I have a hard time believing this thesis that modern technology doesn't help productivity. Think about CRM software. Could you imagine having to go through hundreds of filing cabinets and massive systems just to get information about a customer? What about 100 SDRs doing this at the same time, every day? How about trying to meet with someone on the other side of the country? Or having to hire hundreds of assembly line workers to do the job of a single robot?
No, we are more productive than ever before. But the BENEFITS from these enormously productive technologies only seem to go to the richest of the rich, which is why we live in one of the most unequal times since the gilded age. I hate this term but I honestly think it's just "FUD" put out by these uber-rich people, this sentiment of "oh the economy isn't becoming more productive". It is most definitely becoming more productive, but the only benefit Joe Average sees from that is slightly lower consumer prices (which of course is offset by skyrocketing asset prices).
IIRC the only way society got out of this gini-out-of-the-bottle situation last time was through multiple cataclysmic wars, a great depression, and trust busting, so I'd be lying if I said I wasn't concerned.
> Think about CRM software. Could you imagine having to go through hundreds of filing cabinets and massive systems just to get information about a customer?
A Rolodex used to be enough.
Advancement replacing it with "hundreds of filing cabinets" should tell you something.
Act 2.0 was the desktop version of CRM. and alot of old systems had built in customer databases. had contact info in them. and zoom is cool but phones work in a lot of cases.
If your team was sitting at desks on a fast network, Act! probably obtained 80% of the productivity benefit of the best available, most expensive CRM available today. Or maybe even better than that; because (again assuming a fast network locally) it could be operated with keystrokes quite a lot faster than many of today’s CRM system.
I worked in a place where we had phone, email, and FAX (!) integration set up also. A rep could be on a phone they didn't dial, configuring a quote for what their contact asked for, click a button and it emailed or faxed to the contact. Over 20 years ago.
> Advancement replacing it with "hundreds of filing cabinets" should tell you something.
A rolodex was enough because that's all that could be managed by an individual. If the number of names needed by a person grew past the size of a rolodex, they were simply out of luck because no system existed that would allow them to efficiently handle that much data. That's my takeaway at least.
> A rolodex was enough because that's all that could be managed by an individual. If the number of names needed by a person grew past the size of a rolodex, they were simply out of luck because no system existed that would allow them to efficiently handle that much data. That's my takeaway at least.
Yes, absolutely true.
Given "hundreds of filing cabinets" though, how many of those leads can or will even be contacted in the salesperson/company's lifetime? How many leads will themselves have died before you even get to their number?
It's "advancement" only in the sense that we've made hoarding more efficient (which is a technical achievement in itself).
specifically they said since 2004 productivity increases were only 1% per year. cloud computing/saas probably adds to productivity but not as much as converting from files to desktop computer systems.
I'm not sure how they're measuring productivity. From my own experience as a software developer, I've seen how software makes individuals more productive. But the end result of this productivity is not 2x as much output overall but 0.5x as many people to achieve the same level of productivity. We're decreasing costs but maybe the market doesn't need 2x or 5x more productivity. There just isn't that kind of demand anywhere -- especially with fewer people working.
"Productivity" means "amount of input required to get a given output." I think you might be thinking of "productivity" as a synonym for "output".
Usually in economics the input is labor hours, but for example "energy intensity" is the productivity of how much energy a process uses. In the macroeconomic case it's GDP divided by total energy used, but some industries are more energy intensive than others -- they have lower productivity from their energy use.
Thus 2X the output and same output with 1/2 the people are identical: both describe doubling productivity.
> "Productivity" means "amount of input required to get a given output." I think you might be thinking of "productivity" as a synonym for "output".
Okay but surely we're only talking about average productivity with some assumptions on the approximate employment rate and hours worked per week. No one is going to be impressed by a "5% increase in productivity" next year if unemployment rises to 99%, the 1% of remaining workers only work 10 hours per week, but the average hour yields 5% higher output than the previous year.
> Okay but surely we're only talking about average productivity with some assumptions on the approximate employment rate and hours worked per week.
No. Productivity is simply output divided by some input factor. Employment rate, hours worked per week, wage: none are involved in that calculation (unless you're measuring productivity of the wage, i.e. COGS).
> No one is going to be impressed by a "5% increase in productivity" next year if unemployment rises to 99%, the 1% of remaining workers only work 10 hours per week, but the average hour yields 5% higher output than the previous year.
On the contrary, investors and managers will be very impressed by that.
> On the contrary, investors and managers will be very impressed by that.
No, they won't. You're free to propose any definitions of "productivity" you like, but this particular proposal doesn't remotely match what anyone will ever be talking about in discussions about productivity in the economy.
Indeed I propose the standard definition of productivity used in economics departments, business schools, and thousands of textbooks, news articles and the like, including those written by people, like Brynjolfsson, quoted in the article.
Seems a lot easier to refer to papers, statistics and the like when you use the same terminology everyone else does.
But how is this productivity measured across an entire country? How does unemployment factor in? If I'm making the workers twice as effective but we then lay off 50% of the workforce -- how does that factor in?
> But how is this productivity measured across an entire country?
On a total GDP basis it would be GDP divided by labor hours, no more no less. A national economy is complex, and especially one like the US or Europe, in which a lot of financial services are involved. So typically it is done on a sector basis (labor force productivity in steelmaking or construction, or mining, or office work).
Sometimes it's quite tricky: when the "output" of a given person goes up a lot it could lead to a different product (e.g. when the spreadsheet meant one person could do financial analysis that had previously required multiple people and a lot of time, it didn't mean less time doing analysis but instead significantly more sophisticated analysis in the same time, with the objective (at least) of finding better deals or avoiding worse ones).
> How does unemployment factor in?
It doesn't. It's simply output divided by input. Don't mix the two.
The same output with half the people means a doubling in productivity for that activity. What happens to the other half of people? Orthodox economics says they find some other job, perhaps a more productive one or more likely less so. Pragmatics says some never work again, some find a (often but not always) better job.
That's harsh, but the "lump of labor" fallacy is indeed a fallacy.
I think the non-super rich see a lot of advantages from the modern economy. As an example, just yesterday, I was picking up an order at Walmart. The guy who brought the bags to my car had Airpods in. The existence of Airpods (and phones, Internet, Bluetooth, streaming services, etc) may not have made this guy more productive, but it probably improves his life somewhat.
It’s that people working boring or unpleasant jobs can have an audio environment of their choice. Music, podcasts, audiobooks.
This wasn’t possible when it required a huge device, but AirPods are so unobtrusive and socially acceptable that workers can wear them without it attracting undue attention.
Pranksters on YouTube use it for the same reason; people are used to seeing it and don’t associate it with receiving voice instructions.
One significant thing here: this is a piece of technology which no one in the entire world, at any level of wealth, had a couple decades ago. But today a person in a relatively low-ranked job carrying orders out at Walmart... casually has this technology for fun.
This does not measure as a productivity improvement, but it’s pretty great.
Most non-positional goods are like this. You getting Airpods doesn't make mine any worse. Statistically, you getting Airpods makes mine better, because it increases the chances of there being more content I like.
It sounds plausible: all the benefits have gone to the rich. So, I set out to see what a world would be like if we "redistributed" all those "benefits". So, simply take the entire wealth of every billionaire in the US and divide it by the number of citizens and number of years required to acquire that wealth. It's a relatively simply equation:
Billionaire wealth / Citizens / 30 Years = Yearly Redistribution
4T / 300 M/ 30 = 500$ per year (not exactly life changing wealth)
So, if you stole every last dollar from every last billionaire in the US and redistributed it for the last 30 years, each person would only get 500$ per year.
I have a different theorey. The US and other developed countries have been loosing ever greater amounts of wealth. Wealth per capita has decreased dramatically over the last 50 years. The causes are too numerous to go into, but there are MANY.
At the end of the day, humans want simple solutions to simple problems and the "wealth going to the top" theorey is super easy to understand and super easy to solve. There's only one problem: it's not true. it's debunked now. The real problem of decreasing wealth is much harder to solve and has many causes
> So, if you stole every last dollar from every last billionaire in the US and redistributed it for the last 30 years, each person would only get 500$ per year.
Loaded use of the world “stole” there.
This is a faulty analysis. It’s well studied and well known, for example, that the top 10% of people income wise have ~70% of the wealth in the US. Similar patterns exist globally. This has been reproduced many ways by many people and squarely contradicts your calculation.
"stole" or redistribute. the math works out the same in the end. the reason I used "stole" is because if you "redistribute" every ounce of someone's wealth, I imagine you might get some push back.
You can re-apply this formula to various top N% but you get similar numbers: both for income redistribution and wealth redistribution.
The reason all those articles of top 10% have 70% of the wealth seem so impressive is not because the top 10% have so much, it's because the rest of the 90% has so little. and so even a modest amount in the top 10% is much greater than the tiny bit the bottom 90 has.
Let’s frame it differently. If you redistributed all wealth from just the top 1% today to all us citizens, each person would get 40T / 300M = $133K, which would make a real (and massive) difference in most people’s lives. Redistribute the top 10%, and everyone gets $320k in savings. This would be an average of 30x more savings for the bottom half than they’d have otherwise.
The biggest problem with your calculation is the arbitrary line of billionaires, which leaves out all the millionaires. The top 1% have wealth exceeding 40T, while the bottom 50% have sum total wealth less than the 4T you used for billionaires.
Another problem is dividing by 30, that’s not well justified. Half of all us wealth was gained in the last 10 years. Your calculation implicitly assumes you would redistribute slowly, but since you’re using a hypothetical, why would you do that? Why not redistribute all of it today and see if the sum is meaningful? It doesn’t make sense to redistribute slowly, regardless of how long it took to accumulate.
A third problem is leaving out income from the summary, since wealth is savings and the lower class has little. You conclude that $500/year sounds small but glossed over the fact that it represent savings not income, and that it would add up to a lot even in your setup.
Ok, if you disagree with the number 30 as the number of years needed to acquire that wealth, just use yearly income figures.
Assuming 60K is the average.
So, top 10% at 173K means 113K more than the median houshold. 113/10 = 11.3K extra. So, redistributing top 10% would mean 11.3K extra for 60K average. It's something but not life changing. Considering that more than 70% of million dollar lotto winner loses almost everything within a few years, I'd say an additional 11K wouldn't help people a huge amount.
And, you have to remember, this is an excerise for learning how much wealth is distributed per capita in the top. if you actually instituted anything close to these policies, total, average wages would decrease dramatically as the reduced incentive to earn more prevents people from earning more.
I don’t blame you for it, this misleading headline has been widely reported over and over again. (But please consider not repeating this false information anymore.)
The primary study that lead to this conclusion is a study of Florida lottery winners of amounts less than $150K. The actual result of the study showed bankruptcy rates falling initially, and then rising again after several years, as people ran out of their winnings. The rates returning to normal was reported as people losing everything, which is clearly misleading spin.
>The US and other developed countries have been loosing ever greater amounts of wealth. Wealth per capita has decreased dramatically over the last 50 years. The causes are too numerous to go into, but there are MANY.
Don't leave us hanging throw8383833jj, where did the wealth go?
The biggest drop in wealth is Shelter and Medical. 50 years ago land was much cheaper. A 300K house (non-land cost) costs 310K (maybe 10k for the land). Whereas today, in states where much job creation happens (i won't name names), a 300K house costs 600K or more. You could say, the previous land owner made all that money and it's true. But, it's just a one time wealth transfer from the latest generation to previous generations of land owners. The problem is, going forward from here, there are no more winners in this game. By, charging vast amounts of money for land that should cost very little, we're simply depriving human being of wealth. Even CA, has more acres than people and yet, even in the country side where there is miles of empty land in every direction, we see houses huddled together, a mere few feet apart like some kind of nazi concentration camp. going forward, this is a game with no winners. the wealth is simply denied. conversely, by denying ourselves this wealth, we can create the wealth out of thin air by allowing the land to be developed OR simply by moving jobs (where jobs go, people follow) to areas where there is sufficient developable land (politically achievable).
Also, there's a huge laundry list of regulation, and zoning that impact numerous industries like housing and transportation that make these things more expensive than they need to be and pass those costs onto consumers.
Just for comparison, i once, calculated that in my area, it takes roughly 80,000 man hours to afford the cheapest house in my suburban neighborhood in the bay area. And yet, in thailand (Jon Jai a humble farmer with no education and no construction training and youtuber), has demonstrated that he could build a modest home with just 200 man hours! He'll tell you, that despite the fact that he lives in country where economists say his per capita income is more than 20 tiems lower than US, he's easily able to afford a house, 1 acre of land and enough food for his family of six and only works 15 min a day (2 months full time out of the year). too much to explain here, but you can visit his channel on youtube for details. I was blown away. and of course, he has the freedom to do so, because less regulations and zoning to get in the way. Sure, he doesn't have many gadgets or cars and even a rice cooker would be hard to acquire but he has the essentials of life: shelter, food and water in abundance: and that's what freedom is largely about.
Agree! That’s super interesting. I’ve longed for a life that is much less coupled to work. Thinking about the US, it is somewhat ironic that many US residents think of themselves as self-reliant yet end up inadvertently supporting systems that undermine true autonomy.
The challenge with shelter is that it is fundamentally a positional good. Everyone wants to be within the x% most convenient, which is say, desirable, places to live. So as there are more and more people with more money to chase those limited "slots", they get more expensive. Making everyone worse off.
The solution is to massively build many more new good places to live; but there are also enormous forces against that.
Space is not just space. Space has qualities such as non humid climates, near mountains, beaches, access to potable water, and of course, political considerations.
Also, people like more space than less space so incumbents will fight against others coming in, unless the others are bringing benefits such as money or labor for the incumbents.
When I read “Everyone” in your post, bells went off on my head. It’s too broad a statement. You could offer me a 2M home in the Bay Area, and I’d auction it off to charity. A 5M condo in Manhattan and I’d do the same. You can only say there are enough people with enough money and determination to bid up property in certain areas. Two very wealthy people bidding on one property can take it to astronomical levels, but they are not “everyone”. There are more people who want to live in the Bay Area than there is affordable housing. The number of people who want to live in the Bay Area, though, is a fairly small percentage of the US population (ignoring the homeless who seem to love the Pacific Coast).
Most places in the US are already “good” places to live, if you come with the right attitude, e.g. immigrants looking for a better life. After WWII, GIs dispersed themselves all over the country. They had seen (sometimes too much of) the world, and were open to, and happy with, anyplace in the US that gave them a job, a house and an ability to raise a family. They knew how bad it could be and counted on being able to improve wherever they moved to in the US. And they mostly did, thanks to a solid economy, a stable political system and pure moxie. Same with non-wealthy foreign immigrants. Making the most of what you have generally leads to a pretty nice life anywhere in the US. Even Canada :-).
Internal mobility in the US has been on the decline in recent years, perhaps a sort of generational timidity combined with familial inertia has led to certain highly-populated areas experiencing irrationally high housing costs.
If all you want is a shack on some land you own, you could do that for much less than 80,000 man hours. Land in NE Arizona sells for a few hundred dollars an acre. There's no zoning and very little in the way of regulation.
Stole is pretty loaded language. Also where are you pulling the number 30 from? Seems arbitrary to me. 500 per year for every man women and child for 30 years is a lot of money. That would be equivalent to a one time payment of $60,000 dollars to every family of 4. Sounds like a lot of money to me.
30 is my estimation as to the number of years it takes for the average billionaire to achieve their wealth. most billionaires are pretty old, so I'd say 30 is conservative.
so, 2K per family/year in a country where the median houshold income is 60K, that's about 3.3% of their income.
It’s irrelevant how long it took to accumulate. If you’re hypothetically redistributing wealth, then the hypothetical side assumption should be that it took the same amount of time to accumulate the “redistributed” wealth. You should be comparing saved wealth in the real world to saved wealth in the hypothetical world, not using a strange misleading wealth per year metric.
>I have a different theorey. The US and other developed countries have been loosing ever greater amounts of wealth. Wealth per capita has decreased dramatically over the last 50 years. The causes are too numerous to go into, but there are MANY.
I find this hypothesis very intriguing. I too have found it troubling that the narrative against billionaires doesn't quite seem to line up with the envelope math. That said, I wonder about the optimal parameters of the inevitable pareto distribution of wealth. I think the effect on money velocity and total wealth generation among other things is worth considering. In history, it does seem generally like conditions have been good when inequality is relatively low. (At least within a window of time next to that time.)
However, I'm really hoping you could elaborate more on what you're calling an apparent loss of wealth since I'm very much curious.
What information is that conclusion based on?
Without delving into a description that is TOO laborious, could you give a 100,000ft summary or list of things you think that have contributed to that or where you think the wealth has gone?
as a starting point for figuring out the drop in wealth, I think we should calculate things in terms of number of man hours worked to achieve a given objective: shelter, food, water. Using dollars and CPI numbers is fraught with problems due to problems in their methodologies, which are quite numerous.
The most important aspects of wealth are the basic needs of human beings: shelter, food, water and by extension transportation (because it's required to earn "money"), healthcare (because if you have an accident they can come after your shelter), and education (because it's a requirement for earning money").
Now we have a framework for identifying drops in wealth.
I think the biggest drops in wealth have occurred in shelter, medical and a little bit in transportation. if you dive into those with the methodology of number of man hours worked to achieve them, you'll see what i'm talking about. Sometimes it's not obvious. Cost per mile in transportation can decrease (progress) and you can still get a decrease in wealth, if for instance the average commute distance increases faster than the drop in cost per mile. Just an example, of where increasing capabilities over time, don't necessarily translate to greater wealth. Generally speaking don't just calculate the increase in capability/man hour but also the amount of capability required to achieve the objective.
Growing Govt:
over the last 100 years we've seen countries grow govt spend as percent of GDP from low single digits to 40 to 50%. You may be in favor of all this spending but I strongly suspect that the total amount you get back from govt, is less than what went in. example: "this is especially apparent when someone needs to pay 5K for a lawyer, just to apply for medicaid." alot of wealth can be lost in this way. solution: society needs much more efficient means of wealth transfer mechanisms.
Hypothesis:
exponential Growing human population on a finite planet with finite resources (finite amount of developal land), ore, oil, commodities, will lead to or has led to decreases in wealth which show up as paying more and more for things.
> I think the biggest drops in wealth have occurred in shelter, medical and a little bit in transportation.
But my conclusion is very different: shelter, healthcare and transport have not evaporated. If anything, we are more capable of treating people than before. We have the internet now, we should be able to educate more people.
The problem is that the cost of those things has increased significantly in the last 80 years, but salaries have stagnated. A diabetic teacher could buy a house and afford insulin on a single salary, now they barely can afford the later while they live with their parents, because they can't even rent.
As to why things are more expensive now... well I think the answer is that the difference is going to a small group of extremely rich individuals. Insurance and hospital owners in the case of healthcare, University owners on education. And lawyers in all layers.
The cost of transportation is a bit more complex. It is a finite world, yes. But we'll run of nice weather to plant crops before we run out of oil.
a.) A tiny number of billionaires have reorganized society in ways that cause benefits to accrue to themselves.
b.) The net size of those benefits, distributed equally over all people, is tiny.
All this means is that people are being used in absurdly inefficient ways, because that benefits whoever is in charge.
For example, plantations are arguably like this. They are less productive, per acre, than smallholdings. But they scale: A single owner can make the plantation arbitrarily large. "Who cares if the country grows half as much per acre as it could, if I get to control 10x the acres? That's still 5x the wealth for me!"
Surely we in software, home of the Mythical Man Month, know all about this? It doesn't matter if the microserfs are less productive, if you can have all of them to yourself.
I'm reality it would be even less than that since the wealth of most billionaires is in the form of speculative wealth such as company stock. If tomorrow everyones wealth was liquidated through a magical oracle that could know the true economic value of any given asset you'd find there would be a lot less billionaires in the world
"True economic value" will vary depending on how much the owner discounts future vs present value produced by the asset (e.g. dividends or imputed rent)
It's not that I advocate for wealth redistribution, quite the opposite in fact. But I certainly wish that these leaders would just, y'know, RAISE WAGES. Rent is skyrocketing, housing is skyrocketing, medical expenses are skyrocketing, car prices are skyrocketing, and after 40 years of this, it's finally just now that wages are starting to catch up a tiny bit. Meanwhile, CEO pay has risen >30% since the pandemic alone: https://www.forbes.com/sites/annefield/2022/05/23/ceo-worker...
Right, rising wages is what most people demand of politicians.
But, there's two ways to get more of what you want:
1) rising wages
2) lowering costs.
#1 -> it would be nice but you can only squeeze so much blood from a turnip.
#2 has gotten far too little attention and has a lot of potential to do good, if we start pursuing it in a way that increases overall prosperity, not decreasing propsperity
I don't know if raising wages alone will help. Increased wages will just make cost of production more expensive and raise prices or allow landlords to charge more for rent. What's more important is solving housing, transportation, and healthcare issues so people can satisfy those needs cheaply. Build more houses, improve urban planning and public transit, and create national healthcare.
It'd be a lot more effective to redistribute that wealth, first, not over 30 years, and second, not to 100% of the population, but to the bottom income brackets, so the smallest quintile or even decile. So a one-time payout to the bottom 10% would be $150,000. For 20% or 30% of the population, that kind of money could absolutely and instantly lift them out of poverty.
Moreover, you needn't take every last cent from these billionaires. Just leave them with a mere $100 million each and they still have more money than they could reasonably spend in a lifetime.
Seems immoral to give it to the bottom 10% of people in the US, who are relatively wealthy compared to the rest of the world. Why not give $15,000 each to the 300 million poorest people in the world, or $5000 to the 1 billion poorest?
I see this come up as a gotcha every time redistribution of wealth is ever discussed, but surprisingly the left can be just a nationally minded as anyone else.
I’d be concerned with involving those people in the calculation when we’re under the same political body. As long as we’re in separate nation states that’s kind of an in house issue they need to decide on how they want to deal with it
But the billionaires in USA are international, they "stole" wealth from workers all over the world, your solution to give that to Americans still results in those workers having their labour stolen by Americans. Constantly stealing labour from workers all over the world and giving it to American workers seems just as unethical as giving it to American billionaires, both situations results in a small number of people hording all the wealth.
And then if you distribute it fairly among all the workers who actually did the work to amass that wealth, then there is very little left per worker. And you do it so the poorer gets more since they got less initially, then the American workers wont get a single cent since they are all rich and most of the labour is done in China and India.
Almost any redistribution scheme you come up with is going to look unfair from some perspective. I shy away from "immoral" because that's just a triggering word. What we're really trying to decide are the terms of the social contract, and despite my libertarian past, I am now 100% on board with introducing a personal wealth cap significantly under $1 billion. No person could really spend that much money in day-to-day meatspace activities in a lifetime; it can only be hoarded, squandered, and splurged on flamboyant things, none of which I think we should allow until we get out of climate crisis mode.
The gap between the richest and the poorest is probably the largest ever, but today people are also living far more comfortably than ever: electricity, heated water, food and water at a press of a button, generally good transportation to pretty much everywhere.
What is lacking, for the less privileged, is mostly lack of access to affordable housing and a bad diet (arguably this is mostly due to the enticing nature of fast food and lack of education about how bad it is). Other than that the basic life necessities don't differ too wildly for the rich and the everyone who is not homeless.
I believe it needs to also be said that bad diet is a side effect of everyone trying to produce with cheaper and cheaper materials. I shudder to think what kinds of ingredients are some of the foods I see in cheaper shops made from.
This is not sustainable. It cannot last for that much longer IMO. Literally and metaphorically, people are getting sick of it. They notice. They are not dumb. They might be in denial (people just LOVE their chips and cola for some reason) but they are not dumb.
I see more and more people in my neighborhood going to the local market and negotiating with vendors coming straight from agrarian villages for a "monthly subscription" of sorts -- you bring me one huge basket with fruits and veggies every weekend, I pay you, say, $200 a month. The vendor gets a stable income, you get actual bio food and don't have to pick and choose every tomato and parsley leaf every damn time. The vendors have a vested interest not to cheat their most stable and profitable customers.
Sadly all these societal changes are glacially slow, giving the opportunists plenty of breathing room to swindle people and get rich for decades but oh well, until we develop collective consciousness it seems that this won't ever change... :|
I think it's a little to easy to overlook the abject poverty which still exists in this country. More than two million Americans lack access to clean water or sanitation. I personally know millennials who didn't have hot water in their house growing up. They would heat water on the stove for baths, at least when their utilities were turned on. There exist towns where literal sewage is running out of people's houses in areas where kids play. Hookworm for example is still rampant in parts of the US. Half of our rivers and streams and one third of our lakes are too polluted to swim or fish in, much less drink from. 99% of households having a refrigerator doesn't mean these folk are living comfortably.
Because software cannot produce resources just because it exists. Productivity refers to being able to actually manufacture more widgets and things like food, roads.
Yes technology has made things cheaper. By moving things across the globe and creating a complex supply chain that can produce more goods for less energy and raw material input.
But the per Capita availability of energy and minerals is a fundamental bottleneck that things like CRM software can only go so far in helping.
The article talks about software that allows a call center employee to handle more customers better. This is great but how does something like this help society produce more heating and food which are currently in short supply ? It makes the company more profit and saves customers some money. But if they try to actually get more food it will cause inflation.
I would highly encourage people to read the work of Vaclav Smil. In the grand scheme of things iPhones are irrelevant.
Half the world depends on natural gas and ammonia fertilizer so they don't starve to death. We are living through the consequences of this as we speak.
Software simply isn't on the scale of things like coal, oil, natural gas, electricity or even washing machines.
Computers might be more like the printing press. Perhaps centuries from now we can look back and say what innovations came about due to multi century second order and third order effects.
We in the industry have become lost in the world of bits and "productivity" in producing TikToks and targetting ads for mobile games doesn't help as much as we think towards supply. These are fundamentally ways of aggregating and coordinating demand.
The problem is now on the supply side. We need software that runs on robots eliminating workers and working 24x7 doing things like mining, agriculture and warehouses.
We also need eliminate middle men and deliver directly to the consumer.
Beyond that we need fundamentally new energy sources. Software can help here but increasing digitization mainly creates fat middlemen who don't add as much productivity into the world as they take.
Hence I think Chinas new approach to tech regulatuion that curtails middleman platforms and encourages startups on the supply side makes a lot of sense.
Of course regular people are seeing benefits to increased productivity. The question is whether these benefits are really benefits at all. The average adult spends over 12 hours a day consuming media [1]. It's worth noting that much of this is passive consumption like radio in the background, but active consumption is undeniably increasing as well, most notably smartphone usage. I think the problem is that the more optimized our society becomes, the less true the economic assumption of rational human behavior becomes. Google Maps, for example, saves me time looking at maps rather than doing browsing Hackernews. However, when I think about it rationally, I was no less happy spending a few minutes planning my route before a trip instead of browsing HN during that same time.
“”””But the BENEFITS from these enormously productive technologies only seem to go to the richest of the rich””””
You misunderstand how labor productivity is calculated. It’s simply the the total amount of wealth generated by a worker per hour. So for instance, a worker at a McDonalds restaurant generates $150 in wealth per hour, and gets paid $12 per hour on average.
Total wealth is created by productivity and is then divided between labor and capital. Where labor unions are strong, more of the total wealth goes to labor, and where labor unions are weak, more of the total wealth goes to capital.
It’s the total wealth per hour that has seen slow growth in recent decades.
If you doubt how much computers destroy productivity, then simply visit a hospital and you can see it with your own eyes. My mom was recently in the hospital so I got to see this myself. Mistake after mistake because of bad information either put into the computer, or codes being misinterpreted.
In the old days, an army of secretaries kept the world in order. Despite your intuitions, they did in fact have ways of quickly finding one file out of millions of files. And secretaries offered a flexibility that we’ve lost with computers.
It is the loss of flexibility that causes computers to damage productivity.
> Mistake after mistake because of bad information either put into the computer, or codes being misinterpreted.
To note, in the olden days, mistakes written in your record or misinterpretations (e.g.took the wrong record from the cabinet) would just have been a fact of life and nobody might even notice. Ms Wilson and Ms Wiston just shouldn't have been in the same hospital at the same time.
As you say everything was more flexible, more fuzzy. If you wanted the world to look orderly you'd quickly sweap under the rug the misaligned bits or disappear what you don't want there.
This is also why you use cash and paper register if you need your restaurant's finances to look pristine on paper while still racking in money that doesn't need to be accounted.
> If you doubt how much computers destroy productivity, then simply visit a hospital and you can see it with your own eyes. My mom was recently in the hospital so I got to see this myself. Mistake after mistake because of bad information either put into the computer, or codes being misinterpreted.
I would argue this isn’t necessarily because of computers but a byproduct of an antiquated system and process being codified into a computer. The reason for this seems to be that there are structural inefficiencies built into our healthcare system that create a ton of added complexity that is near impossible to unwind because of legal (contractual and privacy-related) risks. For example, any attempts at improving efficiency in patient care creates potential liabilities for medical professionals. People are scared to innovate in this space, so the programs are just digital translations of an existing process. This requires a time investment to learn the “new way” of doing the same thing, and builds inherit laziness because steps are still require that should have been automated away. Medical notes are a good example of this; it’s required to be documented in an extremely specific way and of a certain length because of insurance so it just ends up being copy and pasted, free text, by the physician to meet this requirement.
> I have a hard time believing this thesis that modern technology doesn't help productivity.
See Solow paradox:
> The productivity paradox, also referred to as the Solow paradox, could refer either to the slowdown in productivity growth in the United States in the 1970s and 1980s despite rapid development in the field of information technology (IT) over the same period, or to the slowdown in productivity growth in the United States and developed countries from the 2000s to 2020s; sometimes the newer slowdown is referred to as the productivity slowdown, the productivity puzzle, or the productivity paradox 2.0. The 1970s to 1980s productivity paradox inspired many research efforts at explaining the slowdown, only for the paradox to disappear with renewed productivity growth in the developed countries in the 1990s. However, issues raised by those research efforts remain important in the study of productivity growth in general, and became important again when productivity growth slowed around the world again from the 2000s to the present day.
>Could you imagine having to go through hundreds of filing cabinets and massive systems just to get information about a customer?
Yes, things are much faster now. But having to manually scan an entire office of files sequentially was never a thing.
The files were alphabetized, indexed, collated. Clerks knew what they were doing.
In digging through my home state of Indiana's Marriage records, they had an ingenious system that did a fair bit of error correction and sped up retrieval of information by orders of magnitude. This system goes back to the 1800s, consists of an index, and sequentially recorded Marriage Licenses, bound in the same book. Entries were indexed by both the groom and brides last name, which meant in most cases, you could recover from a single error. Worst case, you had to scan that one book for the County, for that year, or fraction thereof. If you knew the date, that made it much faster as well.
The answer is probably: to competition. If one company got CRM, wow, huge productivity boost! They would sell so much more per unit of salesperson labor input.
But it's a competitive world, so a lot of companies get CRM. The additional sales productivity gets competed back out; perhaps with the recipients of sales efforts (who now have a large increase in the amount of incoming contacts) losing/wasting as much productivity in aggregate as the companies using the software have gained.
The same dynamic applies to many other areas. Not to all areas of course; there are also real massive, long term benefits to productivity. Famously it used to take over half of all human effort just to keep us fed. It doesn’t anymore.
Medical record digitization seems to have had a neutral-to-negative impact on hospital efficiency. It's hard to believe since the alternative sounds mind-numbingly inefficient but there are tons of low-tech streamlined processes (like having a whiteboard in each patient's room) which are being undermined by having a constellation of disconnected staff all dumping information into Epic and not having time to read other entries.
I was rather disappointed in Lohr (author of this piece) as he is smart and was around in the 1990s for Solow’s famous quip “We see the computer age everywhere except in the productivity statistics”.
In the age of the desktop computer the iPhone would have been a flop (especially in the US’s then-backwards wireless environment). It takes time for people to understand a new capability and for it to reach the point where it’s worth ditching current practice. My aging parents still like to have a meeting (with their lawyer for example) that could have been a phone call or even email; they still visit the bank in person etc. I can’t be bothered with any of that.
The call center makes a good example: I have seen a company that uses machine learning to make the outbound call: it can wait patiently on hold and even do some transactions with the human in the call center. Things like that don’t show up in the stats yet; the real change will be replacing most of the call center ppl with an API, and with the humans there to handle the really hard problems.
The call center seems to be like the standard MBA case of a cost center to optimize but where efficiency is only half correlated with positive customer experience. I mean if you can route people to the right place, and get peoples questions answered quickly it's great, but that leaves a long tail of people in the nightmare situation of digging through phone trees, dealing with untrained staff, or having someone try to cut a call short rather than give you the best experience.
My dentist has a PBX setup so that when you call and you don't get anyone or leave a voicemail, you get a link in a SMS with a link to schedule a call back.
The only real advance for the customer (if you don't count voiceprint authentication, natural language IVR, agents having all your customer details ready as the call connects saving lots of tedious dictation).
On the business side, you have real-time load metrics to feed your automatic workforce management, rerouting of calls based on staffing and load, highly accurate transcription and sentiment analysis that's always on (even when you think you're on hold, always mute your phone), the accessibility of enterprise-grade contact centres to SMB, and about a dozen other things that weren't possible 20 years ago.
Recently, with my husband's work, I saw three one-hour meetings turn into over 200 emails because someone doing the work refused to get on the phone and misunderstood the written word.
I am skeptical that email is that much more productive for many people.
For sure! I’m definitely hoping to see more workers and employees used to short conference calls while growing up on Skype and Discord. So perhaps as the new generations come into the workforce we’ll see it much more. Definitely seems like I’m much more efficient with my peers while discussing stuff over voice than text.
Although I've been using networked email as a primary communications channel for my entire computing life (since ~1978), I did work for a couple of large companies before it was widely adopted and you simply cannot imagine the amount of infrastructure required to produce and move physical paper documents around, not to mention disseminating mass communications. Moving that all online was a massive improvement, even with its drawbacks.
Now it's been ubiquitous for a while, people now try to deal with the drawbacks.
The cliche of 'started in the mailroom' is expired by now but it was there for a reason. Businesses had a whole division whose job was to collect, shuffle, and deliver manila envelopes. Someone would come around with a push cart and drop them in the inbox.
Working in the mailroom was an entry-level, menial job, but one which rewarded intelligence and afforded a unique view into the function of the company.
Depends on the context. Just yesterday, I called the city parking, because I had made a payment the previous day, but I never received confirmation. After the separate ten minute queues just to be hung up on really frustrated me. I sent a short email to an email address I could find, and they fixed my issue within two hours of sending it.
Email has its place for lower priority communication where fast response and interaction is not important.
Text chat is good for interaction but it can bog down with a lot of back and forth and sometimes the meaning is hard to get across. The latency while better than email is still slow and people will often not ask questions that they should.
When those channels are not enough I'll initiate a quick voice/video call with one or a few people to go over a specific topic. Generally we can clarify the situation through some quick questions and answers. The latency is low and answers often invoke other questions. You can usually reach an agreement very quickly that way.
I would think globalization and the shift from manufacturing to services is like a slow tax on productivity. so for every increase in productivity at some office there's a huge negative productivity impact when a factory moves overseas.
After a certain threshold, it is clear that human behavior exhibits many types of compensations, risk compensation as one, but I’m sure (from my personal experience) that there is productivity compensation.
Analysis done over the last century across many countries show that everyone is working fewer hours per year as we transition from an agricultural to a knowledge based economy; this likely means that people want to relax and that new productivity gains will be compensated by fewer working hours and more relaxation.
Because it is the wrong technology. Take project managent Saas for example. Every single one of them don't focus on the big picture. Not a single one tries to make users effective instead of efficient.
I am actually writing a book about this - and my thesis is "software literacy". Software is a form of literacy and people need to a) be literate b) have tools and permissions and culture to allow people to basically code their own solutions.
Most large companies have a sort of process-killing-glass-ceiling where only excel spreadsheets can pass through.
There is an infamous anecdote from the turn/mid of the 20th century:
People believed that innovations in vacuum cleaners, washing machines, etc would cause people to have more leisure time because of how much time it saved in cleaning.
But it didn't happen. Why?
Because people's expectations for hygiene and cleanliness went up. And as it became easier to clean houses and clothes, people were more comfortable with having larger houses, and more clothes.
Technology innovation is much the same way. As capabilities increase so do expectations. And the "economy" is all about expectations and aspirations.
Exactly. We have a lot more free time, we've just raised our leisure standards (dining out more frequently, traveling more) and come up with more forms of entertainment (social media, streaming platforms, gaming). That this sounds to most of us like a wasted opportunity might be because these things are not very fulfilling, or it might just be the hedonic treadmill.
I'm not sure this is true. There are accounts of incredible waste and normalized, office-wide work-dodging-while-pretending-to-work in the earliest years of the post-war white-collar office. They read like they could have been written yesterday, with a few of the details changed.
It could be that as more people moved into white-collar work, though, the fraction of the population experiencing and participating in that kind of thing has gone up.
I mean, technology making us more productive seems obviously true on it's face, so what gives?
--> Productivity, which is defined as the value of goods and services produced per hour of work.
Seems like an interesting measure. So as companies become more efficient and the cost of goods goes down, so does productivity. So you might be able to argue we were more probably productive per unit of work building mainframes than we are building iphones.
Because nobody wants to make themselves or their friends obsolete. In fact, technical debt is a feature, not a bug. Invent a highly functional, durable tool: nobody will buy anything related to it from you again.
Generally, this seems to be rather asyncronous in large companies / "enterprises". I've seen entire departments that are not doing anything relevant. In less severe cases, there are still mostly a few people that do a lot of work, and many that are doing very little. Sort of like the pareto principle of productivity.
1. Technology is making us more productive! Way, way more productive. More or less all of the gains are captured by tech companies who make the technology.
2. Technology is not necessarily adopted for productivity. It is often adopted to facilitate legibility into the day to day activity of the organization. This is often at the expense of productivity! Moreover, this is often acceptable to management!
Why Isn't _every_ new tech making us productive. Some definitely are, diff tracking like github, any comms software, accounting software etc do make us a lot more productive.
Have a look at our GDP per capita graph and tell me again we're not more productive. We're working less and less and making more and more. Some of it is commercial and social innovation, but a lot is technology as well.
I work as a specific type of tech consultant to medium-sized companies, and it's wondrous to behold how easy we can make many aspects of business. Critical functions that took multiple handshakes, paper mail, multiple mistakes, and at least a week now take pre-arranged agreements, API's, and they happen in maybe two seconds, almost always perfectly, and before anybody even realizes.
I've pre-selected a few lines because the problem is supposed to exist on the data of rich countries. You can deselect them at the blue bar at the top of the page (it's not obvious).
I couldn't cut the data in any way that showed the issue ever existed. There is an half decade long decrease on the wealth of the poorer countries but nothing else on this graph.
Anyway, "productivity" isn't GDP per capta. It's close to the GDP divided by the total worked hours. The fact that the GDP per capta is increasing (I didn't expect this) really puts the productivity problem in an entirely new light.
The graph looks linear. If productivity gains were increasing (or even staying constant), you'd expect it to be more than linear. This implies the rate of productivity change is decreasing.
Hum, ok, you expect an exponential growth in productivity. Any reason why?
Anyway, talk about an underspecified issue. The article simply has no claim at all of how they expect productivity to behave, just that it's not following the expectation.
The one productivity problem I'm aware about is about it not growing at all for decades, just moving on a noisy horizontal. It's relevant that the GDP per capita follows a different curve. That means that people are working more and adding less value by work-hour.
I don’t have an expectation. The article is essentially asking why is the second derivative of productivity negative despite increased technological advancement. I’m just pointing out that your graph shows that the second derivative of productivity is indeed negative.
I guess we're really talking about the first derivative of PRODUCTIVITY_GROWTH in the formula GDP/CAP(t) = GDP/CAP(t-1) * (1 + PRODUCTIVITY_GROWTH(t)).
That graph on my comment is the rate of change of productivity (on a relative base, so it's not a derivative, a derivative would be a small bit biased lower). It's what you are calling PRODUCTIVITY_GROWTH. (I didn't find one with the raw productivity.)
You can see directly on the graph that it stays for some times dancing around 0. Most of the times it's higher, but the times with a near 0 average are quite long. If you "integrate" it over the exponentials, you will get some times of approximately linear growth, separated by times of almost no growth. Those times of almost no growth are what people normally talk about when they talk about productivity stagnation. One of those was at the 80s when the computers were taking over offices, another one is quite recent, after the 2008 crisis.
Anyway, the GDP per capita graph is very different.
Productivity is poorly defined and basically impossible to measure. So when discussing it forget any facts and just accept that you will have to talk about it like you do art...
I'd look at huge building projects and millions of resulting apartments that were built but now had no buyers and were sat empty on some zombie bank's balance sheet. And I would not know whether they were worth sticker price (and China was very productive) or nothing (and China was very unproductive) or anywhere in between.
I'd look at FoxConn with >350000 workers making some of the worlds most popular and profitable consumer electronics, but then I'd see they only make 3.6% profit in a country with >3.7% risk free rate of return and think: they're wasting their time and would be better being liquidated.
It's almost as if big chunks of China are run to keep people busy and employed and meet arbitrary central targets and not to make things people want at a price they will pay...
Actually understanding what productive means, and how to measure it is really really hard. And at every step companies and governments have all sorts of perverse incentives to disguise it.
> I'd look at huge building projects and millions of resulting apartments that were built but now had no buyers and were sat empty on some zombie bank's balance sheet. And I would not know whether they were worth sticker price (and China was very productive) or nothing (and China was very unproductive) or anywhere in between.
That's just being confused by propaganda. If you look back at all of the Chinese ghost city stories and note the names, virtually all of those cities are full and productive now. I always thought the stories were a line to make excuses for US lack of investment in infrastructure.
Then why is my attendence still required for 8 hours a day, in a field where working 4-6 hours would not significantly decrease my overall productivity, but increase my well-being and capability to build something on my own.
The limiting factor for productivity in the knowledge economy (or any work requiring creativity) hasn't been time for a while, why do we insist on keeping it where it has been since the tail end of the industrial revolution (or slightly earlier / later, depending on where you are).
Because nobody wants to be "the idiot who pays for innovation from which all our competitors will also benefit". It's like the arms race that the countries all over the world do; you might swear to everything that's holy you're peaceful but you don't know if your neighbor is an a-hole so you arm yourself just in case.
The amount of handy scripts and clever engineering solutions I've come up with in personal and freelance projects beats any salaried work creativity by 10x, if not 50x even. Regularly.
But after 20 years in the profession I learned not to offer these solutions in my regular work. The other programmers will mercilessly rip apart any of your ideas and will ask for literally every other way for you to do it and not the one you suggested. Nevermind that it's none of their damned business how I deliver the end result (I mean if it does NOT involve code to maintain in the future -- obviously).
It's weird. Guess we have some very common and stereotypical weaknesses?
But whatever the case, I gradually learned to keep my mouth shut and get the job done by any means necessary.
It's better to ask for an apology than for permission, I have found empirically.
We are more productive. We are doing more with less people. It doesn’t seem like we are more productive because most people are overworked which creates an illusion of unproductivity. Most of those jobs that were lost in 2008-2009 were never replaced, everyone left just had to pick up the slack which tech helped facilitate
The other aspect is that a lot of our tech is vapid entertainment. As buzz aldrin said, “They promised me mars colonies. All we got was Facebook” or something along those lines.
I think somehow people have managed to conflate higher productivity with better quality of life. There's no such connection imo. The quality of life of a lot of people might have decreased, and because they mentally have a connection between productivity (of the country) vs their own quality of life, they feel that productivity increasing not leading to their own quality of life increasing, is a bad sign.
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[ 2.6 ms ] story [ 327 ms ] threadNo, we are more productive than ever before. But the BENEFITS from these enormously productive technologies only seem to go to the richest of the rich, which is why we live in one of the most unequal times since the gilded age. I hate this term but I honestly think it's just "FUD" put out by these uber-rich people, this sentiment of "oh the economy isn't becoming more productive". It is most definitely becoming more productive, but the only benefit Joe Average sees from that is slightly lower consumer prices (which of course is offset by skyrocketing asset prices).
IIRC the only way society got out of this gini-out-of-the-bottle situation last time was through multiple cataclysmic wars, a great depression, and trust busting, so I'd be lying if I said I wasn't concerned.
A Rolodex used to be enough.
Advancement replacing it with "hundreds of filing cabinets" should tell you something.
I worked in a place where we had phone, email, and FAX (!) integration set up also. A rep could be on a phone they didn't dial, configuring a quote for what their contact asked for, click a button and it emailed or faxed to the contact. Over 20 years ago.
A rolodex was enough because that's all that could be managed by an individual. If the number of names needed by a person grew past the size of a rolodex, they were simply out of luck because no system existed that would allow them to efficiently handle that much data. That's my takeaway at least.
Yes, absolutely true.
Given "hundreds of filing cabinets" though, how many of those leads can or will even be contacted in the salesperson/company's lifetime? How many leads will themselves have died before you even get to their number?
It's "advancement" only in the sense that we've made hoarding more efficient (which is a technical achievement in itself).
that's why you also have software to do it more efficiently - may be even automated ways of contacting the lead. AKA, spam.
But it does increase sales.
Usually in economics the input is labor hours, but for example "energy intensity" is the productivity of how much energy a process uses. In the macroeconomic case it's GDP divided by total energy used, but some industries are more energy intensive than others -- they have lower productivity from their energy use.
Thus 2X the output and same output with 1/2 the people are identical: both describe doubling productivity.
Okay but surely we're only talking about average productivity with some assumptions on the approximate employment rate and hours worked per week. No one is going to be impressed by a "5% increase in productivity" next year if unemployment rises to 99%, the 1% of remaining workers only work 10 hours per week, but the average hour yields 5% higher output than the previous year.
No. Productivity is simply output divided by some input factor. Employment rate, hours worked per week, wage: none are involved in that calculation (unless you're measuring productivity of the wage, i.e. COGS).
> No one is going to be impressed by a "5% increase in productivity" next year if unemployment rises to 99%, the 1% of remaining workers only work 10 hours per week, but the average hour yields 5% higher output than the previous year.
On the contrary, investors and managers will be very impressed by that.
No, they won't. You're free to propose any definitions of "productivity" you like, but this particular proposal doesn't remotely match what anyone will ever be talking about in discussions about productivity in the economy.
Seems a lot easier to refer to papers, statistics and the like when you use the same terminology everyone else does.
I've made many jobs disappear.
On a total GDP basis it would be GDP divided by labor hours, no more no less. A national economy is complex, and especially one like the US or Europe, in which a lot of financial services are involved. So typically it is done on a sector basis (labor force productivity in steelmaking or construction, or mining, or office work).
Sometimes it's quite tricky: when the "output" of a given person goes up a lot it could lead to a different product (e.g. when the spreadsheet meant one person could do financial analysis that had previously required multiple people and a lot of time, it didn't mean less time doing analysis but instead significantly more sophisticated analysis in the same time, with the objective (at least) of finding better deals or avoiding worse ones).
> How does unemployment factor in?
It doesn't. It's simply output divided by input. Don't mix the two.
The same output with half the people means a doubling in productivity for that activity. What happens to the other half of people? Orthodox economics says they find some other job, perhaps a more productive one or more likely less so. Pragmatics says some never work again, some find a (often but not always) better job.
That's harsh, but the "lump of labor" fallacy is indeed a fallacy.
This wasn’t possible when it required a huge device, but AirPods are so unobtrusive and socially acceptable that workers can wear them without it attracting undue attention.
Pranksters on YouTube use it for the same reason; people are used to seeing it and don’t associate it with receiving voice instructions.
This does not measure as a productivity improvement, but it’s pretty great.
Most non-positional goods are like this. You getting Airpods doesn't make mine any worse. Statistically, you getting Airpods makes mine better, because it increases the chances of there being more content I like.
It’s not immediately clear what Salesforce adds that literally couldn’t be done with 1995 tech.
Billionaire wealth / Citizens / 30 Years = Yearly Redistribution
4T / 300 M/ 30 = 500$ per year (not exactly life changing wealth)
So, if you stole every last dollar from every last billionaire in the US and redistributed it for the last 30 years, each person would only get 500$ per year.
I have a different theorey. The US and other developed countries have been loosing ever greater amounts of wealth. Wealth per capita has decreased dramatically over the last 50 years. The causes are too numerous to go into, but there are MANY.
*https://ips-dc.org/u-s-billionaire-wealth-surges-past-1-tril...
At the end of the day, humans want simple solutions to simple problems and the "wealth going to the top" theorey is super easy to understand and super easy to solve. There's only one problem: it's not true. it's debunked now. The real problem of decreasing wealth is much harder to solve and has many causes
Loaded use of the world “stole” there.
This is a faulty analysis. It’s well studied and well known, for example, that the top 10% of people income wise have ~70% of the wealth in the US. Similar patterns exist globally. This has been reproduced many ways by many people and squarely contradicts your calculation.
You can re-apply this formula to various top N% but you get similar numbers: both for income redistribution and wealth redistribution.
The reason all those articles of top 10% have 70% of the wealth seem so impressive is not because the top 10% have so much, it's because the rest of the 90% has so little. and so even a modest amount in the top 10% is much greater than the tiny bit the bottom 90 has.
The biggest problem with your calculation is the arbitrary line of billionaires, which leaves out all the millionaires. The top 1% have wealth exceeding 40T, while the bottom 50% have sum total wealth less than the 4T you used for billionaires.
Another problem is dividing by 30, that’s not well justified. Half of all us wealth was gained in the last 10 years. Your calculation implicitly assumes you would redistribute slowly, but since you’re using a hypothetical, why would you do that? Why not redistribute all of it today and see if the sum is meaningful? It doesn’t make sense to redistribute slowly, regardless of how long it took to accumulate.
A third problem is leaving out income from the summary, since wealth is savings and the lower class has little. You conclude that $500/year sounds small but glossed over the fact that it represent savings not income, and that it would add up to a lot even in your setup.
Assuming 60K is the average. So, top 10% at 173K means 113K more than the median houshold. 113/10 = 11.3K extra. So, redistributing top 10% would mean 11.3K extra for 60K average. It's something but not life changing. Considering that more than 70% of million dollar lotto winner loses almost everything within a few years, I'd say an additional 11K wouldn't help people a huge amount.
And, you have to remember, this is an excerise for learning how much wealth is distributed per capita in the top. if you actually instituted anything close to these policies, total, average wages would decrease dramatically as the reduced incentive to earn more prevents people from earning more.
That’s the threshold income of the top 10%, not the average. The average is much higher.
You’re insisting the spread out wealth is small in the face of evidence that it’s large, larger than your summary even by your own analysis.
> Considering that more than 70% of million dollar lotto winner loses almost everything within a few years
This is yet another faulty analysis, and the 70% number and “million dollar” part are viral misquotes, they are wrong. https://www.nefe.org/news/2018/01/research-statistic-on-fina...
I don’t blame you for it, this misleading headline has been widely reported over and over again. (But please consider not repeating this false information anymore.)
The primary study that lead to this conclusion is a study of Florida lottery winners of amounts less than $150K. The actual result of the study showed bankruptcy rates falling initially, and then rising again after several years, as people ran out of their winnings. The rates returning to normal was reported as people losing everything, which is clearly misleading spin.
https://eml.berkeley.edu/~cle/laborlunch/hoekstra.pdf
Don't leave us hanging throw8383833jj, where did the wealth go?
Also, there's a huge laundry list of regulation, and zoning that impact numerous industries like housing and transportation that make these things more expensive than they need to be and pass those costs onto consumers.
Just for comparison, i once, calculated that in my area, it takes roughly 80,000 man hours to afford the cheapest house in my suburban neighborhood in the bay area. And yet, in thailand (Jon Jai a humble farmer with no education and no construction training and youtuber), has demonstrated that he could build a modest home with just 200 man hours! He'll tell you, that despite the fact that he lives in country where economists say his per capita income is more than 20 tiems lower than US, he's easily able to afford a house, 1 acre of land and enough food for his family of six and only works 15 min a day (2 months full time out of the year). too much to explain here, but you can visit his channel on youtube for details. I was blown away. and of course, he has the freedom to do so, because less regulations and zoning to get in the way. Sure, he doesn't have many gadgets or cars and even a rice cooker would be hard to acquire but he has the essentials of life: shelter, food and water in abundance: and that's what freedom is largely about.
The solution is to massively build many more new good places to live; but there are also enormous forces against that.
People underestimate the positive impact of this solution.
It's not like we don't have the space. All that's lacking is the will.
Also, people like more space than less space so incumbents will fight against others coming in, unless the others are bringing benefits such as money or labor for the incumbents.
Most places in the US are already “good” places to live, if you come with the right attitude, e.g. immigrants looking for a better life. After WWII, GIs dispersed themselves all over the country. They had seen (sometimes too much of) the world, and were open to, and happy with, anyplace in the US that gave them a job, a house and an ability to raise a family. They knew how bad it could be and counted on being able to improve wherever they moved to in the US. And they mostly did, thanks to a solid economy, a stable political system and pure moxie. Same with non-wealthy foreign immigrants. Making the most of what you have generally leads to a pretty nice life anywhere in the US. Even Canada :-).
Internal mobility in the US has been on the decline in recent years, perhaps a sort of generational timidity combined with familial inertia has led to certain highly-populated areas experiencing irrationally high housing costs.
so, 2K per family/year in a country where the median houshold income is 60K, that's about 3.3% of their income.
I find this hypothesis very intriguing. I too have found it troubling that the narrative against billionaires doesn't quite seem to line up with the envelope math. That said, I wonder about the optimal parameters of the inevitable pareto distribution of wealth. I think the effect on money velocity and total wealth generation among other things is worth considering. In history, it does seem generally like conditions have been good when inequality is relatively low. (At least within a window of time next to that time.)
However, I'm really hoping you could elaborate more on what you're calling an apparent loss of wealth since I'm very much curious.
What information is that conclusion based on?
Without delving into a description that is TOO laborious, could you give a 100,000ft summary or list of things you think that have contributed to that or where you think the wealth has gone?
The most important aspects of wealth are the basic needs of human beings: shelter, food, water and by extension transportation (because it's required to earn "money"), healthcare (because if you have an accident they can come after your shelter), and education (because it's a requirement for earning money").
Now we have a framework for identifying drops in wealth.
I think the biggest drops in wealth have occurred in shelter, medical and a little bit in transportation. if you dive into those with the methodology of number of man hours worked to achieve them, you'll see what i'm talking about. Sometimes it's not obvious. Cost per mile in transportation can decrease (progress) and you can still get a decrease in wealth, if for instance the average commute distance increases faster than the drop in cost per mile. Just an example, of where increasing capabilities over time, don't necessarily translate to greater wealth. Generally speaking don't just calculate the increase in capability/man hour but also the amount of capability required to achieve the objective.
Growing Govt: over the last 100 years we've seen countries grow govt spend as percent of GDP from low single digits to 40 to 50%. You may be in favor of all this spending but I strongly suspect that the total amount you get back from govt, is less than what went in. example: "this is especially apparent when someone needs to pay 5K for a lawyer, just to apply for medicaid." alot of wealth can be lost in this way. solution: society needs much more efficient means of wealth transfer mechanisms.
Hypothesis: exponential Growing human population on a finite planet with finite resources (finite amount of developal land), ore, oil, commodities, will lead to or has led to decreases in wealth which show up as paying more and more for things.
> I think the biggest drops in wealth have occurred in shelter, medical and a little bit in transportation.
But my conclusion is very different: shelter, healthcare and transport have not evaporated. If anything, we are more capable of treating people than before. We have the internet now, we should be able to educate more people.
The problem is that the cost of those things has increased significantly in the last 80 years, but salaries have stagnated. A diabetic teacher could buy a house and afford insulin on a single salary, now they barely can afford the later while they live with their parents, because they can't even rent.
As to why things are more expensive now... well I think the answer is that the difference is going to a small group of extremely rich individuals. Insurance and hospital owners in the case of healthcare, University owners on education. And lawyers in all layers.
The cost of transportation is a bit more complex. It is a finite world, yes. But we'll run of nice weather to plant crops before we run out of oil.
a.) A tiny number of billionaires have reorganized society in ways that cause benefits to accrue to themselves.
b.) The net size of those benefits, distributed equally over all people, is tiny.
All this means is that people are being used in absurdly inefficient ways, because that benefits whoever is in charge.
For example, plantations are arguably like this. They are less productive, per acre, than smallholdings. But they scale: A single owner can make the plantation arbitrarily large. "Who cares if the country grows half as much per acre as it could, if I get to control 10x the acres? That's still 5x the wealth for me!"
Surely we in software, home of the Mythical Man Month, know all about this? It doesn't matter if the microserfs are less productive, if you can have all of them to yourself.
But, there's two ways to get more of what you want:
1) rising wages
2) lowering costs.
#1 -> it would be nice but you can only squeeze so much blood from a turnip.
#2 has gotten far too little attention and has a lot of potential to do good, if we start pursuing it in a way that increases overall prosperity, not decreasing propsperity
Moreover, you needn't take every last cent from these billionaires. Just leave them with a mere $100 million each and they still have more money than they could reasonably spend in a lifetime.
I’d be concerned with involving those people in the calculation when we’re under the same political body. As long as we’re in separate nation states that’s kind of an in house issue they need to decide on how they want to deal with it
And then if you distribute it fairly among all the workers who actually did the work to amass that wealth, then there is very little left per worker. And you do it so the poorer gets more since they got less initially, then the American workers wont get a single cent since they are all rich and most of the labour is done in China and India.
Where has it been debunked?
If it is causing share price increases, every shareholder benefits. Why are you excluding millionaires?
> 5,671,005 US households have a net worth of $3 million or more
There's another 16T right there, minimum.
The companies in S&P 500 hold another 1.5T in cash
Presumably there are workers at these companies being rewarded handsomely for these productivity gains, how do you account for that wealth?
The housing market in California grew 1.4T last year, now sitting at over 9T total "value".
This is just first thoughts for my envelope math. Looking at "billionaires" is overly simplistic
This is not sustainable. It cannot last for that much longer IMO. Literally and metaphorically, people are getting sick of it. They notice. They are not dumb. They might be in denial (people just LOVE their chips and cola for some reason) but they are not dumb.
I see more and more people in my neighborhood going to the local market and negotiating with vendors coming straight from agrarian villages for a "monthly subscription" of sorts -- you bring me one huge basket with fruits and veggies every weekend, I pay you, say, $200 a month. The vendor gets a stable income, you get actual bio food and don't have to pick and choose every tomato and parsley leaf every damn time. The vendors have a vested interest not to cheat their most stable and profitable customers.
Sadly all these societal changes are glacially slow, giving the opportunists plenty of breathing room to swindle people and get rich for decades but oh well, until we develop collective consciousness it seems that this won't ever change... :|
https://www.theguardian.com/us-news/2017/sep/05/hookworm-low...
https://time.com/longform/clean-water-access-united-states/
But the per Capita availability of energy and minerals is a fundamental bottleneck that things like CRM software can only go so far in helping.
The article talks about software that allows a call center employee to handle more customers better. This is great but how does something like this help society produce more heating and food which are currently in short supply ? It makes the company more profit and saves customers some money. But if they try to actually get more food it will cause inflation.
I would highly encourage people to read the work of Vaclav Smil. In the grand scheme of things iPhones are irrelevant.
Half the world depends on natural gas and ammonia fertilizer so they don't starve to death. We are living through the consequences of this as we speak.
Software simply isn't on the scale of things like coal, oil, natural gas, electricity or even washing machines.
Computers might be more like the printing press. Perhaps centuries from now we can look back and say what innovations came about due to multi century second order and third order effects.
We in the industry have become lost in the world of bits and "productivity" in producing TikToks and targetting ads for mobile games doesn't help as much as we think towards supply. These are fundamentally ways of aggregating and coordinating demand.
The problem is now on the supply side. We need software that runs on robots eliminating workers and working 24x7 doing things like mining, agriculture and warehouses. We also need eliminate middle men and deliver directly to the consumer.
Beyond that we need fundamentally new energy sources. Software can help here but increasing digitization mainly creates fat middlemen who don't add as much productivity into the world as they take.
Hence I think Chinas new approach to tech regulatuion that curtails middleman platforms and encourages startups on the supply side makes a lot of sense.
[1] https://www.nielsen.com/us/en/insights/report/2020/the-niels...
You misunderstand how labor productivity is calculated. It’s simply the the total amount of wealth generated by a worker per hour. So for instance, a worker at a McDonalds restaurant generates $150 in wealth per hour, and gets paid $12 per hour on average.
Total wealth is created by productivity and is then divided between labor and capital. Where labor unions are strong, more of the total wealth goes to labor, and where labor unions are weak, more of the total wealth goes to capital.
It’s the total wealth per hour that has seen slow growth in recent decades.
If you doubt how much computers destroy productivity, then simply visit a hospital and you can see it with your own eyes. My mom was recently in the hospital so I got to see this myself. Mistake after mistake because of bad information either put into the computer, or codes being misinterpreted.
In the old days, an army of secretaries kept the world in order. Despite your intuitions, they did in fact have ways of quickly finding one file out of millions of files. And secretaries offered a flexibility that we’ve lost with computers.
It is the loss of flexibility that causes computers to damage productivity.
To note, in the olden days, mistakes written in your record or misinterpretations (e.g.took the wrong record from the cabinet) would just have been a fact of life and nobody might even notice. Ms Wilson and Ms Wiston just shouldn't have been in the same hospital at the same time.
As you say everything was more flexible, more fuzzy. If you wanted the world to look orderly you'd quickly sweap under the rug the misaligned bits or disappear what you don't want there.
This is also why you use cash and paper register if you need your restaurant's finances to look pristine on paper while still racking in money that doesn't need to be accounted.
I would argue this isn’t necessarily because of computers but a byproduct of an antiquated system and process being codified into a computer. The reason for this seems to be that there are structural inefficiencies built into our healthcare system that create a ton of added complexity that is near impossible to unwind because of legal (contractual and privacy-related) risks. For example, any attempts at improving efficiency in patient care creates potential liabilities for medical professionals. People are scared to innovate in this space, so the programs are just digital translations of an existing process. This requires a time investment to learn the “new way” of doing the same thing, and builds inherit laziness because steps are still require that should have been automated away. Medical notes are a good example of this; it’s required to be documented in an extremely specific way and of a certain length because of insurance so it just ends up being copy and pasted, free text, by the physician to meet this requirement.
https://economicsfromthetopdown.com/2020/01/17/debunking-the...
https://en.wikipedia.org/wiki/Bullshit_Jobs
See Solow paradox:
> The productivity paradox, also referred to as the Solow paradox, could refer either to the slowdown in productivity growth in the United States in the 1970s and 1980s despite rapid development in the field of information technology (IT) over the same period, or to the slowdown in productivity growth in the United States and developed countries from the 2000s to 2020s; sometimes the newer slowdown is referred to as the productivity slowdown, the productivity puzzle, or the productivity paradox 2.0. The 1970s to 1980s productivity paradox inspired many research efforts at explaining the slowdown, only for the paradox to disappear with renewed productivity growth in the developed countries in the 1990s. However, issues raised by those research efforts remain important in the study of productivity growth in general, and became important again when productivity growth slowed around the world again from the 2000s to the present day.
* https://en.wikipedia.org/wiki/Productivity_paradox
Yes, things are much faster now. But having to manually scan an entire office of files sequentially was never a thing.
The files were alphabetized, indexed, collated. Clerks knew what they were doing.
In digging through my home state of Indiana's Marriage records, they had an ingenious system that did a fair bit of error correction and sped up retrieval of information by orders of magnitude. This system goes back to the 1800s, consists of an index, and sequentially recorded Marriage Licenses, bound in the same book. Entries were indexed by both the groom and brides last name, which meant in most cases, you could recover from a single error. Worst case, you had to scan that one book for the County, for that year, or fraction thereof. If you knew the date, that made it much faster as well.
1 - https://thecorrespondent.com/4503/the-bizarre-tale-of-presid...
The answer is probably: to competition. If one company got CRM, wow, huge productivity boost! They would sell so much more per unit of salesperson labor input.
But it's a competitive world, so a lot of companies get CRM. The additional sales productivity gets competed back out; perhaps with the recipients of sales efforts (who now have a large increase in the amount of incoming contacts) losing/wasting as much productivity in aggregate as the companies using the software have gained.
The same dynamic applies to many other areas. Not to all areas of course; there are also real massive, long term benefits to productivity. Famously it used to take over half of all human effort just to keep us fed. It doesn’t anymore.
In the age of the desktop computer the iPhone would have been a flop (especially in the US’s then-backwards wireless environment). It takes time for people to understand a new capability and for it to reach the point where it’s worth ditching current practice. My aging parents still like to have a meeting (with their lawyer for example) that could have been a phone call or even email; they still visit the bank in person etc. I can’t be bothered with any of that.
The call center makes a good example: I have seen a company that uses machine learning to make the outbound call: it can wait patiently on hold and even do some transactions with the human in the call center. Things like that don’t show up in the stats yet; the real change will be replacing most of the call center ppl with an API, and with the humans there to handle the really hard problems.
On the business side, you have real-time load metrics to feed your automatic workforce management, rerouting of calls based on staffing and load, highly accurate transcription and sentiment analysis that's always on (even when you think you're on hold, always mute your phone), the accessibility of enterprise-grade contact centres to SMB, and about a dozen other things that weren't possible 20 years ago.
I am skeptical that email is that much more productive for many people.
Now it's been ubiquitous for a while, people now try to deal with the drawbacks.
Working in the mailroom was an entry-level, menial job, but one which rewarded intelligence and afforded a unique view into the function of the company.
So your solution to this attitude is to insist more on meetings and phone calls ?
Did anyone ask that person why they came to hate getting on the phone that much ?
Lowering the friction of process often results in more process, but not more result.
Text chat is good for interaction but it can bog down with a lot of back and forth and sometimes the meaning is hard to get across. The latency while better than email is still slow and people will often not ask questions that they should.
When those channels are not enough I'll initiate a quick voice/video call with one or a few people to go over a specific topic. Generally we can clarify the situation through some quick questions and answers. The latency is low and answers often invoke other questions. You can usually reach an agreement very quickly that way.
Analysis done over the last century across many countries show that everyone is working fewer hours per year as we transition from an agricultural to a knowledge based economy; this likely means that people want to relax and that new productivity gains will be compensated by fewer working hours and more relaxation.
+ Microsoft went from about $25B in annual revenue to ~200B in the past 20 years.
+ Apples currently holds about $200B in cash.
Most large companies have a sort of process-killing-glass-ceiling where only excel spreadsheets can pass through.
People believed that innovations in vacuum cleaners, washing machines, etc would cause people to have more leisure time because of how much time it saved in cleaning.
But it didn't happen. Why?
Because people's expectations for hygiene and cleanliness went up. And as it became easier to clean houses and clothes, people were more comfortable with having larger houses, and more clothes.
Technology innovation is much the same way. As capabilities increase so do expectations. And the "economy" is all about expectations and aspirations.
It could be that as more people moved into white-collar work, though, the fraction of the population experiencing and participating in that kind of thing has gone up.
--> Productivity, which is defined as the value of goods and services produced per hour of work.
Seems like an interesting measure. So as companies become more efficient and the cost of goods goes down, so does productivity. So you might be able to argue we were more probably productive per unit of work building mainframes than we are building iphones.
2. Technology is not necessarily adopted for productivity. It is often adopted to facilitate legibility into the day to day activity of the organization. This is often at the expense of productivity! Moreover, this is often acceptable to management!
I work as a specific type of tech consultant to medium-sized companies, and it's wondrous to behold how easy we can make many aspects of business. Critical functions that took multiple handshakes, paper mail, multiple mistakes, and at least a week now take pre-arranged agreements, API's, and they happen in maybe two seconds, almost always perfectly, and before anybody even realizes.
Sort of related to this:
https://xkcd.com/386/
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...
I've pre-selected a few lines because the problem is supposed to exist on the data of rich countries. You can deselect them at the blue bar at the top of the page (it's not obvious).
I couldn't cut the data in any way that showed the issue ever existed. There is an half decade long decrease on the wealth of the poorer countries but nothing else on this graph.
Anyway, "productivity" isn't GDP per capta. It's close to the GDP divided by the total worked hours. The fact that the GDP per capta is increasing (I didn't expect this) really puts the productivity problem in an entirely new light.
Anyway, talk about an underspecified issue. The article simply has no claim at all of how they expect productivity to behave, just that it's not following the expectation.
The one productivity problem I'm aware about is about it not growing at all for decades, just moving on a noisy horizontal. It's relevant that the GDP per capita follows a different curve. That means that people are working more and adding less value by work-hour.
But, anyway, that's GDP per capita. Data for productivity is much less available, but here is some for the US alone (that's the change annualized):
https://fred.stlouisfed.org/graph/?id=PRS85006092,
Notice that the rate of change itself (first derivative) stays for ages around 0.
You can see directly on the graph that it stays for some times dancing around 0. Most of the times it's higher, but the times with a near 0 average are quite long. If you "integrate" it over the exponentials, you will get some times of approximately linear growth, separated by times of almost no growth. Those times of almost no growth are what people normally talk about when they talk about productivity stagnation. One of those was at the 80s when the computers were taking over offices, another one is quite recent, after the 2008 crisis.
Anyway, the GDP per capita graph is very different.
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I'd look at huge building projects and millions of resulting apartments that were built but now had no buyers and were sat empty on some zombie bank's balance sheet. And I would not know whether they were worth sticker price (and China was very productive) or nothing (and China was very unproductive) or anywhere in between.
I'd look at FoxConn with >350000 workers making some of the worlds most popular and profitable consumer electronics, but then I'd see they only make 3.6% profit in a country with >3.7% risk free rate of return and think: they're wasting their time and would be better being liquidated.
It's almost as if big chunks of China are run to keep people busy and employed and meet arbitrary central targets and not to make things people want at a price they will pay...
Actually understanding what productive means, and how to measure it is really really hard. And at every step companies and governments have all sorts of perverse incentives to disguise it.
That's just being confused by propaganda. If you look back at all of the Chinese ghost city stories and note the names, virtually all of those cities are full and productive now. I always thought the stories were a line to make excuses for US lack of investment in infrastructure.
Increasing capability means we can do more with less. So we choose to use less resources.
The limiting factor for productivity in the knowledge economy (or any work requiring creativity) hasn't been time for a while, why do we insist on keeping it where it has been since the tail end of the industrial revolution (or slightly earlier / later, depending on where you are).
Because nobody wants to be "the idiot who pays for innovation from which all our competitors will also benefit". It's like the arms race that the countries all over the world do; you might swear to everything that's holy you're peaceful but you don't know if your neighbor is an a-hole so you arm yourself just in case.
The amount of handy scripts and clever engineering solutions I've come up with in personal and freelance projects beats any salaried work creativity by 10x, if not 50x even. Regularly.
But after 20 years in the profession I learned not to offer these solutions in my regular work. The other programmers will mercilessly rip apart any of your ideas and will ask for literally every other way for you to do it and not the one you suggested. Nevermind that it's none of their damned business how I deliver the end result (I mean if it does NOT involve code to maintain in the future -- obviously).
It's weird. Guess we have some very common and stereotypical weaknesses?
But whatever the case, I gradually learned to keep my mouth shut and get the job done by any means necessary.
It's better to ask for an apology than for permission, I have found empirically.
http://web.archive.org/web/20220524170241/https://www.nytime...
The other aspect is that a lot of our tech is vapid entertainment. As buzz aldrin said, “They promised me mars colonies. All we got was Facebook” or something along those lines.