1.21.2006

Productivity

So I read recently of someone who believes that there will be an economic depression far worse then that of the 70's in about 5 years. Most of the crash will come from a saturation of computers and their ability to increase productivity. If you think about it, for most of the last 20 years our economic prosparity has been driven by our ability to continiously produce more with less. Computers and the robotics they made possible have made all aspects of our work more efficient. More efficient means more wealth can be created per person so all our lives are better then the ones before it.

Once everyone has a computer and every process is automated what happens? Sure, we will have incremental improvements but nothing like what we have seen over the past 25 years. So suddenly our ability to create more wealth platues at just the moment that the size of our work force begins decreasing. The stock market, a classic measure of our economies well being, requires productivity gains to fuel its growth. With the stock market crash that follows the stagnation of productivity people's retirements and savings are decimated. Spending falls, more goods chaising fewer dollars leads to deflation, deflation means people get fired, the massive amount of debt our country has accumulated comes due... a.k.a. not good times.

Ok, so this happens... not alot we can do about it in all honesty. What I am more interested in is how our society will handle this massive change. I am a big believer in the fact that extreme changes in society only occure with correspondingly drastic economic or political changes. The great depression and world wars changed the way our government thought about its responsibilities to its citizens. The end of the roman empire changed the relationship between peasent and king. I probably could go on.

So what happens this time? We are at a unique point in our history I think. Never before have we known so much about how we work and never before has such a potential to learn more existed. Brain research is exploding and, unlike in the past, it is being supported by hard data i.e. like a news article I read this last week. The article discussed how men get more pleasure then wemon when seeing people "get whats comming to 'em". How do they know this? They took FMR scans of participants brains and litterally just watched their pleasure centers of the brain light up. No more asking them clever questions to figure out just how much they liked it.

We are poised to learn just what makes us happy. More then that, we are poised to learn the "right way to live". Just what it is I don't know but i bet it isn't what we have now.

What is funny is just as we may be getting out of this recession we will enter another because of The Revolution (the energy crisis when we run out of fossil fuels). All in all it looks kind of grim for our generation. I think though what I mean to say is that it isn't all going to be bad. This is an opportunity for change and well, we have a chance to do it right. Like they said in Ender's Game, "The right voice at the right time can change the course of history...".

5 Comments:

Blogger Kevin Day said...

Interesting topic. I haven't heard of this productivity theory, but I'm not sure if I'm convinced. I don't know much about business or what drives productivity, but I guess I always thought that the key was "human imagination" to come up with new products and ideas. The technology is important for doing things more efficiently, but the technology won't think of new ways for companies to increase sales.

The whole thing kinda sounds like the quote we hear now from the patent official in 1900 who said "everything that can be invented already as been." I'm optimistic (or naive maybe) that businesses will somehow continue to find ways to be more productive. Maybe this is where nanotechnology really starts to pay off?

Regardless, some sort of major economic downturn is inevitable, and I do like your analysis of our potential reaction to a depression. I had never considered that cognitive science could help us cope with a big societal change. Do you see research of this type bringing changes in the economy directly, or will the government restructure itself to accommodate its citizens so that they can live "the right way"?

As for the governement/people relationship in a future depression, do you envision a "Second New Deal" that does a better job at covering healthcare and retirement? Or might something else happen? Or maybe President Jeb Bush will continue his brother's game of Risk and take over countries to keep our economy afloat. Heck, we could become a country of merceneries selling our army to other countries. Gotta play to your strengths...

12:11 PM  
Blogger Craig Snoeyink said...

Thats a good point, one can't discount the human ingenuity. Even nanotechnology though is made possible by computers and I really don't see it acting as a multiplier for our wealth. The key idea is that increases in productivity act as multipliers of wealth so that alittle change in productivity can cause large changes in quality of life (more and better stuff). Nanotechnology gives us a new source of wealth but it doesn't necessarily multiply everything. Remember, most of our economy is service, a place where computerizing stuff is having a huge effect (For example, free checking accounts are a result of computer automation).

We may invent some spectacular new technology but I don't think it will have the wide reaching and drastic effects that computers have had.

I think I see changes in what we find important. Right now our country values more then anything money and things. Because we value money and things I think we feel you have to work for them, and hard. And heaven forbid if someone gets it for free expecually if I have to pay for it. I'm not sure that is the case in other countries. Expecually in countries where the people are supposedly happier then here (can't say for sure, never been, you will have to tell me when you get back :-) ). The reacurring theme that I hear is "They know how to live".

I think our focus will change to "How to live contently" instead of our current metric of money, things, and status. How that will effect things I don't know. I hope that it will lead to a more socialist state that is better able to protect and provide for the poor and destitute. (More then "A brand new deal" This is a fundemental change in how we view purpose of a government") I don't see any explicit economy regulations but this will undoubtably affect such things. My greatest hope is actually a self reinforcing change in our society that the media takes part it (definately helps make it reinforcing). This will effect quality of life more then explicit changes in the goverment made by a few people.

The big change will simply be a realization that we can do better , that there is a right way to live and we should start looking for it. Who knows where that will lead us. Just think how powerfull that state of mind is...

I actually think further republican rule would facilitate this. The worse things get the better a democracy is able to act in a coherant way. Its just too bad that so many people will have to die for that to happen.

"Gotta play to your strengths..." Sigh... tell me about it...

Another plus... guess who is getting out of graduate school as this is happening... oh oh!! I know :-)

12:33 AM  
Blogger Josh Staiger said...

Anyone who knows anything about enterprise technology knows that the technological infrastructer of *most* companies today (large and small) is almost laughably bad compared to what it could be.

I'd say we're a good 10 years off (or more) before a majority of companies are routinely taking advantage of the most mundane technologies and methods that we know are possible today.

And frankly, we're not even close to solving the *most* interesting problems in computer science: the natural language problem and the turing test.

That solution has the potential to make all our current advances in computing productivity look paltry by compairison.

I hate to say it, because it sounds lame and cliche, but we're still in the early stages of uncovering the productive potential of the computer.

Perhaps going out 100-200 years, you have a point, but who the fuck knows what can happen in 100-200 years?

I seem to recall reading somewhere that back in 1900 they thought our understanding of physics was nearly complete with some minor tweaking... Yeah, look how that turned out.

9:15 AM  
Blogger Craig Snoeyink said...

I don't deny that there will be significant technological advances in the future. I am just saying that, by 5 years from now, a significant number of them will be implemented. Here are several things that I think can safely be listed as being seen in the next 5 years: Wide spread use of RFID tags, psuedo natural language and turing machines (good enough to be functional), plug and play technology infrastructure based on wireless networking (computers as well as sensor technology), web based computing (office programs among others), widespread highspeed internet through broadband connections and distributed wireless access points. The best part is each of these reinforces the other.

The real question is not can we continue increasing productivity but can we continue the rate of productivity increase. Remember, the stock market is alot like an expressway. People follow each other far too closely and break harder then neccessary. This is why we have "stop and go" traffic and why in a divided highway there will be a trafic jam on both sides of the highway despite the wreckage being confined to one. Similarly in the stock market people follow trends much too rigorously and panic in excess of the threat. A downturn or stagnation in productivity will devistate the stock market expecually since the next five years will see massive and ultimately unsustainable increases in both the stock market and productivity.

Basically there is going to be a convergance of many key technologies, a way to easily share information (WiFi) and a way to easily gather information (RFID) will revolutionize manufacturing adn distribution of goods. A better way to interface with humans (Adequate speach recognition and psuedo turing machines) as well as web based software will lower the cost of computing while making it more accessable to everybody (including busnesses).

It will take more then 5 years for these to saturate the market but they are so attractive and usefull that I do see the majority of their impact occuring within 7 years.

Don't forget the walmart factor either. Catch-up or die.

2:41 PM  
Blogger Josh Staiger said...

Eh, I don't buy it. I don't see any reason why the rate of productivity increase will hit a wall, even after the technologies you list are implemented.

I think it's much more likely that the convergence of all those technologies will become the new platform to build on top on and when we get there, new apps will become possible that are very difficult to imagine currently.

Go back to 1995 and everyone still thought that the PC revolution was the big thing, when if fact it was the coming Internet revolution (build on top of the PC) that was the *real* big thing. Not even Microsoft saw it at the time.

And as far as the stock market goes, I'm becoming increasingly convinced that it's all a giant ponzi scheme anyway :)

Read:

The stock market is for suckers...
and
The Longtail of Investing

5:00 PM  

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