SUMMARY

  • The Digital Divide Is About To Get Wider
  • The Case of the Missing Reserves
  • Japan Tries To Raise Taxes

Every morning I am in Chicago, I stop at my favorite coffee shop. The staff knows me so well that they have my usual order ready before I even ask for it. On those rare occasions where I order something different, the cashier asks me if anything is wrong.

Some days, there is a line of caffeine cravers ahead of me. During the periodic waits, I recently began to notice a growing crowd of folks going to the far end of the store, where they pluck a cup with their name on it off a rack. They depart without any interaction with the staff.

Lured by the convenience, I decided to follow the crowd and order my coffee online. But when I entered the shop and grabbed my morning joe from the rack, the staff gave me a look of surprise and disappointment. I guiltily realized I was contributing to the disruption of jobs held by people I had come to know.

If the futurists are right, the shoe may soon be on the other foot. As analytics and artificial intelligence advance, a broad range of jobs will change or fade away. Digital transformation will be a major economic theme of the coming decade.

Weekly Economic Commentary - 9/27/19 - Chart 1

Job transitions are an inevitable product of economic progress. History tells us that employment and standards of living always increase in the wake of these transitions. With labor forces growing slowly (if at all) in major economies, technology allowing fewer to do more should be welcomed. But the next phase of disruption is creating substantial anxiety.

One reason is that cutting-edge technology is threatening service jobs. We’ve gotten comfortable with the notion of robots in manufacturing plants, but walking into a store without cashiers can be jarring. (A first encounter with a driverless vehicle is even more unsettling.) An increasing number of basic news articles are being written by virtual reporters and an increasing number of client service calls are being handled by chat bots.