am going to mention it. The difference between making stuff with workers and making stuff with machines has profound distributive implications! Moreover, these implications are entirely independent of questions of union power.

Suppose I own a cartoonishly simple manufacturing concern in a cartoonishly simple economy. When I employ labour, production is a matter of the coordinated integration of capital goods with valuable human skill and effort. Productive cooperation naturally raises questions about the fair division of the spoils. Now suppose I replace all my workers with machines. Questions of distributive fairness disappear! I own the machines; I don't owe the steely suckers anything! Of course, the principal reason I choose to automate is not that machines don't slack off, become indignant in the face of injustice, or go on strike. I choose to automate because it saves me, and thus makes me, money. Of course, "robots" are expensive. I buy them from robot manufacturers. At some point, a good robot "pays for itself". Until then, I'm dividing profits with the robot-makers instead of workers. (Imagine I'm paying in installments out of my revenue; it's a lot like paying wages.) After then, I internalise all the gains from production. All mine!

Now, I don't know what all those workers I laid off are doing. Not doing what robots can do at a lower cost, I suppose. Certainly my demand for robots, and that of other clever capitalists like me, has created vigourous growth in the robot manufacturing sector. But one has to assume that job growth there can last only as long as it takes to come up with robots that build robots that build robots, and so on. So workers are slowly squeezed out of manufacturing by automation. And the squeeze continues. This squeeze has many implications, one of them being that here is an important sector of the economy in which more or less all the gains accrue to the owners of capital and more or less none to the working class, simply because the working class doesn't work here anymore. Intuitively, the distributive upshot of such developments is that the owners of robots become a bit richer than they were when they employed workers, and that the robot-owning class moves up a bit relative to the no-longer-manufacturing working class, even if the efficiencies of increasing automation, together with that of other innovations, have given the working class, now employed in "services", a steady or slightly rising real standard of living.

This little tale is of course rife with oversimplification, but I think it draws our attention to what seems to me an important neglected truth: technological change shifts the distribution of income and wealth in ways that have nothing to do with (a) the decline of union power or (b) structural injustice. When the nature of production in a large swathe of the economy changes, a lot of things change with it. Sometimes, trends in income growth and inequality are among those changes. If we decide, for whatever reason, that we preferred the pattern of income and wealth that prevailed in days past, we may elect to instate redistributive programmes intended to make the pattern match our preference. But it's important to see that in these cases redistribution does not "fix" the pattern. It didn't break. It changed.

Of course, it's never this simple. It's certainly possible that the rise of the robots has affected the distribution of income and wealth in the way just described (which I take to be morally neutral) while also leading to waning union power and, thereby, to the kind of rich-favouring shift in the balance of political power Jacob Hacker and Paul Pierson hypothesise. Whether you consider this sort of shift in political influence bad or neutral depends on any number of other beliefs. For example, when Mr Krugman calls for "broadly shared prosperity", implicit in his call is an opinon about how prosperity ought to be shared. I'm sure Mr Krugman and I don't quite see eye to eye on this, but I certainly see danger in the possibility of extreme stratification between owners and non-owners of capital. As Mr Cowen says, "This is a reason to encourage the ownership of capital and on a quite broad basis." Eventually, a society of adequately shared prosperity not based on constant, disruptive, inefficient redistributive intervention will need to be based on universal ownership of claims to the output of robots.

It is in this light that the "privatisation" of Social Security—shifting to an old-age pension policy based on mandatory savings and investment—is revealed as a programme of progressive paternalism aimed at distributive justice.

(Photo credit: Bloomberg News)