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)

#71

Post by smsm42 » Tue, Dec 20, 2016, 8:34 AM 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…

I admire your effort in finding something that salvages that obviously wildly misguided prediction by Krugman. But really: if any measure says Internet had no large economical impact on our lives, it's just a bad measure.

And yes, GDP is suffering from some problems. There's huge informational resources that can not be valued the way GDP is calculated. There are many other criticisms of it[1]. OTOH, is somebody gets money for digging a trench in the morning and filling it up at the evening, GDP increases, even though nothing useful were done, the money was just wasted. Don't get me wrong, GDP is a useful indicator, but it doesn't show everything.

[1] https://en.wikipedia.org/wiki/Gross_domestic_product#Limitat...

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

#72

Post by smsm42 » Tue, Dec 20, 2016, 8:37 AM UTC

hyperpape wrote: post #59

snrplfth wrote: post #56

Earlier quoted context omitted.

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?

Maybe people just don't earn them, since not having to pay for treatment they can now spend time on reading books and watching birds instead of working. I don't say that happens with everybody, just one possible scenario. That's the thing with such global measures - they can't capture things they are not designed to capture.

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

#73

Post by hyperpape » Tue, Dec 20, 2016, 3:58 PM UTC

smsm42 wrote: post #71

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…

I admire your effort in finding something that salvages that obviously wildly misguided prediction by Krugman. But really: if any measure says Internet had no large economical impact on our lives, it's just a bad measure. And yes, GDP is suffering from some problems. There's huge informational resources that can not be valued the way GDP is calculated. There are many other criticisms of it[1]. OTOH, is somebody gets…

Your example of the trench is a textbook example of the broken windows fallacy. Digging a trench and filling it up may increase GDP when unemployment is low. It will reduce it when you're near full employment.

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

#74

Post by hyperpape » Tue, Dec 20, 2016, 4:01 PM UTC

krona wrote: post #63

hyperpape wrote: post #57

Earlier quoted context omitted.

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.

You're trying to find growth that is directly attributable to the internet, which is fairly futile in my view because the internet is not in itself a means of production.

Not at all. If the Internet changes the way that other goods are produced, that is an impact of the Internet (so I do think the Internet can claim some influence on the growth of international trade, just not an overwhelming percentage).

My company does SaaS for logistics. We lower the cost of moving goods for our customers. I count that as economic impact. It's just that the impact is relatively limited. We can get you lower labor costs, faster planning, more optimal routing, and higher utilization, but we can't make a truck move twice as far in the same amount of time.