A POLICY AGENDA FOR THE KNOWLEDGE ECONOMY
- Policy debate dominated by discussions of ‘reform’
- Policy agenda set in 1980s >* Irrelevant or counterproductive today
- We need a 21st century policy agenda
- Previous reform era provides a way to think about this.
Over at Equitable Growth: Mark Thoma directs us to Paul Romer. And Paul Romer gets remarkably exercised about George Stigler's long and successful war against the use of the theory of monopolistic competition in economics, with its consequence that even today we have "scientifically unacceptable" people who say:
We will never, as a matter of principle, consider a model in which there are ever any monopolies. We will dogmatically stick only to models of price-taking competition...
From my perspective it is not the contemporary implications of this train of thought for growth theory that are important--for as best I can tell there are people who write growth models where every market has price-taking competition but there is nobody outside who reads them--but rather the historical implications of this train of thought for industrial organization, antitrust, and the rise of the rent seeking sector in the American economy.
I eagerly want to read and hope to see more work in this area. READ MOAR
Over at Equitable Growth Much of the dysfunction of the American press corps is driven by the ideological commitments of its bosses, the cultural flaws of its journalists' communities, or the desperate need to scare its readers and viewers and thus keep them reading and viewing so that their eyeballs can be sold to advertisers.
Some of the dysfunction is not. Some of the dysfunction is unmotivated and completely pointless, even on its own terms.
Here we have Eugene Stern warning readers that reading Nick Kristof of The New York Times will not make you better informed: READ MOAR
Over at Equitable Growth: A good review by Jonathan Knee of the exteremely-sharp Richard Thaler's truly excellent new book, Misbehaving. The intellectual evolution of the Chicago School is very interesting indeed. Back in 1950 Milton Friedman would argue that economists should reason as if people were rational optimizers as long as such reasoning produce predictions about economic variables--prices and quantities--that fit the the data. He left to one side the consideration even if the prices and quantities were right the assessments of societal well-being would be wrong. READ MOAR
Alma Mater Blogging: Greg Mankiw's desire to move Harvard to someplace better adapted to human life than Massachusetts was triggered by:
Greg Mankiw's Blog: Time for Harvard to Move?: The Wall Street Journal reports one of the most pernicious ideas I have heard of late:
Massachusetts legislators, demonstrating a growing resentment against the wealth of elite universities in tight economic times, are studying a plan to levy a 2.5% annual tax on the portion of college endowments that exceed $1 billion. The effort takes aim at one of the primary economic engines of the state...
Sokrates: Internet Media and the Fall of GigaOm
Adeimantos: What? Are you now intellectually flirting with both Hinduism and techno-transhumanism?
Felix Salmon: I told you so. If I may quote myself:
...to understanding economic and financial processes. The Global Financial Crisis of 2008 and the Great Recession that followed challenged much conventional wisdom and academic orthodoxy with respect both to theory and policy. New economic thinking was needed and that need has been extended and amplified through the succeeding years. But: what constitutes 'new economic thinking?'
Glaukon: So: Blogging...
Hypatia: I would like to start by offering the floor to the Great and Good Felix Salmon:
Felix Salmon: To All the Young Journalists Asking for Advice...: I’m also very flattered by the lovely things you said... about how you’d love to have a career in journalism... do[ing] the kind of thing... I do. You won’t.... By the time you’re my age... you’ll... be doing something... nobody today... foresee[s]....The obstacles facing you are much greater than anything I managed to overcome.... The exact same forces which are good for journalism and good for owners are the forces which are bad for journalists....
J. Bradford DeLong on April 12, 2015 at 12:52 PM in Economics: Information, Information: Internet, Long Form, Philosophy: Moral, Political Economy, Politics, Science: Cognitive, Streams: Economics, Streams: Highlighted, Streams: The Honest Broker, Web/Tech, Weblogs | Permalink | Comments (5)
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The Beverly Hilton | 9876 Wilshire Blvd. | Beverly Hills, CA 90210
Tuesday, April 28, 2015 / 3:45 pm - 4:45 pm
Moderator: Josh Barro, Correspondent, New York Times
- Brad DeLong, Professor of Economics, U.C. Berkeley
- Jeremy Howard, CEO, Enlitic
- Gerald Huff, Principal Software Engineer, Tesla Motors
- Amy Webb, Digital Media Futurist; Founder, Webbmedia Group
For centuries, people have worried that new technologies will destroy jobs without creating enough new ones, and every time the doomsayers have been proven wrong. But today, with disruptive advances occurring at dizzying speed, some worry that the time may finally have come when more jobs are destroyed by technology than are created. One 2013 report by Oxford University researchers concluded that 47 percent of U.S. jobs are threatened by automation. Should workers be worried, or is the fear overblown? Is technology--from robots to intelligent digital agents--our friend or a threat? If the latter, what do we need to do to ensure employment by the middle class and others? How can we reorganize our business and economic system to avert more economic turmoil?
Tags: Information Economy, Labor Market, Economic Growth, Inequality, Rise of the Robots, Josh Barro
Over at Equitable Growth: If The Economist is going to add value for society, it will have to become a trusted information intermediary, rather than just seem to be a trusted information intermediary. It may survive, and it may return healthy profits to its conglomerate owners and lavish salaries to its workers if it seems to be a trusted information intermediary, but, really, is that the point?
Does Matthew Ingram and I cannot be the only people who are deeply alarmed at the internet strategy that the very sharp Tom Standage has just outlined for the Nieman Journalism Lab. If you focus on becoming a trusted information intermediary, you may well make it. If you just focus on seeming to be a trusted information intermediary, you surely will not make it. READ MOAR
Sir Terry Pratchett: April 28, 1948-March 12, 2015:
Terry Pratchett: The Pratchett Quote File v6.0: "You can't make people happy by law. If you said to a bunch of average people two hundred years ago 'Would you be happy in a world where medical care is widely available, houses are clean, the world's music and sights and foods can be brought into your home at small cost, travelling even 100 miles is easy, childbirth is generally not fatal to mother or child, you don't have to die of dental abcesses and you don't have to do what the squire tells you' they'd think you were talking about the New Jerusalem and say 'yes'.
For the record, let me say that the ten or so Terry Pratchett books that I have read have made me happy:
...TPP... will almost certainly have nothing on currency... It will not make it any easier, and could well make it more difficult, for the United States to address the trade deficit that results from having an over-valued dollar....
J. Bradford DeLong on March 12, 2015 at 09:23 AM in Economics: Growth, Economics: Inequality, Economics: Information, Economics: Macro, Obama Administration, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (27)
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Over at Equitable Growth: It is foolish to debate whether a trade agreement that has not yet been negotiated is a good idea and should be ratified.
Such a debate should properly begin only once there is something to analyze.
But here we are, so...
Femina illustris Dahlia Remler:
The problem with the @WashingtonPost (and the @NYTimes) is that it sells itself as a trusted intermediary interested in informing you while it is actually focused on seizing your eyeballs so that it can sell them to advertisers...
It’s true that both papers have had financial problems and need eyeballs to sell to advertisers. But Brad is being a bit unfair.
Over at Project Syndicate: If we as a species can avoid nuclear war; curb those among us who are violent because they are God-maddened, state-maddened, or ethnicity-maddened; properly coordinate global action to reduce global warming from its current intolerable projected path to a tolerable one, adapt to the global warming that occurs, and distribute paying for the costs of that adaptation--well, if we can do all of those things, the human race can have a very bright future indeed.
...hysteria surrounding the idea is that a huge wave of automation, technology and skills have lead to a huge structural change in the economy since 2010. The implicit argument here is that robots and machines have both made traditional demand-side policies irrelevant or naïve, and been a major driver of wage stagnation and inequality. Though not the most pernicious story that gained prominence as the recovery remained sluggish in 2010 to 2011, it gained important foothold among elite discussion.
Over at Equitable Growth: I see that the vir illustris Lawrence Mishel, our neighbor here in the Great Center-Left Atrium Building at 1333 H St. N.W., has had his ire awakened by the femina clarissima Melissa Kearney and her forthcoming Hamilton Project event on robots tomorrow: http://www.hamiltonproject.org/papers/future_of_work_in_machine_age/...
Over at Equitable Growth: Something has bothered me ever since I read the highly-eminent and highly-esteemed David Autor's "Polanyi's Paradox and the Shape of Employment Growth":
David Autor (2014): Polanyi’s Paradox and the Shape of Employment Growth: "[The] human tasks that have proved most amenable to computerization...
...are those that follow explicit, codifiable procedures.... Tasks that have proved most vexing to automate are those that demand... skills that we understand only tacitly.... The interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine, codifiable tasks while amplifying the comparative advantage of workers in supplying problem solving skills, adaptability, and creativity. Understanding this interplay is central to interpreting and forecasting the changing structure of employment in the U.S. and other industrialized countries.... READ MOAR
...announced that it is exploring jettisoning its struggling PC business in favor of investing more heavily in software, where it sees better potential for growth. Meanwhile, Google plans to buy up the cellphone handset maker Motorola Mobility. Both moves surprised the tech world. But both moves are also in line with a trend I've observed, one that makes me optimistic about the future growth of the American and world economies, despite the recent turmoil in the stock market.
In short, software is eating the world.
If David Beckworth is here, I want him to ask his question--itself triggered by an observation from Noah Smith at Stonybrook. If he isn't here, or is shy...
...can be decomposed into TFP in investment production and TFP in consumption production. TFP in investment looks better than the overall.... TFP in consumption... has basically flatlined since the early 1970s and is what is driving the Great Stagnation.... The Great Flattening does not seem reasonable. Has productivity growth in consumption really been flat since the early 1970s?... This suggests there are big measurement problems in consumption production. And I suspect they can be traced to the service sector..." READ MOAR
A Question: For us economists, intensive economic growth is the rate in percent per year at which the real cost of obtaining the currently-produced bundle of marketed goods and services decline. what I am hearing from Erik is that, in his view, that is missing much if not most of the action: that what we really ought to be doing is measuring the rate at which the real cost of staying on the same utility surface is declining. And that these two are very different right now.
But the past generation has seen a third industrial revolution, a worthy information-age successor to the first of steam, iron, cotton, and machines and to the second of internal combustion, electricity, steel, and chemicals. Not everyone, but almost everyone in the North Atlantic and many and soon most in the world, can now if they wish have a smartphone--and so gain cheap access to the universe of human knowledge and entertainment to a degree that was far beyond the reach of all but the richest of a generation ago.
Remember my six-part classification of things people do to add economic value?:
If you had asked me five years ago what iPads would be used for, I would not have said "cash registers"...
They tell me that it's $600 vs. $2000 upfront for an iPad vs. a conventional cash-register system, with similar transaction fees.
Conor Dougherty: Two Cities With Blazing Internet Speed Search for a Killer App: "Google Fiber in Kansas City Residents in the Missouri city are finding out that Google’s super high-speed Internet is so fast...
...it’s sometimes hard to know what to do with it. A team of computer programmers here set out to learn how many cute kitten photos can be downloaded in one second on their Internet network, one of the fastest in the country. The answer: 612.... When your city has Internet capacity to spare and is not exactly a hotbed for tech start-ups, figuring out what you are supposed to do with all that speed is a challenge.... fter a few million in waived permit fees and granting Google free access to public land, the area is finding out that Google Fiber is so fast, it’s hard to know what to do with it. There aren’t really any applications that fully take advantage of Fiber’s speed, at least not for ordinary people....
Ideas have ranged from installing Fiber-connected cameras in high-crime areas to building a model home where entrepreneurs could test new kinds of Internet-connected appliances. The Kansas City Public Library is experimenting with a software-lending service that will let residents use high-speed Internet to “check out” expensive and data-heavy programs like video editing software. One company tinkered with a service that would allow families to lease data storage in their homes.... The average connection speed in the United States is about 10 megabits per second, good for 14th in the world....
Economically speaking, the biggest benefit may end up being the way fiber has energized the local start-ups.... Programmers have made a sport out of trying to slow Google Fiber down by using online video games and other data-heavy applications to perform the digital equivalent of turning on every faucet in the house at once: Hence, the “Too Many Kittens for Broadband” experiment, part of a hack-a-thon sponsored last year by the KC Digital Drive...
Over at Project Syndicate: The extremely sharp but differently-thinking Peter Thiel:
Peter Thiel: Robots Are Our Saviours, Not the Enemy: "Americans today dream less often of feats that computers will help us to accomplish...
...[and] more and more we have nightmares about computers taking away our jobs.... Fear of replacement is not new.... But... unlike fellow humans of different nationalities, computers are not substitutes for American labour. Men and machines are good at different things. People form plans and make decisions.... Computers... excel at efficient data processing but struggle to make basic judgments that would be simple for any human.... [At] PayPal... we were losing upwards of $10m a month to credit card fraud.... We tried to solve the problem by writing software.... But... after an hour or two, the thieves would catch on and change their tactics to fool our algorithms. Human analysts, however, were not easily fooled.... So we rewrote the software... the computer would flag the most suspicious transactions, and human operators would make the final judgment. This kind of man-machine symbiosis enabled PayPal to stay in business.... Computers do not eat.... The alternative to working with computers... is [a world] in which wages decline and prices rise as the whole world competes both to work and to spend. We are our own greatest enemies. Our most important allies are the machines that enable us to do new things...
Over at Equitable Growth: I am still thinking about the best assessment of potential output and productivity growth that we have--that of the extremely-sharp John Fernald's "Productivity and Potential Output Before, During, and After the Great Recession". And I am--slowly, hesitantly, and unwillingly--coming to the conclusion that I have to mark my beliefs about the process of economic technological change to market, and revise them significantly.
Let's start with what I wrote last July: READ MOAR
From David Leonhardt's The Upshot:
Claire Cain Miller: Will You Lose Your Job to a Robot? Silicon Valley Is Split: Following are a sampling of the points of view expressed in the Pew report.
Most utopian: “How unhappy are you that your dishwasher has replaced washing dishes by hand, your washing machine has displaced washing clothes by hand or your vacuum cleaner has replaced hand cleaning? My guess is this ‘job displacement’ has been very welcome, as will the ‘job displacement’ that will occur over the next 10 years. This is a good thing. Everyone wants more jobs and less work.” — Hal Varian, chief economist at Google
Over at Equitable Growth: Science fiction writer Charlie Stross sends us to:
Haul Train: "The first significant change in rigid haul truck design for 60 years...
...ETF Mining Haul Trains are the answer to the demand for even larger payloads than current Ultra-Class Trucks offer. The innovative design results in the lowest cost per ton in the industry.... Unique to ETF, each truck irrespective of capacity can operate together with others of the same capacity as a ‘Haul Train’ two; three, four or more individual trucks can easily be linked together using a steel arm carrying an enclosed armoured data cable within its structure. Information data from the first operator controlled truck is transmitted via the link arm to the following trucks guiding and controlling all important operating functions like engine power, steering direction and brakes, just as if each unit had separate operators following each other.
The real operational advantage soon becomes very obvious, for every train there is just one operator, so as unit numbers increase payload capacity go ‘up’ while operator costs come ‘down’. Each haul train features ‘side dumping’ capability, each truck can dump individually or together at the same time at the dump area and crusher. If for any reason the mine plan should change requiring fewer units in the train each truck unit can be de-coupled, allowing each truck to operate independently. This unique configuration provides a mine wishing to increase operating capacity simply by increasing the number of trucks in the train. ETF Mining Haul Trains can be used on the same roads where current Large Haul Trucks are operating with existing haul road profiles and bend radius. Side-tippers are standard...
The remarkable thing about this advertisement is the stress on how the "enclosed armoured data cable" allows the mind to economize on * truck drivers*. Figuring out a way to--sometimes--remove four out of five truck drivers from the necessary resources to make the mine operate is a huge selling point. But, then, if you are paying $50,000/year for a skilled mine-truck driver, that is $500,000 over the ten-year life of a truck that costs $1,000,000 (or more). The cost of getting the human brain is not the bulk of the cost of running the truck, but it is a significant proportion, and economizing on it by replacing drivers and slaving the follower trucks to the leader is a powerful potential source of economy.
I do not know whether the lesson to draw is that human brains still add immense value--look at how much of the cost of even the most capital-intensive mining operations is skilled human labor--or that a great many things that humans do today that are well-paid are ripe for disruption as soon as our technologists can figure out how to use silicon to mimic the skills of we shoebox-sized 50-watt supercomputers well enough...