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I normally take a dim view of economics and this article is worse than usual. My complaint is the massless, frictionless world of economics does not take real

• dredmorbius 10y ago
  I think you're giving this article shorter shrift than it deserves. While I don't feel it (or Gordon) quite puts its finger on the cause, it does a good job of quantifying the symptoms. Gordon does this at rather more length. In particular, we're seeing challenges, from within the economic establishment, of the prevailing view of the past 60 years or so that economic growth is normal and perpetual. On your first point: Gordon illustrates this in exquisite detail, but the impacts of technological innovation (vs. the rate of innovative change disrupting procedures, devices, companies, etc.) have fallen tremendously over the past 150 years. Gordon looks at the period 1870 - 2015, divide roughly into three (almost) 50 year periods: 1870 - 1920, 1920 - 1970, and 1970 - present. In the first 50 years, you saw virtually all the innovations you will find around you today, in at least some form. Steam power, electrical generation (and light, heat, motion, sound recording & transmission), radio, elevators, cinema, sanitation and sewage (far more responsible for improved life expectency than all the rest of medicine), elevators, skyscrapers, and most of all, petroleum and its consequences: cars, trucks, power tools, plastics, and more. It's almost easier to list what didn't develop: TV, penicillin, DNA, computers, lasers, nuclear power, gas turbines, and satellite launch capabilities. What developed from 1920 - 1970 were the applications and utilisations of those technologies. Gordon notes that the home of 1920 was connected to five networks: water, gas, electricity, sewage, and phone. I'd add two more: the postal and package delivery networks, which whilst not fully end-to-end, provide the foundation of the Amazon of its age, Sears, Roebuck and Company. The fundamentally new technologies from 1970 to present have been far fewer, almost entirely concentrated into communications, information and entertainment, and have had vastly smaller impacts on work, home life, health, and transport than the innovations of 1870-1920 and applications of 1920-1970. (Again: covered in detail by Gordon.) On productivity-enhancement as capital goods: I'm finding your argument unpersuasive. Capital equipment, the energy to drive it, and its organisation are key to productivity. Much now derives from how pieces are organised -- WalMart and Amazon are as much logistical companies as anything else. But yes, capital plays a huge role. Of the kitchen, your third point: again, the contrast is the kitchen of 2015 vs. 1970 vs. 1920 vs. 1870. In 1920 you may well have had a wood-burning stove (gas was being introduced), no refrigerator, in some homes no running water (Gordon highlights the total amount of hauling that was required in the 1870 home: water, wood, and food in, various wastes out, little arriving on its own). The change 1870 - 1920, 1920 - 1950, 1950 - 1970, and 1970 - 2015 of kitchen appointments has shown a tremendous fall in rate. That microwave your kids can't be bothered to use didn't exist in the 1970 kitchen, but that's about it. VW's behavior may well be a consequence of firms pressurised to ever-increasing returns in light of declining rates of growth, or of declining absolute productivity.
  • mattclarkdotnet 10y ago
    Bravo. Too many people assume change is somehow the same over time.
• iofj 10y ago
  > We're about to see millions of human roles vaporize when automated driving hits home. This isn't like the dishwasher or desktop calculator. We've already seen self checkout stations. How long until whole stores are automated? Eg: http://newatlas.com/go/5028 http://newatlas.com/go/5028 12 years ago 4 of these shops opened in my university town. All are now broke/discontinued. They were expensive, difficult, slow, ... generally not usable except perhaps for using them as a coke machine. I do think there are ways to get it fixed but no way the current batch of designs is going to take over from convenience stores. > Bullshit as well. Hardware is rapidly approaching free as services dominate. Plus most of our readers shift capex to opex by cloud hosting, for example. Furthermore, offshoring and free trade means you won't invest in equipment because you're not even making the widgets any more, in house. Note that from a purely financial point of view, shifting capex to opex is usually a bad deal. Think sell and lease-back services. In the financial department, absent short term thinking (heh), there should be a big break on this behavior. > Mostly irrelevant when "instant gratification isn't fast enough". Our kids can't even be bothered to microwave something in 30 sec, so prepackaged convenience, dominates households. I hadn't thought of it like that yet. But come to think of it, you're right. > Finally, what does corporate malfeasance (eg VW emissions, banking crisis, LIBOR fraud etc) do to productivity? When they don't get caught, it increases it. Until it becomes so pervasive as to destroy trust in the system. Then it crashes to zero. That is why there is significantly more tolerance towards it when there are huge problems (think 2009-2010), as fixing it would cause more damage. Sadly clearly some management folks have realized this.