Friday, September 12, 2014

The New Economy

Here is a little fertilizer robot that scoots around between corn stalks and precisely applies fertilizer. This is a reminder, to me, of how much 21st century economic growth consists of a reduction of consumption.  This robot wastes less fertilizer, creates less chemical run-off, replaces some tractors, allows for more fallow land, etc.

There are milking operations now that basically are robotic.  The cows mosey in when they want to get milked (and have a snack), and robotic milkers take care of business - no farmer required.  When I was a child, dairy farmers had to report to the milk house every 12 hours, rain or shine.

Some of these improvements might be accounted for in lower real costs for the finished goods they contribute to.  But, I am struck by (1) how many improvements in the level of negative externalities, quality, and availability we are seeing in sundry goods and services - from internet-based services and delivery, automation, miniaturization, etc. - many of which must not be captured by our measures of economic growth, and (2) how we may be entering a period of history where economic growth corresponds with less consumption, turning ancient Malthusian inevitabilities on their heads (at least until Robin Hanson's ems start to multiply).

The fetishization of manufacturing labor over service labor is an example of the backward looking nature of our cultural biases.  The transition from manufacture to service is a progressive piece of this movement toward a better world.  The drumbeat of status-knocking dismissals of service work in the guise of altruistic public posturing does not serve this end.  (The portrayal of service workers in television and movies always strikes me as disconnected from reality.  The service workers I meet are generally polite and respectful, whereas their fictional counterparts tend to roll their eyes and chomp on gum.  I suspect there is a bit of projection going on there from the people who write and act in those productions.)  The new, better world our grandchildren will create will be dominated by human-to-human services, probably including the resurgence of positions such as personal servants.  In fact, many goods and services will, in effect, be commercialized status signaling rituals - such as artisanal production, entertainment, grooming and dressing, elective physical therapies, etc.  That's what people do when our basic material needs are met.  Our ethical biases were developed in a world where technological progress tended to take the form of mass production - when economic improvement meant digging more iron out of the ground.  To the extent that we judge these economic tectonic shifts through our 20th century ethical lenses, we are likely getting in the way of the progress of humanity and the earth we live on.  Our grandchildren will care about our distaste of service work about as much as we care about our grandparent's distaste of sexual equality, social media, etc. - that is, not much.  And they will be better for it.


  1. Thgouht-provoking post.

    Imagine Los Angel;es as a smoggy gas chamber---and then imagine the smog reduced by more than 97 percent. Imagine 1 hour commutes--and then imagine 1/2 hour commutes (thanks to a subway system).

    Okay the subway system hasn't done that yet, but the air is generally clean now in L.A. Believe me, in the 1950-60s, you could see the smog hanging in the air, looking across the street. The eyes watered, it hurt to take a deep breath.

    The shorter commutes and clean air are not measured in GDP. I think they show up in house prices--neighborhoods that had faded, like most between downtown and the sea, have revived.

    This is another reason that I think measures of inflation are only big-needle gauges, not digital print-outs of the "truth."

    But, if you want surly service, I can direct you to a few bars in L.A. where the doormen and bartenders will treat you discourteously.

    1. Thanks Benjamin. Your example of Los Angeles opens up a whole can of worms. There is a lot of regulation that some of us rail against, but clearly some regulations, like some of the auto exhaust regulation that helped get rid of smog in LA have had huge benefits. There are clearly areas where public action, done right, serves the greater good. Yet, even concerning those regulations, I would quibble with how they were implemented. But, my quibbles would relate to counterfactuals. In a cost/benefit analysis of the effect of those regulations compared to the status quo, they probably created more benefits than costs. And, those benefits go mostly unaccounted for in our measures of economic activity. So, while poor public policy frequently is difficult to overturn because its costs are hard to account for, by the same token, some positive public policy has benefits that may be difficult to account for.

      Is there any chance that the improved air quality in Los Angeles has been accounted for in hedonic adjustments for housing? If not, then emissions regulations may have been accounted for as housing inflation and as reduced economic activity in health care.

    2. Great question on the hedonics of housing...not sure