Money & Politics with Jim Pethokoukis
Episode 8: Erik Brynjolfsson

Guest: Erik Brynjolfsson, director of MIT’s Center for Digital Business at the Sloan School of Management.
Dec 22, 2012
Direct Link to MP3 File

On this week’s Ricochet Money & Politics Podcast, Jim’s guest is Erik Brynjolfsson, director of MIT’s Center for Digital Business at the Sloan School of Management. 

Brynjolfsson is also co-author, along with Andrew McAfee, of Race Against the Machine:  How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy. The 60-page ebook explores the apparent disconnect between a) rising innovation and productivity, and b) weak job and income growth.

The Financial Times called Race Against the Machine “compelling for its claim to explain two crumbling economic laws: the first that growth will create jobs; the second that rising wages will follow rising productivity. The authors think this stems from the erosion of a third pattern – that technology creates at least as many jobs as it destroys. Many intuitively doubt this idea, as the looms long ago smashed by Ned Ludd attest.”

But Brynjolfsson argues Moore’s Law means technology is advancing faster than humans can adjust, at least for now.

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  1. Frank Soto
    C

    I’m sorry, I’m unimpressed by references to innovations that aren’t available in the market either because they aren’t useful (a computer that can beat people at jeopardy) or because they aren’t ready or don’t add real value to our productivity  (self driving cars).

    I’m tired of us bragging about innovations that are happening in labs.  If it isn’t in the market, I don’t want to hear about it.

  2. Barkha Herman

    The self driving car is on the roads, and much of the delay is legislative.  See here.

    The importance of the computer that beats everyone in jeopardy is the machine learning ability.  This is the same stuff that prevents spam in you inbox; so not entirely theoretic / in the lab…

  3. Reckless Endangerment

    That was great. Maybe get cowen and/or Charles Murray on next time to offer their takes since there is no serious discussion on this topic occurring on the left.

  4. Frank Soto
    C
    Barkha Herman: The self driving car is on the roads, and much of the delay is legislative.  See here.

    The importance of the computer that beats everyone in jeopardy is the machine learning ability.  This is the same stuff that prevents spam in you inbox; so not entirely theoretic / in the lab…

    It’s actual value cannot be determined until it is in the market place.  Once upon a time we bragged about things we had accomplished.  Thing who’s value could be ascertained in certain terms.  Now, every news story about technology is about some break through that we maybe possibly could see at some point down the road.

    I think we overstate our genius at every turn.  I’d like to see us using much more tangible measurements of our progress than looking at the cool stuff people in universities are working on, many of which will never see the light of day in the free market.

  5. GadgetGal
    Frank Soto

    Maybe you are not seeing the value because you are not looking in the new marketplaces….for example, Kickstarter, or outlets for the makers movement (e.g., Arduino).   Productivity gains can arise from the accretion of small innovations as well as those of larger disruptive technologies such as driver-less cars.   Think of all the development going on in the mobile device world.

  6. skoook

    This Podcast is a thought starter. Iam a Geezer, if you’re reading this deciding whether to listen, I highly recommend it, FWIW.

    Upon reflection I am choosing my to disengage my political prism . How ever Frank Soto’s arguments resonate with me.

    The top  USA 1% , garners 70% of the income, 60% of the income growth, 50% of rest of us  are experiencing a slash in income back to pre 90′s level. The wealth re-distribution opportunity of a lifetime. 

    Our children should all be looking over their shoulder at the machines coming for their job. Growth of the unemployable, inevitable.

    Question to Jim are the measureables that comprise the GDP  acceptably defined, and do they represent the reality of the digital world ?

    Ah the prescience of Mark Steyn.

  7. Leslie Watkins

    I had the same experience at the DMV the last time I renewed my driver’s license. Very easy. But is my better experience an objective measure of productivity? I doubt the overall cost of operating the DMV is any less than it was way back when going to the DMV was purgatorious, so how does my more pleasurable experience become a calculable measure of productivity? I probably just don’t understand the economic context.

  8. Chris Campion

    The DMV might be considered more productive if those same people who’ve been working the windows for decades aren’t still there once automatic renewals, online renewals, etc., become part of the picture.  The fact is, even increased efficiencies in the public sector does not translate to reduced operational costs.  See any public-sector budget (more or less) for the last 40 years. 

    Brynjolfsson didn’t discuss income mobility, just percentages within the demographics.  The mix of incomes will always be changing.  But if you want to see how people are doing, measure how many of them are moving from one earnings bracket to another. 

    Why is it assumed that we want a re-distributive role for government?  Why is it assumed that putting assets in the hands of the 50% or so that pay no net income taxes will suddenly grant them the wisdom to invest their capital wisely, as one large homogenous group?  If anything, the data says otherwise.  It’s more than just income transfer, it’s culture, families, and responsibility – something gov’t is better at teaching people they don’t need rather than the other way around.

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