Looking Backward from 2096
Constant Reader pointed out this very intriguing post (“Falling Demand for Brains“) by Paul Krugman, in which he refers to his earlier extrapolation published in 1996, which begins:
When looking backward, you must always be prepared to make allowances: it is unfair to blame late-20th-century observers for their failure to foresee everything about the century to come. Long-term social forecasting is an inexact science even now, and in 1996 the founders of modern nonlinear socioeconomics were obscure graduate students. Still, many people understood that the major forces driving economic change would be the continuing advance of digital technology and the spread of economic development throughout the world; in that sense, there were no big surprises. The puzzle is why the pundits of the time completely misjudged the consequences of those changes.
Perhaps the best way to describe the flawed vision of fin de siecle futurists is to say that, with few exceptions, they expected the coming of an ”immaculate” economy — one in which people would be largely emancipated from any grubby involvement with the physical world. The future, everyone insisted, would bring an ”information economy” that would mainly produce intangibles. The good jobs would go to ”symbolic analysts,” who would push icons around on computer screens; knowledge, rather than traditional resources like oil or land, would become the primary source of wealth and power.
But even in 1996 it should have been obvious that this was silly. First, for all the talk about information, ultimately an economy must serve consumers — and consumers want tangible goods. The billions of third-world families that finally began to have some purchasing power when the 20th century ended did not want to watch pretty graphics on the Internet. They wanted to live in nice houses, drive cars and eat meat.
Second, the Information Revolution of the late 20th century was a spectacular but only partial success. Simple information processing became faster and cheaper than anyone had imagined, but the once-confident artificial intelligence movement went from defeat to defeat. As Marvin Minsky, one of the movement’s founders, despairingly remarked, ”What people vaguely call common sense is actually more intricate than most of the technical expertise we admire.” And it takes common sense to deal with the physical world — which is why, even at the end of the 21st century, there are still no robot plumbers.
Most important of all, the long-ago prophets of the information age seemed to have forgotten basic economics. When something becomes abundant, it also becomes cheap. A world awash in information is one in which information has very little market value. In general, when the economy becomes extremely good at doing something, that activity becomes less, rather than more, important. Late-20th-century America was supremely efficient at growing food; that was why it had hardly any farmers. Late-21st-century America is supremely efficient at processing routine information; that is why traditional white-collar workers have virtually disappeared.
These, then, were the underlying misconceptions of late-20th-century futurists. Their flawed analysis led, in turn, to the five great economic trends that observers in 1996 should have expected but didn’t. . .
