Krugman: Policy Implications of Capital-Biased Technology
I’ll be writing more about this in weeks to come, but I guess I’d better say something right away about the implications of a declining labor share in GDP. Again, the data so far look like this:
http://krugman.blogs.nytimes.com/2012/12/28/policy-implications-of-capital-biased-technology-opening-remarks/
Consider for a moment a sort of fantasy technology scenario, in which we could produce intelligent robots able to do everything a person can do. Clearly, such a technology would remove all limits on per capita GDP, as long as you don’t count robots among the capitas. All you need to do is keep raising the ratio of robots to humans, and you get whatever GDP you want.
Now, that’s not happening — and in fact, as I understand it, not that much progress has been made in producing machines that think the way we do. But it turns out that there are other ways of producing very smart machines. In particular, Big Data — the use of huge databases of things like spoken conversations — apparently makes it possible for machines to perform tasks that even a few years ago were really only possible for people. Speech recognition is still imperfect, but vastly better than it was and improving rapidly, not because we’ve managed to emulate human understanding but because we’ve found data-intensive ways of interpreting speech in a very non-human way.
And this means that in a sense we are moving toward something like my intelligent-robots world; many, many tasks are becoming machine-friendly. This in turn means that Gordon is probably wrong about diminishing returns to technology.
Ah, you ask, but what about the people? Very good question. Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.
http://krugman.blogs.nytimes.com/2012/12/26/is-growth-over/
