Winning the Stagnant Future

I’m tempted to do a serious review of Tyler’s book, but I’m happy to outsource most of my comments to Arnold Kling. Instead, I’ll just make one brief point about the validity of the various numbers used to justify claims of stagnation or non-stagnation.

All of the numbers in play are fundamentally non-economic. Whether we’re talking about growth in measured productivity or median family income, all of the numbers used are calculated by taking some P and multiplying it by some Q. These are modes of accounting, not of doing economic analysis.

What we really want is something that captures changes in total surplus (or utility) per capita: indifference analysis. A basic question that can start off the discussion is the one I asked on Twitter yesterday:

What multiple of your lifetime income would someone have to offer to get you to agree to have been born 20 years earlier?

If you take the 20th root of that multiple and subtract one, you have an estimate of the annual growth rate of your personal economy. If you don’t have a fancy calculator handy, Wolfram Alpha is your friend.

My sense is that Tyler’s multiple is embarrassingly high (it is, after all, the Age of the Infovore). Mine is high too.

If Tyler wants to defend the stagnation hypothesis against this line of reasoning, he has two choices. First, he can say that the multiple would be even higher for earlier 20-year periods. I doubt that he would say this for himself.

Second, he can claim (correctly) that he is not the typical person. The masses are not infovores. But granting that this is the case, it’s difficult to imagine what sort of improvements could be made, even in theory, that would elicit for them the kind of welfare explosion experienced by infovores in recent decades. What do non-infovores want?

The fact is that in wealthy Western countries we’ve hit pretty severe margins of diminishing utility in terms of what we can offer non-infovores, at least those who have not recently come upon some hardship. You can say bigger houses and more leisure, but all I hear, with only slight exaggeration, is “more Muzak and potatoes.”

Tyler makes many good points, but once you accept that for many people (infovores) welfare is surging and for most others (non-infovores) it has comparatively nowhere to go, then it’s hard to call that exactly stagnation. Indeed, you could argue that we have already won the future.

11 replies to “Winning the Stagnant Future

  1. Adam

    I don’t know that your willingness to live in the past is so contingent on your being an “infovore”. It gets back to Kling’s example of the car, and what happens when it breaks down, etc. There are a lot of individually small ways that life is better than it was that add up to a huge difference in quality of life, beyond how into the internet/information/tech you are.

  2. Eli Post author

    Adam, I think that’s true, but it still is the case that the super-high multiples are going to be among infovores, and also the rate of increase for multiples of subsequent 20-year periods is going to be higher for infovores.

  3. Adam

    But also for people hugely into video games, or (possibly) photography–unless you put those in the infovore category; I think there are a lot of people who have passions that make them a lot better off today.

  4. Eli Post author

    Fair enough, but the point is still that there’s a group whose welfare is really surging and there’s another group who is nearly sated.

  5. Indy

    Implicit in your analysis is the idea that the welfare explosion for inforvores will continue. But what if the phenomenon of the utility explosion of infovores is reaching maturity and coming to an end? Or perhaps you could say that, as with material satiation, the internet is quickly getting to the point where it more that saturates the human capacity for info-utility of an increasing fraction of infovore types. Then by, say, 2035 the 20-year question could indeed have low-or-zero growth.

    Now maybe reaching the human limits of satisfaction and info-utility is indeed a Utopian vision of a future won. But then we are indeed at a kind of stagnation that doesn’t generate any more real growth. If the promises we have made (and upon which people, infovores and others, rely) depend absolutely on real growth that may not (maybe can not) arrive, we’ve got problems.

  6. Eli Post author

    Indy, I think that we have not remotely scratched the surface of what is possible in terms of iterating on the internet. That said, at *some point* the issue you raise could come into play. Tyler’s book gives us some good reasons to stop making promises that we have no idea if we’ll be able to keep.

    For now, I think the biggest threat to the government’s finances is political, not economic.

  7. Indy

    “I think that we have not remotely scratched the surface of what is possible in terms of iterating on the internet.”

    What makes you think that?

  8. Eli Post author

    That’s a whole post in itself, but I’d start with the fact that for the most part our use of the internet is still intentional. I think there are lots of ways that new appliances and interfaces will make internet use ubiquitous and transparent.

  9. Indy

    I very much look forward to that post. I have my own skeptical position, but I’m open minded about it and perfectly willing to be convinced. My thinking is that while some technological developments may be perfectly possible they can still hit the wall of a human’s biological capacity for utility.

    As a brief example – our visual system only has a certain resolution and frame-rate. We can already make the picture elements much smaller, and refresh them much faster, than the we can appreciate. It took decades to get here from Farnsworth, but we’re here (or nearly here – it’s closer to us than it is to 2031). The additional utility, for most people, of going from CGA to VGA to WSVGA to HD-1080 was fairly good, but having seen a display model of an attempt at about double that resolution, I can tell you that to my eyes it’s practically indistinguishable. End of utility. It costs extra to make, but why would I pay extra to get it? I wouldn’t – I’m only human.

  10. Pingback: Will the Infovore Utility Explosion Continue? // Eli Dourado

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