Mon Feb 18th, 2013 at 02:29:58 AM EST
[Moustache of Understanding Alert]
I've been banging on for years (as have others here, but I do it in a slightly more tortured style) about the fact that economics has assumed linkages and beneficial equilbria in analysis. And now I know I've jumped the shark, because Tom Friedman is quoting people saying similar things in his latest column...
front-paged by afew
It's the P.Q. and C.Q. as Much as the I.Q. - NYTimes.com
In their terrific book, "Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy," Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology note that for the last two centuries it happened that productivity, median income and employment all tracked each other nicely. "So most economists have had this feeling that if you just boost productivity, the pie grows, and, in the long run, everything else takes care of itself," explained Brynjolfsson in an interview. "But there is no economic law that says technological progress has to benefit everyone. It's entirely possible for the pie to get bigger and some people to get a smaller slice." Indeed, when the digital revolution gets so cheap, fast, connected and ubiquitous you see this in three ways, Brynjolfsson added: those with more education start to earn much more than those without it, those with the capital to buy and operate machines earn much more than those who can just offer their labor, and those with superstar skills, who can reach global markets, earn much more than those with just slightly less talent.
Of course, being the Moustache of Understanding, TF comes up with a typically wrong analysis and proposal for solutions. I'll let you go read it if you care.
However, I wonder if progress is being made - maybe once we can admit that particular proxy variables in economics (in this case "productivity") are not in fact magically connected to general wellbeing, maybe we're getting somewhere with the Overton Window. And maybe if TF is posting on my topics, I need some new obsessions?