Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998) • Hacker News Board

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#51

Post by hyperpape » Mon, Dec 19, 2016, 5:36 PM UTC

snrplfth wrote: post #49

hyperpape wrote: post #38

While this article is probably wrong (I don't know what the economic impact of the fax machine was, but I suspect a lot smaller than the Internet), we should probably all be asking ourselves whether the economic impact of our industry is really all that big. Looking at the profit of companies like Google and Facebook overstates the impact for them. They are making tons of money, but a lot of that is just a shift in t…

One must also ask, how much of it is consumer surplus. In just the same way as a disease going away reduces the economic activity associated with managing that disease, information technology and the internet have done away with many previously necessary activities, in the process of creating an overall improvement - potentially "shrinking" GDP, even while it delivers substantial benefits. What is instantaneous world…

This is a good question. I think there is certainly some consumer surplus not captured in GDP statistics, though it doesn't necessarily undermine my point.

That said, your example of curing disease is a bad case of the broken window fallacy. No longer having to combat specific diseases 1) leaves people healthy and able to contribute to economic activity, and 2) leaves the people previously employed in medical fields able to take other jobs.

Maybe in 2016, where there's a seeming lack of jobs in the developed world, that's not a clear driver of economic growth, but in 1916, it was.

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#52

Post by erikpukinskis » Mon, Dec 19, 2016, 5:37 PM UTC

mempko wrote: post #9

While he is wrong about the impact of the internet economically. He isn't wrong that technology progress has been disappointing. When you grow up believing you will be driving flying cars and seeing robots help you around the house, how else are you supposed to feel? It is only now that computing power has started to enable old AI techniques such as neural nets, which were once impractical are now starting to be reas…

We'll get there. We're very close actually. We took a huge hit in the 1990s when Bill Gates use chilling effects to try to own the software industry.

The web finally recovered with things like Chrome that got browser competition going again, and Facebook Apps that reminded us we can make our own stores and ecosystems of import.

The next big hit setback was the cloud transition. Servers are just super useful and they are orders of magnitude harder to administer than a PC. This consolidated power amongst sysadmins (and away from users and coders). That has driven the slide back towards proprietary web apps.

But we have been slowly chipping away at the complexity differential between administering a server and using a laptop. See Heroku, etc. We're not there but we're very close to the world where you can spin up a server as easily as you download apps.

Then of course the most recent hit is Apple and the App Store. We eealized there is some value to having a trusted third party curate a collection of software.

And again, we don't have tools to allow people to do that in a decentralized way, but we'll get there.

The question to me is: will free software always be playing catch up? Is this a forever thing?

I think no: it's a disruptive technology with an inherent differentiating factor (access by default, vs paywall by default). I think we're still getting to feature parity with the proprietary development culture, but when we do I think the fortunes of centralized/decentralized will reverse.

But we'll see! 2043 at the latest, if anyone wants to wager.

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#53

Post by krona » Mon, Dec 19, 2016, 5:37 PM UTC

hyperpape wrote: post #38

While this article is probably wrong (I don't know what the economic impact of the fax machine was, but I suspect a lot smaller than the Internet), we should probably all be asking ourselves whether the economic impact of our industry is really all that big. Looking at the profit of companies like Google and Facebook overstates the impact for them. They are making tons of money, but a lot of that is just a shift in t…

> And if you think I'm wrong, ask yourself why GDP growth has been so anemic in the age of the Internet.

Global GDP growth has been fairly steady for 40+ years. http://www.worldeconomics.com/papers/Global%20Growth%20Monit...

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#54

Post by cnnsucks » Mon, Dec 19, 2016, 5:45 PM UTC

hyperpape wrote: post #38

While this article is probably wrong (I don't know what the economic impact of the fax machine was, but I suspect a lot smaller than the Internet), we should probably all be asking ourselves whether the economic impact of our industry is really all that big. Looking at the profit of companies like Google and Facebook overstates the impact for them. They are making tons of money, but a lot of that is just a shift in t…

>> And if you think I'm wrong, ask yourself why GDP growth has been so anemic in the age of the Internet.

GDP is the wrong figure. As we've pulled up the ladder and pushed people out of the workforce our net GDP has leveled off, but non-farm labour productivity has continued the rapid pace characteristic of the US economy, hitting an all time peak in 2015. We're getting more value out of fewer people. Some part of that has to be attributed to advanced communications, including the Internet.

Krugman has established a long history of embarrassingly bad predictions; this is merely one of the most demonstrably terrible. Also sometimes cited is his advocacy for 'housing bubble' policy and subsequent denials. Krugman doesn't know whats going on. He writes economic red meat for his fellow leftists inside his New York echo chamber. The real world is paying no attention.

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#55

Post by matt4077 » Mon, Dec 19, 2016, 5:45 PM UTC

Booktrope wrote: post #42

addicted wrote: post #12

Earlier quoted context omitted.

Big, Professional mistakes

He calls it "The Conscience of a Liberal" and then says "So yes, I’ve been wrong. Let those who are without error cast the first stone." Krugman is a good example of what's gone amiss with liberalism. Even worse than his many errors, is his hypocrisy. He very loudly accused Amazon of being a "monopsony" during Amazon's most recent dust-up with the big publishers, on grounds that its market power would enable it to hu…

Amazon may have been acting in the consumer's interest in the fight about textbook pricing, but it's hard to argue they weren't using their monopsony. The publishers were also not cooperating – they were simply setting prices higher than people would like.

I'm also no big fan of these conspiracies where someone like Krugman does something because it may mean a few thousand $ per year for him. That's a cheap attack, and it really doesn't seem plausible that he'd care more about a bit of money than winning the argument.

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#56

Post by snrplfth » Mon, Dec 19, 2016, 5:45 PM UTC

hyperpape wrote: post #51

snrplfth wrote: post #49

Earlier quoted context omitted.

One must also ask, how much of it is consumer surplus. In just the same way as a disease going away reduces the economic activity associated with managing that disease, information technology and the internet have done away with many previously necessary activities, in the process of creating an overall improvement - potentially "shrinking" GDP, even while it delivers substantial benefits. What is instantaneous world…

This is a good question. I think there is certainly some consumer surplus not captured in GDP statistics, though it doesn't necessarily undermine my point. That said, your example of curing disease is a bad case of the broken window fallacy. No longer having to combat specific diseases 1) leaves people healthy and able to contribute to economic activity, and 2) leaves the people previously employed in medical fields…

Oh, I'm not trying to commit the broken window fallacy. I'm just saying that, for example, if there was a disease that caused a lot of pain, and it was suddenly cured, the reduction in measured economic activity associated with managing that disease might outweigh the measured increased productivity and redeployment of resources and labour. (Maybe something like arthritis, say: usually worst after most people are retired and not measured as workers, doesn't take a huge number of people to manage, but causes a lot of pain.) Obviously curing a disease is an economic good. It's just that we're not terribly good at measuring consumer surplus, or leisure, or various dimensions of satisfaction - especially once you get past basic consumption indicators.

I suspect it's more likely that we're underestimating the consumer surplus from the internet than we are overestimating it. By how much, I don't know.

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#57

Post by hyperpape » Mon, Dec 19, 2016, 5:47 PM UTC

krona wrote: post #53

hyperpape wrote: post #38

While this article is probably wrong (I don't know what the economic impact of the fax machine was, but I suspect a lot smaller than the Internet), we should probably all be asking ourselves whether the economic impact of our industry is really all that big. Looking at the profit of companies like Google and Facebook overstates the impact for them. They are making tons of money, but a lot of that is just a shift in t…

> And if you think I'm wrong, ask yourself why GDP growth has been so anemic in the age of the Internet. Global GDP growth has been fairly steady for 40+ years. http://www.worldeconomics.com/papers/Global%20Growth%20Monit...

Yes, but that owes heavily to growth in pre-internet industries in developing nations. Unless the Internet is a crucial enabler of that growth (possible, but not a given!) the more relevant question concerns growth in the developed world, which has been lower.

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#58

Post by kurthr » Mon, Dec 19, 2016, 5:48 PM UTC

All of this was written before the Dotcom boom!

Do you remember when you had to .com after every company or had to put www. before every company, because almost no one knew how to search (on AltaVista or redirect in a DNS record), or just restarted their computer to get back to the Yahoo! home page?

If not, then you don't remember this time... but almost everyone remembers the DotCom bust 3 years later, when the nerds got their comeuppance!

Within two or three years, the current mood of American triumphalism--our belief that we have pulled economically and technologically ahead of the rest of the world--will evaporate. -Krugman

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#59

Post by hyperpape » Mon, Dec 19, 2016, 5:48 PM UTC

snrplfth wrote: post #56

hyperpape wrote: post #51

Earlier quoted context omitted.

This is a good question. I think there is certainly some consumer surplus not captured in GDP statistics, though it doesn't necessarily undermine my point. That said, your example of curing disease is a bad case of the broken window fallacy. No longer having to combat specific diseases 1) leaves people healthy and able to contribute to economic activity, and 2) leaves the people previously employed in medical fields…

Oh, I'm not trying to commit the broken window fallacy. I'm just saying that, for example, if there was a disease that caused a lot of pain, and it was suddenly cured, the reduction in measured economic activity associated with managing that disease might outweigh the measured increased productivity and redeployment of resources and labour. (Maybe something like arthritis, say: usually worst after most people are ret…

I think you're still making it, just in a more subtle way. What happens to the money those people spend on arthritis treatment?

Re: Krugman: Internet’s Economic Impact No Greater Than Fax Machine (1998)

#60

Post by Hasknewbie » Mon, Dec 19, 2016, 5:55 PM UTC

Bill Gates himself almost completely dismissed the Web only a couple of years earlier in his book "The Road Ahead"[0], to such an extent that he had to heavily update it in the second edition one year later. With that in perspective, is it really surprising to see non-specialists like Krugman still considering it a novelty in 1998, before Google, e-commerce, e-booking, etc?

[0] https://en.wikipedia.org/wiki/The_Road_Ahead_%28Bill_Gates_b...