Source: Rob Carlson. “Diffusion of New Technologies,” 11/27/2011: http://www.synthesis.cc/2011/11/diffusion-of-new-technologies.html
So what do we do? First, it’s important to note that Fed Policy hasn’t meaningfully helped with current joblessness. Instead, QE was effective at dulling volatility and raising asset prices. For investors, the QE taper will now mean rising volatility in both equities and rates markets. In addition, technological advances may help keep inflation muted in the years ahead, which could be a positive if accompanied by stronger economic growth.
As a nation, we need to find ways to create opportunities for Americans being displaced in today’s economy. This includes addressing our entitlements issue, to relieve pressure on the budget to make more productive investments; lending initiatives aimed at small businesses that create new and entry-level jobs; expanding and making permanent R&D tax credits; and making smart investments in infrastructure with private sector support.
It requires additional emphasis on education and retraining, as workers will need to increasingly be flexible and adaptable in the new economic environment. Ultimately, it means gaining the skills and frame-of-mind required to effectively live alongside the machines we’ve already invited into our lives.
Rick Rieder, Managing Director, is BlackRock’s Chief Investment Officer of Fundamental Fixed Income, is Co-head of Americas Fixed Income, and is a regular contributor to The Blog. You can find more of his posts here.