This week's EconTalk is Kelly on the Future, Productivity, and the Quality of Life. This is really a great episode, and I highly recommend giving it a listen, though I am a bit biased because I really like Kevin Kelly. Awkwardly for me, this is essentially the same topic as he wrote on in the previous essay I talked about here. Awkward because I already talked about this a bit, and also because I agree with pretty much everything, so it isn't a target rich environment for me.
The first segment is mostly about that essay, which is a critique of Robert Gordon's paper Is US Economic Growth Over? in which Gordon makes the case that stagnation is pretty much the norm for all human economies over our history, and seeing as how the growth from the third industrial revolution (computers) was pretty minimal, we might well be reverting back to the norm of stagnation after our ~300 yea boom. Kelly makes some excellent points about this, the first being that Gordon himself states that changes in previous industrial revolutions took nearly 100 years to really play themselves out, yet we are only 20-50 years into the whole computer thing, depending on how we look at it. (Gordon starts his clock basically when the first mainframes were used in the 60's-70's, Kelly argues the beginning is really in the mid 90's with networking.)
The second point, and really an over arching theme for the entire podcast is that productivity as we usually measure it, as either GDP or how much stuff we can produce with set inputs, is really only the basis for our growth and well being, and not the end. I really think this is a key insight, not just to understanding what the hell is going on with our economy lately, not just looking at what the future holds, but even understanding just why we bother making things in the first place.
Skipping ahead a bit, because I think this is the most important point in the entire podcast (and maybe the world?) Kevin and Russ talk a bit about how many of the things we make are made because they are "cool" and not because they are practical in some sense. Whether or not "cool" is the right word is sort of besides the point, but one can substitute wonderful, pleasing, awesome, delightful or beautiful and get to the same point. In fact, do that, for each word, and think about things you own or have created that fit the bill. I suspect that nearly everything hits one of those six words, but relatively few fall only into the category of merely productive or efficient. (I would note that those of us who produce things often find things that are more productive or efficient to also be wonderful and pleasing, with a tiny increase in the former generating a huge increase in the latter.)
The larger point here is that while making from less is nice, we do it largely so that we can do all the other things we like more. Things like discovery, experimentation, play, and just plain goofing off. One of the key factors of early, stagnant economies was that there was only just enough production to cover material needs plus a tiny bit extra, and so we had a hard time devoting resources to science and invention, as well as straight up pleasurable things like theater. Russ points out that in all of Elizabethan England there might have been only about 100 people engaged in the production of plays, but now there are far more than that who have employment making a single movie. We spend a great deal of time making things that are just to make us happy, more than at any other time in our history, and that is both awesome, and really difficult to fully measure in terms of productivity. But really, what is the point of doing anything if not to increase over all human happiness and well being?
Related to this point, that sometimes you need to trade production of stuff for researching new ways of making things, there is an interesting discussion of how rather pointless computers were for a long time. Computers just didn't produce much value for companies for quite a while, but it wasn't because they were inherently useless, but because they were new, and everything is difficult the first time. Much like learning to play the piano because you like piano music, for a long time you are going to be objectively worse at producing music compared to a CD player, but after a lot of investment you can reap far better results than if you just relied on CDs, not just in joy from hearing music, but also in new joy in learning new things and creating things yourself. This is important, because optimizing current resources often leads to sub-optimal long term results, as you limit your ability to advance and find yourself stuck on local peaks while greater peaks are just out of reach. I will repeat that, because it bears repeating (and perhaps rephrasing):
Optimizing current resources for production is going to lead to sub-optimal results due to a lack of growth.
Take, for example the case of a college student deciding how to spend his meal budget. He can spend all of his money on campus buying meals, and eat pretty well every day. Alternately, he can attempt to cook at home every day for the same amount of money, or do a mix of both on campus and home cooking. The trouble with home cooking is that his skill at cooking is only about enough to make cold cereal and ramen, and so he won't be able to eat at well at home. Anything more complicated will likely fail, and so waste money.
Now, off the bat, it looks like our poor student should just eat on campus all the time. This gets him the most food for the same money, and probably saves him some time. However, if he has the capacity to improve his skills in the kitchen, such as by borrowing a cook book and trying things out, he might well eat less well in the short run, but over time he may develop skills that allow him to eat much better food than he could get on campus.
Things get more complicated of course when you consider that time spent learning to cook might be better spent studying for class, and that he might only learn that he is a terrible cook no matter what, and so have no more skills than before but less food. On the other hand, he might discover that he loves to cook and finds a new calling in life, or maybe use his cooking skills to impress a mate. If he only eats at the cafeteria, figuring after he gets a job he can either hire someone to cook for him or get married and have his wife do it, only to find he can't get a job or a wife that cooks. Whatever. The key is that due to the uncertainty in the system he can not globally optimize at all at the beginning. Without knowing all the possible outcomes and their probabilities he is limited to guessing what the right mix of stuff now and investment for later is. And while it is impossible to know exactly what the correct mix of those two is, we can be pretty sure it is not all of one and none of the other.
What... EconTalk? Oh, right. Bringing it back to the EconTalk episode, Kevin Kelly might put it as "Seeking productivity and production at all costs is bound to fail. We want people to try out new things, experimenting and playing, regardless of whether it looks like waste or not, because that's the only way we can discover new things that will push our ability to produce farther." He would probably say it better, though.
A related point that Kelly makes is that measuring new things is really hard. We see this in the CPI when it comes to cell phones (which were not even in there for the first 15 years or so of their existence), or in how to measure the GDP gain of free things. We produce a lot of value in YouTube cat videos, but we have no idea how to measure that as part of GDP because people don't pay for them other than with time. Really what we need is a measure in how productive we are at pleasing ourselves which requires what, brain chips? I don't know, maybe we could measure that with FMRI machines for everyone?
Another point in the talk, and I am completely abandoning the framework of the podcast to talk about what I want to here, is that machines are good for optimizing and productivity, while humans are good at goofing off and creating new things. This is a major point in the essay, and really branches from the over all theme of productivity as economists think of it being only the foundation for what we do, not the end all be all. This gets to the future, in terms of "what will we do when machines do everything we do better than people?" The answer seems to be "find new things that we are best at, then make machines to do those, and then repeat." For every thing we stop doing because a machine is better, we end up finding a dozen other things to work on to make ourselves happier. There is a good bit of discussion on this, and it is a really important point.
All in all, a great EconTalk, and highly recommended!
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