Sunday, June 18, 2017

Taking a short break - no post this week or next

An exceptionally heavy workload and travel schedule have conspired to prevent me from writing this week and next. I expect to post again on Sunday, July 2.

Sunday, June 11, 2017

Can we create a durable future?

It is hard to imagine anyone today building something as durable as the Roman Colosseum. Most of the damage we see to the 2,000 year-old stadium comes from two earthquakes and the persistent looting of its marble, stone and brass infrastructure by humans using them for other building projects. Were it not for these unfortunate depredations, the Colosseum might be largely intact today.

We pen fantasies about the durability of our culture in science fiction novels, television programs and movies set hundreds and even thousands of years from now. By then we humans will supposedly be moving with magical ease at speeds greater than light, zipping through the known universe aided by voice-command convenience (or maybe even thought-comand convenience).

But our age seems to be populated by buildings and cultural artifacts that are designed for impermanence. It's not that we are technically incapable of making things that are durable when we want to, especially when it feeds our desire to turn science fiction into fact. NASA's Mars Rovers launched in 2003 were designed for a mission of 90 Martian solar days. The Spirit rover operated until 2010. The Opportunity rover is still operating.

Sunday, June 04, 2017

Baumol's cost disease, productivity and the future of growth

William Baumol, one of the most famous economists you've never heard of, died recently. Baumol's fame came out of the observation that there are sectors of the economy in which productivity is rising swiftly, for example, manufacturing, and sectors where it is rising slowly or not at all, for example, string quartet performances.

The conclusion he drew from observing the behavior of wages in these sectors was that wages had to rise in the low-productivity growth sectors even as they do in high-productivity growth sectors. This is because people will over time simply leave the low-productivity growth sectors for the better wages of the other sectors. This theory became known as Baumol's cost disease.

In practice, society still values string quartet performances enough to pay their practitioners sufficiently to keep them playing. Baumol extended his theory to any economic sector in which personal service is essential to that sector. Examples include education, health care, child care, and legal services. As it turns out, nobody (yet) wants a robot lawyer or nanny.