By 1995, it'll be evident that the Internet means as little as fax (1998)
web.archive.org
web.archive.org
And you can certainly look at the average comment thread and think, "wow, most people don't have anything to say to each other." The benefit of wider access wasn't realized so directly. But by 2005 what had happened instead was the start of aggregation-as-a-service. Instead of wandering around different people's web sites at random or reading the Usenet firehose, you could read Slashdot, Digg, your RSS feed, your Livejournal, etc. All of these added ways of curating, either through the site's proprietary algorithm, or by simply acting as a slightly smarter bookmark that could track posts-over-time.
That allowed signal-to-noise to increase, which realized a lot of the benefits we take for granted now, but also created the ethical perils of how to do good curation and not get stuck in a spiral of negative engagement.
The prize still isn't in the raw data capacity, but how to get our minds onto the information most useful and relevant to our lives.
"The seductive chaos of the Internet today offers hints at why these agents to come will be so important. Like Alice’s Restaurant, you can get anything you want — but unless you have software help, you might never find what you are looking for."
"It is this avalanche of content that will make context the scarce resource. Consumers will pay serious money for anything that helps them sift and sort and gather the pearls that satisfy their fickle media hungers. The future belongs to neither the conduit or content players, but those who control the filtering, searching and sense-making tools we will rely on to navigate through the banal expanses of cyberspace."
As Joe Weisenthal (co-host of Odd Lots podcast) wrote last year, Krugman wasn't was wrong as most people seem to think:
> So the first part of Krugman’s prediction was obviously, completely, unequivocally wrong. It turns out that people have a lot to say to each other. More than we ever thought. A total zero on that one. Points to the dunkers.
> The more interesting half of the quote though — and the one that the critics mostly remember — is the second part about the impact on the economy being no greater than the fax machine. This one is completely defensible.
> As Skanda Amarnath, head of research at Employ America, wrote to me, what people see as a major economic impact is really the social impact. From a true data impact, Krugman wasn’t wrong. “Productivity growth has been substantially weaker during the age of the internet,” Amarnath wrote. “The same deceleration is visible in terms of both nominal and real investment in software and even the broadest definition of hardware (information processing equipment). There has been some shifting and cannibalization of activity as a result of retail moving to e-commerce channels, and new media dominating advertising services at the expense of old media, but if we’re talking about macro impact beyond substitution, the burden of proof is with those eager to mock Krugman on this point.”
* https://www.bloomberg.com/news/articles/2021-05-24/paul-krug...
As Krugman himself stated in 2018:
> I must have tossed it off quickly (at the time I was mainly focused on the Asian financial crisis!), then later conflated it in my memory with the NYT piece. Anyway, I was clearly trying to be provocative, and got it wrong, which happens to all of us sometimes.
* https://www.snopes.com/fact-check/paul-krugman-internets-eff...
It's been over twenty years since Krugman wrote that article: people need to get over it. It was a throw away article for a now-defunct B-list publication.
People seem to like to dunk on Krugman for this 1998 pop-econ article, but don't bother looking at his academic work. For example this was also published in 1998:
And here's something else that he published in 1998:
> THE LIQUIDITY TRAP-that awkward condition in which monetary policy loses its grip because the nominal interest rate is essentially zero, in which the quantity of money becomes irrelevant because money and bonds are essentially perfect substitutes-played a central role in the early years of macroeconomics as a discipline. […]
* https://www.brookings.edu/bpea-articles/its-baaack-japans-sl...
Which kind of has become important over the last few decades as Japan, and now many other countries (especially post-GFC), have to deal with luke warm growth:
* https://en.wikipedia.org/wiki/Secular_stagnation
I found it really puzzling that someone so educated who seemed more familiar with technology than the average person couldn't see - or more accurately feel - the impact the internet was going to have. The second I went online and tried a random chat website, I knew that what I was witnessing was rudimentary but would become revolutionary, and most people around me felt the same.
Rather, it's creativity and curiosity.
Sci-fi authors could have imagined much more.
People who think "it's just a fad" can't think much beyond what it's being shown there and see what's really going on behind and how this can grow.
In a way, they were not criticizing "the internet". They were criticizing mIRC, or some site best viewed with Netscape 1.0 and thinking that's where it ended. But of course that's where it begins
They did - Hitchhiker's Guide to the Galaxy is basically Wikipedia on a tablet. Well, except that the authors are volunteers, the device can do a lot more, and it doesn't have the calming words on its cover.
Recalling that he used to have trouble with economics exams, he asked to see some of the current papers. Noting them casually, he observed, “These are the same old questions!”
“Yes,” agreed the prof, “we never change the questions.”
“But,” objected the visitor, “don’t you know the students will pass the questions on from class to class?”
“Certainly,” was the bland response. “But in economics we are constantly changing the answers.”
By witnessing a chat website you immediately grasped that the internet (web) is something dynamic, not static.
The economics professor probably had a different perception of the internet at that time, thinking web pages were static documents (in a way similiar to a fax).
Said professor probably saw the internet has more of a fancy distributed library system. Without working with the underlying technology, it can be hard to see how something will flesh out.
Early iterations of tech often sucks. It's easy to dismiss technology that barely works as unlikely to overcome the major hurdles it is encountering. Think: self-driving cars.
Multi core CPUs and speedups in other bottlenecks on the other hand..
However, parallelizing work onto separate cores turned out to continue to extend performance, so it didn't matter so much.
That said, I feel like there were many things that were faster 25 years ago than now, so even multicore hyper-threaded CPU improvements are being chewed up by software doing more. Still, that's a separate issue.
I've also heard non tech people complain about how clear it is that each Windows version is just a shabby coat of paint over the last version and they wish Microsoft would just stop, so I don't think it's just me.
I have to imagine XP would fly on a current machine with multiple gigs of RAM and an SSD.
In 1998 there was 0.25 um, ie 250 nm process, now we have 5 nm process. 50x improvement.
In 1998 processors were ~100MHz, now we have 2-4GHz. 20x-40x improvement.
Modern chips are incredibly faster even on the single core. You couldn’t get anything close to modern smartphone on 1998 technology.
https://www.researchgate.net/profile/Danny-Quah/publication/...
The econonic impact of the internet (aside from how many "industries it trasnformed" and so on) is the mere continuation of the earlier GDP trends.
And if we go back, we see that the real turning point (with which the internet era change can't even compete) was the steam/oil/industrial revolution combo circa 19th century:
https://qph.cf2.quoracdn.net/main-qimg-e8ee3a46d7cd36d4dc451...
Consider discoveries like: steam engine, combustion engine, jet engine, electricity, "the germ theory of disease", vaccines, surgery, x-rays, laser, nuclear power, airplane, car, air conditioning, fridge, digital computer, reinforced concrete, spectometer, synthesizer, transistors, DNA, etc.
Including of course the digital computer, the personal computer, the OS, the command line, the UI, the mouse, the internet, Lisp and Smalltalk.
Here's a take: https://news.uchicago.edu/scientific-progress-slowing-james-...
Here's another: https://docs.google.com/document/d/1cEBsj18Y4NnVx5Qdu43cKEHM...
But the real pulpit imho is having captured the low hanging fruits.
> "You can see the computer age everywhere but in the productivity statistics".
https://en.wikipedia.org/wiki/Productivity_paradox
It always seemed crazy to me, but as far as I'm aware the invention of computers didn't seem to have a noticeable effect on their economic measures of productivity.
———- I don’t believe that phone books, newspapers, magazines, or corner video stores will disappear as computer networks spread. Nor do I think that my telephone will merge with my computer, to become some sort of information appliance.” “I suspect Big Brother won’t have an easy time tracing us. … Our privacy will be protected, as it always has been, by simple obscurity and the high cost of uncovering information about us.” “What will the electronic book look like? Some sort of miniature laptop computer, I’d guess. We’ll download selections and page through them electronically. Try reading electronic books. They’re awful.” “When high-bandwidth links allow every home to access animated, talking, holographic computerized encyclopedias, I can’t help thinking that kids still won’t use ’em.” “Video-on-demand, that killer application of communications, will remain a dream.” “It’s easy to make fancy home pages on the World Wide Web. But jumping from one document to another baffles me even more than watching someone channel surf. I’m never certain of my location in a twisty maze of cross-references.” “Why not send a fax? It’s far more universal than e-mail — we not only find fax machines everywhere, but they can all speak to one another. … I find it easier [than e-mail] to just scribble a note on a plain piece of paper and send it over a fax. Or address an envelope, lick a stamp, and mail the letter
He got that one 100%... Kids still wont touch educational content with a 10-ft pole, much less encyclopedias - unless (a) forced by parents, (b) they belong to the statistically small subset of nerds (I'm one, not meant offensively).
Reminds me of the cheesy William Gibson quote:
The future is already here—It's just not very evenly distributed
Isn't that exactly what happened? And in 2008 the housing bubble collapsed? Or maybe you have a different story about that bit of history.
- Internet won't have a long run impact on economy - NOPE
- IT job growth will slow drastically - NOPE
- US triumphalism will vanish within a few years of 1998 - YEP
- Inflation will go up in 1999 - YEP, but didn't quite hit 3%
- Productivity growth will slow in 1998 - YEP (not a long-run trend, but he was right about 1998)
- Some time in the next 20 years, we'll see another 70s-style supply crunch - NOPE, but pretty close, since it is happening right now; he just missed by a few years
It's especially interesting in that the entire column seems to be a general poo-pooing of economic optimism and expression of his skepticism that anything happening in the 90s will fundamentally change the way the business cycle works. That seems generally in line with the predominant Hacker News zeitgeist - be skeptical of everything, don't buy hype cycles, the future will probably mostly end up being similar to the past. Every now and again, you spectacularly miss some legitimate sea change, but most hype cycles do end up receding.
- End to autocracies and government corruptions as citizens organize in unstoppable ways - Nationalism and cultural conflicts fading away as everyone makes friends around the world and gains mutual understanding - Poor people picking up free education on Internet and entering Middle Class - Free trade among ordinary individuals without intermediaries
Instead sucky governments and mega corporations seem to have gained even more power against ordinary individuals through centralized control of various endpoints (so much for "keeps working in nuclear war" mesh vision) and individuals ignored the wealth of free knowledge available to engage in escapism and bias confirmation.
So I would argue that "for the people" Internet ended up meaning little for society, as opposed to advanced in computing in general and information technology in service of corporations, that did bring about huge economic and practical gains. For example, today's cars are tremendously more safe and efficient compared to what was possible with purely mechanical components. But that is not "Internet" per se.
> No one could have predicted computers would be so small nor so light on power usage for their relative processing power.
He’s predicting the future but assured that technical progress won’t occur in an 8 year timeframe, after watching us go from mainframes to PCs over the previous 30 years.
This is a case of abject stupidity on the part of Krugman.
Just 3 years later, online banking was ubiquitous in 2001 - such that I stood at a conference for retail banking and personally pitched dozens of banking executives on frameworks and white label software they could use to build their own. Meaning that it wasn’t just one-off banks who were doing it, and surely some were doing this in 1998 as well.
Cable modems were becoming common. ADSL was next best thing.
1998 was a year things really exploded. It was part of the tech bubble upswing. I’m confused what would cause someone to think that was the end of history.
He mad a specific statement:
> By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.
Which if you look at the numbers, isn't really wrong:
> As Skanda Amarnath, head of research at Employ America, wrote to me, what people see as a major economic impact is really the social impact. From a true data impact, Krugman wasn’t wrong. “Productivity growth has been substantially weaker during the age of the internet,” Amarnath wrote. “The same deceleration is visible in terms of both nominal and real investment in software and even the broadest definition of hardware (information processing equipment). There has been some shifting and cannibalization of activity as a result of retail moving to e-commerce channels, and new media dominating advertising services at the expense of old media, but if we’re talking about macro impact beyond substitution, the burden of proof is with those eager to mock Krugman on this point.”
* https://www.bloomberg.com/news/articles/2021-05-24/paul-krug...
Where he did get it wrong:
> […] -becomes apparent: most people have nothing to say to each other!
As Krugman himself stated a few years ago:
> I must have tossed it off quickly (at the time I was mainly focused on the Asian financial crisis!), then later conflated it in my memory with the NYT piece. Anyway, I was clearly trying to be provocative, and got it wrong, which happens to all of us sometimes.
* https://www.snopes.com/fact-check/paul-krugman-internets-eff...
It's been over two decades since Krugman wrote that article: get over it.
"The practical misconception here — and it’s a big one — is the notion that we live in an era of wildly irresponsible money printing, with runaway inflation just around the corner. It’s true that the Federal Reserve and other central banks have greatly expanded their balance sheets — but they’ve done that explicitly as a temporary measure in response to economic crisis."
That temporary measure turned out to be not so temporary! And in fact it was only about to accelerate dramatically. And it turns out inflation is still a concern worth taking seriously.
I'm not a Bitcoin person, but even after Bitcoin's current crash, if you had done the opposite of what Krugman suggested in 2013 and bought Bitcoin, your investment would be up well over 20,000%.
https://www.nytimes.com/2013/04/15/opinion/krugman-the-antis...
Actually it was temporary. The Fed bought things up and then stopped, and then started reducing assets:
* https://fred.stlouisfed.org/series/WALCL
And then COVID hit. They're reducing assets now (quantitative tightening). Odd Lots had a recent episode on this, "What the Fed's Big Balance Sheet Unwind Means for Markets":
* https://play.acast.com/s/oddlots/6edf697f-abc7-4960-8060-aed...
* https://podcasts.apple.com/gb/podcast/what-the-feds-big-bala...
Heh, well, he got this one right at least.
How much experience did Krugman have with the fax machine? My dad always used to tell me stories of secretaries "texting" each other all day long.
It's even underestimating the point of comparison.
Faxes were a big deal. Sending paper documents over a phone line? Magic.
I mean, from an economic or productivity perspective, it's not clear to me that the internet does mean more than the fax machine did, especially by the 2005 deadline. The fax machine was world-changing.
It's not that he was wrong, per se, he just appears to have underestimated the human appetite for saying meaningless things to nobody in particular. :P
I would like to see numbers, but I would expect human discussions to be dwarfed by "computer talk" (excluding streaming media, even if I really like cat videos I don't think they should be counted here).
Please do not editorialise titles.
We have the technology _today_ for the average work week to be about 5 hours we just choose not to do this as a society.
In the past, there was a leisure class, and we certainly have the productivity to have one again, but instead we have billionaires and continue to work 40 hours a week.
* https://en.wikipedia.org/wiki/1997_Asian_financial_crisis
* https://en.wikipedia.org/wiki/1998_Russian_financial_crisis
As he himself stated in 2018:
> I must have tossed it off quickly (at the time I was mainly focused on the Asian financial crisis!), then later conflated it in my memory with the NYT piece. Anyway, I was clearly trying to be provocative, and got it wrong, which happens to all of us sometimes.
* https://www.snopes.com/fact-check/paul-krugman-internets-eff...
And here's something else that he published in 1998:
> THE LIQUIDITY TRAP-that awkward condition in which monetary policy loses its grip because the nominal interest rate is essentially zero, in which the quantity of money becomes irrelevant because money and bonds are essentially perfect substitutes-played a central role in the early years of macroeconomics as a discipline. […]
* https://www.brookings.edu/bpea-articles/its-baaack-japans-sl...
Which kind of has become important over the last few decades as Japan, and now many other countries, have to deal with luke warm growth:
* https://en.wikipedia.org/wiki/Secular_stagnation
But as Joe Weisenthal (co-host of Odd Lots podcast) wrote last year, Krugman wasn't was wrong as most people seem to think:
> So the first part of Krugman’s prediction was obviously, completely, unequivocally wrong. It turns out that people have a lot to say to each other. More than we ever thought. A total zero on that one. Points to the dunkers.
> The more interesting half of the quote though — and the one that the critics mostly remember — is the second part about the impact on the economy being no greater than the fax machine. This one is completely defensible.
> As Skanda Amarnath, head of research at Employ America, wrote to me, what people see as a major economic impact is really the social impact. From a true data impact, Krugman wasn’t wrong. “Productivity growth has been substantially weaker during the age of the internet,” Amarnath wrote. “The same deceleration is visible in terms of both nominal and real investment in software and even the broadest definition of hardware (information processing equipment). There has been some shifting and cannibalization of activity as a result of retail moving to e-commerce channels, and new media dominating advertising services at the expense of old media, but if we’re talking about macro impact beyond substitution, the burden of proof is with those eager to mock Krugman on this point.”
* https://www.bloomberg.com/news/articles/2021-05-24/paul-krug...