While this article is probably wrong (I don't know what the economic impact of the fax machine was, but I suspect a lot smaller than the Internet), we should probably all be asking ourselves whether the economic impact of our industry is really all that big.<p>Looking at the profit of companies like Google and Facebook overstates the impact for them. They are making tons of money, but a lot of that is just a shift in the location of advertising dollars. Amazon has lowered prices, and there's real economic impact there, but what is the actual percentage?<p>In my current line of work, transportation management software, we're giving companies tools to be more efficient and reduce their freight expenditure, but the reductions are really very modest--good enough to keep customers happy, but nothing revolutionary. That seems to be the pattern for an awful lot of software: if you can beat an established industry by a little bit, that's enough for a business, but that's not the kind of revolution that you'd think there is listening to people hyping startups.<p>And if you think I'm wrong, ask yourself why GDP growth has been so anemic in the age of the Internet.
While this is highly embarrassing for Krugman (even if he will never admit it!), he is far from the only person who has fallen for this: Expertise in one area does NOT make you an expert in all.<p>This year especially should drive that point home. It's best to only make bold statements when you are sure, and when you do so, put your money where your mouth is ("Skin in the game", as Nassim Taleb says). And most definitely do not become a paid opinion writer, or even bother taking any of their pontificating seriously.
Fitting I'm currently re-reading "Thinking Fast and Slow" and there is a chapter on expertise:<p>From the book:<p>When do judgments reflect true expertise?<p>An environment that is sufficiently regular to be predictable an opportunity to learn these regularities through prolonged practice. (aka not economics)<p>When both these conditions are satisfied, intuitions are likely to be skilled.<p>Intuition cannot be trusted in the absence of stable regularities in the environment.<p>If the environment is sufficiently regular and if the judge has had a chance to learn its regularities, the associative machinery will recognize situations and generate quick and accurate predictions and decisions. You can trust someone’s intuitions if these conditions are met.<p>When evaluating expert intuition you should always consider whether there was an adequate opportunity to learn the cues, even in a regular environment.
Despite his impressive pedigree, Paul Krugman is more of a political mouthpiece than an economist. His regular opinion pieces in the New York times or frequently abrasive and wrong.
Paul Krugman responded to this a few years ago:
<a href="http://www.businessinsider.com/paul-krugman-responds-to-internet-quote-2013-12" rel="nofollow">http://www.businessinsider.com/paul-krugman-responds-to-inte...</a><p>The article the economic impact of the internet quote came from wasn't a scholarly article or his normal column, it was a fun, let's make some provocative predictions type article.
While he is wrong about the impact of the internet economically. He isn't wrong that technology progress has been disappointing. When you grow up believing you will be driving flying cars and seeing robots help you around the house, how else are you supposed to feel? It is only now that computing power has started to enable old AI techniques such as neural nets, which were once impractical are now starting to be reasonable.<p>I am also disappointed in how closed and centralized the applications that run on the internet have become since the internet was privatized. Where we used to have decentralized systems in the 80s to late 90s, we now have huge star (wheel and spoke) networks.<p>The days you get your internet from the weird guy down the street running a rack of servers in his closet are long gone.<p>We have also re-created old medium and I seriously doubt people like Alan Kay are impressed with that. We have invented the most important tool in the history of humanity and it's being used by billions of people to look at Facebook instead of say, solving real problems like climate change. As Alan Kay said "The computer revolution hasn't happened yet".
This is similar to the Robert Solow's 1987 quip, "You can see the computer age everywhere but in the productivity statistics."<p>Is a big part of this what exactly economists are measuring, and either they're right and we're just too close to see it, or they're missing important stuff when they measure.<p>And to be fair, I think the fax was pretty big in it's day for business to business communication.
I'm still curious to know what are the "Internet Economic Impact".<p>This article was written before the net bubble.<p>So far all I see in the economics of internet is netflix replacing DVDs, twitter/facebook/online presence (which is advertising, which means little to me), and... that's it. Other domains like online gaming are not that great in term of economic impact.<p>Amazon is closing book and movie stores.<p>I can see that the internet changed many things, but was it improvement? I don't know. When you account music and movie piracy, credit card fraud, scammers, online security, it doesn't seem so great.<p>The only improvements I can see is porn (being able to channel your sexuality) and dating websites (more people being able to risk a little more to find somebody).
I much prefer Ha-Joon Chang's "the washing machine changed the world more than the internet" [0], which I think fares a lot better than Krugman's claims.<p>> When we assess the impact of technological changes, we tend to downplay things that happened a while ago. Of course, the internet is great – I can now google and find the exact location of this restaurant on the edge of Liverpool or whatever. But when you look at the impact of this on the economy, it's mainly in the area of leisure.<p>> By liberating women from household work and helping to abolish professions such as domestic service, the washing machine and other household goods completely revolutionised the structure of society. As women have become active in the labour market they have acquired a different status at home – they can credibly threaten their partners that if they don't treat them well they will leave them and make an independent living. And this had huge economic consequences. Rather than spend their time washing clothes, women could go out and do more productive things. Basically, it has doubled the workforce.<p>[0] <a href="https://www.theguardian.com/technology/2010/aug/29/my-bright-idea-ha-joon-chang" rel="nofollow">https://www.theguardian.com/technology/2010/aug/29/my-bright...</a>
It's kind of unfair to point and laugh at the person who didn't predict the future correctly. I don't think anybody could have foreseen the <i>interactive</i> potential for the internet.<p>The internet encompasses vast video game experiences, nearly realtime communication from politicians and public figures (without hauling around a C-SPAN 2 camera team), and has even taken on a life of its own with YouTube stars and internet celebrities, completely bypassing the traditional media channels that were usually dominated by the whims of their producers.<p>Even now I think our impression of the internet is roughly in line with the people of the early 20th century who could not have begun to imagine the vast possibilities provided by mass electrification.
Also "Why the web won't be a nirvana" <a href="http://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306" rel="nofollow">http://www.newsweek.com/clifford-stoll-why-web-wont-be-nirva...</a>
> By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.<p>Sort of dwarfs any validity in the article.
All of this was written before the Dotcom boom!<p>Do you remember when you had to .com after every company or had to put www. before every company, because almost no one knew how to search (on AltaVista or redirect in a DNS record), or just restarted their computer to get back to the Yahoo! home page?<p>If not, then you don't remember this time... but almost everyone remembers the DotCom bust 3 years later, when the nerds got their comeuppance!<p><i>Within two or three years, the current mood of American triumphalism--our belief that we have pulled economically and technologically ahead of the rest of the world--will evaporate.</i>
<i>-Krugman</i>
Bill Gates himself almost completely dismissed the Web only a couple of years earlier in his book "The Road Ahead"[0], to such an extent that he had to heavily update it in the second edition one year later.
With that in perspective, is it really surprising to see non-specialists like Krugman still considering it a novelty in 1998, before Google, e-commerce, e-booking, etc?<p>[0] <a href="https://en.wikipedia.org/wiki/The_Road_Ahead_%28Bill_Gates_book%29" rel="nofollow">https://en.wikipedia.org/wiki/The_Road_Ahead_%28Bill_Gates_b...</a>
Krugman today wrote an article saying that America is at risk because some politicians are prioritizing their own power over the good of the country [0]. GOP politicians in the new cabinet and the White House are named.<p>Why was the OP posted to Hacker News today? Is it in response to Krugman's dire warning about American democracy and how the GOP is putting us all at risk?<p>Be careful about politics on Hacker News. The tech industry has an important role to play in media, and we know that the GOP has spent substantial sums to create bias in the media. [1] There is a strong incentive for the GOP to astroturf Hacker News and we should all be careful.<p>It's true that "reality often has a liberal bias" - and that's because the leaders of the GOP -- politicians and their big donors -- are trying to create their own reality, where they can cut taxes to keep more money in the pockets of the 0.01%. Use your own head when you see links like this.<p>[0] <a href="http://www.nytimes.com/2016/12/19/opinion/how-republics-end.html" rel="nofollow">http://www.nytimes.com/2016/12/19/opinion/how-republics-end....</a>
[1] <a href="http://www.salon.com/2008/09/24/mccain_letters/" rel="nofollow">http://www.salon.com/2008/09/24/mccain_letters/</a><p>edit: I expect the vocal right-leaning minority here to vote heavily; if you agree with the above and you're not a frequent voter please upvote posts here you agree with.
To me, all this shows is that economics is very hard. I like krugman although he s a bad public speaker and a sore loser, yet even he cant model long-term effects of things. I wonder where his thought process fails