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Krugman: Is the Computer Revolution Coming To a Close?
ninguna writes "According to Paul Krugman: 'Gordon argues, rightly in my view, that we've really had three industrial revolutions so far, each based on a different cluster of technologies. The analysis in Gordon's paper links periods of slow and rapid growth to the timing of the three industrial revolutions:
IR #1 (steam, railroads) from 1750 to 1830.
IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900.
IR #3 (computers, the web, mobile phones) from 1960 to present.
What Gordon then does is suggest that IR #3 has already mostly run its course, that all our mobile devices and all that are new and fun but not that fundamental. It's good to have someone questioning the tech euphoria; but I've been looking into technology issues a lot lately, and I'm pretty sure he's wrong, that the IT revolution has only begun to have its impact.' Is Krugman right, will robots put laborers and even the educated out of work?"
IR #1 (steam, railroads) from 1750 to 1830.
IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900.
IR #3 (computers, the web, mobile phones) from 1960 to present.
What Gordon then does is suggest that IR #3 has already mostly run its course, that all our mobile devices and all that are new and fun but not that fundamental. It's good to have someone questioning the tech euphoria; but I've been looking into technology issues a lot lately, and I'm pretty sure he's wrong, that the IT revolution has only begun to have its impact.' Is Krugman right, will robots put laborers and even the educated out of work?"
Gordon's Paper has been thoroughly investigated by Roger Pielke Jnr at the Breakthrough Institute.
Gordon's smoothing of growth fails to show the variability and creates a picture of trends that are not really there. A quote from the article linked above:
In short, there is no evidence of a stair step reduction in the growth rate of US per capita GDP in either dataset. The US BEA and Census data shows essentially no change (a linear trend, blue line, shows a statistically insignificant downward tick) whereas the Maddison data shows a bit of an increase (red line). The data is sensitive to the time period chosen – for instance, from 1970 the BEA/Census data shows an increase in the annual rate of per capita GDP growth. I can find no evidence of a post-1950 secular decline in per capita economic growth in the United States, and in fact, there is evidence that growth rates have accelerated a bit from 1970.
The poster can't read, or summarize.
Here's the link to Krugman's column: http://krugman.blogs.nytimes.com/2012/12/26/is-growth-over/
And this means that in a sense we are moving toward something like my intelligent-robots world; many, many tasks are becoming machine-friendly. This in turn means that Gordon is probably wrong about diminishing returns to technology.
Ah, you ask, but what about the people? Very good question. Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.
And then eventually Skynet decides to kill us all, but that’s another story.
Anyway, interesting stuff to speculate about — and not irrelevant to policy, either, since so much of the debate over entitlements is about what is supposed to happen decades from now.
He's also a former adviser to Enron.
Take from it what you will.
Quo usque tandem abutere, Nimbus, patientia nostra?
Not to mention defending Obamacare as a cost saving program,
Which it is. There is nothing as inefficient as the current system we have. We pay twice as much as any other country in the world for no better outcome.
openly lying about Ryan's voucher program
The only person lying about Ryan's program was Ryan, since it wasn't even a program. There were unspecified massive cuts in his program, the equivalent of the slashdot 1)... 2)... 3)??? 4) Profit!
Surprisingly the press fell for it much as you did too, with no one questioning what exactly step 3) would consist of. Krugman speculated that it would consist of massive cuts to social programs and thus indeed kill people, if we were to take Ryan at his word.
He has zero credibility left except perhaps with deluded dailykos crowd.
He provides confidential advice to governments all over the world, has a column in one of the most prestigious newspapers in the world, is a professor in one of the best universities in the country and is the winner of the Nobel prize of economics. Yeap, I can see the zero credibility all over the place.
deluded dailykos crowd.
You are projecting here. You might disagree with everything he says, but the dude has credibility up the wazoo.
For example, I think Alan Greenspan. is a hack and at least 50% responsible for the current mess we are in (Bush being the other 50%) but I have no problem admitting that the guy's opinion still carries a lot of weight in many circles. More than I wish it did, but that's tangential to the point.
You on the other hand don't seem to be able to make the simple distinction between what you wish the world was and what it is. Hence you delude yourself into believing that Krugman is irrelevant.
The development of modern computing and telecommunications is not an industrial revolution of the type characterized by IR #1 and IR #2, and this is where Gordon's assumptions falter and Krugman's skepticism gains traction.
The "I" in this case refers to Information not Industry, and it is the 2nd one. The 1st one was the development of the printing press. From this standpoint, IR #1 (the printing press and movable type) took centuries for it's impact to be fully realized. The depth and breadth of it's influence on western civilization is difficult to measure in "simple" macroeconomic terms. Likewise, IR #2 (the electronic digitization of information) is a revolution that is so fundamental in nature that I don't believe it lends itself to being mapped as cleanly as Gordon implies.
Krugman starts the conversation in a couple of good spots: robotics and it's impact on GDP, and the potential of Big Data to drive decision making. What about desktop manufacturing (aka 3D printing)? MOOC? Genomics? Realtime translation?
In fact the more that I think about it, the more I think that Gordon has successfully found an important trend, but has the wrong story to explain it. The first two Industrial revolutions owe their economic impacts to advances in our energy metabolism as a species. Gordon's IR#1 was about the conversion of hydrocarbons into mechanical energy using steam. Gordon's IR#2 was about the conversion of hydrocarbons into electricity using steam turbines, and into mechanical energy using internal combustion. Economic benefits from the digital revolution has much more to do with efficiency and productivity, and almost nothing to do with finding new sources of energy to exploit. Indeed we're using more energy than ever to push information around, but each joule expended has had a significant ROI from an economic standpoint. Consider Just In Time production techniques, which are dependent on the ability to rapidly gather and disseminate information up and down the manufacturing supply chain. There's not a whole hell of a lot more efficiency that we're going to wring out of JIT. In fact, Japan's Tsunami disaster demonstrated that we are now SO optimized from an industrial standpoint that natural disasters in one part of the world can have nearly immediate impacts across the global economy. In other words, we have reached the point of diminishing returns on the productivity gains that digital information can provide to the industrial economy.
So Gordon is wrong, but about the right things.
And even if it would, the rich will never abide huge taxes. They like being rich and intend to stay that way, and will not hesitate to use their wealth to achieve their political ends. Robin hood taxes will never fly, no matter how badly the lower classes want it.
The tax rate for top earners in 1940 was 78%, so they've abided it before.
Unfortunately, Krugman's Nobel prize was awarded for destroying a "straw man" argument. Again, politics degraded the prestige of the award.
I've read every one of Krugman's books, and it baffles me how a supposedly well-educated person can come up with this stuff. (I read a LOT of Economics books, and it isn't just Krugman, unfortunately.) I strongly object to him stating that he is going to use Economic reasoning to make a point, then substitute, ex-cathedra, some political justification that cannot be supported by the argument.
Here is where I'm coming from:
First of all, I assume six rules of General Semantics (as simplified by Ken Keyes, Jr In his book,"Taming your Mind" http://www.amazon.com/Taming-Your-Mind-Ken-Keyes/dp/0960068872/ref=sr_1_53?ie=UTF8&qid=1356574942&sr=8-53&keywords=ken+keyes+jr).
The rules are:
"Up to a point" (Assumes that nothing is absolute; that things are true, false, black, white, etc., Up to a point at which the assumption no longer holds.)
"To me" (Assumes that there is a personal dimension to the formation of every opinion, and the interpretation of every fact.)
"As far as I know" (Assumes that there is a limit to the amount of knowledge about anything, and any opinon is only valid subject to the discovery of further evidence.)
And, "What", "When" and "Where" indexes (Assumes that any topic or opinion is mutable in meaning, depeding on context.)
I also place arguments into categories:
Economic Philosophy (arguments about what Economics should be)
Economic Science (arguments derived from observation, logic, statistics, etc.)
Economic Technology (arguments describing how to achieve specific Economic results)
The only arguments that really interest me fall into the Science category, but you need to be aware of the influencing other two categories in order to evaluate them.
In Krugman's case, his Philosophical stance is "left-of-Keynes/pro-Socialist". If you evaluate his arguments from the point of view that this is correct, then his arguments hold water in most cases. However, modern Science shows Keynes and Socialism to have deleterious effects on the smooth functioning of economic behavior. It takes much intervention to make the technological results appear, and they are usually only temporary. Modern Economists have figured out that Keyenes' "General Theory" is, in fact, a very limited "special theory". To make it work (or to get the "desired" results) requires intervention of the sort that interferes with personal liberty and free choice. This mis-allocates resources and diminishes wealth and prosperity.
Since Krugman is no dummy, I have to assume that he is aware of all this and his insistence on forwarding flawed solutions is based on his political beliefs rather than Economics. It is immoral to borrow legitimate authority in one area and use it for a personal agenda to the detriment of others (IMO), and that puts Krugman in category of "Liars" and "Con men" as far as I am concerned.
Horny teenagers have been in existence for about as long as teenagers have existed. There also isn't any, to my knowledge, reversible sterilization where the initial sterilization has a reasonable certainty it will be successful and the reversal has an equal chance to be reversed.
http://www.plannedparenthood.org/health-topics/birth-control/birth-control-shot-depo-provera-4242.htm
99% effective when used as directed (one shot every 12 weeks), wears off and allows pregnancy after 6 - 10 months of no injections.
With cheap and guilt-free access to contraception that happens seldom, where anti-choicers don't run amok, there's also the option of abortion for the rare cases where birth-control fails. In contrast "purity balls" and bullshit like that don't work. USA is the outlier among first-world nations:
http://www.nationmaster.com/graph/hea_tee_pre_sha-health-teenage-pregnancy-share
In USA, 22% of all 20-year-old females have given birth. The equivalent rate for Japan and Sweden are 2% and 3%. (and atleast for Sweden, most of -those- are conservative religious folks - drop that nonsense and the risk drops to sub-1% which is, if not ignorable, then atleast not a major reason for population-growth.