Arnold Kling  

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In my opinion, it is this debate between Tyler Cowen and Erik Brynjolffson. The speakers, the moderator, and the audience questions were all top form.

Remind me never to get into a live debate with Tyler. I thought he was more persuasive at this event, even though I was on Brynjolffson's side at the beginning.

My take on the substance:

Brynjolffson says that capital per worker has been growing very strongly, with the gains very unevenly distributed.

Cowen says that the Solow residual per worker has been growing more slowly. More capital per worker means doing more with more. A higher Solow residual means doing more with less.

Both of these views could be true. In fact, if you were to ask me right now, I would say that they are both true. Indeed, suppose that the Commerce Department has understated the growth in capital by failing to make sufficient allowance for quality improvement. If that were true, it would strengthen both sides of the debate. It would show that we have had more capital growth, and at the same time it would show that the Solow residual is smaller.

On net, I come away from this debate with more sympathy toward Tyler's outlook than I had before.

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COMMENTS (3 to date)
Eelco Hoogendoorn writes:

I am very sympathetic to Tyler's point, but I think he did a poor job of defending against some of Erik's attacks. He keeps hammering on the fact that wages are stagnant, without giving a mechanism as to why stagnation in technology would disproportionally impact the relatively poor (I can think of some, but its far from obvious). At least Erik's take on things does answer this question; is not hard to imagine why the (cognetive) underclass is expected to perform poorly in times of fast change.

That said, Tyler has the dose-response relationship on his side. There is in my mind no question whatsoever that technological change used to be much faster, and averaged over the prewar period, that didnt seem to bother the underclass at all. Even accounting for the great depression, Erik has a major problem there.

Ultimately, I think both are correct, and their take on things is not diametrically opposed. Yes, we are feeling the pain of readjustment; we have been experiencing it since the industrial revolution, but its only really starting to hurt now because we no longer have the expectation of stellar future growth to mask it.

Then it is no wonder that both essentially agree on the same policy medicine; but if Erik believed in the completeness of his own story he should have taken issue with Tylers suggestion of more fundamental research.

Nathan Smith writes:

One quibble. Tyler asks why his stock portfolio isn't doing well, if technological progress is as fast as Erik says. But he keeps saying how fast technological progress was in the 1920s and 1930s. The stock market did terribly in the 1930s. It's doing badly now for the same reason it did badly then (though not to the same extent, thankfully): politics. Big government. Political risk. Washington interfering in the private economy. New entitlements. The 1930s had great technological progress but were economically stagnant because of statist presidents like Hoover and Roosevelt and all that.

Concerning what to do to accelerate growth, one big thing: end all sorts of policies that undermine savings. Privatize Social Security. Abolish the home-interest tax credit. End subsidized student loans. There's another big thing that might work though I hesitate to propose it because it goes against my libertarian biases, but I think it might work. Subsidize the ideas/technology/research sector. For example, create a major program of patent and copyright buyouts, and work with Amazon and/or Google to make it so that people can access, roughly speaking, any book anytime for free. Distribute free e-readers to the entire population. Cut student loans but pay universities to put courses online for free: this can be the 21st-century way of subsidizing public education. And help people to catch up to the technological frontier. Create computer classrooms in every public library. Let homeless people watch videos on how to program Java, with a little bit of supervision to make sure they're focused. Create a Manhattan Project to pioneer the best computer languages for the age of cloud computing. Of course, this program would put a lot more resources in the hands of the 1%.

Shayne Cook writes:

Tyler's primary focus seems to be a (relative) stagnation in median wage from 1973 to present.

My question to Tyler - had I been there - is whether Tyler's "median wage" includes full cost-of-labor elements such as wage PLUS Social Security, Medicare, health insurance, life insurance, and other benefits.

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