Month: March 2011
I take these points to be a jumping off place for thinking about computers and future economic growth, and wages, more generally. The AI revolution basically came first to chess! Of course chess is sustained by a mix of donations, corporate and political sponsorship, wage labor (e.g., lessons), and volunteer labor, so it is hardly a metaphor for the economy as a whole; still we can see how computer labor and human labor might fit together:
1. Databases equalize preparation opportunities for the top players. Those who rise to the very top have very strong creative skills. In relative terms, being a chess “grind” is worth less than in times past.
2. If the computer is set at 2200 strength, “me plus the computer” (I override it every now and then) almost always beats “the computer alone.” Often we beat “the computer alone” very badly. If the computer is set at full strength, my counsel is worth much less, although it is not valueless.
3. With a computer set at full strength, the useful “team” requires a much stronger human team member than I. The required education level — for the team’s “wage premium” — is ratcheted up.
4. Chess is an area where educational reform has been extremely rapid and extremely successful. Chess education today revolves around learning how to learn from the computer, and this change has come within the last ten to fifteen years. No intermediaries were able to prevent it or slow it down. Humans now teach themselves how to team with computers, and the leading human players have to be very good at this. The computers which most successfully team with humans are those which replicate most rapidly.
5. There are many more chess prodigies than ever before, and they mature at a more rapid pace.
6. We used to think that computers would play chess like we did, only “without the mistakes.” We now know that playing without the mistakes involves a very different style from what we had imagined. A lot of human positional intuitions are garbage, and the computer can make sense out of ugly-looking moves. A lot of the human progress since then has involved unlearning previous positional rules and realizing how contingent they are. Younger players, who grew up playing chess with computers, are especially good at this. For older players, it is a good way to learn how unreliable your intuitions can be.
7. Highly exact and concrete analysis, and calculation of variations, is now the centerpiece of grandmaster chess at top levels. We have learned how to become more like the computers. The computers have taught us well.
8. Chess-playing computers still are not meta-rational. They do not understand what they do not understand very well, for instance blocked positions and long sequences of repetition. That is one reason why human-computer teams are so important and so productive.
The author is Gordon C. Bjork and the subtitle is Structural Change and the Slowdown of U.S. Economic Growth. I recommend this not-so-well known book, first published in 1999, very highly. Among its other merits, it traces how much of the productivity slowdown results from the switch of the U.S. economy into lower-growing sectors. Excerpt:
Thus, if the 1950s structure of relative output levels and employment were combined with the intra-sector growth rates of the decade ending in 1990, the aggregate intra-sector growth rate would have been 19 percent as opposed to the 13.2 percent it actually was in the decade ending 1990. If the slow-growth decade of the 1980s had had the same output structure as the high-growth 1950s, it would have had higher growth rates than the high-growth 1950s. Conversely, if the 1990 structure had been in effect in the 1950s, the intra-sectoral growth rate for the decade would have been only 11 percent, rather than its actual 17 percent. These two examples of the effect of output structure on average growth rates illustrate the importance of structural change in determining aggregate rates of growth in per worker output by changing the relative size of sectors.
Michael A. asks me:
As always, appreciate all your prodigious information output. I am traveling to Costa Rica this summer and was wondering if you might be able to give me any info about Best of Costa Rica — specifically foods, wines, etc. to hit as well as music and books to check out beforehand, sights to see, the usual Tyler Cowen treatment.
I haven't been to Costa Rica in a long time, but here is what lodged in my memory:
Monkeys and birds, hanging sloth is hard to see, excellent dialect on Caribbean coast, eat palmitos [hearts of palm], like it or not beans and rice for breakfast, cross the country by taxi in a day, if you mispronounce the volcano it rhymes with the last name of David Boaz, Spanish paella in the capital, "Tica," music is mediocre, worst Chinese food anywhere, the least interesting locale in Central America but the best trip for most Americans. Glad I went but won't return.
Applying Carroll’s theories to Britons, you understand why foreigners think we are repressed. Americans won’t touch strangers, the French won’t talk to them, but Brits will neither touch nor talk to them.
Here is more.
Since he was "discovered" in 1996, Tokuda has emerged as a major player in Japan's emerging adult movie genre known as "elder porn." He says he has appeared in more than 350 films such as "Prohibited Nursing" and "Maniac Training of Lolitas." In these scripts, Tokuda always gets the girl.
The films play upon well-documented Japanese male fantasies. In each, Tokuda plays a gray-haired master of sex who teaches his ways to an assortment of young nurses and secretaries. Whips and sex aides often factor in the plotlines.
Tokuda is 76 years old and he makes an average of one film a week. It is estimated that "elder porn" now accounts for one-fifth of the Japanese adult film sector.
The article is here and for the pointer I thank Daniel Lippman.
It has slipped off the front page, but the underlying problems are not solved:
The cost of borrowing for Portugal, Ireland and Greece has hit euro-era highs, amid concern in the market that European leaders will fail to take concerted action to dispel fears of sovereign defaults in the eurozone.
The long-term market interest rate for Spain has come close to setting a record and Italy’s borrowing cost rose above 5 per cent for the first time since November 2008. The moves came as Portugal was forced to pay a sharply higher premium in a debt auction on Wednesday, raising renewed fears that it will be forced to seek an international bail-out.
In Greece there is a national, and growing, anti-austerity movement.
It takes on the facial characteristics of whomever you are speaking to (with a camera intermediary) and it is "based on a larger robot created by Professor Hiroshi Ishiguro."
When asked how he responds to comments that his Telenoid appears creepy, Ishiguro simply shrugged his shoulders and said that “it is not creepy.”
Nonetheless it is naive to think spending cuts can do the job alone, and insisting on no tax hikes drives us faster along the path of fiscal ruin.
This is a political, not economic judgement on Tyler's part — that a majority won't accept the necessary cuts. But I think it's much less politically feasible to imagine enacting VAT (which, in the past, has been Tyler's preferred approach). That's an idea that practically demagogues itself (A EUROPEAN-style Tax! A regressive, HIDDEN tax on EVERYTHING you buy! A tax that will hit the savings of RETIREES the hardest –people who 'worked hard and played by the rules' who were taxed when they earned and saved the money and are now going to be hit by a REGRESSIVE, EUROPEAN, HIDDEN TAX on EVERYTHING when they try to spend the money).
Republicans are so married to 'no new taxes' and Democrats to 'higher taxes only for the rich', that a VAT (or any other new broad-based tax) seems out of the question. So I can much more easily imagine spending cuts eventually getting bipartisan approval with only nominal tax increases included in the bargain.
A few points:
1. A VAT has never been my preferred outcome, rather I warn that it may be necessary if we do not act soon.
2. Balancing the budget within five to ten years with spending cuts alone would be difficult but by no means impossible. I am all for doing that, but a) it won't happen as stated, and b) it still won't balance the budget over a ten to twenty year time frame.
3. The path toward long-run fiscal balance involves recalibrating Medicare, Medicaid, and Social Security to lower rates of indexation, reimbursement, benefit increase, and so on. We need to start that process now. It cannot be done overnight or even over a few years' time. It takes a long time for those gains to come in, cumulatively. No one is going to vote for a "thirty percent cut to Medicare, today," although they might vote for changes in rates, which over time would amount to large reductions.
4. The time for a Grand Fiscal Bargain is now. If we don't do it fairly soon, we won't get spending under control at all. Furthermore the number and percentage of elderly voters will only increase, which will make spending cuts more difficult as time passes.
5. Let's say a proposal for long-run balance were presented, with $3 in spending cuts for every $1 in tax hikes. That is still a good deal for the anti-tax, anti-spending conservative. Rejecting such a deal means we will end up with something closer to $3 in tax hikes for every $1 in spending cuts. (And no, I don't know what is the "break even" point for a good bargain in this regard.)
6. Bill Niskanen's research shows that by taking tax hikes off the table we simply encourage governments to spend more. Spending then looks like a free lunch.
7. Making it a priority to "avoid any tax hike today" is the same kind of short-run view which brings us to fiscal catastrophe in the longer run. In the medium-run, much less the long run, this attitude will lead to higher taxes. However much it may masquerade as a low-tax attitude, it is in reality a high-tax attitude. Unintended consequences is a fundamental economic idea and it is very much operating here.
8. If I called on President Obama to push for a budget deal, and I cite CAP in support, it was not to criticize the Democrats, or Obama (as DeLong and Krugman mysteriously suggested), but rather because I see him as by far the most influential player in this process.
In short, I am asking for the true fiscal conservatives to step up to the plate, and bring about lower taxes in the long run, rather than simply "playing team on the tax issue" in the short run. Time is not on our side, and if we think it is we are fooling only ourselves.
Chili or Mexican food would be ideal. Thanks in advance for the help…
From David Brooks's new blog:
What do you do after your party wins an election? In a forthcoming study for the journal Computers in Human Behavior, Patrick Markey and Charlotte Markey compared Internet searches in red and blue states after the 2006 and 2010 elections. They found that the number of searchers for pornography was much higher right after the 2010 election (a big G.O.P. year) than after 2006 (a big Democratic year). Conversely, people in blue states searched for porn at much higher rates after 2006 than after 2010. One explanation is this: After winning a vicarious status competition, people (predominantly men, I guess) tend to seek out pornography.
And David's new book is here.
2. Is the euro really dead? (Too much on stocks, not enough on flows, to convince me.)
3. Is the stamp really dead? (aka: the culture that is Sweden)
6. The future of educational reform, by Steve Teles.
What I think left-leaning economists should do more:
Look for structural reasons for policy failure, rather than attribute it always to misguided ideology. Consider the implications of imperfect knowledge on the part of government actors. Also, consider that the existence and growth of special interests is at least partly endogenous with respect to policy.
What I wish that right-leaning economists would do more:
Look for structural explanations for the growth of the state, rather than attribute it always to misguided ideology. Consider the implications of urban density. Consider that as the economy becomes more complex, the potential dispersion in wealth due to differences in ability, information, and luck becomes very large, while the ability to overcome such differences with sheer effort probably declines.