Innovation Won't Overcome Stagnation | Hacker News Reader

Innovation Won't Overcome Stagnation

bloomberg.com

10 pointslnguyen11 comments

I have many problems with this analysis, but I'll name the biggest one: the author focuses on increases in value provided, but doesn't consider the cost (for consumers) to obtain that value.

If we receive the same value for lower cost, that's as good as an increase in productivity: I can earn the same money and afford a better living standard. Moreover, this kind of advance benefits the poor disproportionately (relative to the kind the author addresses).

This assumes the poor and middle class don't see a decrease in wages, which just doesn't happen. Wages are a function of supply and demand, and with a larger labor pool, wages go down. A good example is the effect globalization has had on the Midwest[1]. Wages are lower, inequality is higher, and the jobs are being concentrated to cities with a higher cost of living. Historically, a family could live comfortably with a single wage earner in the house. Nowadays that's very tough to do without having an advanced degree.

[1] http://www.epi.org/press/globalization-lowered-wages-america...

> This assumes the poor and middle class don't see a decrease in wages

I disagree. I think it only assumes that relative wages fall less than the relative incremental value of the new tech increases.

> Wages are a function of supply and demand

Yeah, but my point is that wages in isolation don't tell you much. The difficult-to-measure value accessible with those wages matters too.

> A good example is the effect globalization has had on the Midwest[1]

Irrelevant. Globalization need not move in lockstep with new technology.

I don't want to be reductionist, and perhaps my original comment came across as overconfident. My core assertion is that "it's not that simple," which decreases the value of conclusions based on oversimplified analysis. I think the article is oversimplified.

> It's true that many recent innovations have reduced costs. But they've often done so by using lower-quality products or untrained workers, or by extracting revenue from personal assets.

I read biography of Tomas Bata, in industrialist from 1930ties. Growth and innovation used to be about making things cheaper and affordable, while preserving quality. Today it is hard to imagine housing cost should go down, rather than up.

Housing costs are going up because the good jobs are being concentrated to a handful of cities in the country that benefit from globalization. Cheap housing is abundant in rural America, but because the corporations that control our government benefit from a concentrated workforce, they have no reason to invest in rural America.

Housing costs also go up because of the mortgage interest deduction. The home-owning middle class is living in subsidized housing.

Are you saying that the mortgage interest reduction is causing the insane housing costs in the cities? If this were the case, wouldn't we see an equivalent increase in costs in the somewhat rural areas?

As people move away from the midwest, and the midwest economies lag, their housing costs should have cratered. Instead, they had the same 2008-2009 bubble popping everyone else saw, then continued to drift up. Source: bought and sold homes in 3 regions in the last 10 years. Also, you can marinate yourself in the trend lines on trulia.

Not productivity-enhancing: "A driverless or electric automobile is just a new type of car."

Productivity-enhancing: "Word processing software didn't eliminate the need to type out documents but eliminated secretaries and typing pools, leaving individuals to do the task themselves."

Sure, those are totally different.

I guess by the author's logic, there has been stagnation since the the stone age, because cars still use wheels to move stuff. A smart phone is no different than a rotary phone ,because they involve imputing numbers into an interface, etc.

This author seems to be afflicted by a crippling short-sightedness. I stopped reading when I hit the sentence about autonomous cars being "just a new type of car".

Reply on news.ycombinator.com