Hacker News Reader

Comment by oli5679 | Hacker News Reader

Reminds me of the economist Robert Solow's quip:

"You can see the computer age everywhere but in the productivity statistics."

Maybe productivity metrics aren't a perfect measure of society. On many qualitative dimensions we have a much higher quality of living now because of computers: You can talk to anyone almost anywhere in the world for free, instantly. You can recall any information or media instantly. The list goes on..

Continuing the beer theme of my sidethread comment, I read a piece years ago making the point that the then-current explosion of microbreweries looked like a productivity disaster -- microbreweries produce a gallon of beer for a much higher cost than Anheuser-Busch does, so when an economist working with national-level data divides "beer produced in 2011" by "dollars spent producing beer in 2011", it looks like beer productivity has cratered compared to the golden age of the 1950s.

In reality, of course, a can of Budweiser is cheaper than ever (productivity is up) while the populace has become so rich that it's voluntarily spending extra money on what it perceives as higher-quality beer. But there is no conceptual place for this in "beer" productivity statistics.

This is great, it's one of those ideas I'll come back to later and think about again, applying to different stuff.

Economics is such a tragedy, because on the one hand it's so elegant and satisfying, but on the other it seems sufficiently incomplete to be considered broken. Maybe it's the newtonian version of something.

You mean current methods will be replaced by more nuanced and accurate methods. Not that economics will be replaced. That'd be like physics being replaced instead of the methods changing.

Newtonian methods had known flaws before relativity replaced them and quantum mechanics expanded that. Current economic methods also have known flaws. We're just waiting for Einstein.

Correct, of course, and thanks for giving me the wording I'll use instead of mine next time :)

> it's one of those ideas I'll come back to later and think about again, applying to different stuff

The general form of the idea is called Simpson's Paradox - https://en.wikipedia.org/wiki/Simpson%27s_paradox

The application to the beer example is that as high-cost beers displace low-cost beers from the market, the cost-per-beer-sold rises even as the price of low-cost beer and the price of high-cost beer are both falling.

> Economics is such a tragedy, because on the one hand it's so elegant and satisfying, but on the other it seems sufficiently incomplete to be considered broken.

The study of economics is as much a framework for asking questions as it is for answering them. National-level economic systems are inherently to complicated to do meaningful experiments on, so we don't get to use the tools we normally do to find our way. Economics isn't broken, but the view of economics as a sister to physics is.

I was being generous hoping it's on a similar path to physics, because even in earlier stages physics produced something other than fascinating thought experiments and directly conflicting advice.

Is it better for the economy for people to buy coffee from Starbucks or from 7-11? One is much cheaper and frees up money to be spent on other things.

> One is much cheaper and frees up money to be spent on other things.

The "other things" that people would spend on are just other vehicles for acquiring utility. If the customer enjoys the better coffee enough to justify the higher cost, then spending on that is exactly in line with "better for the economy".

Thats because Utility is a very hard thing to measure, being so subjective and individual.

This is a good comment. It is interesting to consider how much rhetoric there is about robots and AI and Machine Learning and how these technologies can revolutionize work and lead to big productivity gains. And yet, in reality, the economy shows no sign of this. Productivity growth was very strong in the mid-20th century, but since 1973 productivity growth has been stagnant.

Because all the competitors are doing it, too.

This is nonsense. The inflation-adjusted cost of producing one can of beer would be a pretty standard measure of productivity (in the beer industry). It can rise and fall completely independently of whether beer companies all use the same strategies or all use unique strategies.

I don't know much about the subject. How do we measure productivity? What units do we use?

I ask because it _feels_ like everything has changed since 1973 at least. So I'm curious where my intuition differs from reality.

> How do we measure productivity?

Productivity as typically reported is a statistic called "Total Factor Productivity" (TFP).

Here's how it's calculated: https://en.wikipedia.org/wiki/Total_factor_productivity#Calc...

> What units do we use?

TFP is unitless.

Call centers, accounting, and help desk and other things that used to take a small army are now a subscription service for far less money. The “efficiency” rating is probably wrong if it doesn’t think that’s increased efficiency.

Productivity has been stagnant, or productivity growth has been stagnant?

Constant productivity growth is a terrible argument that computers haven't contributed to productivity. No single innovation, however broadly defined, will produce constant growth. As one source of growth peters out, another one picks up.

AI and Machine Learning are newer, and probably have plenty of productivity gains to point to, but the thing that comes to mind for me is the amount of CAD and computer analysis that goes into our products these days. You can make a car that lasts twice as long and is more aerodynamic. Musk's rockets use computers for design and algorithms to land. The down stream effect is new satellites with more bandwidth (e.g. Iridium).

In the end, a designer can make a product people get more use out of.

> Productivity growth was very strong in the mid-20th century, but since 1973 productivity growth has been stagnant.

That's not true; the first decade of the 2000s rivaled the post-war era in terms of TFP growth:

https://www.bls.gov/lpc/nfbbar.gif

Even Brynjolfsson's ultimate thesis was not that "computers don't induce growth in TFP", but rather that "computers and business practices need to converge in order for computers to have an effect on TFP".

Reminds me of this article:

Google and Facebook contribute zero economic value. That's a big problem for trade.

https://www.washingtonpost.com/news/innovations/wp/2016/10/2...

Really, 0 economic value. Nobody gets anything of value from using those services, its just wasted time.

The linked article is about how despite those services obviously having value to their users, they aren't accounted for in economic statistics, e.g. in measuring productivity, because they are "free" (i.e. paid for by subjecting oneself to advertising/tracking).

I am suspect of this being true because GDP is measured in several ways, and you can measure the contribution of tech companies through their salaries and profits or through their expenditures and sales to ads. (i.e. their contribution to GDPcan be measured in their revenue)

But this is also a red-herring, its at most an accounting issue, not a real economy issue.

Changes in GDP are caused either by debt or by productivity increases. Productivity growth since 1973 has _not_ been stagnant.

Labor productivity since 1973 has been much lower than in the decades before 1973:

https://qz.com/633080/the-rise-and-fall-of-american-producti...

And yet, secretaries have been replaced by e-mail and calendars, human computers have been replaced by Excel, and armies of bean-counters have been replaced by business CMS systems that cost one fifth as much to maintain. People who used to do those jobs are now making lattes and avocado toast.

This is nonsense because anyone can see that the technology facilitated outsourcing and offshoring and logistics. The productivity that should have been in the old industrial heartlands happened - it just happened in China instead.

What magical new inventions is he thinking we should produce?

There’s plenty of demand for healthcare services and infra, but no social will to force the political will to fund it

Everyone has an opinion about how the rest of the world isn’t doing what they think it should, given some high level abstract view

Few offer concrete ideas

Reply on news.ycombinator.com