Category Archives: Growth Causes and Consequences

Vickies and Thetes

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Ross Douthat writes,

Yet the decline of work isn’t actually some wild Marxist scenario. It’s a basic reality of 21st-century American life, one that predates the financial crash and promises to continue apace even as normal economic growth returns. This decline isn’t unemployment in the usual sense, where people look for work and can’t find it. It’s a kind of post-employment, in which people drop out of the work force and find ways to live, more or less permanently, without a steady job. So instead of spreading from the top down, leisure time — wanted or unwanted — is expanding from the bottom up. Long hours are increasingly the province of the rich.

Pointer from Reihan Salam.

As befits his role as a conservative NYT columnist, Douthat gives this a civilization vs. barbarism spin.

Here the decline in work-force participation is of a piece with the broader turn away from community in America — from family breakdown and declining churchgoing to the retreat into the virtual forms of sport and sex and friendship. Like many of these trends, it poses a much greater threat to social mobility than to absolute prosperity. (A nonworking working class may not be immiserated; neither will its members ever find a way to rise above their station.) And its costs will be felt in people’s private lives and inner worlds even when they don’t show up in the nation’s G.D.P.

Note: Joseph Sunde thinks along similar lines.

Old Predictions

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A commenter reminded me of Red Sox Technologies, an essay that I wrote nine years ago about technologies that always seem promising but fail to deliver (at the time, the Red Sox were still without a World Series win). It is interesting to look at what I wrote as predictions and to evaluate them. In effect, I was predicting failure for micropayments, e-books, speech recognition, video conferencing, social networking software, and online education.

Micropayments, as they were envisioned back then, are still a non-factor.

e-books are ubiquitous, but my guess is that within a decade they will be in a phase of rapid decline. The book format just does not seem right to me for the digital world.

Speech recognition is still a disappointment, I think. Siri is looking like another iteration of “not quite there yet, but shows the potential….”

Video conferencing is still remarkably unused. In my essay, I was snarky about business meetings in general. I became very bullish on videoconferencing when I saw how it worked on Google+. But it still seems to be way under-used relative to in-person meetings. The best explanation I have heard is that there is some important signaling value in in-person meetings that overwhelms the efficiency gains from video conferencing.

Social networking software really took off. I was way off base on that one.

Online education is picking up, but the hype is still ahead of the reality. I still think that teaching=feedback, and too many educational technologies fail to put feedback front and center. I think at this point a lot of the interest in online education is driven by the fact that in regular education costs are going way up and quality is, if anything, going down.

Vickies and Thetes

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Cory Doctorow writes,

We’ve been talking about an increase in productivity producing an increase in leisure for a long time, but instead, the “winner take all” world of Brynjolfsson and McAfee often seems to produce a “winner” class that works itself into an early grave by running 100-hour work weeks at astounding payscales, and a much larger “loser” class that works itself into an early grave by working 100-hour weeks in shitty, marginal, grey-economy jobs, trying to stitch together something like an income.

I think this is wrong. The “loser” class has less income to spend on expensive schools and health plans that pay for you to get an MRI if you complain of a bad headache. But the people in this class do not necessarily work 100-hour weeks. I think that Neal Stephenson’s depiction in The Diamond Age is more apt. Some people work a lot and save a lot, because that is what their values call for. Those are the Vickies. Some people work less and save less. They are the Thetes. Their lifestyle looks distasteful to the Vickies, but they do not starve or lack for toys.

Pointer from Tyler Cowen. Both Doctorow and Cowen link to pieces by Kevin Kelly, and each Kelly piece is worth reading.

The Un-Malling of America

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Jeff Jordan writes,

Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while, as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online.

Pointer from Tyler Cowen.

It used to be that a mall was lots of stores with a few places to eat tacked on as an afterthought. Now it’s the other way around.

It’s not just that people are buying more stuff online. They are buying less stuff (as a share of income), period. This is partly a long-term trend, as documented by economic historian Robert Fogel and picked up on by Nick Schulz and myself. It may be accentuated by information technology–think of all the stuff you don’t have to buy now because of digital technology: books, bookshelves, radios, music discs or tapes, stereo systems, calculators…

Year-end Stories

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In 2005, I listed five stories that I thought would have long-term significance: productivity; cognitive neuroscience, solar power, cancer therapy, and mainstream media meltdown. All five were areas where the trends were not clear. My inclination at the time was to take the optimistic view in all areas (in the case of the mainstream media, being optimistic to me means believing that the meltdown will be rapid).

Today, I would be less optimistic. Moreover, I think that the unsustainable fiscal outlook and its consequences have become one of the most important stories.

In 2003, I wrote one of my favorite essays, on what I called The Great Race between Moore’s Law and Medicare. There is an optimistic scenario for economic growth (think Ray Kurzweil) which would make all concerns about the long-term budget outlook seem foolish. However, other scenarios are less favorable. Recently, the budget situation has been deteriorating faster than the technological outlook has been improving. In terms of the great race, the wrong horse is gaining.

How Much Does Culture Matter?

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Daron Acemoglu and James Robinson write,

Were the economic prospects of North Korea, which shares the same Korean culture of course, not just as bright until the economy became enmeshed in collective ownership and central planning which destroyed incentives and opportunities? As we discuss in Why Nations Fail, this example is telling. North and South Korea had the same culture when they were divided but very different institutional structures were created in the South. It is of course not culture that explains South Korea’s success but institutions.

Do cultural habits dominate formal institutions or do formal institutions dominate cultural habits? I do not have a settled view on this issue. I agree that the Korea example argues for formal institutions. However, there are other instances that seem to go the other direction. Why is democracy apparently working out so poorly in many places, such as Iraq? Why does average national IQ serve to predict economic outcomes?

Paul Romer’s project to set up charter cities makes sense if you think that formal legal institutions are the differentiating factor. If he is right, you can set up a city in, say, Honduras, with the legal structure of Hong Kong, and over time the economy in the Honduran city will start to look like the economy in Hong Kong.

Suppose that you oversee a large organization, such as a corporation or a government department. If you want to effect change within the organization, how would you go about doing it? One approach is to change the internal rules and compensation practices–a change in institutions. Another approach is to hire people who possess certain traits and values–a change in culture. From my experience, I would say that if you are in a hurry you need to bring in new people and change the culture.

In the long run, institutions may be what matter, but that does not necessarily provide you with a guide to social change. Institutional change tends to affect people gradually, and you may never get to the long run. Most urban school reform efforts fail, because the entrenched teachers and bureaucrats outlast the reformers.

Mobility

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Timothy Taylor writes,

geographic mobility in 2011…all-time low since the start of the data in 1948

Read Taylor’s whole post, and you may also wish to click through to some of the links he provides. My thoughts:

1. After the Second World War, the U.S. population shifted for a variety of reasons. Blacks moved north, to escape segregation. Otherwise, because of air conditioning, the south became more attractive than it had previously. Factories left cities and were replaced by office buildings, eventually leading to an urban population that was more white-collar than blue-collar. The automobile gave rise to suburbia.

All of these shifts are now complete, more or less. There will always be new factors that provide an impetus to mobility, but they may not be as strong as the ones that operated in the 1950s and 1960s.

2. I think that it is often the case that in order to raise your income you have to be willing to move. Over time, people may have become less motivated (certainly less desperate) to increase their incomes.

3. Read (or re-read) Enrico Moretti’s The New Geography of Jobs. I am not saying that he directly explains the decline in mobility, but his data and analysis are relevant.

4. I believe that exit, not voice, is the best check on government. A reduction in mobility is likely to cause state and local government to get worse.

Chris Anderson on 3D Printing

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He talks with Russ Roberts. He views it as a general-purpose technology, like the personal computer. I have some doubts about the analogy. It might be more analogous to digital technology in music production. In theory, digital music studios empower anyone to become a recording artist. In practice, only a limited number of people have the time, inclination, and aptitude to create music.

Still, it is a fascinating discussion. The ability to prototype and test-market products cheaply should lead to faster evolution in product development, even if the number of people who join the “maker movement” is smaller than Anderson anticipates.