Quotable

I think unfortunately, we are likely to see a host of neoluddites arise. It has always been true that technological improvements have cost some people their jobs which can be a very difficult experience. Usually you then adapt to the new job market. You acquire new skills, find new uses for your old skills, the cards are matched, PSST and all that. However, what happens if the cards start being reshuffled much more frequently? What if technology starts displacing jobs faster than it creates them? Obviously there is an upper-bound as you need people to make the new technology. But if the trend accelerates, we may be seeing the first signs of the singularity. A few highly qualified people will have gigantic productivity. On the other hand, the vast majority of people will be ZMP workers. (to borrow from Tyler Cowen) Sure, being one of the qualified few will be amazing, but everyone else will probably also greatly enjoy life. After all, when the tiniest amount of capital generates huge returns, who needs a job?

I know Krugman et al. keep telling us there is not a "shred of evidence" that regulation has anything to do with this. Still, I wonder if the government had passed a new plan where all firms had to put up thousands of new dollars to ensure adequate maintenance for every new machine they hired...

These two points:

For all the talk of uncertainty, the increase in orders is a sign that companies are optimistic about the future. After all, no executive would expand production facilities if he or she thought customer demand was about to stagnate.

The man-vs-machine situation, however, presents a huge negative to the outlook. In an economy based on consumer spending, the lack of jobs and income growth means consumers can’t spend.

The article calls into question the Higgsian regime uncertainty theory, as jstults alludes to.

Let's hope that everyone does not give up on high productivity just yet. We have to find the economic activities that do not respond well to production efficiencies, and begin the process of creating lateral skills shares. However, there is no real wealth creation in lateral skills shares, if people give up on what the processes of manufacturing and production can actually provide in free market conditions.

This is the ongoing Death of Overhead. Machines (and networks, etc) replace humans engaged in bureaucratic overhead work and make companies vastly cheaper to run, but hard times are the best times to make such changes, since you're needing to squeeze every dime to survive. During more prosperous times, the bureaucracy has an easier time resisting this sort of thing.

The last place to do this is government, but the leanness of the rest of the economy makes government seem even more bloated than it is.

This statistic is a bit misleading as the starting point is Q2 2009.

It is possible (I don't have the statistics to back this up) that capex on IT fell by far more that 26% when the recession hit in 2008 and then just recovered to a more normal level in 2009.

I would be wary of drawing too many conclusions from this very limited data set.

I am still waiting for the new zero GDP world with 100% unemployment. Each human gets a self generated nano machine genetically integrated into our DNA make-up which enables us to instantaneously create combos of physical and virtual reality. Like the Matrix movies without all the crappy wires and post apocalyptic bad guys.

Boy, would that be a hell of a problem for a president to fix.

Hugh, spending on equipment and software is still about $22B below the peak in Q4 2007 on a nominal basis. So yes, I agree that the starting date makes this misleading.