Robert Gordon has written an interesting paper, Is U.S. economic growth over? faltering innovation confronts the six headwinds about future economic growth. He argues that there is no fundamental reason to assume economic growth is going to remain indefinitely: in fact, there was little growth before 1750 and it could be that the last 250 years have just been a temporary exceptional period. The growth we have had has been due to three linked industrial revolutions - the steam one, the diesel one and the computing one - producing economic growth as their inventions become available but eventually petering off. Finally, even if he is too pessimistic about the near future innovation rate, there are growth-reducing "headwinds" (demography, education, inequality, globalization, energy/environment and debt) that at least are likely to slow the US for a long while.
In many ways this is a complement to Tyler Cowen's thesis in The Great Stagnation: we got a lot of growth out of low-hanging technological fruits that enabled us to build a great standard of living, but now it has become much harder to innovate something that truly matters.
Gordon points out that a lot of innovation is not really innovative or important: they do not really change how things are done in society or how it is to live in it. The first and second parts of the industrial revolution drastically reduced the amount of unpleasant work and need for human effort, and increased life expectancies enormously. The computer revolution has improved productivity and efficiency in many ways, but the biggest gains seem to have been in entertainment and communication: more opportunities for consumption rather than replacing human labour with machines.
He makes a thought experiment:
You are required to make a choice between option A and option B. With option A you are allowed to keep 2002 electronic technology, including your Windows 98 laptop accessing Amazon, and you can keep running water and indoor toilets; but you canít use anything invented since 2002.
Option B is that you get everything invented in the past decade right up to Facebook, Twitter, and the iPad, but you have to give up running water and indoor toilets. You have to haul the water into your dwelling and carry out the waste. Even at 3am on a rainy night, your only toilet option is a wet and perhaps muddy walk to the outhouse. Which option do you choose?
His argument is rhetorically good, but also shows some interesting issues of what we want from technology. We do not care how we get a particular function (a steam-powered ipad is still OK) but we care about the function (having to go to the outhouse is not OK, even if it was a miracle of green engineering). The functions we care deeply about are the ones that interface directly with how it is to live or enable it: it fits with a Maslowian hierarchy of needs with food and shelter near the base and convenient entertainment further up.
Gordon points out that "A common feature of this innovative revolution was that many of the improvements could only happen once." Once things get better - indoor temperatures at a comfortable level rather than fluctuating, free and fast travel introduced, food hygiene achieved - there is not much that can be done in these domains. We might want greener air conditioning, faster air travel or nutritionally perfect food, but compared to the already made improvements they are going to be minor advances. I would assume that performance improvements in many domains - in terms of actual utility - are highly convex and quickly level off. A modern pocket calculator is faster than my first one from the 1980s, but for most calculations this speed difference is unimportant: I only care about it performing the basic arithmetic. We rarely care about Moore's law directly, just what it enables.
I can't judge his analysis of economic trends: productivity measurement remains mysterious to me. But this kind of argument is an interesting challenge to the accelerationist school of thought. The basic caricature view of theirs would be that productivity ought to increase faster and faster as we get technologies that not only replace or complement human labour, but also help develop better tech. The most extreme form is of course recursive self-improving AI: a small part of the the economy can make itself grow more or less arbitrarily fast (and hence, in principle, the whole economy could take off).
This likely underestimates the importance of particular technologies unleashing new domains of activity: great inventions pushes the productivity frontier in a lumpy manner. The stagnation people think we are getting too few innovations, either because they are getting harder to find or because we are doing something wrong.
One can also make a lumpy long run view like Robin Hanson's growth mode theory: yes, industrial revolutions are fairly discrete things and do peter out. It is just that they happen from time to time, and in the long run they tend to build on each other: growth is not just due to inventions, but to the kinds of societies they enable. One open question is of course if they come more and more often, or whether they can be arbitrarily far apart in time.
It is also interesting to consider what kinds of inventions would produce something important for the human condition, as desirable and transformative as indoor plumbing, personal vehicles or antibiotics. Here is my tentative list:
The point of these is that once they exist, rational people would not want to go back to the previous state even for a fairly high compensation.
Note that early technologies do not have to be about fixing early steps on the hierarchy of needs. Yes, we tend to try to solve those first, but the earth-shattering innovations are still random. Writing, one of the biggest leaps, occurred very early but did not solve the perhaps more pressing food, health and shelter problems. We still haven't solved ageing, despite it producing 100% mortality.
I suspect that, looking back from the far future, the above list will seem rather naive. But the important angle is to realize that there are things to invent or find solutions to that would change the human condition. They are worth pursuing if we want more growth, and they are worth investigating if we want to have a say in how the human condition changes.Posted by Anders3 at August 30, 2012 05:14 PM