Tuesday, November 28, 2017

What's crucial is to know why growth has been slowing.

I don't know who Boffins is, but The Register back in September reported that Boffins fear we might be running out of ideas.

The opening:
Innovation, fetishized by Silicon Valley companies and celebrated by business boosters, no longer provides the economic jolt it once did.

In order to maintain Moore's Law – by which transistor density doubles every two years or so – it now takes 18 times as many scientists as it did in the 1970s.

That means each researcher's output today is 18 times less effective in terms of generating economic value than it was several decades ago.

"18 times less". I can stop reading the Boffins article right there. I guess we'll never know who Boffins is -- or, are.

I saw that stat before, the number of scientists required to accommodate Moore's Law, like angels fitting on the head of a pin. Back in September, maybe. Saw it three or four times, under different and apparently unrelated headings. All the sightings reported the same statistic, though not all in such anti-mathematical terms. 18 times less?? For the record, "times" means multiply and "less" means subtract. What are we supposed to do with 18 -- multiply it or subtract it? Eh, forget Boffins.

I am never impressed when an article draws a conclusion from one statistic. But when three or four articles all draw a conclusion from the same statistic, you will find that I am, well, three or four times less impressed.

Do the math.

It's not only Boffins the "number of scientists" stat that leads to the "out of ideas" idea. There is also Tyler Cowen's "low hanging fruit". There is no more low-hanging fruit, Cowen says: We've already plucked all the good ideas that were easy to reach. That's quite an insult to every innovator going back to Newton, Descartes, and the guy who invented three field rotation.

And there is Robert J Gordon, of course, whose mournful soliloquy suggests that faltering innovation is the cause of declining economic growth. Gordon writes of "six headwinds", problems we cannot solve. He seems to think our innovators are plumb out of ideas.

This reminds me of Arnold J. Toynbee's "challenge and response": Civilization faces repeated challenges, but will survive as long as the response to the challenge is adequate. If we're out of ideas, though, our response may turn out to be inadequate. You should be concerned.

The NBER summary of Robert Gordon's view tells us that economic growth "gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since."

If you want to know why growth accelerated, you need to look back to 1750 and before. Some of that history is fascinating stuff. Fascinating, but not crucial.

What's crucial is to know why growth has been slowing. What's crucial is to know the correct response, the response that will allow civilization to survive.

Timothy Taylor asks Will Artificial Intelligence Recharge Economic Growth? He writes:

Of course, the transition to the artificial intelligence economy will have some bumps and some pain, as did the transitions to electrification and the automobile. But the rest of the world is moving ahead. And history teaches that countries which stay near the technology frontier, and face the needed social adjustments and tradeoffs along the way, tend to be far happier with the choice in the long run than countries which hold back.

It's coming anyway, Taylor says. And because he compares it to "electrification and the automobile" I have to think he sees the AI transition as a way to increase economic growth. That makes sense, at least if you think economic growth has lost its "charge" due to a lack of ideas, and that AI is an idea whose time has come.

But if a lack of good ideas is not the problem, then the advance of artificial intelligence may be no better for us than for Sarah Connor and her son John. So maybe we want to spend a little more time thinking about the cause of the decline of growth.

What if we pick the wrong response? I mean, most people say we have to reduce the Federal debt. Some people say we have to increase the Federal debt. And a few people, myself among them, say we have to reduce private debt. All those ideas are out there. Will any of them work?

Toynbee was right. We have to pick the right response, or it's all for naught. What's crucial is to know why growth has been slowing.

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