Eric Schmidt is wrong – the robots are not drinking champagne

I’ve not yet read [amazon_link id=”1480577472″ target=”_blank” ]The Second Machine Age[/amazon_link] by Erik Brynjolfsson and Andrew McAfee but am eager to do so. This question of what technology is doing to jobs and living standards is the issue of the moment. It’s obviously tempting for people to reach for the extremes (The robots are eating our jobs! We wealth-creators are being unfairly attacked!), when the truth will be nuanced, as it always is. Of course some comment has been more thoughtful. Gavin Kelly of the Resolution Foundation wrote a measured survey of the debate (its balance belied by the headline The Robots are Coming!). This Wonkblog column (Will Robots Steal Our Jobs?) pushes back against the robo-phobia in a reasonable way by looking at the history of the first Industrial Revolution.

[amazon_image id=”1480577472″ link=”true” target=”_blank” size=”medium” ]The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies[/amazon_image]

What I do know is that Eric Schmidt is wrong. The Google chief presented this at Davos as “a race between computers and people”. On the contrary, it’s a battle between people and people. I see no robots drink champagne and nibbling canapes at the World Economic Forum. The technology creates the potential for great advances in living standards, almost always in the recent (past 250 years) past shared widely. The sharing is done by society, and the institutions that govern it.

One key institution is public education, so the masses have skills that complement technology rather than competing with it. Our education systems are struggling to adapt from the age of mass production to the modern industrial system. Another set of institutions consists of those that redistribute – collective bargaining, the welfare state since the mid-20th century, in need of reinventing. There is also the question of the ownership of the machines. The invention of the joint stock company is often overlooked as an important mechanism not only for raising capital but for sharing ownership among the growing middle class. There’s a very good book about the co-evolution of institutions and technology during the Industrial Revolution, [amazon_link id=”0226014746″ target=”_blank” ]The Institutional Revolution[/amazon_link], by Douglas Allen – well worth a read for those pondering what institutions might stop the triumph of the robots, or rather their gilded owners.

[amazon_image id=”0226014746″ link=”true” target=”_blank” size=”medium” ]Institutional Revolution: Measurement and the Economic Emergence of the Modern World (Markets and Governments in Economic History)[/amazon_image]

History retweeting itself

Tom Standage’s latest book, [amazon_link id=”1408842068″ target=”_blank” ]Writing on the Wall: Social Media – the first 2000 years[/amazon_link], has kept me going through a week of travel and meetings. As you’d expect from such a consistently interesting and good writer, it’s a fabulous book. It combines storytelling with the point (similar to that in his equally terrific [amazon_link id=”162040592X” target=”_blank” ]The Victorian Internet[/amazon_link]) that there are some constant themes in the impact of communications technologies through the ages. Here, the point is that all media are social media: they are all means of communication, the defining feature of human societies. It’s what we do. What’s more, the characteristics of different media are complementary, and introducing a new means of communication will certainly change how the older methods are used but will not displace them.

[amazon_image id=”1408842068″ link=”true” target=”_blank” size=”medium” ]Writing on the Wall: Social Media – The First 2,000 Years[/amazon_image]

Writing on the Wall draws parallels (in a suitably subtle way) between innovations of the past and today’s social media – for example, English Civil War pamphleteering and blogging, or London’s 18th century coffee houses and Twitter. The examples range from Republican Rome to pre-Revolutionary France, Martin Luther and the printing press, and the dawn of modern mass media in 19th century newspapers. In every case, the innovation was enthusiastically used by the many, and condemned as a vehicle for dangerous – blasphemous, uncivilized, destabilizing – by the powerful few. Each technological innovation did disrupt existing political structures, the book suggests.

Some of the less well-known examples (to an English reader) are especially interesting. I liked the example of disrespectful songs about Louis XV circulating in late 18th century Paris – Robert Darnton’s terrific book [amazon_link id=”0674066049″ target=”_blank” ]Poetry and the Police: Communication Networks in 18th Century Paris[/amazon_link] covers this episode. People wrote rhymes on slips of paper they could hand out in the coffee house or leave lying around in the park. The ‘nodes’ of these networks were known as ‘nouvellistes’. The reason these handwritten slips circulated was because the French authorities restricted printing so tightly – they were the Chinese censors of their day. It’s interesting to see that French journalism is still rather respectful of authority. I attended a Franco-British conference last week, and our French counterparts assured us that ‘everyone’ had known about President Hollande’s affair (by word of mouth) for months – impossible to imagine that happening in British journalism.

[amazon_image id=”0674066049″ link=”true” target=”_blank” size=”medium” ]Poetry and the Police[/amazon_image]

Newspapers played an important role in the American colonies, in paving the way for the war of independence. Although also controlled by the British authorities, publishers successfully resisted the strictest measures, and papers circulated alongside letters in written correspondence. Tom Paine’s catalytic pamphlet [amazon_link id=”1448657113″ target=”_blank” ]Common Sense[/amazon_link] was serialized in many papers.

I loved the title of the Epilogue – ‘History Retweets Itself’. It argues that ‘old’ mass media were an anomaly, and prior to their emergence in the mid-19th century social media networks were the means of sharing information and ideas. There are some interesting thoughts on the future of ‘new’ social media – will they stay in their proprietary silos or not? The book concludes: “The rebirth of social media in the Internet age represents a profound shift – and a return, in many respects, to the way things used to be.

 

 

Introducing game theory

A question in the comments: what books are suitable to introduce game theory to a young reader? I asked on Twitter and got loads of good replies – huge thanks to all who made suggestions:

Ariel Rubinstein’s [amazon_link id=”1906924775″ target=”_blank” ]Economic Fables[/amazon_link] (I loved this book so much it was the Enlightened Economist Book of the Year in 2012)

[amazon_image id=”1906924775″ link=”true” target=”_blank” size=”medium” ]Economic Fables[/amazon_image]

[amazon_link id=”0273684965″ target=”_blank” ]A Guide to Game Theory[/amazon_link] Fiona Carmichael

[amazon_link id=”038541580X” target=”_blank” ]Prisoner’s Dilemma: John Von Neumann, Game Theory and the Puzzle of the Bomb[/amazon_link] by William Poundstone

[amazon_image id=”038541580X” link=”true” target=”_blank” size=”medium” ]Prisoner’s Dilemma: John Von Neumann, Game Theory and the Puzzle of the Bomb[/amazon_image]

[amazon_link id=”0669246034″ target=”_blank” ]Fun and Games[/amazon_link] by Ken Binmore, or his [amazon_link id=”0199218463″ target=”_blank” ]Game Theory: A Very Short Introduction[/amazon_link]

[amazon_image id=”0669246034″ link=”true” target=”_blank” size=”medium” ]Fun and Games: A Text on Game Theory[/amazon_image]

[amazon_link id=”0393062430″ target=”_blank” ]The Art of Strategy[/amazon_link] or [amazon_link id=”0393310353″ target=”_blank” ]Thinking Strategically[/amazon_link] by Avinash Dixit and Barry Nalebuff (I’ve read these, too, and they’re pitched at a business audience so very accessible)

A critique of game theory, [amazon_link id=”0415094038″ target=”_blank” ]Game Theory: A Critical Introduction[/amazon_link] Shaun Hargreaves Heap and Yanis Varoufakis

Finally, some recommended online lectures – Ben Polak’s Yale course.

 

 

 

Complementarity and serendipity

After writing yesterday (in The Economics of Shelfies) about the complementarity between e-books and physical books, and arguing that in general different vehicles for ideas are complements rather than substitutes, I happened to read this last night in Tom Standage’s [amazon_link id=”1408842068″ target=”_blank” ]Writing on the Wall: Social Media – the first 2000 years[/amazon_link]. It’s about the circulation of handwritten poetry among groups of friends and family members in Tudor times:

“The printing press was now a century old, but rather than making obsolete the copying and sharing of documents in manuscript form, print actually increased the importance and prevalence of handwritten text. Printing pushed up demand for paper throughout Europe, encouraging production and making it cheaper (its price fell by 40% during the 15th century) and more widely available.”

The passage goes on to explain the fashion for creating ‘miscellanies’ or commonplace books, large handwritten notebooks, sometimes shared.

[amazon_image id=”1408842068″ link=”true” target=”_blank” size=”medium” ]Writing on the Wall: Social Media – The First 2,000 Years[/amazon_image]

I’m about half way through the book and will review it later this week.

The economics of shelfies

Digital technologies have obviously disrupted the publishing business as they have music and film and will do higher education. The record business was first to experience the shock and in its response offered plentiful examples of what not to do. To my mind, publishing has done much better, both in terms of the incumbents safeguarding their position and in terms of innovation with new formats and new creative options.

This is not to say that everything is ideal. There are new, damaging concentrations of market power in e-book distribution. There are too many celeb biographies and cookbooks due to the winner-takes-all dynamics – dynamics that Anita Elberse’s recent book [amazon_link id=”0571309224″ target=”_blank” ]Blockbusters[/amazon_link] explains.

[amazon_image id=”0571309224″ link=”true” target=”_blank” size=”medium” ]Blockbusters: Why Big Hits – and Big Risks – are the Future of the Entertainment Business[/amazon_image]

Still, as I’ve said a few times, the balance is positive in terms of innovation, and also number of titles available and book sales. This weekend I read this post about the ‘book porn’ phenomenon, the growth in websites like Bookshelf Porn and Explain Yourshelf, the ‘#shelfie‘ vogue on Twitter. The author of the post explains it in terms of the physical pleasure, turning pages, feeling the heft of the book, seeing the spines on the shelf.

There’s an economic account, too, namely that reading online and reading offline are complements, not substitutes. Many people made the assumption that e-books would substitute for physical books. But the sales numbers don’t bear that out, as physical book sales have not declined much (during an economic downturn) while e-book sales have soared (from a low base).

It’s the same mistake that was made when people predicted the paperless office; in fact, access to more information led to more printing of documents, not less. Or when it was predicted that telephones, or social media, would reduce face-to-face contact, when all the evidence is that they increase it (see Ed Glaeser on this).

Generally, forms of communication and vehicles for ideas are complements, not substitutes.