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Book Review: The Great Stagnation [Jan. 19th, 2013|10:31 pm]
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All these plane trips lately have meant lots of books getting finished, and the latest is Tyler Cowen's The Great Stagnation. I wanted to like it because I like Cowen's blog and the book's thesis - that the world's technological and economic progress is slowing to a halt - appeals to the crotchety catastrophist in me. Instead, I thought the book was grating to read and didn't defend its main thesis well enough to be worthwhile.

Cowen believes that the era of spectacular economic and technological growth lasting from the Industrial Revolution to about 1970 is now over, and right now we're just sort of wringing the last couple of drops out a few nearly-empty low-hanging fruits from the past (this mixed metaphor is in honor of Cowen, whose book contains cringe-inducing overuse of the phrase "low-hanging fruit").

He compares the many spectacular advances of the pre-1970 world - steam engine, railroad, camera, combustion, telegraph, telephone, electricity, light bulb, radio, television, automobile, airplane, computer, jet engine, et cetera - to the relatively few advances of the post-1970 world, which he pretty much just lists as "the Internet". He blames this on a few things, including increased spending on unproductive activities, screwed up politics, and of course mining all the veins of low-hanging fruit to exhaustion.

The book is well worth thinking about, and even well worth reading despite what I considered the awkwardness of its prose. But in the end I think I reject the thesis. Let me explain why.

Kurzweil Meets Anti-Kurzweil

Here's a graph very similar to one in the book. It shows median US income over time. We can see that up until about 1970, it increases rapidly. Around 1970, it shifts into a holding pattern with occasional fluctuation but no general upward trend. So far, so good for the Great Stagnation thesis.

Here's the same graph, except it's added GDP per capita, a measure based on the mean rather than the median. Mean GDP per capita stays at exactly the same upward trend throughout. This graph was emphatically not in the book, and I am puzzled as to why. Tyler Cowen is a very smart economist and I'm sure he knows about this. I am very reluctant to contradict him about economic data which is something I know almost nothing about. But since I expect I will be corrected if I'm wrong, let me explain what I think the implication is.

America is growing at about the same rate it's always grown. Starting in the 1970s, the growth became concentrated in the hands of a few very rich people, who became very very rich. This lowered the growth in median income without affecting the mean.

If this is true, there's not a Great Stagnation, there's a Great Widening Of The Gap Between Rich And Poor (note to self: come up with better name for this before writing a book on it). And in fact we know there has been a Great Widening of the Gap Between Rich And Poor, and that it did start around 1970. This seems to provide an almost-fatal blow to the Great Stagnation theory; it's really hard to argue that growth is stagnant when the GDP growth chart sticks exactly to the trend line (this is even clearer here) without 1970 having even the slightest kink.

(Once again, this seems like an obvious enough objection - and one none of the other reviewers raised - that I expect I am missing something here.)

But if growth is stable, what about the argument from diminishing inventions? Cowen makes this argument in two parts. The first part relies on the research of Jonathan Huebner, who has been tracking various measures of innovation over time:

Okay, first things first, that is one really suspicious trend line on that first graph. Not quite corporate taxation Laffer Curve-level suspicious, but suspicious nonetheless (just to make it clear I'm not straw-manning here: "'We are approaching the dark ages point, when the rate of innovation is the same as it was during the Dark Ages,' Huebner says. 'We'll reach that in 2024.'"

Second of all, that "all the innovations since 1400" graph is very vulnerable to what you count as an innovation. Kurzweil tries almost the same exercise and uses it to prove the rate of technological advance is going up.

The second graph uses actual US patent data, which is both better and worse. It's better because number of patents is an objective measure that's hard to cherry-pick. It's worse because measuring science by patents seems a lot like measuring art by weight ("We produced sixty tons of oil paintings last year!"). Nevertheless, even on its own terms, this graph fails to support the book's hypothesis: it looks from the graph like the rate of patent discovery has been going down since 1930 - right smack in the middle of Cowen's Era of Low-Hanging Fruit In Every Garage - and going slightly up since 1970. But in general both eras seem to be following a line of which Kurzweil might well approve.

This is a chart not of patents per million people, but of patents in general. It tells a much clearer story, which is that patents have been going up at what looks like a very continuous (and fast - the graph is logarithmic in scale!) rate for as long as they've been measured with the exception of the Great Depression. Once again, the era from 1970 to the present looks exceptionally good. We can also find that the growth rate of science continues to be freakishly steady at 4.7%/year, although the methodology used for that calculation is even worse than measuring art by weight, more like measuring art by number of donkeys needed to haul it or something. But it only confirms what all our other statistics are showing.

If we can't prove the Great Stagnation with the math, what about our own eyes? Like Cowen, I have an easier time naming revolutionary inventions of the past than revolutionary inventions of the present. But this is to be expected: revolutionary inventions of the present do not seem like revolutionary inventions yet.

When William Shockley invented the transistor (with some help from a probable distant relative of mine) in 1947, the news headlines did not read "MOST IMPORTANT INVENTION OF TWENTIETH CENTURY DEVELOPED". If they existed at all, they probably said "You know those giant machines that the government sometimes uses to break codes? It looks like someday we might be able to build one of their component parts more efficiently. Who knows if one day our great-grandchildren will marvel that we were alive at the time they invented the polywell fusor or the photonic crystal, and we'll sagely nod our heads and say "Yeah, I think they mentioned something about that on Twitter once."

It may even be unusually difficult to notice anything being invented when you're in the midst of it. One day they say they've discovered quantum computers are possible, and you think "Yeah, an existence proof, big deal." A few years later they've successfully sustained a few qubits and you think "Yeah, still far away from a practical application." Then later they build a very clunky prototype quantum computer, and you think "Just a natural progression of the qubits they already had, and it's not even as good as a regular computer yet." And then a few years later you've got a commercial quantum computer on your desk that can calculate the square root of infinity in half a second, and you just think "Well, it's about time, considering how long the government and academics have had these." At no point do you think "Whoa, a quantum computer, this is so futuristic!"

And finally, in order to make his argument work at all, Cowen has to say "Let's ignore the Internet." Really he needs to ignore all electronics: the personal computer, the cell phone, the smart phone, the video camera, the mp3 player, voice-over-IP - but yes, the Internet is the most glaring counterexample. Cowen here notes that the Internet, for all its importance, hasn't had much direct effect on economic growth. Wikipedia has made life immeasurably better, but it hasn't pushed a lot of products, employed a lot of people, or consumed a lot of widgets in the same way a General Electric or a Ford Motor would. And to his credit, Cowen says that this is more a condemnation of the way economists measure value than of Wikipedia. But he doesn't take the next step and allow the existence of all this nifty online technology to count against his Great Stagnation hypothesis.

And to be fair, you would think if we were really technologically advancing, we would see these advances in fields other than computing. Maybe computing is just so fascinating right now that a disproportionate number of our smart scientists, rich venture capitalists, and social attention is on it right now and it's distracting us from doing other things? I dunno. But saying "Aside from computing, the 21st century has been pretty lackluster" is a lot like saying "Aside from industrialization, the 18th century was kind of unimpressive."

This Time It's (Not) Different

Another piece of strong evidence came in the form of very recent economic indicators - all of which are depressed because of the recent recession. Cowen (or possibly not Cowen and just other stagnationists; I don't remember) claims that this is the chickens finally coming home to roost: that rather than Yet Another Recession In The Business Cycle, this is a population drunk on low-hanging fruit finally being forced to come to terms with the new normal.

This is a convincing argument, but...

I have now lived almost thirty years. I have been in a few booms and a few recessions. Every time, I have heard people make very clever and convincing arguments why this time the boom will never end, or why this recession is structural and inescapable. Each time they are just as persuasive as the last. And each time, the boom or recession ends, much like all the others, and there is much gnashing and wailing of teeth from those who had bet otherwise. In fact, I have come to Notice A Pattern. And I have read books from people older and wiser than I, and they have confirmed that they have Noticed A Pattern too.

And some have suggested that before the boom or recession even begins, one should make an Outside View inspired resolution to just completely ignore all the claims that This Time It's Different. And this seemed wise, and so I did that.

This is not a foolproof strategy. It may be that Sometimes It Really Is Different. The Japanese financial crash of 1990 or so was different, and Japan never really recovered from that. Some people have said this crisis here is very similar and will do the same to the US. They make good points. But I'm deliberately ignoring them.

It's also kind of hard for Cowen to use this recession to support his thesis when we have a pretty good idea what caused it and stagnant technology wasn't it.

Throwing Money In A Giant Human-Welfare-Shaped Ditch

The strongest part of the book in my opinion was the chapter on how much money we're throwing away.

Most people here will be familiar with Robin Hanson's work on health care. Cowen re-iterates that work. Health care spending is growing almost ten percent a year and the percent of GDP devoted to health care has doubled since 1980. This might be acceptable if we were getting better health care for our money, but we very clearly are not: aside from changes in infant mortality rates, life expectancy has barely budged in the last few decades. Studies, especially the famous RAND study, show that people who spend more on health care don't have significantly better health outcomes than anyone else. A very large amount of health care - between a quarter and a third - is spent in the last year of a person's life, trying to hold off the inevitable.

Health care is now 16% of the US GDP and this number is only going up with no end in sight. It's diverting resources that could be going to infrastructure and new non-health technology and so a massive drain on everything. I would say that the waste was astronomical, except that as Feynman points out there are only a few billion galaxies in the universe and so once you reach trillions of dollars of waste it is more accurate to just say the waste is at levels-only-found-in-economic-waste-numbers.

What I hadn't heard before, and what makes a similar amount of sense, is the same argument with education. Since 1970, per-pupil spending in school in real money has doubled, with practically no effect on most measures of student scores. Schools that spend more per pupil don't get any better results once confounds for economic class have been adjusted out. We spend about 150% more money on education than Germany but aren't doing any better than they are.

I am not including a chart in this section because it confuses me. The conservatives put out charts like this one which purport to show massive increases in per pupil school spending, but graphs like this one show total spending as percent of GDP as quite stable. I'm not sure what to make of that since I would expect the inflation adjustment in the former to do about the same work as the GDP-percent-ing in the latter.

Still, a government constantly spending more and more money on education without seeing any better results seems to fit with the way I expect the world to work pretty well.

Cowen's arguments on health and education are important both because they're things more people should know about - in the sense of "we're spending huge amounts of money and not getting anything in return" - and also because they provide a way his Great Stagnation thesis could still be sort of correct even given our high GDP.


Overall I disagree pretty strongly with the rest of the book. The evidence from GDP and scientific output seems to pretty thoroughly disprove a stagnation - it would be possible to question it, but I can't think of on what grounds you would even want to.

I was also turned off a bit by the bloggish style of the book; I like Tyler Cowen's blog, but hearing a blog tone in a book was kind of weird. And the last chapter - where Professor Cowen tells us it's all going to be okay after all, and gives some helpful hints - it just seems totally incongruous. The assertion that everything will get better seems flimsy and unsupported, and the helpful hints, like "We should give more status to scientists", see like Vaguely Good Things but not really related to the thesis of the book.

I will happily praise the book's few forays into politics, as well as its excellent job not foraying into politics more than it did. It took a very even keel between liberalism and conservativism, even though it would be very easy to use its main thesis in praise of either side. And the few political points it did make - about the uselessness of health and education spending, and about how our politics is pretty much built on an foundation assumption of constant growth that can be siphoned off to fund programs to bribe voters - is well taken. Even if the constant growth hasn't stopped quite yet, that's still a scary foundation and one we need to be thinking about.

And I will not as happily, but still honestly, admit that even though I found the book's arguments weak, I feel strangely compelled to believe it.

I don't know what is so attractive about the Great Stagnation thesis. Maybe it's a sort of morality story, a feeling that our politicians, business leaders, and voters have screwed things up so bad that it would be only fair if we started stagnating; they've been beating the goose so hard that one almost wants to see them get their comeuppance when the golden eggs stop. That there's so much hypocrisy and irrationality that the ability of the economy to just keep churning on and on at its accustomed pace is almost proof that nobody cares about our sins and by extension our virtues. Maybe it's the hope that if something went horribly wrong, we could finally get about smashing the system and building a more elegant one, which is always attractive to think about whether or not it's merited.

Or maybe it's that you hear stories about the old days, when two bicycle mechanics outside any formal academia or Pentagon research laboratory could watch some birds, think really hard, and invent the airplane through nothing but pluck and Good Old-Fashioned American Ingenuity. And the modern world of establishment academics doing research for big corporations is so disappointing in comparison that it would be better for it to be a dead end than for it to be the shape of things to come.

There's another thing that bothers me too, which is the sheer damnable linearity of the economic laws. The growth of science as measured in papers/year; the growth of innovation as measured in patents; the growth of computation as measured by Moore's Law; the growth of the economy as measured in GDP. All so straight you could use them to hang up a picture. These lines don't care what we humans do, who we vote for, what laws we pass, what we invent, what geese that lay long-hanging fruit have or have not been killed. The Gods of the Straight Lines seem right up there with the Gods of the Copybook Headings in the category of things that tend to return no matter how hard you try to kick them away. They were saying back a few decades ago Moore's Law would stop because of basic physical restrictions on possible transistor size, and we worked around those, which means the Gods of the Straight Lines are more powerful than physics.

And the lines slant upward, which is very kind of them, but not all of them make sense, and none of them seem to be in our very direct control, and some of them are on log plots, and some of them, when drawn out in a Kurzweillian fashion, go to kind of scary places.

So no, I don't think it is going to be a Great Stagnation we are going to have to worry about.

[User Picture]From: gwern branwen
2013-01-20 05:07 am (UTC)
One of my own reactions to TGS was that I kept feeling like Cowen was going to mention AI as a breakthrough for stagnation, but he never did, and I wasn't sure I was imagining him hinting at it as a dangerous idea or whether it was just my own obsessions.

> http://www.libertyjuice.com/wp-content/uploads/2010/12/educationspending.jpg

It says 'federal' spending. I remember being struck in reading local newspapers how big an issue hiccups in federal funding was, and how relatively smoothly 'no child left behind' went even though all the teachers moaned and still moan about it. I suspect that the contradiction is easily resolved: for whatever reason, federal funding is increasing enough to keep it steady as a fraction of GDP while local and state funding withers (explaining why federal funding appears to increase faster than GDP).

Possibly this lets voters get to have their cake and eat it too: they're cutting (local and state) taxes while still thinking of the children.
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From: vilhelm_s
2013-01-20 05:32 am (UTC)
I like your point that the gods of the Straight Lines beat even physics. Of course, for Moore's law we have an idea why that is, namely that companies are using the law to plan their future products. There is some equilibrium where everyone knows that if they aim lower they are guaranteed to be outcompeted. (Not sure why nobody aims higher. Perhaps it would be insane to try to beat physics more than you absolutely have to?).

I wonder if some similar mechanism accounting for the general economic phenomenon?
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[User Picture]From: handleym99
2017-01-25 01:52 am (UTC)
It's important, whenever you see a sentence like "They were saying back a few decades ago Moore's Law would stop because of basic physical restrictions on possible transistor size, and we worked around those, which means the Gods of the Straight Lines are more powerful than physics. " to ask who THEY are...

What you often find is that either "they" are a bunch of lunatics or you've misremembered what "they" were saying (because, let's face it, the past all blurs together after a while).
In this case, for example, consider a representative article like this:

Here we have the NYTimes, in 1997, printing a very sloppy, gee-whiz article that conflates a whole lot of different points in a single article. We get simultaneous reporting on leading edge research (which is not even relevant to products shipping today, 20 yrs later) interspersed with various numbers describing products of the time. It's easy for a quick reader to assume the message of the article is something like "very soon transistors will be based on the movement of a single electron" whereas the ACTUAL message is something completely different
- what's being discussed is memory, not logic
- even in that case the islands that hold the individual electron are 7nm in dimension which, while small, is not the size of a single atom

FWIW it's unclear from the article whether what's being described is persistent storage or dynamic storage. If persistent storage, it's basically describing an evolution of flash and, as most of you know, we've gone in another direction with flash. Rather than trying to use a single electron for storage (which is way too fragile to thermal disruption) we've gone to 3D, stacking multiple (now 64, soon to be 96 then 128) separate memory cells on top of each in a single chip.
If dynamic storage, again you have to understand that there's a massive gap between the lingo used and what it appears to suggest. At the 7nm node, the closest thing to 7nm is the width of the finFET's channel inside the fin (which is, at that node, I think more like 12nm wide). The entire fin (including everything wrapped around the fin and the gunk below it) is quite a bit larger, the transistor itself usually consists of two or three or four fins, and the transistors used for dynamic storage (ie for all the various SRAM cells) are MASSIVELY larger than the logic transistors. So after all this talk of 7nm, the fundamental layout unit of most of the chip, the SRAM cell, is of order 50x30nm^2. Even at the point where logic transistors can no longer shrink, there may still be scope for ongoing shrinkage of the SRAMs that take up much of most chips.

We see something similar with the claim that "they" were "all" predicting global cooling before "they" were predicting global warming. "They" were in fact a niche group of climatologists hyped by a journalist who had no idea what he was talking about, not exactly a mass consensus:
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[User Picture]From: Chris Hallquist
2013-01-20 05:46 am (UTC)
I didn't find Cowen terribly persuasive either, but it *is* worth noting that he does spend some time arguing that GDP is a bad measure of economic growth. And actually, I think Cowen is right in principle about this, for reasons explained in the SMBC comic:


Though whether "true" economic growth (whatever that is) has in fact been less than GDP I have no idea.
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[User Picture]From: sunch
2013-01-20 10:35 pm (UTC)
C.O. here: the reason this comic is completely wrong is because GDP is based on voluntary transactions where each party attempts to improve its utility - so, generally, the result of each transaction is, well, improved utility for both parties.
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[User Picture]From: mindstalk
2013-01-21 02:19 am (UTC)
It's also based on tax-funded government spending and repairing broken windows and on increasing the scope of rent-seeking. If I can get a patent and thus start charging for what were formerly free use of ideas, I'm probably increasing measure GDP.
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[User Picture]From: sunch
2013-01-21 05:10 am (UTC)
As long as transactions are voluntary, utility of both parties improves, even if one of the parties is a government official. That even includes some cases of paying for patents. I have to agree though that patents, being an instrument of government regulation and hence not leading to voluntary transactions, don't necessarily increase utility for both parties. I don't know what percentage of GDP consist of payments enforced by government regulation - if it's significant, that part of GDP should probably be counted separately.
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[User Picture]From: ice_hesitant
2013-01-21 04:19 pm (UTC)
You are assuming information symmetry between the two parties in a voluntary transaction. If there is information asymmetry, a transaction will not necessarily make either or both parties better off.
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[User Picture]From: sunch
2013-01-21 05:57 pm (UTC)
.. which is why I said "generally". Be as it may, information asymmetry does not make the above mentioned comic strip any more relevant.
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[User Picture]From: Tim McGowan
2013-01-20 07:35 am (UTC)
"These lines don't care what we humans do, who we vote for, what laws we pass, what we invent, what geese that lay long-hanging fruit have or have not been killed."

I recommend this speech by Steve Davies:


You don't need to watch the whole thing, you'll probably get the picture quickly enough. The short story: In at least one view of history, what we invent is much, much more important than who we elect, and sometimes these important inventions are shockingly simple. Shipping containers, for instance, are just very big boxes, but they reduced the cost of the transportation of goods 34-fold.

I think that's part of the secret here, why it seems like no matter what we do growth keeps going up. We actually do quite a lot to make it go up but we're biased to focus more on the political world and big ideas than simple innovations, which account for quite a lot.
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From: (Anonymous)
2013-01-20 08:07 am (UTC)
My perception is that there has been a stagnation in everything not strictly related to computers from the 1970s until about now, and we are going to see a resurgence (with a ton of computer-aided stuff such as controls and the like) in mechanical and other innovations as the economy gets better.

Also, ignoring the internet is kind of absurd. The entire middle-class and above population has been upgraded to a cybernetic state in a single decade.
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[User Picture]From: squid314
2013-01-20 05:15 pm (UTC)
Why do you think mechanical innovations will increase when the economy gets better when the economy was very good in eg the 1990s but you think that era was still stagnant?
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[User Picture]From: mindstalk
2013-01-20 02:37 pm (UTC)
GDP per capita vs. median wage: also useful would be productivity, and IIRC Krugman's older books emphasize that productivity growth was about 3% a year up to the 1970s and about 1% a year after that.

I'm not sure if GDP can be inflated by overseas corporate earnings; it can definitely be increased by resource extraction and unsustainable conversion of environmental resources into money.

I'm pretty sympathetic to low-hanging fruit. Yeah, computers and biotech and shipping containers, but also limits. We increased message speed from "guys on horse" to "lightspeed", it can't go any faster. We have heat engines operating at 40% of theoretical maximum and an even higher percentage of their Carnot limit. Efficiency in producing light has increased by like 100x and again is within a small integer factor of theoretical limits. Transportation speed increased a lot then stopped; trains are getting faster but that's still slower than planes, it's more an efficiency increase.

The radical transformation of life in the rich countries certainly seems to have slowed down, or perhaps moved higher up Maslow's hierarchy of needs. Wikipedia and cell phones are big in their way but IMO not as big as moving off farms into electrified cities.
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[User Picture]From: squid314
2013-01-20 05:17 pm (UTC)
"I'm not sure if GDP can be inflated by overseas corporate earnings; it can definitely be increased by resource extraction and unsustainable conversion of environmental resources into money."

I heard an interesting counterclaim here from the Economist, which was that just as the ancient Greeks never developed industrialization because they had slave labor which was cheaper and more convenient, so a lot of the productivity stagnation in the modern world is because with globalization we have super-cheap labor in China etc that makes increased labor technology not all that useful.
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[User Picture]From: mindstalk
2013-01-20 05:20 pm (UTC)
Quite possibly. trade = technology, to an economist.

super-cheap = labor that can be made more productive by increasing intensity of known education and capital rather than by innovating new techniques.
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From: (Anonymous)
2013-01-20 02:57 pm (UTC)

There are very good reasons for increased healthcare and education spending

Specifically, it's because we as a society have gotten better at making widgets.

If it takes an hour of work per widget made, we should expect an hour of education to cost approximately one widget (assuming there's no overall preference between making widgets and educating people). If it takes a half hour of work to make a widget, an hour of educations should cost approximately two widgets.

Education and health care aren't getting more expensive as much as they're staying the same. It's just that the value of time in general has gone up as we have become more productive. The real problem is, again, the wealth gap - increased productivity has been pocketed by the rich.
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From: deiseach
2013-01-20 07:50 pm (UTC)

Re: There are very good reasons for increased healthcare and education spending

I tend to agree broadly with this. Does Cowen take account for the 1970s-80s being the period when heavy industry more or less collapsed? All the steel making, ship building, car manufacturing plants that went overseas? The strikes over the mining industry in Britain, the miners' strike of 1984-85 where the government of Margaret Thatcher took on the National Union of Mineworkers and broke their power? All for the sake of "efficiency improvements to be achieved by means of increased mechanisation and thus job cuts" - that probably accounts for some of the 'stagnation' of growth in the figures: shutting down inefficient plants, increased mechanisation, move to overseas production.

And also the flattening out of family income: formerly well-paying manufacturing jobs drastically reduced or even gone. This also accounts for the increase in education spending; before, you could leave school at 15 and get a job sweeping the floor in the local factory and move up on the shop floor that way. Now, even for service industry jobs, you need a certain level of education and training. Instead of working in the box factory or the car assembly line, you may be working in the pharmaceutical factory or the chip assembly line, and you need more education even for the lower-level or entry-level jobs.

I'd say we're not in a stagnation, more a plateau; we've hit a limit for the moment, until the next Big Discovery triggers a whole new wave of innovation and creation.
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[User Picture]From: st_rev
2013-01-21 06:41 am (UTC)

Re: There are very good reasons for increased healthcare and education spending

There are clear structural problems in education spending that this model doesn't account for, e.g. the proliferation of spending on administrative staff in higher education. Some of that latter change is thanks to the need for IT staff, but not all of it.
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[User Picture]From: handleym99
2017-01-25 02:02 am (UTC)

Re: There are very good reasons for increased healthcare and education spending

At least for some of us, the issue is not how much money is being spent of health and education as that is appears to be spent very badly. Rather than spending money throughout life, to generate a constant higher level of life satisfaction and eventually a longer life, we spend it all at the end to keep life going, in pain, connected to a machine, for three more months.
It's like we saved our money and lived on cat food for 80 years so that we could dine on truffles and kobe beef for the last year of our life --- is that a sensible budgeting scheme?

As for education, my understanding is that a huge amount of the discrepancy between the US and other countries at the school level (not talking higher ed) is in the money that is now (and was not) spent on special need students. In principle there's a discussion that can be held about whether that is a wise use of money, whether it's best as far as a way to spend money on those kids as opposed to alternatives, but no-one should pretend that that's money supposedly being spent as investment in the next generation of employees.

In both cases there's massive confusion as to where the money is actually spent, how this differs from other countries, and far too much hysteria along the lines of "anyone who refuses to spend money on my pet cause --- whether that's keeping grandpa alive for one extra week, or providing special ed to my son --- is a Nazi monster who deserves to be shamed and destroyed". Good luck changing that.
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[User Picture]From: celandine13
2013-01-20 04:51 pm (UTC)
I'm more of a stagnationist than you, but less than Cowen.

Basically, I think there is some kind of "juice" that drives the economy, but it's hard to measure. It has something to do with technological innovation -- but *real* innovations that genuinely open up new resources, not me-too imitations and applications, which is why counting patents doesn't really work. It has something to do with economic wealth -- but GDP is an easy measure to goose, and Wikipedia probably produces a ton of "wealth" in the sense of "value to people" compared to its impact on GDP, and it's questionable whether everything that goes on in finance is really creating "wealth" in that sense.

It's clear that we have much more "juice," more real wealth, than we had in the past. In the 1940's, middle-class households had to worry about conserving milk and eggs.

It's not inconceivable that the growth of "juice" is slowing down though. That's consistent with your income inequality point -- a lot of what is making the rich get richer is financial innovation, which may be partly fake, not actually juice-producing (and not long-run sustainable.) It's consistent with more scientific publications and patents (but less meaningful innovation in the average publication/patent.) But, to be honest, the case for juice-stagnation is mostly subjective. And based on structural considerations -- there's more bureaucracy in universities and more regulations on business and generally more hoops to jump through and less chance of two bicycle mechanics making a flying machine.

Most of our juice these days seems to be concentrated in computing. And it's clearly wrong to brush it off as "except the internet" as though the internet were an irrelevant toy. AI basically *is* juice, just not necessarily human-juice. I'm not even sure that the narrow AI algorithms we have now (driving finance, advertising, media through click rates) aren't drifting away from human-juice.

The thing about those straight lines is: I don't think they're real. Growth in patents and scientific papers are inflated by more people wanting to be inventors and scientists (and not necessarily doing more *real* invention or science). GDP growth is probably being goosed by some gov't/econ institutions setting up tautologies. And Moore's Law works because a couple thousand people at a few companies *decided* it was a goal. So yeah...intentionality is kind of "stronger than the laws of physics" (not literally, but in the way you mean.) But I don't think the "straight lines" are somehow natural laws. They didn't use to be there. They're not eternal. 300 years ago there was basically no global GDP growth at all. If growth-in-juice can emerge out of nothing, it can also decline.
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From: (Anonymous)
2013-01-21 01:07 am (UTC)
>- a lot of what is making the rich get richer is financial innovation, which may be partly fake, not actually juice-producing

A lot of the "financial innovation" is more about appropriating oneself a larger share of the pie, rather than making the pie bigger. See: how Mitt Romney made his money.
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[User Picture]From: squid314
2013-01-21 05:46 pm (UTC)
The lines were pretty straight even when calculated retroactively from data before the underlying laws were discovered.

If human goal-setting were able to make Moore's Law stay true by sheer will, that would be at least as interesting a result as Moore's Law itself.

I don't know much about the GDP calculation, but it "successfully" fell in response to the latest big recession, which suggests that whatever else it is it's not a tautology.
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From: michaelvassar
2013-01-21 08:45 pm (UTC)
I just don't believe the lines. When you look at the data in more detail rather than accepting the abstractions and aggregates, it basically doesn't support the narrative or thesis that the graph tries to push on you by choice of categories and definitions.
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[User Picture]From: gabrielduquette
2013-01-21 05:53 am (UTC)
The unwritten subtitle of this book seems to be: "Or, How Gains In QOL Have Become Difficult to Quantify."
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[User Picture]From: st_rev
2013-01-21 06:34 am (UTC)
I'd like to see more discussion of Eroom's Law in this context.
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From: cronodas
2013-01-21 07:47 pm (UTC)
My father thinks that the future is going to be in biotechnology and engineered life - growing houses from seeds, and such. (Personally, I suspect that, like fusion power, biology will be the technology of the future and always will be.)
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[User Picture]From: squid314
2013-01-21 07:52 pm (UTC)
Has there ever been a thing that people said was the technology of the future and always would be, that then got solved and became common?
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From: michaelvassar
2013-01-21 08:44 pm (UTC)
The Panama Canal was one. Flying machines. Maybe Immortality (we're not dead yet, and our prospects look pretty good).

OTOH, some things do stay vaporware for a REALLY long time. Ornithopters and space colonies, for instance.
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From: cronodas
2013-01-21 10:53 pm (UTC)
Well, in this case, "always" means "not in my lifetime". ;)

My own response to my father is that something like smarter-than-human AI might very well come along before super-biotech and make the point moot anyway. (And if we had super-biotech we could probably make smarter organic brains anyway.)

Edited at 2013-01-21 10:53 pm (UTC)
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[User Picture]From: ciphergoth
2013-02-01 04:54 pm (UTC)
The Paperless Office. OK offices aren't paperless, but they're a *lot* less paperful than they were.
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From: (Anonymous)
2013-01-21 08:37 pm (UTC)


You might want to look at my talk with Tyler on this topic from the 2011 Singularity Summit. I'd also be interested in talking with you about it. I've explored this issue a lot, and there is SO MUCH more to say and the inferential distance is way to large to cover in a short number of blog posts.
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From: michaelvassar
2013-01-21 08:42 pm (UTC)

Re: Stagnation

Sorry, wasn't logged in above.
Also, link is here.
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[User Picture]From: ciphergoth
2013-01-24 10:14 pm (UTC)

Re: Stagnation

Am looking forward to Scott blogging the Skype conversation that resulted from this post!
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[User Picture]From: torekp
2013-01-26 08:29 pm (UTC)
I'm not sure what to make of that since I would expect the inflation adjustment in the former to do about the same work as the GDP-percent-ing in the latter.

Whaaaa?!? No, GDP grows in real terms, so inflation adjustment versus GDP-percenting are very different operations.

Despite that gaffe, you're still probably the smartest person on the internet, by the all-important measure of agreeing with me. :)

By the way, a comparison of education spending and results between Finland and the USA suggests to me that increased spending still can get better results, if done right.
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[User Picture]From: tcpip
2013-02-10 10:40 am (UTC)
Do you mind if I repost this (properly credited of course) to isocracy.org?
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2013-02-21 11:06 pm (UTC)

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