Paul Krugman and Charlie Stross

A few passages from a much longer discussion between Paul Krugman and science fiction author Charlie Stross (via): 

Anticipation World Con, Transcription by Edwin Steussy: ...PK: [T]his is different for me, but it should be a lot of fun. … What do you really think the world is going to look like, say, 30 years from now? ... I was thinking about this coming up – and thinking that – maybe it was just my age or something, but things don’t seem to have changed as much in the last 30 years as myself as a sci-fi reader would have expected them to. And I don’t know if I’m missing something... There is no question that things have changed, but ... I still have the sense that the transformation in the quality of life that I thought would be happening by now... If I can veer off into something I allegedly know something about, in case you haven’t heard, we have a global economic crisis. What’s amazing about it is how much it’s traditional.

CS: A good, old fashion banking crisis.

PK: They happen to involve complicated institutions that are not called banks, they do rely on IT, you no longer have to have rows of tellers to provide people fast access to cash, not subject to standard bank regulation, they can manage to have bank runs all the same. You read John Maynard Keynes‘ The Great Slump of 1930, and with just a few words changed it’s a very fine description of what’s happened to the world in the past year. We haven’t actually changed the structure of how we do things to anything like the extent one might have imagined.

CS: Working hypothesis. It’s a working hypothesis that I’m trying to get my head around. Back to 1970-ish, do you remember the book by Alvin Toffler called Future Shock?

PK: Yeah.

CS: My working hypothesis is that we are living in a future shocked civilization in fact the future shocked globe. There is a lot of evidence of it all around. The ascendancy of religious fundamentalism in all sorts of cultures is one particular response. People don’t like rapid change when it’s applied to them against their will, when it’s coercive, and when people don’t like something, an external stimulus, they tend to kick back against it. Religious fundamentalism boils down very largely to one thing: certainty in life. ... And to people who are disoriented and distressed by the way the world around them is changing that’s got to be a source of … a very attractive offer of mental stability.

PK: You know, I think this is where being an American makes a difference. And knowing that we’ve had these crazies with us consistently as a major feature of our political scene. Going back to certainly the 1920’s.

CS: Don’t they seem to be a bit louder now?

PK: They have their ups and downs. But, a lot of what we see now is … read H.L. Menken on the fundamentalists and it’s the same … it sounds very similar. In a lot of ways, I think that the modern world began in the 20’s with radio and the penetration of mass culture into places that previously had been comfortable with their bibles. So this is not so new. They got louder … I’m about to go off onto a discourse on US … it’s not clear that the fundamentalists got any more fundamentalist … what happened was that we had a political shift in the United States at least that empowered them … the break up of the old weird coalition between basically Northern labor unions and Southern segregationists … created a place where the religious right had power again but I don’t think that there’s … I’m about to switch sides here … there has been a rise in religious fundamentalism among unusual groups there are … amazing number of relatives of mine who have ... kids ... have suddenly turned orthodox and that was not something anyone quite envisioned … maybe some kind of future shock.

CS: I’ve noticed in the UK over the past decade there has been an increasing (small “c”) conservatism in the electorate fostered by a feedback loop with some newspapers. Standard headline is, “Threatening entity here going to do something hideous to you.”

PK: That’s my column for tomorrow’s New York Times actually. ...

...

CS: There’s a huge latency in ... technology. ...

PK: ...There’s a favorite story about this among the economic historians and it’s about electricity. Which is that electrification … widespread electrification is a phenomenon of the 1880’s and particularly factories were electrified in the 1880’s and it did nothing much for productivity because they were still building factories the way … a 19th century factory was a five story brick building … very tight spaces … which has a steam engine in the basement … driving trains and pulleys and shafts and it took about 30 years for them to figure out that, hey!, with each machine having it’s own electric motor, we can have a wide spread out single story floor plan with lots of space and we don’t have to be moving stuff up and down these stairs and we can have plenty of room for material flow and … we saw a little bit of that in IT, but the thing was it was terribly disappointing because although it actually does show in the GDP numbers, what was the first place where people really figured out what do with IT in a way that was productive, and the answer was Wal-mart. It turns out that all this unglamorous stuff like inventory management, basically knowing what exactly is left on the shelves the moment it is checked out of the counter being able to plan your whole system for something big box stores brought in and actually you can see that’s where the GDP growth …

CS: Logistics is vastly underrated. It’s invisible.

PK: That’s right. That’s the other thing, with globalization … about the outsourcing … about the Internet and the IT … but that’s a relatively minor thing so far, probably much bigger in ten years so, but the big thing was the freight container.

CS: Oh yeah, the freight container and the fork lift and pallet.

PK: Right. And the big cranes and the bar code on the side of the container.

CS: ...I think one of the things logistics is going to … well, computers are going to give us, is much tauter supply chains between production and consumption.

PK: That’s by the way one of the mysteries … we don’t quite know why there’s so much stuff being shipped long distances, particularly … its one thing when we’re talking about oil because oil is where it is, it has to be shipped to get to other places, but … there was a time, again thinking of the United States, a time when we knew what Detroit did for a living, we knew Troy, New York was the detachable collar and cuff center of America and all these local specializations and you could explain why stuff was being shipped back and forth. These days, it’s very very hard to figure out what’s different about the economies of different cities and so if … why is there so much … who are all those people on the plane today. Why were they traveling and … better still, when you’re flying between Cleveland and Atlanta, what is it that Cleveland has that Atlanta needs? What is it that Atlanta has that Cleveland needs? Actually, what is that Atlanta has that anyone needs? I actually did try to figure out what Atlanta’s economy is about … it seems to be about the airport. We’re not quite getting it. ... If we can all have short supply chains why don’t we have that now for all of the services that cities generate and yet we have all of this trucking going back and forth among seemingly very similar US cities.

CS: Because I reckon that complexity, the number of different components, the number of different of different specialties that you need to run a modern, high tech civilization has mushroomed by orders of magnitude over even the past 50 years. And all of this stuff is really small, very, very specialized, there’s only a very few people who do it in one place and it has to get shipped about even though it looks similar.

PK: That’s the working hypothesis, something like that. ...

I think it's difficult to see how much things have changed when you are living through it. It's like kids. When you are with them everyday, you hardly notice that they are changing, but if you don't see them for several years, the large amount of change is obvious. I don't think we fully realize yet how much of a revolution information technology - the internet in particular - is bringing about. It's not as spectacularly obvious as underground cities or flying cars, but I think the change it brings is far more pervasive both socially and economically. In the future, when people look back at this time period, they will see it as a time that brought about vast change to the world, on the order of the industrial revolution. The change has not yet been fully realized, it's only been a couple of decades or so since the internet began, which isn't that long as these things go, and we are still getting wired up at both the extensive and intensive margins (i.e. the technology is still spreading, improving, and becoming more mobile, and we are increasingly interconnecting ourselves with links, RSS feeds, Facebook, Twitter, and the like). But even so, even though this is just the beginning, the changes that have occurred already are far more extensive than we understand as we live through them. I was thinking about getting old the other day, and one of the things that disappoints me most about the prospect of my time ending is that I won't get to see how this all plays out, future shock and crazies included. I think we are living through a time of vast, important change and what the world will look like hundreds and thousands of years from now fascinates me. I wish I could stick around to see what happens.