Going in a hand basket or wearing shades?
January 20, 2016 1:01 AM Subscribe
The idea that America’s best days are behind us sits in sharp tension with the high-tech optimism radiating from the offices of the technology start-ups and venture capital firms of Silicon Valley.(NYT) Robert Gordon just published a book on the end of US growth. His TED talk echos this.
That's not really an accurate gloss on Gordon's argument or it's counters.
Gordon's case, as I understand it, is basically the mid-19th to mid-20th century was an anomalous period in human history, when economic growth was very high due to a series of profound innovations. While technology has continued to improve, the computer revolution has had far less impact on productivity than stuff like, oh, indoor plumbing and electricity. We should expect the slow growth we of the first 5,000 or so year of recorded history to resume going forward.
The tech optimist case is basically that stuff like robots, AI an the Internet of Things are embryonic right now, but over the next several decades they will begin having a profound effect on our lives, just as impactful as the industrial revolution.
Income inequality is sort of a side issue to this debate. There's some suggestion that the future techs are part of the reason behind it, inasmuch as they make capital more valuable and labour less so. But's not at all clear they're the main driver -- piketty's famous work on the subject looks more to land ownership a politics, IIRC.
posted by Diablevert at 5:02 AM on January 20, 2016 [6 favorites]
Gordon's case, as I understand it, is basically the mid-19th to mid-20th century was an anomalous period in human history, when economic growth was very high due to a series of profound innovations. While technology has continued to improve, the computer revolution has had far less impact on productivity than stuff like, oh, indoor plumbing and electricity. We should expect the slow growth we of the first 5,000 or so year of recorded history to resume going forward.
The tech optimist case is basically that stuff like robots, AI an the Internet of Things are embryonic right now, but over the next several decades they will begin having a profound effect on our lives, just as impactful as the industrial revolution.
Income inequality is sort of a side issue to this debate. There's some suggestion that the future techs are part of the reason behind it, inasmuch as they make capital more valuable and labour less so. But's not at all clear they're the main driver -- piketty's famous work on the subject looks more to land ownership a politics, IIRC.
posted by Diablevert at 5:02 AM on January 20, 2016 [6 favorites]
What we have seen happen with oil in the past 18 months is just a taste of the resumption of technology doing one of the things it does best, and did exceptionally well in parts of the 20th century: make things cheaper.
Silicon Valley is a great place to lead that because Moore's Law has given it at least some competency to deal with things becoming cheaper. Tesla will be able to cope with $5,000 cars a lot better than Ford.
posted by MattD at 5:06 AM on January 20, 2016 [2 favorites]
Silicon Valley is a great place to lead that because Moore's Law has given it at least some competency to deal with things becoming cheaper. Tesla will be able to cope with $5,000 cars a lot better than Ford.
posted by MattD at 5:06 AM on January 20, 2016 [2 favorites]
Couple points...
While technology has continued to improve, the computer revolution has had far less impact on productivity
The nugget here that isn't in view is the discrepancy in labor vs. capital productivity (or what is referred to as output/capital ratio). Eg, if the global trend follows Australia's experience, then we see a highly impactful digital revolution, but one that isn't overly sunny. Ie, remember that these large numbers are huge aggregations of abstractions and accounting measures that all come from the post-hoc rationalization of a given activity of asking, "was it profitable".
Second, innovation doesn't only have to be in the form of business operations and production. Parliamentary democracy is an innovation. So is drone-enabled coercion.
posted by Reasonably Everything Happens at 5:21 AM on January 20, 2016 [3 favorites]
While technology has continued to improve, the computer revolution has had far less impact on productivity
The nugget here that isn't in view is the discrepancy in labor vs. capital productivity (or what is referred to as output/capital ratio). Eg, if the global trend follows Australia's experience, then we see a highly impactful digital revolution, but one that isn't overly sunny. Ie, remember that these large numbers are huge aggregations of abstractions and accounting measures that all come from the post-hoc rationalization of a given activity of asking, "was it profitable".
Second, innovation doesn't only have to be in the form of business operations and production. Parliamentary democracy is an innovation. So is drone-enabled coercion.
posted by Reasonably Everything Happens at 5:21 AM on January 20, 2016 [3 favorites]
Tesla will be able to cope with $5,000 cars a lot better than Ford.
Yet GM is going to beat Tesla to the Ford Model T price point. I've grown bored with any framing in terms of America's standard of living. Multinationals, their margins and labor costs, are what determine development and low and mass-scale margins are attractive and bring about an equilibrium-- which is moral by some measures. Two-car garages complemented by Winnebagos and Jet-skis? The American way of life can't export the engineering of its flush-toilets, let alone its toys. Nestle's bottled water market in Afghanistan is an illustration of how neocons believe market solutions are sufficiently efficient to take the place of municipal projects for considerable spans of time. As many things fall apart, the owning class is in a position to risk their money and markets by terms they'll greatly control. Work Projects, New Deals...there's a rhyme afoot.
posted by lazycomputerkids at 5:44 AM on January 20, 2016 [5 favorites]
Yet GM is going to beat Tesla to the Ford Model T price point. I've grown bored with any framing in terms of America's standard of living. Multinationals, their margins and labor costs, are what determine development and low and mass-scale margins are attractive and bring about an equilibrium-- which is moral by some measures. Two-car garages complemented by Winnebagos and Jet-skis? The American way of life can't export the engineering of its flush-toilets, let alone its toys. Nestle's bottled water market in Afghanistan is an illustration of how neocons believe market solutions are sufficiently efficient to take the place of municipal projects for considerable spans of time. As many things fall apart, the owning class is in a position to risk their money and markets by terms they'll greatly control. Work Projects, New Deals...there's a rhyme afoot.
posted by lazycomputerkids at 5:44 AM on January 20, 2016 [5 favorites]
The explicit goal of a lot of the "high tech optimism" of Silicon Valley involves replacing employees with software, contracts with terms of service and workplace safety, retirement benefits and health insurance with nothing, nothing and nothing. "Like Uber but for ducking obligations of employing people and deliberately breaking the law."
The fact that they're successful in a city and state with thoroughly corrupt and largely paralyzed governance should not be cause for optimism, but of course, seeing that would require facing up to some unpleasant realities, and we can't have that.
We can definitely have a TED talk though. That's de rigeur.
posted by mhoye at 6:06 AM on January 20, 2016 [18 favorites]
The fact that they're successful in a city and state with thoroughly corrupt and largely paralyzed governance should not be cause for optimism, but of course, seeing that would require facing up to some unpleasant realities, and we can't have that.
We can definitely have a TED talk though. That's de rigeur.
posted by mhoye at 6:06 AM on January 20, 2016 [18 favorites]
In strict, technical terms, the future in the video was so bright that one had to wear shades because of impending nuclear apocalypse. Which I think is appropriate - in the eighties it was the "nuclear war is a survivable event" lunatics, now it's the "let's make an app to replace the entire working class, that will be sweet" people. Either way, they expect their wealth and position to protect them through a global disaster.
posted by Frowner at 6:07 AM on January 20, 2016 [13 favorites]
posted by Frowner at 6:07 AM on January 20, 2016 [13 favorites]
technology doing one of the things it does best, and did exceptionally well in parts of the 20th century: make things cheaper.
https://research.stlouisfed.org/fred2/graph/?g=3bVn
Real (2009 dollars) per-capita housing and health costs.
Back in 1991 I was paying $700/mo rent for a decent 1B in West LA and a PC cost $3000.
Today, these numbers are reversed, and the rent is due monthly
posted by Heywood Mogroot III at 6:25 AM on January 20, 2016 [22 favorites]
https://research.stlouisfed.org/fred2/graph/?g=3bVn
Real (2009 dollars) per-capita housing and health costs.
Back in 1991 I was paying $700/mo rent for a decent 1B in West LA and a PC cost $3000.
Today, these numbers are reversed, and the rent is due monthly
posted by Heywood Mogroot III at 6:25 AM on January 20, 2016 [22 favorites]
For the 1% the country's best days are indeed yet to come. For some of the 99% they are but a memory and for the rest they are a fantasy that never existed for them and never will.
posted by tommasz at 6:50 AM on January 20, 2016 [2 favorites]
posted by tommasz at 6:50 AM on January 20, 2016 [2 favorites]
For some of the 99% they are but a memory and for the rest they are a fantasy that never existed for them and never will
sigh. This is solely a political problem, not one of economics or technology.
We've built a rat race -- a treadmill -- and cannot abandon it now.
Reverse that treadmill and you fix so much that is wrong, at least in the blue (urban) states. Don't, and yes, we'll be still screwed.
Rents in housing and healthcare are the primary wealth-taps the parasitical 1% have on the 99% now.
posted by Heywood Mogroot III at 6:58 AM on January 20, 2016 [6 favorites]
sigh. This is solely a political problem, not one of economics or technology.
We've built a rat race -- a treadmill -- and cannot abandon it now.
Reverse that treadmill and you fix so much that is wrong, at least in the blue (urban) states. Don't, and yes, we'll be still screwed.
Rents in housing and healthcare are the primary wealth-taps the parasitical 1% have on the 99% now.
posted by Heywood Mogroot III at 6:58 AM on January 20, 2016 [6 favorites]
David Graeber has a theory about this.
posted by kevinbelt at 7:29 AM on January 20, 2016 [1 favorite]
posted by kevinbelt at 7:29 AM on January 20, 2016 [1 favorite]
Just pointing out, again, that Gordon's book is not about income inequality, really.
It is an interesting thesis. If Gordon is right, it's the Flintstones. If he's wrong it's the Jetsons. To be provocatively glib. How one might deal with the problem of income inequality in a Gordon-world is very different from how one might deal with it in a "4th industrial revolution" world (which, incidentally, is what the muckitiest of mucks are chatting about at Davos this morning).
posted by Diablevert at 7:38 AM on January 20, 2016
It is an interesting thesis. If Gordon is right, it's the Flintstones. If he's wrong it's the Jetsons. To be provocatively glib. How one might deal with the problem of income inequality in a Gordon-world is very different from how one might deal with it in a "4th industrial revolution" world (which, incidentally, is what the muckitiest of mucks are chatting about at Davos this morning).
posted by Diablevert at 7:38 AM on January 20, 2016
This was fun:
posted by clawsoon at 7:42 AM on January 20, 2016 [3 favorites]
But the productivity slowdown of recent decades was clearly affected by one-time factors, including a shattering financial crisis.But, of course, the innovations that improved the lives of hundreds of millions between 1910 and 1960 didn't have to deal with anything like, say, two world wars and a great depression...
posted by clawsoon at 7:42 AM on January 20, 2016 [3 favorites]
Gordon's case, as I understand it, is basically the mid-19th to mid-20th century was an anomalous period in human history, when economic growth was very high due to a series of profound innovations.
A related point I have heard is that post-War America was in a singular position, since everyone else's economy was ruined by the war. After the hard landing of the total war economy in the late 40's was over, American industry proceeded into an unprecedented era of global dominance, and that boom lasted into the 1970's.
posted by thelonius at 7:42 AM on January 20, 2016 [3 favorites]
A related point I have heard is that post-War America was in a singular position, since everyone else's economy was ruined by the war. After the hard landing of the total war economy in the late 40's was over, American industry proceeded into an unprecedented era of global dominance, and that boom lasted into the 1970's.
posted by thelonius at 7:42 AM on January 20, 2016 [3 favorites]
The funny thing about the future is that you really can't predict it.
Economists and academics writing in the 1930s during the depths of the depression would not have predicted a global war in the next decade and a post war boom to follow. Social scientists in the 1950s didn't see the beatniks transforming into the counterculture, the rise of the civil rights movement, or the series of cultural clashes that bled into the early 1970s. Political scientists in the 1980s didn't see the fall of the Berlin wall or the collapse of the Soviet Union. Almost no one saw the internet coming, and those who did drastically underestimated its impact on wider culture. Even now, did ANYONE think that Trump would be the leading Republican candidate when he announced with his paid actor supporters and the ridiculous escalator ride? If there's any consistency, it's that people tend to overestimate the amount of change over the short term, and drastically underestimate the amount of change over the medium term.
Everything is super clear in hindsight, but our foresight is absolutely terrible.
posted by leotrotsky at 7:43 AM on January 20, 2016 [9 favorites]
Economists and academics writing in the 1930s during the depths of the depression would not have predicted a global war in the next decade and a post war boom to follow. Social scientists in the 1950s didn't see the beatniks transforming into the counterculture, the rise of the civil rights movement, or the series of cultural clashes that bled into the early 1970s. Political scientists in the 1980s didn't see the fall of the Berlin wall or the collapse of the Soviet Union. Almost no one saw the internet coming, and those who did drastically underestimated its impact on wider culture. Even now, did ANYONE think that Trump would be the leading Republican candidate when he announced with his paid actor supporters and the ridiculous escalator ride? If there's any consistency, it's that people tend to overestimate the amount of change over the short term, and drastically underestimate the amount of change over the medium term.
Everything is super clear in hindsight, but our foresight is absolutely terrible.
posted by leotrotsky at 7:43 AM on January 20, 2016 [9 favorites]
Basically, we figured out how to tap into a couple of new sources of energy that dwarfed previous energy supplies. We had tremendous growth over the course of a century-and-a-bit as we figured out the best ways to utilize the newly available energy.
We won't see a similar burst of growth again until we find another new energy source that takes us up a couple of orders of magnitude again.
posted by clawsoon at 7:52 AM on January 20, 2016 [2 favorites]
We won't see a similar burst of growth again until we find another new energy source that takes us up a couple of orders of magnitude again.
posted by clawsoon at 7:52 AM on January 20, 2016 [2 favorites]
The absence of actual numbers here was bugging me.
So I just plotted US GDP growth by year from the US Bureau of Economic Analysis for the period 1946-2015. You see a wiggly ramp up peaking in 1978 with 14.46%, and then a gradual wiggly ramp down to the present. Of course, it's nowhere near that simple; what about inflation? I plotted inflation over that same period and you see the same ramp up and down over the same time frames. Finally I took growth minus inflation to see if I could correct for that. Then I threw in a trendline to see if I could get anything useful. I used the 2nd order polynomial trend line because the linear one is kind of obvious. Here it is.
Things look less sunny than they were post war, but then the rest of the industrialized world was cinder and ashes, so no surprise there. But I'm not sure gloom and doom are called for either.
posted by leotrotsky at 8:15 AM on January 20, 2016 [6 favorites]
So I just plotted US GDP growth by year from the US Bureau of Economic Analysis for the period 1946-2015. You see a wiggly ramp up peaking in 1978 with 14.46%, and then a gradual wiggly ramp down to the present. Of course, it's nowhere near that simple; what about inflation? I plotted inflation over that same period and you see the same ramp up and down over the same time frames. Finally I took growth minus inflation to see if I could correct for that. Then I threw in a trendline to see if I could get anything useful. I used the 2nd order polynomial trend line because the linear one is kind of obvious. Here it is.
Things look less sunny than they were post war, but then the rest of the industrialized world was cinder and ashes, so no surprise there. But I'm not sure gloom and doom are called for either.
posted by leotrotsky at 8:15 AM on January 20, 2016 [6 favorites]
Just pointing out, again, that Gordon's book is not about income inequality, really.
While I'm only a few chapters into it, I read it very differently. He seems very clear on his belief that inequality is a growth-retarding force, and attributes significant portions of the growth during the "special century" to inequality-reducing factors such as labor unions (along with technological innovation).
posted by enn at 8:17 AM on January 20, 2016 [1 favorite]
While I'm only a few chapters into it, I read it very differently. He seems very clear on his belief that inequality is a growth-retarding force, and attributes significant portions of the growth during the "special century" to inequality-reducing factors such as labor unions (along with technological innovation).
posted by enn at 8:17 AM on January 20, 2016 [1 favorite]
I wouldn't say it's irrelevant, only that his outlook is broader --- inequality is one factor out of six that he believes will slow down growth in the future (population aging, debt, education, globalisation and pollution are the others).
posted by Diablevert at 8:26 AM on January 20, 2016
posted by Diablevert at 8:26 AM on January 20, 2016
Then I threw in a trendline...Here it is.
LeoT, interesting work, thanks. Along with the capital/labor split I mention above, I think a big part of correctly evaluating his position (and/or guessing at the future) is having some consideration of what is 'good' GDP. Ie, accounting for illth.
If China or the US decide that the only make-work program that's feasible for the next generation is higher intensity global warfare (see the GDP spike around WW2), then innovation will play a significant but very different kind of role than it did with cars and indoor plumbing.
posted by Reasonably Everything Happens at 8:35 AM on January 20, 2016
LeoT, interesting work, thanks. Along with the capital/labor split I mention above, I think a big part of correctly evaluating his position (and/or guessing at the future) is having some consideration of what is 'good' GDP. Ie, accounting for illth.
If China or the US decide that the only make-work program that's feasible for the next generation is higher intensity global warfare (see the GDP spike around WW2), then innovation will play a significant but very different kind of role than it did with cars and indoor plumbing.
posted by Reasonably Everything Happens at 8:35 AM on January 20, 2016
like all of the venture capitalist money is in Silicon Valley. All of it. I wish I could remember the exact figures — it's been years and years since I looked — but I recall that immediately before the '08 crash, something like 60% of the VC money in America was in Silicon Valley, and after the crash something like 85% of the VC money was there.
If you take all the money and put it in one little pile, life is going to suck everywhere the money isn't and it's going to be real weird and real tacky under the giant money pile.
There is no contradiction involved in having a country that's mostly broke, but where one little part of it is buried under more money than it knows what to do with. It's how it worked in pre-Revolutionary France. It's how it's working in England right now. Hell, Suzanne Collins isn't the most thorough worldbuilder, but it's even how it works in the Hunger Games trilogy.
(though to be fair Silicon Valley would be a lot more fun if people there dressed like they were in Versailles or The Capitol...)
posted by You Can't Tip a Buick at 9:10 AM on January 20, 2016 [5 favorites]
If you take all the money and put it in one little pile, life is going to suck everywhere the money isn't and it's going to be real weird and real tacky under the giant money pile.
There is no contradiction involved in having a country that's mostly broke, but where one little part of it is buried under more money than it knows what to do with. It's how it worked in pre-Revolutionary France. It's how it's working in England right now. Hell, Suzanne Collins isn't the most thorough worldbuilder, but it's even how it works in the Hunger Games trilogy.
(though to be fair Silicon Valley would be a lot more fun if people there dressed like they were in Versailles or The Capitol...)
posted by You Can't Tip a Buick at 9:10 AM on January 20, 2016 [5 favorites]
(though to be fair Silicon Valley would be a lot more fun if people there dressed like they were in Versailles or The Capitol...)
Oh, they do, they just do it on the playa.
posted by leotrotsky at 10:03 AM on January 20, 2016 [1 favorite]
Oh, they do, they just do it on the playa.
posted by leotrotsky at 10:03 AM on January 20, 2016 [1 favorite]
like uber, but for bread and circuses
posted by entropicamericana at 10:31 AM on January 20, 2016 [3 favorites]
posted by entropicamericana at 10:31 AM on January 20, 2016 [3 favorites]
like all of the venture capitalist money is in Silicon Valley. All of it. I wish I could remember the exact figures — it's been years and years since I looked — but I recall that immediately before the '08 crash, something like 60% of the VC money in America was in Silicon Valley, and after the crash something like 85% of the VC money was there.
It was about 48% for Q3 2015. (Dow Jones VentureSource, pp. 12-13)
Silicon Valley got 9.3 billon of 19 billion in VC funds invested during the quarter. The US gross domestic product during the quarter was 18,060 billion during the same period.
posted by Diablevert at 11:13 AM on January 20, 2016 [1 favorite]
It was about 48% for Q3 2015. (Dow Jones VentureSource, pp. 12-13)
Silicon Valley got 9.3 billon of 19 billion in VC funds invested during the quarter. The US gross domestic product during the quarter was 18,060 billion during the same period.
posted by Diablevert at 11:13 AM on January 20, 2016 [1 favorite]
https://research.stlouisfed.org/fred2/graph/?g=3bVn
Not totally sure, but I think the two series (GDP and PC) have their labels reversed, if I'm reading the definitions correctly.
posted by Mental Wimp at 11:32 AM on January 20, 2016
Not totally sure, but I think the two series (GDP and PC) have their labels reversed, if I'm reading the definitions correctly.
posted by Mental Wimp at 11:32 AM on January 20, 2016
Thanks for the figure corrections re: VC concentration in SV — I knew I was misremembering...
posted by You Can't Tip a Buick at 11:46 AM on January 20, 2016
posted by You Can't Tip a Buick at 11:46 AM on January 20, 2016
productivity, inflation and GDP statistics are mismeasured to the degree that they only give weight to market-based transactions (as designed), so concepts and trends like technological deflation, zero-marginal costs, 'free as in beer', network externalities, etc. tend to be ignored by economists even as their impact -- on employment and wages -- grows.
what's annoying then is resorting to 'monetization' strategies, artificial scarcities, inconvenience design, advertising (attention rents), etc. to turn stuff that's free and useful -- has utility! -- back into the realm of exchange and transactions -- has 'economic value' (so marx ;) -- but ones that are now fundamentally extortionary and extractive, like how housing, health care, education, etc. have become.
industrial era institutions that once did a passable job of ironing out capitalism's 'Polanyi problem' are no longer effective, but the problem as i see it is twofold:obsessed with interested in. conceptually, i think the answer lies in 'framing' cooperative/win-win/infinite game solutions around the problem, which attracts me to stuff like MMT, 'radical' central banking proposals, basic income/job guarantees, GDP accounting extensions, the nature of 'wealth', etc. -- and of course the politics surrounding it all -- like if you keep on proposing (plausibly) workable policy alternatives, bringing them inside the overton window, and keep asking and demanding 'why not?' then i think forward progress can be made.
posted by kliuless at 2:46 PM on January 20, 2016 [2 favorites]
what's annoying then is resorting to 'monetization' strategies, artificial scarcities, inconvenience design, advertising (attention rents), etc. to turn stuff that's free and useful -- has utility! -- back into the realm of exchange and transactions -- has 'economic value' (so marx ;) -- but ones that are now fundamentally extortionary and extractive, like how housing, health care, education, etc. have become.
industrial era institutions that once did a passable job of ironing out capitalism's 'Polanyi problem' are no longer effective, but the problem as i see it is twofold:
- what institutions to reconfigure/build -- including the nation-state itself as a fundamental unit of political organization -- to most effectively (in the public interest?) channel 'historical' forces of production, coercion and cognition; ernest gellner's 'plough, sword and book'?
- what political arrangements (besides widespread violence?) are there that would allow the powers-that-be -- those who benefit from and control current institutional policies -- to relinquish their privileges, or at least spread them around more equitably?
posted by kliuless at 2:46 PM on January 20, 2016 [2 favorites]
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