The world is models

I’m going to argue that Tyler Cowen’s new book showed something important, but not what everyone is debating.  Most of the discussion revolves around the issue of whether real economic growth has slowed dramatically in recent decades, and is likely to continue to disappoint over the next few decades.  Perhaps what it really showed is that real GDP is itself becoming an increasingly meaningless concept. 

Much of the debate revolves around whether we have accurately measured inflation.  But this debate assumes there is a “true” inflation rate out there, and we just have to correctly measure it.  OK, but what is inflation and real GDP growth trying to measure?  How much more stuff we have?  Or how much more happiness? 

I vaguely recall that price indices are supposed to measure how much more money we’d need to keep the same level of utility.  But what is utility?  Lots of economists seem to think it means something like ‘happiness.’   But that can’t be right, as surveys indicate little or no increase in US happiness over time, yet even the pessimists agree that RGDP/capita has grown significantly since 1945. 

If RGDP is supposed to measure how much “stuff” we have, then how do we compare items?  Is an iPod more or less stuff than a washing machine?  Is an hour with a pet psychologist more or less stuff than a microwave?  Sometimes when a new product arrives, its value can be estimated by looking at how much more it sells for than an older version of the product.  But this won’t work if the early adopters are wealthy people willing to pay much more for a slightly improved version of flat panel TVs. The masses won’t buy that slightly improved version until its price falls to the old version, and when people take it home they won’t notice much difference when actually watching TV shows.

Maybe inflation doesn’t exist out in reality, rather is merely a concept we create with statistical tools.  Indeed according to the smartest man in the world, it’s not even clear that any sort of reality exists:

Hawking gives a good description of how scientists come to the conclusion that something is real.  We construct intellectual models that, within some range of phenomena, and to some degree of approximation, agree with observation.  But he calls this “model-dependent reality,” and suggests that this is all there is to reality.

Questions about the nature of reality have puzzled scientists and philosophers for millenia.  Like most people, I think that there is something real out there, entirely independent of us and our models, as the earth is independent of our maps.  But I believe this because I can’t help believing in an objective reality, not because I have good arguments for it.  I am in no position to argue that Stephen Hawking’s anti-realism is wrong.  [from a book review by Steven Weinberg]

That’s right, Stephen Hawking says it’s turtles . . . er . . . it’s models all the way down. 

But I’m also a pragmatist.  During the 100 years leading up to 1973, RGDP was a reasonable way of thinking about the obvious fact that lots more of almost every type of “stuff” was being churned out.  Living standards were clearly rising as we accumulated vastly more cars, TVs, appliances, restaurant meals, etc.

But how will we measure RGDP growth in the information-oriented economy that Tyler Cowen describes?  We’ve gone from watching TVs with 4 channels, to watching computer monitors with 100 million “channels.”  What is the monetary value of that?  What’s the utility value?  Tyler points out that many of the info tech innovations produce surprising little revenue.  I’d add that in the long run that’s also true of biotech, the other great technological hope.  A complete cure for cancer will initially earn great revenue, but after coming off patent will sell for relatively little, despite continuing to cure cancer.

Tyler Cowen’s book as been both a marketing coup and an intellectual game changer.  It has gotten people to focus on issues they intuitively knew were out there, but for which they lacked a framework for thinking about.  The WSJ recently called him a 21st century Thomas Friedman.  That got me thinking about Friedman’s famous “suck on this” comment.  Well here’s my own suck on this:

If we are serious about utility being the be all and end all of economic growth, then isn’t it possible that there was little economic growth between 1945 and 1973, but lots of growth since?  Suppose all that postwar growth in “stuff” didn’t really make people any happier.  But then after 1973 the widespread use of anti-depressants made people much happier than before.  In that case, isn’t it possible that utility has actually risen faster since 1973?  Economists think they are just technicians, collecting data about the economy.  No need to think about what the purpose of life is.  No need to read Nietzsche.  But if we don’t know what we are measuring, how likely is it that we will come up with accurate measurements?

As soon as I saw Tyler Cowen compared to Thomas Friedman, I knew that his commenters would ridicule him mercilessly.  And I was right.  But those sarcastic comments come from little people, envious of great men like Thomas Friedman.  I’m not too proud to try to emulate the great sage of the 1990s.  Hence the title of this post.

PS.  God I hope that the ”sensory impression of snow outside my window” isn’t real; I really don’t want to do anymore shoveling.  Do any others readers have a similar sensory impression?  Confirmation from others won’t show that the snow is “real,” but it will accurately predict whether I am about to suffer.  And pain is real.  That’s because pain (and happiness) are the only things for which the reality and the perception are one and the same.


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131 Responses to “The world is models”

  1. Gravatar of marcus nunes marcus nunes
    1. February 2011 at 07:42

    Steve Wlliamson didn´t get it!
    http://newmonetarism.blogspot.com/2011/01/cohen-on-innovation.html

  2. Gravatar of mbk mbk
    1. February 2011 at 07:49

    Now this discussion is getting somewhere. It’s also worth noting that GDP is a rate. It is not a stock. It measures busy-ness of some kind. The growth of GDP is the growth of activity and this per se does not have to mean much. It may mean people have to work harder to rebuild after a war. It may mean tighter standards that make the world just a tiny bit safer, but are much more expensive than previous standards. Diminishing returns. Increased maintenance cost of existing structures. etc. GDP movements matter most as a proxy measure of how well the coordination machine of the economy works.

    In terms of models I completely agree. Hawking is not the first to say so of course, and frankly I think he and physicists as a class have been some of the worst offenders in implying that having one model that works, equates having “the” explanation for something.

  3. Gravatar of Bill Gee Bill Gee
    1. February 2011 at 07:53

    The concept of “utility” is one that appears to be undergoing a makeover of sorts. My latest version of the McConnel/Brue textbook actually removed the chapter on utility altogether. Perhaps they’ll put it back in for the 19th Edition.

    I think the problem with using Utility as a measurment of economic growth is that the concept is incredibly fickle. What I get me great satisfaction today might get me very little satisfaction tomorrow. But the day after that, I might get more utility from it again.

    That’s the problem with attempting to correlate GDP with Utility. A pleasant walk on the beach may get me a great deal of satisfaction, but it will do absolutely nothing for GDP.

  4. Gravatar of David Pinto David Pinto
    1. February 2011 at 08:05

    If utility is happiness, the snow is decreasing my utility.

  5. Gravatar of VG VG
    1. February 2011 at 08:36

    It is only snow on top. Below that it is just a series of models.

  6. Gravatar of Wimivo Wimivo
    1. February 2011 at 08:38

    Hawking isn’t even the smartest physicist in the world.

    To quote Philip Ball,

    “Most people will be astonished to hear that Hawking is not rated by his peers among the top ten physicists even of the 20th century, let alone of all time.”

    “More importantly, Hawking has no reputation among scientists as a deep thinker. There is nothing especially profound in what he has said to date about the social and philosophical implications of science in general and cosmology in particular. There is far more wisdom in the views of Martin Rees, John Barrow or Phil Anderson, not to mention the old favourites Einstein, Bohr and Feynman.”

    Princeton’s Edward Witten would be a better choice.

    Just sayin’.

  7. Gravatar of Bryan Willman Bryan Willman
    1. February 2011 at 08:38

    Why do people persist in thinking that “happiness”, and especially self-reported “happiness”, is the goal?

    Everybody has a variety of goals, which change according to their internal models (somewhere in the middle of the stack of turtles all the way down.) Some goals are set by the environment.

    So, somebody who has 20 healthy great-grandchildren is a genetic success, regardless of how horrible her life may have been. It is NOT for me to judge if she should be happy or sad. I merely observe that in evolutionary terms she is a winner.

    To add to the fun, people have different models in different circumstances. So for the very poor, “not hungry, not cold, not beaten up this week” are probably real victories. For the rich where that is all assumed, status relative to other people is one likely measure of victory.

    But of course one great privilege of wealth is the freedoms it offers – so you don’t have to work, so you can choose to spend 40 hours a week writing music you like. And be totally unconcerend with whether any other human wants it. That has high utility to most people, but will never show in GDP, not only because there is “no money” but because there is no value traded to other people.

    It helps (well, I think it helps) to remember that money (the thing we mostly try to measure) is above all else a call on other humans, with some persistence over time. So measurements of GDP are a measure of “stuff people will trade other people for” – and will per force miss changes bit and small that don’t show up on that ledger.

    This is part of why changes in the effects of technology are hard to assess. Often, there is no more “money” (Scott talked about this.) There may not be important real world changes. But there might be internal changes people value (I can get administrative stuff done faster and therefore do not worry about it anymore. Value to me, doesn’t show in GDP.)

  8. Gravatar of Greg Ransom Greg Ransom
    1. February 2011 at 08:40

    Scott, physicists are famously bad at philosophy. So bad they sometimes screw up their science.

    Read Wittgenstein. Skip the incompetent “philosophy” of the physicists.

  9. Gravatar of Greg Ransom Greg Ransom
    1. February 2011 at 08:42

    “Philosophy” = getting the fly out the bottle put there by confused mathematicians, confused scientists, confused linguists, etc.

    I.e. “philosophy” is the process of identifying the 5th wheels added to science and math and epistemology by scientists, mathematicians and Plato / Aristotle.

  10. Gravatar of Greg Ransom Greg Ransom
    1. February 2011 at 08:45

    Is there a more in your face insult?

    “The WSJ recently called him a 21st century Thomas Friedman.”

  11. Gravatar of Greg Ransom Greg Ransom
    1. February 2011 at 08:46

    This use of the word “utility” has nothing to do with marginalist valuation logic — it’s a relic of pre-marginalist thought.

    Don’t they teach the basics at Chicago?

    Scott writes,

    “If we are serious about utility being the be all and end all of economic growth, then isn’t it possible that there was little economic growth between 1945 and 1973, but lots of growth since? Suppose all that postwar growth in “stuff” didn’t really make people any happier.”

  12. Gravatar of mbk mbk
    1. February 2011 at 08:58

    Wimivo, well said on hawking, I initially wanted to say something along your lines. And I agree with Greg re: the bulk of scientists and philosophy. I’d venture most working scientists have little idea of the epistemological basis of their method. I really started understanding what science is and does only after I stopped practicing it…

  13. Gravatar of Kevin Dick Kevin Dick
    1. February 2011 at 09:01

    I made a comment over at EconLog that the problem may be decreasing marginal costs / increasing returns to scale. All pure speculation. But here’s my claim:

    In an industrial economy, most of the stuff you buy exhibits increasing marginal costs and decreasing returns to scale, at least at the level of demand where it is typically sold. So if GDP increases, that’s a pretty good indicator that we’re prospering more. We were willing to suck up those increased marginal costs.

    But information-based goods exhibit decreasing marginal costs and increasing returns to scale. For instance, Tyler’s new book has a marginal cost of perhaps a few cents and is going down. Whereas 40 years ago, it would have been a few dollars. At the end of the first printing, it would have been 10s of thousands of dollars to get the next book. Now the concept of out-of-print doesn’t even make sense.

    And it’s not just books, movies, and games. Much of the value added of all products is “information content”–all of which has no marginal costs and increasing returns to scale.

  14. Gravatar of Gene Callahan Gene Callahan
    1. February 2011 at 09:08

    I second Greg Ransom’s remark about physicists as philosophers. Suggesting that models are all there is to reality is inane.

  15. Gravatar of Indy Indy
    1. February 2011 at 09:13

    I always like to refer back to this page about hard drives when issues like this come up.

    The best place to start on our trend is about 30 years ago, when a single megabyte of hard drive cost about $200 (in 1981 dollars!). By mid 1994 – that had dropped to $1. By 2000, to 1 penny. Today, last I checked, you can get a 2 TeraByte WD “Green Caviar” drive shipped to your house for $70 – that’s 3.5 cents per gigabyte in 2011 pennies.

    The US government, if it wanted to, and for only seventy bucks, could keep a 600K file on every citizen on one single hard drive. The collected works of mankind and entire libraries can now be stored in one server and comprehensively searched almost instantaneously for a few thousand dollars. Makes you wonder what a multi-billion-per-year NSA can do.

    Now, according to the CPI, a dollar thirty years ago would be worth about $2.60 today. By my calculations, the real price of digital storage has declined by a factor of around 14 million!

    But of course, we can’t just consider space alone. You’ve got to think of other real quality improvements like speed (over 1000 times faster than a 1981 hard drive), reliability, compactness (1000 times more compact), noise, power consumption, ease of use and installation (“plug and play”) resistance to physical shocks (my laptop could tell some stories, but keeps plugging along, but really old drives would crash if you looked at them funny) etc. I’m going to say that, per megabyte, current hard drives are also at least 70,000 times *better* than they were in 1981.

    That adds up to a total deflation factor of something almost everybody uses of of about One Trillion (give or take an order of magnitude) in a single generation! Think of how many things in our life would not have been possible without this kind of price:capability ratio improvement in digital storage.

    The same story could be told for computing power in terms of transistors and operations-per-second as well, though that’s been decelerating quite a bit lately.

    I don’t think there’s any historical precedent for something like this. The fact is we’ve got two parallel worlds coexisting in the general marketplace.

    One – where most Americans spend most of their money (80% IIRC), food, clothing, shelter, transportation, education, health care – is defined by relatively slow and steady changes in price and quality and contributions to “utility”. Using the chain-method to compare one year with the previous year can safely assume that price differences are not mostly quality-influenced.

    The other world almost needs to chain months or weeks together. And their ability to deliver life-altering levels of utility has exploded (especially for a certain minority of uses, who Cowen calls “infovores”).

    Phenomena like this make concepts like inflation and “real vs nominal” GDP seem confused and misguided.

  16. Gravatar of Benjamin Cole Benjamin Cole
    1. February 2011 at 09:46

    I have pondered some of these same topics.

    Is is really true that a couple living in a postage stamp apartment in Manhattan, so driven by their careers they have no kids, is richer than a Thai family on 10 acres of land, lots of fresh food and a pick-up truck, with several children?

    Would a vistor from Mars think so?

    Still, I sense GDP per capita is rising, even in USA. Scott Sumner has said so in so many words; the tar paper shacks of yesteryear are mostly gone. If you visit Beverly Hills today, the mansions are double and triple the size of the 1960s, and incredibly richer in furnishings, gardens etc.

    Digitized info does change a lot, and I think makes us much “richer.” Finding old books on Google and reading them was impossible just a decade ago.

    I sense Scott Sumner is wrong when he says GDP is not growing as quickly as it once did. I think we are in the midst of a global boom. Items once luxuries will become commonplace, such as cars, telephones, medical care, globally.

    Barring an environmental meltdown, it will be better world than ever before.

  17. Gravatar of Morgan Warstler Morgan Warstler
    1. February 2011 at 09:50

    “Perhaps what it really showed is that real GDP is itself becoming an increasingly meaningless concept.”

    Hurrah!

  18. Gravatar of tonyv tonyv
    1. February 2011 at 10:18

    If you want to read a very good historical account about how economics came to be what it is, and how concepts like utility have to do with a straight relationship with 19th century physics, read “More heat than light” by Philip Mirowski…

  19. Gravatar of Morgan Warstler Morgan Warstler
    1. February 2011 at 10:22

    I stand firm, the great invention know to man is the Internet. Fire is a close second.

    I don’t know how many of you enjoyed the resplendent form of Rae Dawn Chong as much as I did in “The Quest for Fire,” and I wasn’t around during the period, but I’m going to posit that learning to make fire spread as information “comparably” as fast any other invention – generally until the Internet.

    Hyperbole maybe, but the point is the Internet has compressed and is compressing human history into a faster and faster rate of change – unlike anything we have ever seen.

    Let’s call it Velocity.

    We need one caveat: there is a medium and there is a message.

    In my model, the medium inventions always TRUMP the message inventions, because when you improve the medium, you “get the credit” for the rate of changes you bring for all future inventions, until the medium is improved again.

    Books trumped whatever conveyed fire, because books conveyed “everything invented” after books were invented faster.

    Radio trumped gunpowder, because radio conveyed information faster – you still need books, but all market aberrations ended quicker, this trumps gunpowder.

    Finally we have the Internet – books, video, everything conveyed instantly. And until a new medium trumps the Internet, its gets the weighted credit for conveying everything invented after it faster.

    Now then, we can judge all other utility gains against the GMT of invention: the Internet.

    And now we can look at any Economist’s data that says that 1980 onward isn’t the greatest period of economic expansion and the fastest rate of improving people’s lives – just has the wrong assumptions. And it helps us figure out WHY their assumptions are wrong.

    —-

    Look, if you spend anytime near the 90′s you must remember “network effects” and then after that “everything becomes free”

    If the way cool, smarter than you, tech geeks are right:

    1. More nodes in the network exponentially increases value.
    2. Everything becomes free.

    HOW can you sit around thinking we’re going to measure economic output or human success in the future by how many dollars trade hands?

  20. Gravatar of scott sumner scott sumner
    1. February 2011 at 10:43

    Marcus, I agree. People interested in technology often think all sorts of progress has been made recently. But for the average person, going from the horse and buggy era to the 1960s was a much bigger deal.

    mbk, If I’m not mistaken, even some of the ancient Greek philosophers (pre-Socratic?) questioned reality. Is that right.

    Bill Gee, Yes, but all the other alternatives for RGDP are also full of problems.

    David, The perception of snow is certinly making me sad.

    VG, let’s hope so, models are easier to shovel.

    Wimivo, That doesn’t surprise me, but I often take a little poetic license. Let’s just say he’s much smarter than me. And Steven Weinberg (no slouch) admits he can’t come up with any good arguments against Hawking.

    Bryan, I agree with you about happiness, but I’d say the same about evolutionary success. How did it help Genghis Khan that he has 40 million descendants?

    Greg, Hawking is studying reality. That’s physics. And in his doing physics, he noticed that there is no such thing as reality, only models. That’s also doing physics.

    What does “marginalist valuation logic” have to do with RGDP?

    mbk, So what is science? And what does it do?

    Kevin Dick, You said;

    “So if GDP increases, that’s a pretty good indicator that we’re prospering more.”

    That’s a tautology. The problem is knowing when (real) GDP increases.

    I agree about falling MC.

    more to come . . .

  21. Gravatar of W. Peden W. Peden
    1. February 2011 at 10:51

    Hawking is not the best person to consult about the philosophy of science.

    For one thing, a model is a model OF something, and an observation is an observation OF something. If it’s true that we have models and we make observations, then we have to have subject matter for these things. We have many interactions with this subject matter that go beyond observation. We might as well call that subject matter “reality”.

    However, he has the mirror image of a good point here, in that if something is real we can model it. On the other hand, we can model many things that aren’t real. To torture what Wittgenstein said a little: we talk about the world, but we often say things that are false and there are things we do not talk about.

  22. Gravatar of W. Peden W. Peden
    1. February 2011 at 10:52

    Greg Ransom,

    A good example of what you’re saying would be neuroscience. In my experience, talk to a neuroscientist about the philosophy of mind for more than five minutes and they will have both said (or implied) that consciousness is identical with the brain AND that consciousness is caused by the brain.

  23. Gravatar of W. Peden W. Peden
    1. February 2011 at 10:53

    (With exceptions. I once knew an undergraduate biology student who knew far more about the philosophy of mind than many grad students, but he was the type who read Plato in Greek to relax and spent his holidays in the rainforest discovering new species of butterfly.)

  24. Gravatar of Luis H Arroyo Luis H Arroyo
    1. February 2011 at 11:05

    Very good. But I don´t see how we can avoid refering to RGDP. Excessive inflation is cause of pain, that si quite sure (or not?). Excessive deflation is perhaps worse (is it?). In both case, A reason to watch inflation and RGDP.
    Do you think that face to major risk of stangflation (Egipt) it suffice to pursuit a NGDP of 5% a year? Nice dilemma.

  25. Gravatar of scott sumner scott sumner
    1. February 2011 at 11:17

    Gene, It’s counter-intuitive, but the more I think about it, the more sense it makes to me.

    Indy, I certainly agree with your last sentence. But I’m still not sure we know what we are trying to measure.

    Benjamin, I agree about the Thai family, and also that RGDP is growing. But my only evidence that RGDP is growing is casual observation. I don’t think the government statisticians know what they are supposed to be measuring, Hence I don’t think they add much to casual observation.

    Tonyv, Yes, I’ll try to read that. I’ve heard it’s good.

    Morgan, I think we agree that progress is in the eye of the beholder.

  26. Gravatar of scott sumner scott sumner
    1. February 2011 at 11:21

    W. Peden, OK, But Steven Weinberg is very smart, and can’t come up with any good arguments against Hawking. Obviously he knows about the argument you just presented–why doesn’t he think it a good argument?

    It seems to me that to have reality you need a God, and then reality becomes the world as perceived by God. But Hawking doesn’t believe in God, hence no reality.

    Luis, Yes, 5% NGDP growth is perfect for stagflation.

  27. Gravatar of Luis H Arroyo Luis H Arroyo
    1. February 2011 at 11:23

    BTW, I´m with Williamson. I think that economics can not bring happiness, but bad economics can do very pain. And on the argument of SW, I would say that the High Tech is not happiness, but it bring free time (to work, perhaps) and leisure.

  28. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 11:33

    Scott,
    Lane Kenworthy has an interesting post on Cowen’s “The great Stagnation”. He lists three potential reasons for the slowdown:
    1. Innovation has slowed.
    2. The degree to which innovation boosts economic growth has declined.
    3. The degree to which economic growth boosts median income growth has declined.
    He proceeds to argue that innovation has not slowed as Coweb claims and instead argues for hypothesis #3:

    “Between 1947 and 1973, GDP per family increased at a rate of 2.6% per year and median family income grew at 2.7% per year. From 1973 to 2007, GDP per family increased at 1.7% per year, but median family income grew at just 0.7% per year.”

    http://lanekenworthy.net/2011/01/31/the-great-decoupling/

    Interesting, but note that GDP per family growth still slowed down from 2.7% to 1.7%. that adds up over 40 years.

    Krugman applied the “Kitchen Test” to Cowen’s hypothesis:

    “Better yet, think about how a typical middle-class family lives today compared with 40 years ago — and compare those changes with the progress that took place over the previous 40 years.

    I happen to be an expert on some of those changes, because I live in a house with a late-50s-vintage kitchen, never remodelled. The nonself-defrosting refrigerator, and the gas range with its open pilot lights, are pretty depressing (anyone know a good contractor?) — but when all is said and done it is still a pretty functional kitchen. The 1957 owners didn’t have a microwave, and we have gone from black and white broadcasts of Sid Caesar to off-color humor on The Comedy Channel, but basically they lived pretty much the way we do. Now turn the clock back another 39 years, to 1918 — and you are in a world in which a horse-drawn wagon delivered blocks of ice to your icebox, a world not only without TV but without mass media of any kind (regularly scheduled radio entertainment began only in 1920). And of course back in 1918 nearly half of Americans still lived on farms, most without electricity and many without running water. By any reasonable standard, the change in how America lived between 1918 and 1957 was immensely greater than the change between 1957 and the present.”

    So it sounds like he pretty much agrees with Cowen.

    Steve Williamson said the following (see Marcus Nunes’ link above):

    “Let’s go back to 1959, which is when I started to notice technology in a serious way. My father bought a new car that year – a 1959 Oldsmobile. My father wanted a radio in the car, and seatbelts, and those had to be installed by the dealer. The car came with an automatic transmission, but for us that was a novelty. This car required attention. It quickly developed oil leaks, its tires had to be replaced frequently, and it did not always want to start in the cold weather. Compared to this, the car that is within reach of the average person in the US today is a marvel. It is enormously safer, more efficient, easier to maintain, and with many devices that did not exist in 1959.”

    And with that I have to profoundly disagree.

    Maybe, Steve’s father just had bad luck. Or just maybe Oldsmobiles really sucked that year. I happen to have a completely different impression owing to the fact that I own a 1959 Lincoln Continental coupe.

    It’s loaded with all the convenience you expect in a modern car with power everything, air conditioning, etc. It even has a power retractable rear window (a “Breezeway Window”) and automatically dimming high beam headlights courtesy of its Autronic Eye. Just try and get those on a “modern” car.

    And the car has an amazing fit and finish. The paint is original and it looks perfect. Although the doors weigh a ton they open and close with barely any effort at all. It’s ultrareliable, starts easily in any kind of weather and is bone dry as far as leaks go. It gives me amazingly little trouble despite the fact it’s now over half a century old. (Who said Detroit didn’t know how to build cars back then.)

    Granted, it’s not a Chevy, a Ford or a Plymouth of that vintage. A low priced car of 1959 doesn’t really compare with a modern car. But I’ll stack my Lincoln with any modern car, luxury or otherwise. The only drawback it has is that it drinks gas like there’s no peak oil coming. But it brings me a lot of pleasure so I don’t mind the expense for now. And what do you expect of a car that is 19 feet long. 80″ wide and weighs about 5600 pounds curb weight. And thanks to all that mass I don’t worry a bit about safety.

    So when I apply the “Car Test” I just don’t see much progress in the last 50 years.

    On the other hand I truly do believe the level of technological progress in electronics has been astonishing in just the last decade. A few years ago I made a big effort to pick up those “low lying fruit” when I got a 50″ plasma, 7 channel surround sound, satellite radio (mainly for the Grateful Dead channel) a 160 gigabyte Ipod, high speed broadband with updated computers etc. It sounds extravagant but it didn’t really cost that much money and it all gives me a lot of utility.

    What doesn’t give me a lot of pleasure is shoveling snow. (Maybe it’s time to get a snow blower like all of my neighbors.) Actually I’m in a lot of pain right now from the 12″ of heavy wet stuff we got last Thursday. So I don’t need an intellectual model to tell me that’s real.

  29. Gravatar of Lorenzo from Oz Lorenzo from Oz
    1. February 2011 at 11:52

    Right, how many people are going to stand up and say “actually the victims of Hitler/Lenin/Stalin/Mao/Pol Pot/[insert mass murdering monster here] were killed by a model”. They were killed in service to various models, but I think they were killed by real things and their deaths were real things. As is every death.

    If you can fill the unforgiving minute
    With sixty seconds’ worth of distance run,

    We all live in a world of unforgiving minutes and it takes a particular form of comfortable unreality to temporarily fail to notice. Not that anyone does except when engaging in a particular form of abstract theorising. It is not a model, for example, that confines Stephen Hawking to a wheel chair.

  30. Gravatar of Greg Ransom Greg Ransom
    1. February 2011 at 12:17

    What does this remark have to do with anything either of us wrote above? I was commenting on your misuse of the word “utility” — something that has happened here before.

    Scott,

    “What does “marginalist valuation logic” have to do with RGDP?”

  31. Gravatar of Jason Jason
    1. February 2011 at 12:19

    Nice post.

    Three comments:

    1. It’s possible that “100 million channels” may be more tractable situation (with a more useful, if statistical, definition of value) than 4 channels.

    2. I think you’re right about the microwave vs therapy session question. I’m left wondering whether the key insight into macroeconomics is that this question is impossible to answer in principle, so *any* basket of goods used to measure inflation is appropriate, just maybe not accurate, like a temperature indicator that doesn’t couple to high energy modes. The real thing you are trying to measure is the price of every good, so any basket is an approximation, and selecting the products in it may bias it; best to go with a random or very large sample, along with knowledge of the rates at which things sell at various prices. Google’s new price index may be interesting.

    3. Is it possible the stagnation is just capitalism starting to work properly finally, reducing everything to zero marginal product (even innovation)? Cells evolving into a multicellular organism probably went through a phase where it was possible for one cell to “get ahead”. Life for a cell in a body is far more certain, but also lived at the margin of existence. (I guess this is Robin Hansen and the subsistence brain emulations … with a little of Cowen’s ZMP; I just don’t think we’re at a point where this recession, or even the past 30 years, can the considered the sign of anything big and long term like that even given the uncertainty in the data.)

  32. Gravatar of Bryan Willman Bryan Willman
    1. February 2011 at 12:57

    @scott – “but I’d say the same about evolutionary success. How did it help Genghis Khan that he has 40 million descendants?”

    Oh, I don’t think it did. Just like Seattle’s having more coffee shops than about anyplace in history does me no good (I’m allergic to coffee) – but by the “coffee availability evaluator” I’m a winner. The genetic/evolution example is important because it shows you can be a “winner” by some important standard that you don’t value very much.

    Perhaps “happiness” should be replaced by a Life Circumstance Evaluator. Enough money for some level of physical comfort? That’s one score. The rest is the “freedom to do things that matter to that person score” and is about social rules and politics as much as about economics. (People stand on the street corner in Kirkland and hand out flyers comparing Obama with Hitler. And it’s protected speech. So for anybody with a claim to make in public, that freedom is large and valuable.)

  33. Gravatar of Bryan Willman Bryan Willman
    1. February 2011 at 13:02

    @Indy

    And that’s just the hardware. The effects are greater for software, but also slowing down.

    In 1981 the “os” would have been DOS, that was viewed as primitive by its own authors.

    By 1991 there was windows and NT, and the authors (including me) felt we had advanced from primitive to “merely crude”.

    OSX and Win7 are hugely better.

    And they are the most severe case of hyper low marginal cost and enourmous advantages to scale. The total in investment in Win NT 3.1 through Windows 7 is billions of dollars. To make a comparable new OS from scratch is order $1 billion. Each extra copy could cost as little as a few cents, and 0 of that might befall the creator.

    With a product like Windows, there’s a very large double edged sword. If you do something really good, literally a billion plus people will benefit from it. If you do something really bad, it will be an irritant or a blight to literally a billion people.

    Google, facebook, twitter, maybe do NOT scale quite so much, because they must support the product with big servers they pay for. But incremental costs are still very very low.

    But you cannot eat any of this.

  34. Gravatar of Luis H Arroyo Luis H Arroyo
    1. February 2011 at 14:06

    “So when I apply the “Car Test” I just don’t see much progress in the last 50 years.”

    Jajajajajajajajajajajajajajajajajaja, Mark A. Sadowski, that is not very cientific , is it?

  35. Gravatar of Nemi Nemi
    1. February 2011 at 15:10

    “Perhaps what it really showed is that real GDP is itself becoming an increasingly meaningless concept.”

    BRAVO!!

  36. Gravatar of Greg Ransom Greg Ransom
    1. February 2011 at 15:48

    Just how incompetent are “lots of economists” when it comes to marginalist thinking about “utility”?

    This looks to me like a scientific issue much more serious than the well ancient and well-known problem of indices.

    Scott writes,

    “But what is utility? Lots of economists seem to think it means something like ‘happiness.’”

  37. Gravatar of Chris T Chris T
    1. February 2011 at 15:57

    People interested in technology often think all sorts of progress has been made recently. But for the average person, going from the horse and buggy era to the 1960s was a much bigger deal.

    However, people interested or working in technology would have a much better idea of the rate of change and how a particular advance affects the world we live in. If people actually working closely with technology or science say that it is advancing more quickly, it’s a good bet that it is.

    I’ve spoken of this before, but technological progress is not measured by discrete inventions. Such things do not exist, it is instead a process of constant refinement. The innovation across the many, many fields required just to make this blog possible is staggering. The same with going from a 1959 Chrysler to a 2012 Chrysler Sonic even if to an untrained eye they’re still categorically ‘cars’.

  38. Gravatar of Kevin Dick Kevin Dick
    1. February 2011 at 16:11

    @Scott. Yes, I meant RGDP as calculated using traditional measures of inflation. When you have falling marginal costs / increasing returns, it’s hard to know what inflation means.

  39. Gravatar of Morgan Warstler Morgan Warstler
    1. February 2011 at 16:14

    Mark, good lord:

    http://www.youtube.com/watch?v=joMK1WZjP7g

    DeKrugman is an idiot:

    1. Who the hell would want a god damn TV with 3 channels on it? You might as well not even invent a TV with 3 channels on it. Might as well listen radio. You average school play would be better than stuff on TV. And of course, 500 channels employs countless people making Reality TV shows.

    2. If we took any 1000 kids 15 years old back to 1957, 50% would commit suicide. Here Johnny, put this card in your spokes! Let’s have a pen pal! What’s a Taco? You want to see pictures of naked ladies doing what to what? You have to be friends with your neighbors! Don’t drink out of that fountain! Johnny, aren’t you glad you have a car and toilet?

    Jesus, you old guys are unable to even grasp for a brief moment, that after doing THAT to the 16 year olds, the ones who didn’t kill themselves – if you took them to 1910, they’d say, “oh I have to piss outside and ride a horse” (Scott, PEE).

    If you took them back another 50 years – it’s ALL the same, life without 500 channels, the Internet, instantaneous now – this is what it is ALL about. And in 20 years every man woman and child in Africa will have it too.

  40. Gravatar of Morgan Warstler Morgan Warstler
    1. February 2011 at 16:19

    “Right, how many people are going to stand up and say “actually the victims of Hitler/Lenin/Stalin/Mao/Pol Pot/[insert mass murdering monster here] were killed by a model”.”

    Uhm, No.

    The Internet is how we’re ending all that shit. In 20 years, it will be obvious to all involved. Caveat: As long as we shut up the greenies and deal with peak oil properly.

  41. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 16:41

    Luis,
    Well, no, it’s not very scientific. (Nor is my pain from shoveling snow.) That’s the point. My subjective “Car Test” is no worse than Krugman’s “Kitchen Test” and I think equally valid.

    And lest we forget how little progress has been made in automotive technology since the mid 1970s let me offer a mini-timeline of accessible (not expensive) automotive firsts (at least to Americans):

    1923-Car Radio (Springfield)
    1928-Defroster (Studebaker)
    1928-Tilt Steering Column (GM)
    1934-Unibody Construction (Chrysler)
    1937-Safety Padding (Chrysler)
    1937-Windshield Washer (Studebaker)
    1938-Air Conditioning (Studebaker)
    1938-Fog Lights (GM)
    1939-Automatic Transmission (GM)
    1940-Power Windows (Packard)
    1948-Rear Window Defogger (GM)
    1948-Power Seats (GM)
    1949-Radial Tires (Michelin)
    1949-12-Volt Electrical System (GM)
    1949-Seatbelts (Nash)
    1949-Disc Brakes (Chrysler)
    1949-Padded Dashboards (Chrysler)
    1951-Power Steering (Chrysler)
    1956-Power Door Locks (Packard)
    1957-Cruise Control (Chrysler)
    1958-Electronic Fuel Injection (Chrysler)
    1960-Alternator (Chrysler)
    1960-Electronic Ignition (GM)
    1964-Automatic Climate Control (GM)
    1964-Twilight Sentinal (GM)
    1965-Telescoping Steering Column (GM)
    1966-Heated Seats (GM)
    1967-Antilock Brakes (Chrysler)
    1971-Sealed Battery (GM)
    1974-Airbags (GM)

    Since then automotive innovation has pretty much dried up. What’s the most significant automotive innovation in the last 37 years? Well that would be the modern cupholder of course (Chrysler, 1983).

  42. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 16:51

    Morgan,
    The 1959 Chevrolet (as all GM cars from 1957-1964) were built with on a tubular X-frame with no side rails. It was a notoriously bad design and that was the principle reason why GM selected it for its display of corporate propaganda. (Also, notice the crash was off center, specifically to take advantage of the peculiar weakness of that type of construction.) I was thoroughly unimpressed when I first saw that video a couple of years ago.

    I’d gladly take on a 2009 Chevy with my 1959 Lincoln, my 1966 Imperial or my 1974 Buick Estate Wagon, if I didn’t value them so much. (All three are banned from competing in demolition derbies for obvious reasons.) It would become my hood ornament.

  43. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 17:10

    Morgan,
    And yes, I’m aware that the crash test was actually comissioned by the IIHS for its 50th anniversary. Being a nonprofit organization it would have absolutely no interest in making self serving biased claims and serving GM’s interests in the process (not!).

  44. Gravatar of Bababooey Bababooey
    1. February 2011 at 17:14

    I’d just as soon direct policy by gutting a steer and interpreting its entrails than by delivering something called “happiness”. At least the entrails directive is self evidently bullshit.

  45. Gravatar of mbk mbk
    1. February 2011 at 17:46

    Scott, Gene, I don’t actually want to question “reality”. My drift is that no single model of reality is likely to convey all of it. Analogous to this, we have several “channels” of sensory organs. And in science we have several “channels” of models that tell us their own biased version of reality. Particle, wave, which is “true”? Neither and both, both are models. Science builds models of reality as a sort of extended sensory organ of ours, we construct an internal model whose elements and relations we attempt to bring into congruence with reality. Since we only know about reality through this very process, there is a circularity in perception, and science, that we can not escape. In this particular sense we do “make it all up” but that doesn’t imply that “it” doesn’t exist (no reality) or that we fabricate reality (reality = one particular, perfect, immutable model). We do fabricate models. It is in this sense that say, proponents of autopoietic theory talk about “everything that is being said is being said by an observer”. To me models, and science, are working assumptions, overlapping each other, occasionally inconsistent, always incomplete. My preferred description of the modeling process, or modeling relation, is by the theoretical biologist Robert Rosen, see his book “Life itself” for instance.

    Since Wittgenstein was mentioned, there were actually two of him. There’s the early man of logic who said that things can either be expressed clearly or none at all (and that once used as a stepping stone his words can be discarded). And there’s the later mystic who says that if lions could talk, we wouldn’t be able to understand them (because meanings of words depend on how they are used – so if you’re not a lion you don’t know how lions use words; if you don’t know what an apple is you can’t hope to understand the word “apple” etc, all powerful indictments against meaningful implementation of AI lest you are content with simulacra, mimicking mind without actually having one). Just for good measure, people I know claim that anything that’s in Wittgenstein is already in Pierce, only clearer. But I don’t know enough of either to pass judgment here.

    Indy, Morgan, what I don’t understand here is how exponential increases in quantity can be equated to quality. Isn’t it obvious that the step in sheer functionality from typewriter to word processing is huge, while the step from command line word processing to the GUI based kind is much smaller? And yet the GUI demands orders of magnitude more processing power and memory. And re: the internet, is not the explosion of a medium something else than the content it conveys? Does knowing that cars exist really trump actually owning one? I don’t “get” this idea that all the world is information. Media have favored dissemination but they have not created information. We still read centuries old texts whose theories we can neither prove nor refute. Dissemination has done nothing for that.

    I’m much with Scott on the idea of praising modern plumbing over the internet. Not to mention that almost no house I ever lived in go the plumbing really right. Ever since the internet came out I thought of it as an extended newspaper. And I still do. I also use it occasionally as an extended mail order catalog although reality already hits me with insane shipping costs. And I use it for communication, such as in blog comments, but let’s get real: this post I am writing should count as entertainment only. It won’t change a thing in the world and will be forgotten instantly.

    Happiness: the happiest people you’ll find are ones that live in small communities with sense of empowerment over their lives and close personal relationships with a few select people, things appropriate to what our genome “expects” of life. This does not have to be village life – it can be an abstract intellectual community. Modernity, and the internet, now finally manage to close the circle and bring back some of these emotional factors that were destroyed in the industrial phase for the sake of material efficiency (faceless mass living organized around material production).

  46. Gravatar of Morgan Warstler Morgan Warstler
    1. February 2011 at 20:10

    “Indy, Morgan, what I don’t understand here is how exponential increases in quantity can be equated to quality.”

    No, it is called Network Effects:

    http://en.wikipedia.org/wiki/Network_effect

    The second part is “Free”

    Before the press, we had a pen and paper, if you wanted to make copies, you just needed lots of cheap guys to pay to sit and make copies. No problem, for people who knew stuff worth writing down, copy guys were super cheap.

    Then we had the press. Then you have a typewriter. This is faster so why? So you don’t have to write with a pen?

    But TRUTHFULLY, what happened was we finally had more people who had something important to write down. Most people had nothing of value to say.

    Photocopier copies your type written pages, even desktop publishing, faxing… YAWN.

    The important part was that more people were worth listening too.

    —–

    Now it is “type… and whole world sees it is real time, in their language! in their favorite color font, read to them out loud!”

    It can’t get faster! Until it is “think!”

    ok, so at one end of history, we have caveman makes mark on a wall at one end.

    at the other end, NOW, we have typing perfection.

    And you think the the really cool stuff happened BEFORE the Internet?

    Now look, I get that to the guy who had to write it out, take dictation, the typewriter was a pretty big deal… but to ME and BILLIONS of other people – who cares about his cramped hand? being bored? The productivity gain was what?

    Scott claims to be a utilitarian, well as a function of utility 99% the real gains in the story of history, happen after the Internet.

    The Romans and Indians had plumbing – if peeing outside was big deal, we would have had it far sooner. What matters is the medium of exchanging information, how aggressively can you write a meme into someone else’s head and MAKE THEM want to pee inside. How fast can you make/help people adopt.

    Here’s a question: if Scott has to give up the Internet or keep it and use an outhouse for the rest of his life, you really think he gives up the Internet?

    Lastly, something tells me there is something important about Mish’s 2% a year is unsustainable argument (see graph as well):

    http://4.bp.blogspot.com/_nSTO-vZpSgc/R8R4sqMbaLI/AAAAAAAACNc/2-vb9Q66VkA/s1600-h/inflation-targeting.png

    http://globaleconomicanalysis.blogspot.com/2011/01/world-economic-forum-endorses-fraud.html

  47. Gravatar of Rien Huizer Rien Huizer
    1. February 2011 at 21:12

    Scott,

    Amazing, this is what I found so difficult about economics when I was young until I understood that economics is really two things: applied mathematics with lots of people trying to sell structured observations that fit the mathematics in markets such as education. politics and business and others trying to disrupt what they do. The other economics is narratives that help people -especially in democratic processes- argue about why what they want should be attractive to enough others. For a retiree the two make a fascinating hobby, so fascinating that I would say that whereas it had only derived utility (passing exams and qualifying for jobs) in the past, it now ranks equallly with golf. I wish I had more time to devote to both. Would there be a market or another institution that would solve my problem?

  48. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 21:23

    Morgan,
    One more point. (You’ve obviously hit a nerve.)

    Automobile safety is one issue where I have a very Libertarian perspective. I’m not at all convinced that safety regulations have helped (me).

    In fact, nobody has said it more simply than Emily McGee, spokesperson for the Competitive Enterprise Institute (CEI) when it issued “Deadly Effects of Fuel Economy Standards”

    “You can’t argue with physics — the bigger the car the safer it is.”

    http://legacy.library.ucsf.edu/tid/dwt22d00/pdf;jsessionid=14187DE7CFED81BB9CE1D64100A47F25.tobacco04

    Until Newton’s Laws are revoked, I’ll trust three tons over a ton and a half anyday.

  49. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 21:45

    Oops. Sorry, wrong, although related, link. The correct link to the “Deadly Effects of Fuel Ecnomy Standards” is here:

    http://www.cascadepolicy.org/QP/CAFE_link.pdf

    And here’s another related paper:

    “CAFE causes 2,000 to 4,000 car occupant deaths each year because it restricts the production of larger, more crashworthy cars.”

    “We found strong evidence that vehicle weight and safety are correlated.”

    “We found that in the 1989 model year, CAFE reduced the weight of cars by 14%, but that led to a 14% to 20% increase in fatalities in that model year’s car.”

    http://www.fortfreedom.org/s51.htm

  50. Gravatar of Mark A. Sadowski Mark A. Sadowski
    1. February 2011 at 21:54

    And yes I understand the distinction between fuel economy standards and safety regulations. My point is that CAFE has undermined safety far more than safety regulations could ever compensate for.

  51. Gravatar of Morgan Warstler Morgan Warstler
    1. February 2011 at 22:17

    Mark, I do not support safety standards at least not public ones. And I don’t think light beats heavy, and I think big old cars are nice to look at – I once had a convertible Lincoln with suicide doors.

    I also don’t buy your wave away of crumble zones and shoulder + seat belts – altho I do buy Superfreak’s spiel on child seats. And airbags I completely buy.

  52. Gravatar of Luis H Arroyo Luis H Arroyo
    2. February 2011 at 02:35

    Eh, Guys, if you look at car modeled in Europe for the las 30 years? the aplication of high tech has been impresive, and the result in safety indisputable. 30 years ago a travel of 700 Km was an damned hell for me in insecurity, noise, heat… Now that I´m got muh more older, I can do it and feel vey well at the end.
    It is ridiculous to argument that the last 30 years don´t mind any thing in productivity, saffety, enjoyable works, leisure, comunication, accurated businees decision, and so many aspects of our lives. Now, I can work at home, I can buy the supermarket at home, I can have a friend in Brasil, I can lern in Scott blog, I can criticize Krugman, I can buy books much cheaper than ever, and so on.
    The best is that except in very pourest countries, a lot of billion of people can also. Perhaps their cars are so bad as mine in the 70´s, but they have got many other things.

  53. Gravatar of W. Peden W. Peden
    2. February 2011 at 05:42

    Prof Sumner,

    Certainly, if ‘to be’ was to be perceived, then we’d need to introduce God into the picture. On the other hand, if we can allow that there are things that are real but not perceived, then we’re just back to the common-sense view that there are limits to what we can know and that our beliefs can always be wrong.

    I think that the principle reason why the line of reasoning I took in that comment is unpopular is that it means endorsing a certain degree of scepticism: anything that we think we know can be wrong. Much of the history of philosophy is an attempt to find infallible knowledge and many modern scientists (including Hawking) are influenced by the attempts of philosophers from the first half of the 20th century. That was when there was a lot of emphasis on building knowledge up from supposedly incorrigible knowledge and getting this tricky “reality” stuff out of the picture.

    This approach became increasingly unpopular in Atlantic philosophy after Wittgenstein, Quine et al tear into it in the 1950s, but there’s a definite and lasting appeal: if what we’re really doing in science is modelling sensory data, then scepticism loses its sting.

    Mbk,

    It’s worse than just two Wittgensteins: there are at least three. However, the modern exegical view is that there is significant continuity through his work. To a large extent, he never says that his early work was wrong, but rather just incomplete. The ultra-potted history of Wittgenstein is this: first he focuses on our ability to use language to talk about the world, then he realises that we use language to do more than just talk about the world, and finally he considers language as something we use together in a society. There’s a lot of philosophy in between, but that’s the development that drives his work.

    (Wittgenstein was my speciality at the undergraduate level. It’s interesting that you mention Peirce as well, who was also a favourite of mine: I wouldn’t say that their work is identical at all, but there’s certainly a lot of similarities between Wittgenstein’s early work and Peirce’s work. Both made amazing innovations in mathematical logic that we still use today, although Peirce’s work was almost totally ignored during his lifetime.)

  54. Gravatar of Jay Z Jay Z
    2. February 2011 at 10:02

    Mark,

    The big old cars from the 1950s were not safer than today’s cars. Fatalities per mile driven are less than a quarter of what they were then. Crumple zones make today’s cars much more survivable in accidents than the old ones.

    I disagree with you on the safety issue. At some point community standards develop and it’s just better to standardize things through regulation than force the “freedom” of a libertarian free-for-all. Private sector does the same thing. People only have time for so many choices in a day, week, year; eliminating some of the poorer options is a benefit to the common good.

  55. Gravatar of Mark A. Sadowski Mark A. Sadowski
    2. February 2011 at 11:53

    Morgan,
    Seatbelts have been an option on American cars since 1949. (And 1948 if one counts Tucker, which included them as standard.) All my cars have them and my Buick has shoulder belts as well. (Although I have to confess I don’t often wear them, despite the state law.)

    Luis,
    I agree there’s been huge progress in information technology and other electronic goodies. But IMO, at least in America, there’s been no real progress in cars (or kitchens).

    Jay Z,
    There’s a lot of possible reasons why fatalities per mile are lower now, only one of which is better designed cars. I agree crumple zones are an advancement, but I also think they are much more necessary on smaller cars. (What’s the alternative?)

    Eliminating my option to buy a very large car (I hate trucks) as the CAFE standards did means I’ll probably just keep driving my older land yachts.

  56. Gravatar of Greg Ransom Greg Ransom
    2. February 2011 at 13:45

    Scott,

    Do you truly believe that most economists conceive of “utility” as a substance — something like “happiness” — that is maximized?

  57. Gravatar of OneEyedMan OneEyedMan
    2. February 2011 at 15:06

    @Mark A. Sadowski
    That’s an impressive list. I don’t think the recent winner is the cup holder. The car based GPS appeared in about 1990. I got one in the 2000′s and find it the single greatest improvement in marital peace of anything I’ve ever purchased. I’d much rather have that than heated seats. Portable DVD players might also be considered an automotive innovation from the 1990′s that massively improved the experience of long term family travel. Recognizing the problems of CAFE, the increased efficiency of engines prevents them from being worse. We don’t have to make the cars much less safe to meet the standard. Also, the HP of the typical American car has increased a lot from 135 hp in 1975 to 202 in 2010 (http://www.eia.doe.gov/emeu/25opec/sld012.htm , http://www.eia.doe.gov/oiaf/servicerpt/cafe/cafe_tbls.html), and many people like that too.

  58. Gravatar of Morgan Warstler Morgan Warstler
    2. February 2011 at 17:16

    W,

    I learned Wittgenstein from Bruce Goldberg, and it was exasperating. But I took a lot out of it, and cribbed a lot from him generally.

  59. Gravatar of scott sumner scott sumner
    2. February 2011 at 17:48

    Luis, I don’t totally agree with Williamson. Modern economies don’t just happen, it takes lots of work. One has to know where one is going. For instance, the move in Europe toward a big free trade zone didn’t just happen naturally, governments set it up, partly under the influence of economic theory.

    Mark, I certainly agree about cars and other products seeing slower technological improvements after the 1950s than before.

    Lorenzo, You said;

    “It is not a model, for example, that confines Stephen Hawking to a wheel chair.”

    We have models of what does confine him to a wheelchair. But seriously, this is like the free will debate (Hawking also doesn’t believe in free will.) It’s pointless, because people talk right past each other. I was just having some fun with that quotation–I knew it would set people off, after my earlier attempts to cite Rorty.

    OK, So what is a price index supposed to measure? Suppose a new Dell computer sells for $1000, and replaces the previous model, which also sold for $1000. And suppose the BLS says that because of quality improvements the price actually fell 20%. What’s the theory behind that? How do they determine that number? I thought the theory was that the new model provides the same utility as a $1250 version of the previous generation.

    Jason, You said;

    “The real thing you are trying to measure is the price of every good, so any basket is an approximation, and selecting the products in it may bias it; best to go with a random or very large sample, along with knowledge of the rates at which things sell at various prices. Google’s new price index may be interesting.”

    But it’s obvious that people don’t at all agree on which practical compromise is appropriate. If they did, they’d all agree with Tyler. The fact that some people say we’ve had lots of progress and others say we haven’t, shows that there is a huge debate about the right price index. We all agree about what happened to NGDP, it’s RGDP (properly measured) that we don’t agree about.

    I can’t answer your third question, except to say that we aren’t there yet.

    Bryan, Some surveys don’t ask about happiness, they ask about life satisfaction. I believe the answers are similar, but not identical.

    Greg, To me, ‘utility’ means “that which we seek.”

    Chris T, We went form the horse and buggy era in 1900 to the moon in 1969. If we had to go back to the moon, we’d use almost identical technology, and it would take us just as long. I don’t dispute that there are areas where technology has moved fast, but in terms of impact on people’s lives it’s slowing down except in computers.

    Kevin, I have a bad habit of talking about RGDP as it should be measured, but it’s not actually measured properly–which leads to confusion.

    Morgan, You are talking to someone who doesn’t own a laptop computer, or a cell phone, or a blackberry, or iPod. I don’t watch TV shows. When I want to see a movie I watch it at the movie theatre. For me it still is 1960.

    I have stopped buying albums, however, and now buy CDs. Does that make me up to date Morgan?

    Bababooey. I agree.

    more to come. . .

  60. Gravatar of Morgan Warstler Morgan Warstler
    2. February 2011 at 18:10

    I stand by my assertions, all of them. And it is far more interesting to see where your economics take you when you say out loud, greatest invention known to man, greatest productivity gains come from the Internet.

    Network Effects: the value of the thing is based on how many other people use it.
    Free: http://www.wired.com/techbiz/it/magazine/16-03/ff_free

    Finally, I’ll take that as a yes, Scott would use an outhouse for the rest of his life, if he had to give up the Internet to save his toilet.

  61. Gravatar of scott sumner scott sumner
    2. February 2011 at 18:59

    mbk, You know more about philosophy than I do, but fwiw, here’s my take on reality:

    People build models to understand the world. They think those models correspond to reality, but they may or may not. In practice, we don’t care about reality, just prediction and control. And maybe intuitive understanding. If we have all those, and are completely wrong about “reality” (say we are in the Matrix) it doesn’t matter. As long as we have prediction and control we think we know reality. Primitive people thought the sun orbited the Earth. It allowed them to predict sunrises in the east. As long as that works, it doesn’t matter what reality is.

    Rien, Time is the big problem for everyone involved in this information rich society we now live in. I don’t have an answer.

    W. Peden, Following up on my previous comment, here’s what I’d guess motivates Hawking. If you think of quantum mechanics, it can be used for a certain amount of prediction and control. Yet if you ask physicists “exactly what is an electron?” They can’t answer the question. All they can tell you is how it fits into their model. (No, they have no idea whether it is a little particle, like a tiny bb orbiting the nucleus.) That’s also true at the cosmological scale. We have models of the big bang, but we don’t really know what the big bang was. Hawking probably just uses his intuition to assume that’s true everywhere. We have commonsense models that give us the illusion of seeing right into reality (“there’s snow out my window”), but all we really have is prediction and control. And we already know that common sense gives incorrect answers at the quantum scale, or the cosmological scale. So what good is common sense? It’s all about prediction and control. I’m a pragmatist

    Greg, You asked:

    “Do you truly believe that most economists conceive of “utility” as a substance — something like “happiness” — that is maximized?”

    Yes.

  62. Gravatar of Greg Ransom Greg Ransom
    2. February 2011 at 19:12

    Wow. Things are far worse than even my most most uncharitable image of the profession.

    Scott writes,

    “Greg, You asked:

    “Do you truly believe that most economists conceive of “utility” as a substance — something like “happiness” — that is maximized?”

    Yes.”

  63. Gravatar of mbk mbk
    2. February 2011 at 22:51

    Scott, your description of the situation could just as well be mine – whether some model is “true” can’t be determined except for semantic correspondences between model and reality, which are always a “choice” of the observer. And it is ultimately the wrong issue anyway. The common language version of this is Wikipedia’s rendering of Tarski’s undefinability theorem: “Truth in the standard model of the system cannot be defined within the system.”. And really, I am quite the dilettante in all of this.

    W Peden, I understand Peirce was even more heterogeneous (and prolific) than Wittgenstein in his thought, I have only had very limited exposure to his writings. But his semiotics sound like what the late Wittgenstein would have been preoccupied with.

  64. Gravatar of Greg Ransom Greg Ransom
    3. February 2011 at 08:28

    This is called reifying artifacts of a model that have nothing to do with the explanatory use of the model.

    The fallacy of reifying “utility” as an entity maximized on the model of Bentham’s maximization of happiness has been well understood for 100 years — and the fallacies built into Samuelson’s version of the thing have been well known for at least 30 years.

    This is one reason “Austrians” have often focused on the pure logic of marginal valuation — trade-offs at the margin — without any need for reference to a entity called “utility”.

    And ironically, neoclassicals have long denied falling into this mistake, claiming that their implied ordinal use of “utility” avoids the fallacy of reification. But all the while, you can see freshmen learning something else. And if your word is to be believe — these freshmen were correctly grokking exactly what was in the minds of their professor and TA.

    Scott wrote,

    “To me, ‘utility’ means “that which we seek.”

    and

    GREG: “Do you truly believe that most economists conceive of “utility” as a substance — something like “happiness” — that is maximized?”

    SCOTT: “Yes.”"

    Reference, Franz Čuhel, “On the theory of needs”:

    http://pcpe.libinst.cz/nppe/3_1/nppe3_1_4.pdf

  65. Gravatar of Greg Ransom Greg Ransom
    3. February 2011 at 08:34

    The classic work on the picture behind the model uses in neoclassical economics is:

    Philip Mirowski, _More Heat Than Light_.

    Neoclassical economics all about the conservation of a quantity of “stuff” — modeled precisely on the physics of energy.

    Note well — Mengerian economics has a different genealogy and does the logic marginal significance during choice in a fashion that does not derived from the math of energy physics.

  66. Gravatar of Greg Ransom Greg Ransom
    3. February 2011 at 08:43

    Scott, do you think this is the common view taught and believe at Chicago over the last half century?

    Scott,

    ““To me, ‘utility’ means “that which we seek.””

  67. Gravatar of Mark A. Sadowski Mark A. Sadowski
    3. February 2011 at 09:50

    One Eyed Man,
    When I mentioned the modern cupholder I was partly joking, but not really. GPS and DVD are easily added to any vehicle (much more than heated seats). I listen to satellite radio mostly and have added that to all of my cars. And yes, I also have modern cupholders in my cars. (Why not?)

    You’ve got to take the EIA data with a large grain of salt. The EIA used to maintain a fantastic database of US small vehicle fleet data all the way back to the 1950s (curb weight, horsepower, fuel economy). What happened to that data? Well, partly nobody cares about ancient automotive history (except me). But mainly, moving the start date to 1975 serves their interests. The CAFE standards kicked in three years later and in honor of their 30th anniversary they didn’t want you to realize how much engine performance was lost in the several years preceding 1975. So a quarter century of automotive history was conveniently flushed down the memory hole a few years ago.

    Starting in 1966 and proceeding through 1975 the engines of American cars were literally choked to death. It started with positive crankcase ventilation, although that didn’t do much harm. But then there came lowered compression levels in 1971 (gasoline octane levels had tumbled) and exhaust gas recirculation valves, air reactors, etc. through the mid 1970s. Compounding the problem was the simultaneous disappearance of high performance options. By 1975 all American engines (not just V-8s) were mere shadows of their former selves.

    Let me give you an example that I’m very familiar with, the Buick 455 engine. When introduced in 1970 it could be had in a high performance version that generated about 295 net HP (370 gross). By 1974 that version was down to 255 net HP. The following year it was only available with 205 net HP. That’s a 30% decline in potential net HP in just 5 years. My 1974 Estate Wagon originally came with the high performance version of that engine (called the Stage One). When the time came for a new engine I had one built (NOS block) by Tri-Shield High Performance without all the ancient emissions gobbledygook (it would have been too hard as my ex had destroyed all of that a few years earlier but that’s another story). The engine compartment is much cleaner, the local DMV could care less, and my car is much happier.

    More in a bit….

  68. Gravatar of Mark A. Sadowski Mark A. Sadowski
    3. February 2011 at 09:52

    OneEyedMan (continued),

    Another factor to consider is downsizing was in full force in the 1970s. Prior to 1971 more than 50% of all light vehicles sold in the US were full-size American cars (they often called them “standard-sized” in those days). In fact the most popular light vehicle sold in the US in 1970 was full-size Chevrolet (Impala/Caprice). The most popular engine on that car was small block 350 V-8. It generated 170-220 net HP depending on how you ordered it, and a lot of people ordered it with more power (uh! uh! uh! as Tim the Toolman would say). And a 400 was also available. On the other hand the median sized new vehicle of 1975 can probably be approximated by a mid-sized Chevelle with a 305 V-8 generating 140 net HP.

    More importantly, as any gearhead worth his salt will tell you, *torque matters*. Horsepower is great, but it’s torque that gets you off the starting line. And whereas it’s relatively easy to get small displacement engines to generate a lot of horsepower it’s much more of a challenge to generate large amounts of torque from a small engine. (Again, Newton’s laws of physics have not yet been revoked.)

    So let’s compare a 1970 full-size Chevrolet with a 2010 Ford F-150 (the best selling light vehicles of their respective days). A Chevrolet usually came with a 350 generating 275-310 foot-lbs of torque. A 2010 Ford F-150 usually came with a 281 V-8 generating 202 net HP and 265 foot-lbs of torque. I fail to see much progress.

    The mid 1970s through the 1980s were the Dark Ages of engine performance for American cars. Talking about how much progress we’ve made in HP since 1975 is kind of like a person of the 1300s patting themselves on the back for being so much more civilized than a person of the 800s. He’s completely ignoring all the magnificent achievements of Classical antiquity.

    One last thing. Why am I so aware of such matters other than the fact I have a small collection of antique cars? When I was a toddler my father owned a 1967 Ford Fairlane GT convertible with a roaring high performance 390 V-8. By 1981 he was reduced to driving a Mercury Zephyr station wagon with an wheezy inline 6 cylinder engine. He grumbled endlessly about the Zephyr (!@#$%^& that Zephyr!!!) and lamented the day he ever traded in his wonderful convertible. (And the Fairlane GT would be worth a small fortune today. The Zephyr, eh, not so much.)

  69. Gravatar of Mark A. Sadowski Mark A. Sadowski
    3. February 2011 at 12:12

    P.S. The 1970 Chevrolet Caprice/Impala could also be ordered with a big block 454 V-8 (both in a standard and a high performance version) just as a Ford F-150 could be ordered with a high performance 281 or with a 330 V-8. But I’m trying to represent the most popular way each vehicle was actually ordered.

  70. Gravatar of o.nate o.nate
    3. February 2011 at 12:57

    Stiglitz has been talking about the problems with using GDP to measure economic progress for a while:

    http://www.guardian.co.uk/commentisfree/2009/sep/13/economics-economic-growth-and-recession-global-economy

  71. Gravatar of Chris T Chris T
    3. February 2011 at 15:54

    We went form the horse and buggy era in 1900 to the moon in 1969. If we had to go back to the moon, we’d use almost identical technology, and it would take us just as long. I don’t dispute that there are areas where technology has moved fast, but in terms of impact on people’s lives it’s slowing down except in computers.

    You’re still thinking of technology as discrete objects and measuring it as such. The moon landing only became possible through the constant development of the enabling technologies and ideas over a period of centuries.

    Let’s take the car for example:
    The first time an engine was strapped onto a buggy, the gain over a horse was actually negative. It was only after decades of working on the engine that the capabilities started to exceed that of a horse. Improvements have kept on rolling ever since. (Role back all modern engines to 1950′s engines, how fast do you think the economy would collapse? That should give you some idea of the true effects of advancement in the past 50-60 years.)

    Incidentally, your example of the moon landing is kind of odd considering the net material effect on the vast majority of people’s was nonexistent. The impact of space on people’s lives following the moon landing has been far more significant, but less apparent.

    Scientist may not understand economics, but economists don’t understand science and technology.

  72. Gravatar of Mark A. Sadowski Mark A. Sadowski
    3. February 2011 at 16:56

    Chris T,
    You wrote:
    “(Role back all modern engines to 1950’s engines, how fast do you think the economy would collapse? That should give you some idea of the true effects of advancement in the past 50-60 years.)”

    Granted, no American automobile engine produced in the 1950s is still in production. But the venerable Chevrolet small block engine remained in production in one displacement or another from 1955 through 2003. And just to be clear, the original design of the small block Chevrolet remained remarkably unchanged for its entire production run, from the 265 used in the 1955 Chevy Belair, to the 400 used on 1970s Chevys to the Generation II LT 1 used on Chevrolet police cars Impalas and Corvettes, and Buick Roadmasters in the early to mid 1990s, and ending its life as the small block Vortec on Chevrolet trucks in the late 1990s through the early 2000s. When it comes to automobile engines, actually there’s nothing really new under the sun.

  73. Gravatar of Mark A. Sadowski Mark A. Sadowski
    3. February 2011 at 20:07

    Mark (the car geek) has to laugh,

    Reliability, Safety, Horsepower and Longevity of Design are among the concerns that were brought up.

    What about Handling? Doesn’t anyone care about how much *fun* it is to drive?

    I have news. There’s been no real improvements there either. Torsion bar suspension (the best there ever was or ever will be) has been around for a *very* long time.

    Those who think cars have improved dramatically in the last half century are kidding themselves. They have absolutely no real experience in making such disapproving judgements.

    As Luis would say, Jajajajajajajajajajajajajajajajajaja, that is not very cientific , is it?

  74. Gravatar of OneEyedMan OneEyedMan
    3. February 2011 at 20:19

    @Mark A. Sadowski
    That was an astonishing display. Thanks for sharing.
    I don’t see what point you’re making when you say that DVDs and GPS are easily added to cars. I don’t see how it makes them less of advances.

    The replacement of metal in cars with plastic seems like an important tool in transforming a constant level of engine power into increased performance and safety, though at the the cost of durability. Care to weigh in?

    I’ve with Chris T in that I believe focusing on the headline innovations rather than the cumulative quality and quantity improvements is a mistake. The arrival of cars is easy to see. The changes that make it possible for most families to own more than one car that is safer, durable, and more comfortable (and perhaps more efficient, powerful, and better handling) are much less glamorous but equally important.

    Focusing on median income seems insane, at a minimum we should be focusing on growth net of transfers. But I don’t understand what is special about the median worker anyway. From a welfare perspective they seem unworthy of special treatment and the sort of worker that median represents has changed over time (race, gender, skills).

    I find that people who think GDP is a bad measure of material progress undervalue the bundle that most people consume.

  75. Gravatar of Mark A. Sadowski Mark A. Sadowski
    3. February 2011 at 20:33

    OneEyedMan,
    You wrote:
    “That was an astonishing display. Thanks for sharing.”

    Believe me it was both a pleasure and pain. I truly felt guilty afterwards for what I thought what is in some respects merely venting. However, I’ve really enjoyed this “venting” and I’ll try and address your well intentioned points after some sleep (and a little thought).

  76. Gravatar of Chris T Chris T
    3. February 2011 at 22:45

    The CAFE standards kicked in three years later and in honor of their 30th anniversary they didn’t want you to realize how much engine performance was lost in the several years preceding 1975. So a quarter century of automotive history was conveniently flushed down the memory hole a few years ago.

    Starting in 1966 and proceeding through 1975 the engines of American cars were literally choked to death. It started with positive crankcase ventilation, although that didn’t do much harm. But then there came lowered compression levels in 1971 (gasoline octane levels had tumbled) and exhaust gas recirculation valves, air reactors, etc. through the mid 1970s. Compounding the problem was the simultaneous disappearance of high performance options. By 1975 all American engines (not just V-8s) were mere shadows of their former selves.

    Fascinating, that explains why horsepower went off a cliff for the Chevy small-block in the 1970s. Although it does demonstrate the substantial gains that have been made even under substantial limitations (we’ve reached or exceeded past performance even with tight emissions standards). Would you trade current emissions for much greater power in today’s vehicles? As the husband of a woman with asthma and as an expectant father, I would not.

    As far as safety – traffic deaths are at their lowest since 1950, even though the population is more than double the size and is driving far more.

    http://www.insurancejournal.com/news/national/2010/09/10/113147.htm

    Fuel economy – average fuel economy was about 20 mpg for passenger cars in 1950 and is 33.7 today. A gain of 68.5% (this is what I was referring to when I mentioned swapping in 1950′s engines collapsing the economy; the sudden spike in fuel demand would vastly exceed current supply).

    Advances over the past decade have mostly wiped out diesel’s disadvantages versus gasoline.

  77. Gravatar of Mark A. Sadowski Mark A. Sadowski
    4. February 2011 at 13:44

    @OneEyed Man,
    You wrote:
    “That was an astonishing display. Thanks for sharing.
    I don’t see what point you’re making when you say that DVDs and GPS are easily added to cars. I don’t see how it makes them less of advances.”

    I’m not debating the fact that such devices are automotive advancements. All I’m saying is they are not reasons for buying a new car. One can always add such devices to an older car.

    And:
    “The replacement of metal in cars with plastic seems like an important tool in transforming a constant level of engine power into increased performance and safety, though at the the cost of durability. Care to weigh in?”

    In my opinion the use of plastics needs to be separated from the more general issue of weight saving materials.

    Plastics already compose about 8% of modern vehicle weight mainly in the form of bumpers, minor engine parts and interior parts. Thus they are probably reaching the upper limit of potential uses. And aside from the effects of ultraviolet light exposure in my opinion plastics are relatively durable and corrosion free. But since not all plastics are recyclable they may pose an environmental problem.

    There are many other weight savings materials that have more potential than plastics. These include metals (aluminum, magnesium, titanium etc.) and composite materials (e.g. carbon fiber). Obviously less weight means better acceleration and slalom performance as well as fuel economy. The main disadvantage of these materials is cost. But more importantly, I am sceptical of their safety benefits.

    The crashworthiness of a vehicle is really a function of two things: 1) maximum deformation of pasenger compartment under dynamic load and 2) maximum acceleration of passenger during impact. The first clearly can benefit from the use of such materials, as they can bring increased stiffness for the same weight. It’s the second part that I have a problem with. It’s primarily a function of the mass of the vehicle. Crumple zones can compensate for a light mass by absorbing the energy of the impact. But there’s only so much you can do. NHTSA studies find a pretty stong inverse relationship between vehicle mass by vehicle class and driver death rates per registered vehicle years.

    While I’m on the subject of safety allow me to make plug for large cars. Pound for pound the safest vehicles are cars. For example, driver deaths per million registered vehicle years (2001-04 models during 2002-05) for cars, SUVs and pickup trucks in the 4500-5000 pound weight class were 34, 65 and 55 respectively. Much of the difference is due to rollover deaths. The rollover accident death rate for these vehicles was 4, 32 and 21 respectively. The difference is obviously due to the high center of gravities in trucks. But even in multiple vehicle accidents cars outperformed SUVs and pickup trucks in that weight class with the death rates at 18, 23 and 24 respectively. Simply put, large cars put more around the driver than large trucks. In my opinion through their different treatments of trucks and cars the CAFE standards are contributing the higher than necessary death rates.

    And ceteris paribus, large cars accelerate faster, brake better, handle better, have better fuel economy and pollute less than large trucks.

    The NHTSA driver death rates are here in a table on page six:

    http://www.iihs.org/externaldata/srdata/docs/sr4204.pdf

  78. Gravatar of Mark A. Sadowski Mark A. Sadowski
    4. February 2011 at 14:52

    Chris T,
    You wrote:
    “Fascinating, that explains why horsepower went off a cliff for the Chevy small-block in the 1970s. Although it does demonstrate the substantial gains that have been made even under substantial limitations (we’ve reached or exceeded past performance even with tight emissions standards). Would you trade current emissions for much greater power in today’s vehicles? As the husband of a woman with asthma and as an expectant father, I would not.”

    I have no real quarrel with decreased emissions. I was merely pointing out that lousy early emissions control devices helped lead to a dramatic decline in engine performance between 1970 and 1975. And actually, the median modern engine probably delivers only slightly more HP and certainly delivers less torque than in 1970.

    And you wrote:
    “As far as safety – traffic deaths are at their lowest since 1950, even though the population is more than double the size and is driving far more.”

    The reasons for the decline in traffic deaths per vehicle mile are many: improved roads (remember, there was no interstate highway system at all in 1950, and it took a few decades to complete), increased seatbelt use mainly due to legal mandates, decreased alcohol use by drivers, greater legal enforcement of traffic laws etc. In my opinion the trend in traffic deaths is too broad a measure affected by too many variables to indicate whether it is a product of improved vehicle design.

    And you wrote:
    “Fuel economy – average fuel economy was about 20 mpg for passenger cars in 1950 and is 33.7 today. A gain of 68.5% (this is what I was referring to when I mentioned swapping in 1950’s engines collapsing the economy; the sudden spike in fuel demand would vastly exceed current supply).”

    But how much of that is a matter of improved engine technology and how much is simply a result of the fact passenger cars are a lot smaller both inside and out nowadays?

    Incidentally, I just found out that the Chevy small block is still alive and kicking. Evidently it’s still in production at General Motors’ Toluca, Mexico plant under the company’s “Mr Goodwrench” brand, and is also manufactured as an industrial and marine engine by GM Powertrain under the Vortec name. In all over 90 million Chevy small blocks have been made spanning seven decades. And that means that an engine made in the 1950s is still profitable to be made today. So much for the economy collapsing under the weight of 1950s engine technology.

  79. Gravatar of Chris T Chris T
    4. February 2011 at 15:01

    It’s kind of ironic, CAFE standards were meant to decrease the oil consumption of the vehicle fleet. They did that, but instead of working on continuing to increase fuel efficiency, auto makers spent the next thirty years working on getting engine power back to where it was!

  80. Gravatar of Chris T Chris T
    4. February 2011 at 15:45

    And actually, the median modern engine probably delivers only slightly more HP and certainly delivers less torque than in 1970.

    However, this was starting from a much lower level starting in the 1970′s. Remove the need to meet fuel standards and engines could be a lot more powerful. Comparing today’s engines to those in the 1950′s is not a fair comparison without accounting for the different requirements.

    This graph illustrates the point:

    http://www.sightline.org/images/blog-2008/Mileage-horsepower-EPA-600.gif

    HP was sacrificed for fuel economy from 1977 to about 1982 to meet the new CAFE requirements. After 1982, automotive innovation was focused on creating power without sacrificing fuel economy (much). The SUV is actually a direct result of this effort.

    And that means that an engine made in the 1950s is still profitable to be made today.

    The small-block’s basic design hasn’t changed much, but it has still undergone some changes. Wikipedia actually has a list of them:

    http://en.wikipedia.org/wiki/Chevrolet_small-block_engine#Major_changes

    The performance of post-1970 variants was also significantly lower than the early generations.

  81. Gravatar of Mark A. Sadowski Mark A. Sadowski
    4. February 2011 at 16:39

    Chris T,
    You wrote:
    “HP was sacrificed for fuel economy from 1977 to about 1982 to meet the new CAFE requirements. After 1982, automotive innovation was focused on creating power without sacrificing fuel economy (much). The SUV is actually a direct result of this effort.”

    It would be nice if the graph you posted were corrected for vehicle mass. However, be it as it may, what you are seeing in the vertical portion of the graph is probably mostly due to the following. In general there was a greater effort to keep heads cooler in the mid 1980s to 2000s leading to greater power through a higher compression ratio and greater spark advance at the same time maintaining higher and more consistent cylinder temperatures. This was the result of advancements in intake technology, not internal engine technology per se.

    For example, compare a 1978 Chevy with a 350 to a 1996 Chevy Impala SS. Horsepower increased from 170 to 260 and unadjusted fuel economy (combined) increased from 15 MPG to 23 MPG. So yes, there was an improvement in HP and fuel economy but mostly it is the same engine with vastly improved intake technology. (And I should note, to your benefit, the 1996 Chevy Impala weighed about 10% more than the 1978 Chevy.)

  82. Gravatar of Chris T Chris T
    4. February 2011 at 17:00

    Average vehicle weight has been steadily increasing actually:

    http://www1.eere.energy.gov/vehiclesandfuels/facts/2007_fcvt_fotw475.html

  83. Gravatar of Mark A. Sadowski Mark A. Sadowski
    4. February 2011 at 17:16

    Chris T,
    Average passenger car weight peaked in 1973 (at about 4100 lbs curb weight) and probably will never again attain that weight again (at least in my lifetime).

  84. Gravatar of scott sumner scott sumner
    4. February 2011 at 19:26

    mbk, You said;

    “Truth in the standard model of the system cannot be defined within the system.”.

    Yes, that’s why we need the God’s eye view, to see if what we think is true, really is true.

    Greg, I don’t think most economists give utility much thought, as it doesn’t play a direct role in what they do. My opinion is that most have a fairly simplistic notion of utility–that it is something like happiness. But that’s just my hunch, I have no proof. Most assume it can’t be measured.

    o.nate. Yes, Stiglitz is right about that.

    Chris, You said;

    “but economists don’t understand science and technology.”

    Maybe, but since you misunderstood my comment, you might want to rethink that remark. I never claimed the moon landing affected people’s lives. I agree it doesn’t. But going from horse and buggy to moon landing is an impressive technological jump, in most people’s eyes. Technology can be defined in 100 ways, all equally arbitrary.

    You are wrong about 1950s engines, or at least 1960s. When I was a kid the engines were quite powerful.

    Oneeyedman, You said;

    “The arrival of cars is easy to see. The changes that make it possible for most families to own more than one car that is safer, durable, and more comfortable (and perhaps more efficient, powerful, and better handling) are much less glamorous but equally important.”

    I couldn’t disagree more strongly. The cars my dad had in the early 1960s worked pretty well. Mine works somewhat better, but the gain is trivial compared to the gain he got over someone having a horse 60 years earlier.

    I agree that medium income is a bad measure, median consumption would be much better. And consumption has done better than income. It’s also far more equally distributed

    Heh, the comments are sounding more like Car Talk than the money illusion!

  85. Gravatar of Mark A. Sadowski Mark A. Sadowski
    4. February 2011 at 19:35

    Scott wrote:
    “Heh, the comments are sounding more like Car Talk than the money illusion!”

    The two are somewhat related. However, I get your point. Evidently I need to take this debate somewhere else.

  86. Gravatar of Morgan Warstler Morgan Warstler
    4. February 2011 at 21:32

    “But going from horse and buggy to moon landing is an impressive technological jump, in most people’s eyes.”

    Most OLD people’s eyes.

    Go look at the foil covered thing, and think “they did it in this?”

    You still haven’t answered me:

    1. Toilet
    2. Internet

    Please choose Mr. Utility

  87. Gravatar of Greg Ransom Greg Ransom
    5. February 2011 at 11:23

    It plays a direct role as a central part of the fraudulent background understanding underwriting pseudoscience in academic economics.

    “Greg, I don’t think most economists give utility much thought, as it doesn’t play a direct role in what they do. My opinion is that most have a fairly simplistic notion of utility–that it is something like happiness. But that’s just my hunch, I have no proof. Most assume it can’t be measured.”

  88. Gravatar of Chris T Chris T
    5. February 2011 at 14:47

    Maybe, but since you misunderstood my comment, you might want to rethink that remark. I never claimed the moon landing affected people’s lives. I agree it doesn’t.

    The remark was actually a reference to your and quite a few other economists apparent beliefs that ‘innovation’ is the development of singular inventions like ‘cars’ and ‘light bulbs’. In fact, all of them had long development times and only came into widespread use when the underlying technologies matured. (The light bulb took 70 years from the invention of the filament to being used in commercial lighting. The time between the first use of on-board propulsion for a land vehicle to the first commercial automobiles was about 213 years.)

    But going from horse and buggy to moon landing is an impressive technological jump, in most people’s eyes. Technology can be defined in 100 ways, all equally arbitrary.

    Technology is applied to solve problems. You can’t measure it by how much it is perceived to change, but how well it addresses the problem it’s meant to solve! For example, an incandescent light bulb is considered better because the actual light emitting technology – the filament – is a material found to produce a much higher luminance for much longer than the flame produced by the wick and wax of a candle. Today, LEDs stand to outclass the filament in every technical aspect important for lighting.

    I stand by my remark.

    You are wrong about 1950s engines, or at least 1960s. When I was a kid the engines were quite powerful.

    They were powerful, but a the price of extremely high fuel use. Fuel use in passenger cars (data includes motorcycles which are negligible) about 1.7 billion barrels in 2009 with an average fleet fuel efficiency of 22. Fuel use for passenger cars in 1960 was just under 1 billion barrels, but with an average fleet efficiency of 14 mpg. Using the engines of 1960 in today’s motor fleet would require about 66% more fuel or 2.72 billion barrels which is an additional 2.74 million barrels per day just for passenger cars. This would be a 15% increase total U.S. liquids consumption (18.42 mbd in 2009)!

    Fuel efficiency pg 9:
    http://www.eia.doe.gov/emeu/aer/pdf/perspectives_2009.pdf

    Fuel Use:
    http://www.bts.gov/publications/national_transportation_statistics/html/table_04_05.html

  89. Gravatar of scott sumner scott sumner
    5. February 2011 at 17:07

    Mark, Be my guest.

    Morgan, I’ll have new post tomorrow that discusses your question (indirectly.)

    Greg, I won’t comment, because I never give the subject much thought.

    Chis, you said;

    “The remark was actually a reference to your and quite a few other economists apparent beliefs that ‘innovation’ is the development of singular inventions like ‘cars’ and ‘light bulbs’. In fact, all of them had long development times and only came into widespread use when the underlying technologies matured.”

    I certainly know all that, but don’t see the relevance. I am interested in developments that affected living standards.

    You said;

    “Technology is applied to solve problems. You can’t measure it by how much it is perceived to change, but how well it addresses the problem it’s meant to solve!”

    That just kicks the can down the road. How do you determine which “problems” are the most important?

  90. Gravatar of Mark A. Sadowski Mark A. Sadowski
    5. February 2011 at 17:24

    Scott wrote:
    “Mark, Be my guest.”

    Ouch! I’m not sure how to interpret that.

    Let me share a story (it will clarify).

    I was at the American Station Wagon Owners Association (ASWOA)National Meet in Princeton New Jersey in 2003. I was standing in front of my vehicle (my 1974 Buick Estate, of which someone posted a picture of in wiki under “Buick Estate” unbeknownst to me) when someone came up to me and said “Did you know that’s the largest station wagon ever built?” I said “How do you know?” He responded by telling me that he had read it on stationwagon.com. I asked him “Who’s lousy opinion is that?” He said “Mark Sadowski!” I responded by saying “What the hell does that guy know?”

  91. Gravatar of Mark A. Sadowski Mark A. Sadowski
    5. February 2011 at 19:41

    Scott,
    I only tortured the poor fellow so much. Eventually I admitted my identity and shook his hand. Oddly, at least to to me, after all that, he asked for my autograph (naturally on an antique sales brochure). (I wonder, how much is it going for these days?)

  92. Gravatar of Greg Ransom Greg Ransom
    5. February 2011 at 20:36

    This is part of the tragedy of modern academic economics, isn’t it?

    Call it massive market failure. Massive scientific failure — and not a single economists has any self interest in doing anything about it.

    Scott writes,

    “Greg, I won’t comment, because I never give the subject much thought.”

  93. Gravatar of Greg Ransom Greg Ransom
    5. February 2011 at 20:40

    For what it is worth, as I read the literature, no one who has given the subject any thought has been able to vindicate the scientific pretensions of your discipline.

    Scott writes,

    ““Greg, I won’t comment, because I never give the subject much thought.”

  94. Gravatar of ssumner ssumner
    7. February 2011 at 12:29

    Mark, I feel the same way when people quote things I said earlier–what the hell does that guy know?

    Greg, Unless people are able to agree on a definition of “science” (and it’s clear they can’t) I don’t see much point in arguing whether something is or is not a science.

  95. Gravatar of Chris T Chris T
    7. February 2011 at 13:31

    I am interested in developments that affected living standards.

    Therein lies the problem with defining ‘innovation’ as singular inventions like ‘cars’ and ‘airplanes’. Limiting one’s measure to just those, one overlooks the long line of improvements in motor power and efficiency that made cars and airplanes possible. We’re left waiting for announcements of revolutionary inventions that will never come and dismiss the year to year progress we hear of as nothing more than ‘refinements of earlier inventions’, overlooking the fact that that’s how those inventions came about and then became useful in the first place.

    Routine air travel has only really become economic in the past fifty years. It is true that the development of air travel in the first fifty years to make rapid travel by air possible, but it took the next fifty to make it truly economical. Thus the largest impact of air travel on living standards really happened with the developments in the latter half of its first century.

    That just kicks the can down the road. How do you determine which “problems” are the most important?

    There are quite a few problems that are perpetual, such as cost (to manufacture, operate, and maintain) and durability. Even so much as changing the material of some components in a device can have a significant impact on these.

    Other problems are more specific. Aircraft bodies need to be made of a light, durable, and economic material. Aluminum is used to solve that problem in today’s planes. Decades of work have resulted in the ability to manufacture large quantities of the lighter, stronger carbon composites economically. Next generation aircraft, such as the 787, will have fuselages made primarily out of the material.

  96. Gravatar of ssumner ssumner
    7. February 2011 at 17:11

    Chris. You are still missing the big picture:

    1927: Lindbergh flies the Atlantic in tiny one engine plane.
    1969: Boeing 747
    2011: Boeing 747

    How anyone can think the modest improvements in the 747 since 1969 are in any way comparable to the previous 42 years is simply beyond my conprehension. I don’t understand why everyone doesn’t see how much faster progress was in the old days. To me it seems obvious.

    Composites? Yes, that’s an improvment at the margin, but very marginal compared to 1927-69.

  97. Gravatar of Chris T Chris T
    7. February 2011 at 19:10

    I’m not missing the big picture, I just think the improvements over the last forty years have been much more significant than you give them credit for.

    For all the rapid progress of the first fifty-sixty years, the impact on the average person was quite limited. The development that really allowed commercial air travel to take off (pun intended) was the advent of the high-bypass turbofan in the 1960′s. The 747 would be far too expensive to operate without it.

    Another major development has been avionics which has allowed ever more tightly compressed airspace, far safer air travel, and much better economics all around. This development’s impact is anything but modest.

    Composites? Yes, that’s an improvment at the margin, but very marginal compared to 1927-69.

    You might be surprised. Part of the reason the tubular design has been around so long is precisely because of the limitations of aluminum – limitations composites do not share. Substantial work is going into redesigning the basic shape of the fuselage and we could see some radically new shapes down the road (or even larger planes). They’re also lighter and can tolerate higher pressure differentials and moisture.

  98. Gravatar of Nick Rowe Nick Rowe
    7. February 2011 at 19:20

    Totally off-topic, but I cannot let this stand: Mark “More importantly, as any gearhead worth his salt will tell you, *torque matters*. Horsepower is great, but it’s torque that gets you off the starting line. And whereas it’s relatively easy to get small displacement engines to generate a lot of horsepower it’s much more of a challenge to generate large amounts of torque from a small engine. (Again, Newton’s laws of physics have not yet been revoked.)”

    It’s torque at the drive wheels that matters, not on the crankshaft. hp=torque x rpm. Halve torque, double rpm, double the gear ratios, and you get exactly the same torque at the drive wheels for a given hp and mph. Hp (and the flatness of the hp curve) are what matters, not engine torque.

    I drove across the US in a 1967(?) Plymouth Fury I station wagon. It had drum brakes on all 4 wheels (twin leading shoes), and no power brakes! It took all my strength to stop it on a long hill.

  99. Gravatar of Chris T Chris T
    7. February 2011 at 19:25

    More on composites:

    http://www.designnews.com/article/14313-Boeing_787_Dreamliner_Represents_Composites_Revolution.php

    I’m in the sciences and have followed technology closely all my life. This is probably far more impressive to me since I have an idea of what had to happen across a variety of fields to make it possible.

  100. Gravatar of ssumner ssumner
    10. February 2011 at 06:51

    Chris T. You are looking at things the wrong way. An economist could not care less how much technology goes into a product, only the effect on living standards matters. The comfort of the new Boeing jet will surpass the 1960-era 707. But by a trivial amount compated to how the 1960 707 surpassed flying in a 1910 vintage plane.

  101. Gravatar of Morgan Warstler Morgan Warstler
    10. February 2011 at 07:07

    “1927: Lindbergh flies the Atlantic in tiny one engine plane.
    1969: Boeing 747
    2011: Boeing 747″

    “An economist could not care less how much technology goes into a product, only the effect on living standards matters.”

    And Scott, you are a HORRIBLE OLD MAN, and thus not to be trusted as an economist. The last thing we need is another shitty baby boomer bringing a paradigm view to our future based on their wildly outdated, “can’t even grasp how to use modern technology” notions of living standards.

    Scott, any kid would KILL THEMSELVES if they had to live in 1973 – even with $100K a year to spend, even with $1M to spend.

    My god, its disgusting that you would cram such excellent modern lives back into your squalid, intolerable disgusting past, and say, don’t worry they have 747s!”

    Who the fuck cares about that? You are an animal, whose entire world view is based on RENOUNCING the modern age.

    Cell phone? Don’t need them!
    The Internet? A drug!
    What I want is a shag carpet in 2000sqft. of Hollywood Hills circa 1973! Think of the opulence! Think of the luxury!

    WTF is wrong with you Scott?

    You have a moral obligation to run the numbers assuming the greatest known human invention is the Internet, and that the glories it provides trump EVERYTHING you hold dear.

    For if you cannot let go of your own interpretation of living standards and do the compute as instructed, regardless of your own ideas, you are not a servant of the people, you are not a utilitarian, and you are not a free market economist.

    It is a very small exercise, to redo your math with far different assumptions, why are you so afraid of trying it?

  102. Gravatar of Chris T Chris T
    10. February 2011 at 10:10

    You are looking at things the wrong way. An economist could not care less how much technology goes into a product, only the effect on living standards matters. The comfort of the new Boeing jet will surpass the 1960-era 707. But by a trivial amount compated to how the 1960 707 surpassed flying in a 1910 vintage plane.

    The question is, if we froze technology to that available in 1960, what would be the economic effect today? The cost of a service determines its utility. It is true that commercial air travel really came into its own during the 1960′s, but it required constant advancement to maintain its growth.

    If mere existence is your metric, then it is impossible to surpass the 1960′s because that kind of event can only happen once. If instead your metric is rate of innovation is that required to meet 1960′s demand versus that required to meet today’s demand, it becomes a far more interesting question.

    The advancements included in the 787 are supposed to reduce fuel consumption by 20% over comparable existing aircraft and significantly reduce maintenance costs. By potentially reducing operating costs and thereby ticket prices, the effect on living standards could be quite substantial.

  103. Gravatar of DrWho DrWho
    10. February 2011 at 11:40

    “You are wrong about 1950s engines, or at least 1960s. When I was a kid the engines were quite powerful.”
    They were, especially when compared to what came before, and what existed in the last half of the 70s and early 80s, but today’s ordinary V6 engines are more powerful than most performance V8s were in the 1960s, and the average 4 cylinder has as much power as a standard V8 had in the 1960s, just with less torque. And today’s V8s are more powerful than highly modified race versions from back then.

  104. Gravatar of Morgan Warstler Morgan Warstler
    10. February 2011 at 13:23

    “If mere existence is your metric, then it is impossible to surpass the 1960’s because that kind of event can only happen once.”

    Which is why the Internet trumps everything – everything created for decades from now will be tied directly to the Internet.

    When the doctor performs surgery from 10K miles way routinely, that’s the Internet, when we identify better medicine or new flus, simply by tracking everyone’s health in real time – that’s all the Internet.

    When 50% of the population works from home, that’s the Internet.

    When giant networked radio telescopes figure out god is really a 16K year old platypus on living on a comet -the Internet.

    Scott, didn’t you read Jonathan Livingston Seagull during the 1970′s?

  105. Gravatar of DrWho DrWho
    10. February 2011 at 13:36

    “I’d gladly take on a 2009 Chevy with my 1959 Lincoln, my 1966 Imperial or my 1974 Buick Estate Wagon..”

    You sound like you do not know the difference between mild steel of the old cars, 35,000 psi tensile strength, and the new cars Ultra High Strength Steel – 110,000 psi. That’s 3 times stronger, and it’s all around the passenger compartment. While the extra weight of the 59 Lincoln, or the 66 Imperial, would push back a lighter new car in a frontal collision, the new car’s passenger compartment would remain intact, while the old car’s passenger compartment would likely get sheared off of the frame, and at least partially collapse once it went past the new car crumple zone and hit the vault-like passenger compartment of the new car. And the g-forces on the person in each of the old cars would likely kill them, at a 40 mph speed, even if the passenger compartments did not collapse enough to do so. And neither the 59 or 66 have 3 point seat belts, so you still would wind up dead or permanently injured if you hit a new car. And many of the new cars weigh as much or more than the old ones – like SUVS and pickup trucks.

  106. Gravatar of Mark A. Sadowski Mark A. Sadowski
    10. February 2011 at 19:28

    Drwho,
    Lets look at the numbers relating to your claims concerning 1960s engines.

    1) “…today’s ordinary V6 engines are more powerful than most performance V8s were in the 1960s…”

    The typical V-6 (Toyota, Honda etc.) these days is a 3.5 liter producing about 270 HP and 250 ft-lbs of torque (all net of course). Performance versions of V-8s in the 1960s came both in big block and small block versions. Let me try and be generous and instead choose a small block version. The high performance 1969 Chevrolet 350 small block produced 280 HP and 310 ft-lbs of torque.

    2) “…and the average 4 cylinder has as much power as a standard V8 had in the 1960s, just with less torque.”

    The largest I-4s these days are about 2.5 liters and produce about 170 HP and 170 ft-lbs of torque. In 1969 the most popular light vehicle engine was the Chevy small block 350 V-8. In its most detuned version it still produced 180 HP and 275 ft-lbs of torque.

    3) “And today’s V8s are more powerful than highly modified race versions from back then.”

    By “today’s V-8s” I assume you mean something fairly typical. The 2011 Ford F-150 has an optional 5.0 liter V-8 producing 360 HP and 380 ft-lbs of torque. By highly modified race versions I assume you mean something that was not street legal. A street legal high performance Chrysler 426 Hemi V-8 officially produced 375 HP and 415 ft-lbs of torque in the late 1960s (Ford and Chevy each had similar engines). Actual output was over 525 horsepower and 575 ft-lbs of torque (all net of course). The manufacturers and dealers only listed such figures because of legal issues and rising insurance costs. Needless to say the highly modified NASCAR (race) version of that engine was far more powerful.

  107. Gravatar of Mark A. Sadowski Mark A. Sadowski
    10. February 2011 at 20:09

    Drwho,
    You wrote:
    “You sound like you do not know the difference between mild steel of the old cars, 35,000 psi tensile strength, and the new cars Ultra High Strength Steel – 110,000 psi. That’s 3 times stronger, and it’s all around the passenger compartment.”

    Maraging still is increasingly used on passenger compartments (I discussed weight saving materials earlier). But it is much more expensive than conventional steel. To claim it is all around the passenger compartment of modern vehicles is a tremendous exageration. In any case the steel on my Imperial is so thick and stiff my body shop had to bring in special equipment in order to repair damage done to it in an accident in 2002 (more on that in a bit). Even if it is supposedly less strong there is considerably more of it.

    And you wrote:
    “While the extra weight of the 59 Lincoln, or the 66 Imperial, would push back a lighter new car in a frontal collision, the new car’s passenger compartment would remain intact, while the old car’s passenger compartment would likely get sheared off of the frame, and at least partially collapse once it went past the new car crumple zone and hit the vault-like passenger compartment of the new car. And the g-forces on the person in each of the old cars would likely kill them, at a 40 mph speed, even if the passenger compartments did not collapse enough to do so. And neither the 59 or 66 have 3 point seat belts, so you still would wind up dead or permanently injured if you hit a new car.”

    I’ve been over this before, but let me repeat some of my points. The crashworthiness of a vehicle is really a function of two things: 1) maximum deformation of pasenger compartment under dynamic load and 2) maximum acceleration of passenger during impact. The first clearly can benefit from the use of light weight materials, as it brings increased stiffness for the same weight. It’s the second part that is the problem. It’s primarily a function of the mass of the vehicle. Crumple zones can compensate for a light mass by absorbing the energy of the impact. But there’s only so much you can do. NHTSA studies find a statisticaly significant and strong inverse relationship between vehicle mass by vehicle class and driver death rates per registered vehicle years.

    Moreover, I don’t need NHTSA studies to know that this is true. I have experience in this regard. In 2002 I was traveling south on Business Route 13 in Claymont Delaware in my 1966 Imperial. As a headed past the entrance ramps to Interstate 95 a Ford F-150 abruptly cut in front of me to make the I-95. He did not make it (I braked but to no avail) . My front right caught his right rear. His pickup was totaled. I drove away from the accident with relatively minor damage to my grill, bumper and right front fender.

    I was not wearing a seatbelt at the time but I scarcely felt the impact. The other driver complained of whiplash (his truck was spun violently sideways). Mass and the resulting kinetic energy matter a great deal in two vehicle accidents. There is also a reason why 1966 Imperials are banned from competing in demolition derbys.

    And you wrote:
    “And many of the new cars weigh as much or more than the old ones – like SUVS and pickup trucks.”

    My cars all weigh almost exactly the same amount: 5600 lbs curb weight. Some current full size vans, SUVs and pickup trucks weigh that much but certainly not all. I’ve done a fairly exhaustive inventory of sales in the past decade or so and would say about 10% of all such light vehicles are over 5000 lbs curb weight. And I would say no more than 3% weigh more than 5600 lbs curb weight.

  108. Gravatar of Mark A. Sadowski Mark A. Sadowski
    10. February 2011 at 20:10

    “Maraging still” should read “Maraging steel” of course.

  109. Gravatar of Mark A. Sadowski Mark A. Sadowski
    10. February 2011 at 20:20

    When I say “all such light vehicles” I mean all light vehicles sold in the past ten years. In other words aproxilately 10% and 3% of all light vehicles sold in the last ten years are over 5000 and 5600 lbs curb weight respectively.

  110. Gravatar of Mark A. Sadowski Mark A. Sadowski
    10. February 2011 at 20:26

    Scott,
    I know I implied I would shut about cars but I couldn’t resist.

  111. Gravatar of Mark A. Sadowski Mark A. Sadowski
    10. February 2011 at 20:46

    After checking my database I have to correct something. The cutoff for the top 10% in curb weight is about 5200 lbs. The former was an approximate shipping weight.

  112. Gravatar of Chris T Chris T
    11. February 2011 at 14:50

    Perhaps the best comparison between eras would actually be engines built for racing. Since these are specifically built for power and ignore most other concerns, they would be the best straight up technology comparisons.

    The 426 Hemi was a V8 introduced in 1964 and had a rated output of 425 HP with 480 ft lbs of torque (there are rumors of much higher torque being achievable). It was designed specifically for use in NASCAR stock cars and proved so dominant that NASCAR banned it.

    The engine used in the Car of Tomorrow in 2008 was a Chevrolet V8-R07 specifically built for racing. With a 358 cu in displacement, it had a rated output 850 HP with 540 ft. lbs. The HP is double the Hemi rating.

  113. Gravatar of Mark A. Sadowski Mark A. Sadowski
    11. February 2011 at 15:18

    Chris T.,
    Just to be clear, the HP of the Chevrolet V8-R07 (racing engine) is double the *advertised* HP rating of the street legal version of the 1960s Chrysler 426 Hemi. That is hardly a fair comparison.

  114. Gravatar of Mark A. Sadowski Mark A. Sadowski
    11. February 2011 at 15:47

    Chris T wrote:
    “Perhaps the best comparison between eras would actually be engines built for racing. Since these are specifically built for power and ignore most other concerns, they would be the best straight up technology comparisons.”

    This raises a number of issues. Let me try and break through to the truth. Today’s engines are more efficient and produce less pollution per HP and torque than yesterday’s engines (all very nice things). But back then when gas was cheap and the air was free we were happy just having a lot of both (and frankly, we had as much or more of both as you kids). Is that a suitably even-balanced and yet caveman-like response for you young whippersnappers?

    If you wanted to compare based on racing engines (that have no worries as far as efficiency or pollution) I’ll save you the trouble. It probably would show very, very little improvement.

  115. Gravatar of Scott Sumner Scott Sumner
    11. February 2011 at 19:26

    Morgan, You make me sound like Howard Hughes at the end of his life–holed up in that top floor apartment in Vegas, watching Ice Station Zebra 120 times. With shag carpeting.

    Chris, You seem to be arguing that it’s not fair to compare the modern advances to those of 1900-60, because things like the airplane could only be invented once. But that’s exactly my point. I’m not saying inventors were better in the old days–modern inventors are better. But they had the advantage of being in the right place at the right time. So there was huge progress, and after 1960 it was mopping up–gradually improving productivity so that more and more could partake of those inventions.

    Dr. Who, I agree about engines.

    Morgan, You said;

    “When giant networked radio telescopes figure out god is really a 16K year old platypus on living on a comet -the Internet.
    Scott, didn’t you read Jonathan Livingston Seagull during the 1970’s?”

    What I would miss most in 1973 would be people like you. Getting in touch with people who have bizarre but hugely entertaining imaginations. Even if they do call me a horrible old man.

  116. Gravatar of Chris T Chris T
    11. February 2011 at 20:56

    Just to be clear, the HP of the Chevrolet V8-R07 (racing engine) is double the *advertised* HP rating of the street legal version of the 1960s Chrysler 426 Hemi. That is hardly a fair comparison.

    The 1964 426 Hemi was specifically designed and built for NASCAR and was only sold to the public to qualify as ‘stock’. After cars equipped with the engine thoroughly dominated, the rules were amended that at least 1000 cars or engines had to be sold as stock. The oil crisis made it impossible to sell such cars to the general public and that requirement was removed. So in fact, it is a fair comparison.

  117. Gravatar of Chris T Chris T
    11. February 2011 at 21:22

    So there was huge progress, and after 1960 it was mopping up–gradually improving productivity so that more and more could partake of those inventions.

    What I’m confused about is what exactly you are trying to measure and how you’re measuring it. Are we talking about simple availability to or actual use by the general population when we’re talking about living standards? If something is available, but large numbers of people don’t use it due to cost, the actual impact on living standards is quite low. It’s existence is rather irrelevant.

    Alternatively, if something must keep getting better just to keep costs low at the point that demand is not only maintained, but increasing, then its effects on living standards are the same as the advance that brought it to that initial price in the first place.

    Say a product is only competitive at price X and an advance occurs that gets it to price X and 10,000 people initially use it. Now say that 100,000 people would use it so long as the price remained at X, but if the technology remains unchanged the price doubles every 10,000 people. If the price goes to 10X then no one will use it and its effect on living standards is zero.

    What would you say is the bigger advance? The one that initially made it usable by 10,000 people or the one that kept it at usable price for ten times as many people? That is precisely the situation we are talking about when it comes to the airline industry.

  118. Gravatar of Chris T Chris T
    11. February 2011 at 21:23

    price doubles every 10,000

    Should be increases by an additional X every 10,000 people.

  119. Gravatar of Mark A. Sadowski Mark A. Sadowski
    11. February 2011 at 21:45

    Chris T,
    The Chrysler 426 Hemi only sat out the 1965 season. The numbers I quoted for the street legal version were for 1966-1969. In 1966 Richard Petty averaged 160.6 MPH in the Daytona 500 using the NASCAR version of the engine. Are you telling me that a street legal version could do that?

    The NASCAR version differed from its street cousin by virtue of a higher compression ratio, wilder valve timing, and massively larger intake and exhaust manifolds. Get a clue!

  120. Gravatar of Mark A. Sadowski Mark A. Sadowski
    11. February 2011 at 22:21

    Chris T:
    Here’s some video of Richard Petty in an erly 1990s Chrysler NASCAR 426 Hemi match:

    http://www.youtube.com/watch?v=bmB2lHek__Q&feature=player_embedded

    Do you still think they ever allowed such engines on the road?

  121. Gravatar of Chris T Chris T
    12. February 2011 at 10:15

    They were available to the public, because under NASCAR rules they had to be to even race.

    160 miles per hour? Modern NASCARs routinely hit speeds in excess of 190 miles per hour and would be capable of much more if NASCAR didn’t deliberately restrict the maximum speeds for safety reasons (Above 200 mph cars start falling under FAA regulations – joke).

  122. Gravatar of Chris T Chris T
    12. February 2011 at 10:18

    228 mph in 2004 without restrictor plates:

    http://www.nascar.com/2004/news/headlines/cup/06/10/rwallace_talladega/index.html

  123. Gravatar of TheMoneyIllusion » Don’t mind the gap TheMoneyIllusion » Don’t mind the gap
    12. February 2011 at 12:06

    [...] Readers who skip my comment sections can sample Morgan here at 2/10, 7:07am and 2/10, 13:23pm.  If only I could combine Morgan’s Hunter [...]

  124. Gravatar of Scott Sumner Scott Sumner
    12. February 2011 at 14:01

    Chris, The boom in flying was caused by deregulation, not technological progress.

    By the 1960s ownership of cars and appliances and indoor plumbing and TVs and electric lights and telephones was already pretty widespread. Yes, it’s even more widespread today. But the rate of progress has slowed sharply.

  125. Gravatar of Mark A. Sadowski Mark A. Sadowski
    12. February 2011 at 14:08

    Chris T.
    You wrote:
    “They were available to the public, because under NASCAR rules they had to be to even race.”

    Yes, but that requirement was much more flexible than you evidently are aware. As I mentioned thay had a higher compression ratio, different valve timing, and larger intake and exhaust manifolds than the version sold in the showroom. Consequently they produced more HP and torque than the street legal version.

    And I’m not questioning that modern NASCAR engines are more powerful and that the cars are faster. What I’m saying is that a 1960s Mopar equipped with a street legal 426 Hemi was not as fast or powerful as the NASCAR version.

  126. Gravatar of Chris T Chris T
    12. February 2011 at 17:16

    The boom in flying was caused by deregulation, not technological progress.

    Technology may not have caused the boom, but it is responsible for making it sustainable. This goes beyond price, the avionics and air control technology of the 1960′s simply would not be able to handle today’s level of air travel.

    Other statistics:
    -There were 4.76 accidents per 100,000 flight hours in 1990 and had fallen to 1.63 in 2010.
    -The 727 was introduced in 1963 and took 18 gallons to move 1000 pounds 1000 nmis.
    -The 737-900 was introduced in 2006 and took 13 gallons to do the same
    -The 787-8 will come out this year and will take 8.1 gallons

    With fuel efficiency comes range: 2700 nautical miles for the 727, 3200 for the 737-900, and 8200 for the 787.

  127. Gravatar of ssumner ssumner
    13. February 2011 at 08:21

    Chris, I disagree. It would have been possible to have many more people flying with 1960s technology. I might ahve required a few more airports, and perhaps a few more aircraft accidents due to human error. But even in the 1960s flying was so safe it’s hardly even worth worrying about. Twice as dangerous would still have been very safe.

  128. Gravatar of Chris T Chris T
    14. February 2011 at 11:52

    Safety isn’t the only concern, delays from one aircraft affect thousands across the world. Without the precise information and control afforded to modern aircraft and control systems, the system would be completely overwhelmed (as it is, the modern system is straining to cope with today’s air traffic). You would be lucky to have your flight leave on its scheduled day.

    Heck, transponders existed in the 1960′s, but used a 12-bit (4096 permutations) code which doesn’t provide near enough permutations to cover modern air traffic.

  129. Gravatar of ssumner ssumner
    15. February 2011 at 19:24

    Chris T, I’ve read the main problem today isn’t technology but government. The government typically owns the airports and runs air traffic control. A private system would be far more efficient, and use better technology. They would also use congestions pricing.

    They could also have built more airports with the old technology.

  130. Gravatar of Morgan Warstler Morgan Warstler
    15. February 2011 at 23:17

    Question: Let’s say peak oil is real and suddenly in 10 years we have roving hoards of starving people.

    1. How do we count previous technology gains against this fact?
    2. If we suddenly move to a coal nuclear based system, a real Noah’s arc kind of endeavor, how do we count this?

    We know already NGDP can’t handle digital, free, or network effects.

    How do we judge “stagnation” if we survive a challenge greater then WWII, but end up without any access to cheap oil?

  131. Gravatar of ssumner ssumner
    16. February 2011 at 19:26

    Morgan, I don’t follow. We had nukes and coal in 1973. Are you saying computers will solve the energy crisis. We can switch to other energies with or without computers.

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