KRUGMAN: If not income redistribution, then what?

What happens when good jobs disappear? It’s a question that’s been asked for centuries.

In 1786, the cloth workers of Leeds, a wool-industry center in northern England, issued a protest against the growing use of “scribbling” machines, which were taking over a task formerly performed by skilled labor. “How are those men, thus thrown out of employ to provide for their families?” asked the petitioners. “And what are they to put their children apprentice to?”

Those weren’t foolish questions. Mechanization after a couple of generations led to a broad rise in British living standards, but it’s far from clear whether typical workers reaped any benefits during the early stages of the Industrial Revolution.

So are we living in another such era?

Until recently, the conventional wisdom about the effects of technology on workers was, in a way, comforting. Clearly, many workers weren’t sharing fully—or, in many cases, at all—in the benefits of rising productivity. But this, the story went, was because technology was raising demand for highly educated workers while reducing demand for less-educated workers. And the solution was more education.

Now, there were always problems with this story. Notably, while it could account for a rising gap in wages between those with college degrees and those without, it couldn’t explain why a small group—the famous “one percent”—was experiencing much bigger gains than highly educated workers in general.

Still, there may have been something to this story a decade ago.

Today, a much darker picture of the effects of technology on labor is emerging. In this picture, highly educated workers are as likely as less-educated workers to find themselves displaced and devalued, and pushing for more education may create as many problems as it solves.

Until around 2000, the nature of rising inequality in America was all about worker versus worker; the distribution of income between labor and capital—between wages and profits, if you like—had been stable for decades.

Since then, however, labor’s share of the pie has fallen sharply. A new report from the International Labour Organization points out that the same thing has been happening in many other countries, which is what you’d expect if global technological trends were turning against workers.

And some of those turns may well be sudden. McKinsey Global Institute recently released a report on a dozen major new technologies that it considers likely to be “disruptive,” upsetting existing market and social arrangements. Even a quick scan of the report’s list suggests that some of the victims of disruption will be workers considered highly skilled, and who invested a lot of time and money in acquiring those skills.

The modern counterparts of those woolworkers might well ask further, what will happen to us if, like so many students, we go deep into debt to acquire the skills we’re told we need, only to learn that the economy no longer wants those skills?

Education, then, is no longer the answer to rising inequality, if it ever was.

So what is the answer? The only way we could have anything resembling a middle-class society would be by having a strong social safety net. And with an ever-rising share of income going to capital rather than labor, that safety net would have to be paid for to an important extent via taxes on profits and/or investment income.

I can already hear conservatives shouting about the evils of “redistribution.” But what, exactly, would they propose instead?•

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Krugman is a New York Times columnist. Send comments on this column to ibjedit@ibj.com.