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Toilets versus computers

In an earlier post I discussed Robert Gordon’s argument that the big technological innovations (for example the discovery of the flush toilet) had already occurred and that more recent innovations – such as the development of the computer and computer-networking via links with telephones were having at best only marginal impacts on productivity.  There is a sense in which this is true – toilets led to huge gains in human health by enabling humans to efficiently separate themselves from their waste – this theme is taken up  here.  Computers and computing seems to pervade our life but, as Bob Solow and others have pointed out, the measured impacts on productivity have been marginal.  Gordon sought to “prove” his claim by posing the conceptual question of whether people would most prefer to give up their toilets or their computers-cum-mobile phones.  His assumed answer was that most would prefer to forego the modern technology – it seems less essentials.  Well this is not in fact oobvious.  In some cultures – China, African and many other developing countries – access to technologies such as mobile phones seems to be preferred, according to Kevin Kelly, to improved sanitation.  The argument is that improved networking capabilities offer greater gains (in getting work, facilitating contacts) to these people than building a decent sort of crapper.

The general implication (removed from the specifics of toilets) of the Gordon argument is technological pessimism.  Kelly, a technological optimist, seeks to rebut this pessimism.

This Kelly argument does not explain the limited impacts of new technology on productivity development in the United States now. It might however explain part of the recent rapid growth in countries like China. Kelly suggests that  perhaps  the transformational capabilities of computer networking in countries such as the United States and Europe will take a lot of time.   Maybe 100 years.

I am sure that the impact of computer networking on societies will be enormous over the next 100 years as the universal access to all types of information develops, educational systems are transformed and so on. We will live better lives.  I am less convinced that we in developed countries will produce more at least in the sense of material goods and services.  That is probably a good thing.  Indeed I am surprised at the strength of the reaction to the Gordon arguments.  Economists should be focusing on the impacts of new technologies on the quality of the lives we can lead rather than the efficiency with which we can produce widgets.

Update: Can we do better than the toilet? (1196)

1 comment to Toilets versus computers

  • Jim Rose

    The scale effect debate in endogenous growth covers the same ground better using applied price theory.

    An increase in the size of the population, other things equal, raises the number of researchers and should lead to an increase in the growth rate of per capita income.

    This prediction is strongly at odds with 20th century empirical evidence as Chad Jones argues.

    A ten-fold plus increase in the number of R&D workers and several-fold more graduates since 1950 has had no effect on the rate of productivity growth in the USA – the global industrial leader.

    Understanding why will explain why Gordon has over-played his hand.

    The process of development of new product lines fragments the economy into submarkets whose size does not increase with population. Product diversity dilutes the effects of a larger R&D labour force and a better educated population.

    As technology advances it becomes more complex so society must make an ever-increasing expenditure on R&D to keep innovating at the same rate as before.

    Gordon over-played his hand because the growth-enhancing scale effect of more R&D workers per sector is just offset by the growth reducing effect of product proliferation.

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