Wednesday, April 30, 2014

What I've Been Reading

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee. If you have missed all the recent advancements in AI, then this book will bring help you up-to date with "reality". Personally, I didn't learn anything new from the book but it's well written and especially the later chapters are insightful.

Technology is a gift of God. After the gift of life it is perhaps the greatest of God’s gifts. It is the mother of civilizations, of arts and of sciences.

- Freeman Dyson

Three sets of winners in the second machine age:
The first two sets of winners are those who have accumulated significant quantities of the right capital assets. These can be either nonhuman capital (such as equipment, structures, intellectual property, or financial assets), or human capital (such as training, education, experience, and skills). Like other forms of capital, human capital is an asset that can generate a stream of income. A well-trained plumber can earn more each year than an unskilled worker, even if they both work the same number of hours. The third group of winners is made up of the superstars among us who have special talents— or luck.

Americans nearly doubled the amount of leisure time they spent on Internet between 2000 and 2011. This implies that they valued it more than the other ways they could spend their time. By considering the value of users’ time and comparing leisure time spent on the Internet to time spent in other ways, Erik and Joo Hee estimated that the Internet created about $ 2,600 of value per user each year. None of this showed up in the GDP statistics but if it had, GDP growth— and thus productivity growth— would have been about 0.3 percent higher each year. In other words, instead of the reported 1.2 percent productivity growth for 2012, it would have been 1.5 percent.

As Paul Samuelson and Bill Nordhaus put it, “While the GDP and the rest of the national income accounts may seem to be arcane concepts, they are truly among the great inventions of the twentieth century.” 27 But the rise in digital business innovation means we need innovation in our economic metrics. If we are looking at the wrong gauges, we will make the wrong decisions and get the wrong outputs. If we measure only tangibles, then we won’t catch the intangibles that will make us better off. If we don’t measure pollution and innovation, then we will get too much pollution and not enough innovation. Not everything that counts can be counted, and not everything that can be counted, counts.

As more data become available and as the economy continues to change, the ability to ask the right questions will become even more vital. No matter how bright the light is, you won’t find your keys by searching under a lamppost if that’s not where you lost them. We must think hard about what it is we really value, what we want more of, and what we want less of. GDP and productivity growth are important, but they are means to an end, not ends in and of themselves. Do we want to increase consumer surplus? Then lower prices or more leisure might be signs of progress, even if they result in a lower GDP. And, of course, many of our goals are nonmonetary. We shouldn’t ignore the economic metrics, but neither should we let them crowd out our other values simply because they are more measurable.

On Technological Unemployment:
The argument that technology cannot create ongoing structural unemployment, rather than just temporary spells of joblessness during recessions, rests on two pillars: 1) economic theory and 2) two hundred years of historical evidence. But both of these are less solid than they first appear.

There is no ‘iron law’ that technological progress must always be accompanied by broad job creation.

In the long run, low wages will be no match for Moore’s Law. Trying to fend off advances in technology by cutting wages is only a temporary protection. It is no more sustainable than asking folk legend John Henry to lift weights to better compete with a steam-powered hammer.

The consequences of high neighborhood joblessness are more devastating than those of high neighborhood poverty. A neighborhood in which people are poor but employed is different from a neighborhood in which many people are poor and jobless. Many of today’s problems in the inner-city ghetto neighborhoods— crime, family dissolution, welfare, low levels of social organization, and so on— are fundamentally a consequence of the disappearance of work.

- William Julius Wilson summarized a long career’s worth of findings in his 1996 book 

When Work Disappears: The World of the New Urban Poor.

No comments: