Would You Buy a Used Macroeconomic Policy From This Man?

195 Responses

  1. Draven says:

    1: Wrong!

    2: apoarently messr Krugman doesn't realize the kind of impact the internet has *by that point*, even… (or what impact the fax machine had)

  2. Did he at least write that before 2005?

  3. Squidget says:

    Paul Krugman is an economist, not a technology guy. The fact that you have to use (ancient) predictions he made about technology to try to discredit his economic credentials does not make a good argument.

    I would be interested to read your issues with Paul Krugman's current economic theories though. Where do you think that he gets it wrong?

  4. Xenocles says:

    If I'm reading the archive date right it's 1998.

  5. Kreshon says:

    He wrote this in 1998.

  6. tim says:

    @squidget

    Paul Krugman is an economist, not a technology guy.

    So technology has no impact on the economy?

  7. Clark says:

    @Squidget

    Paul Krugman is an economist, not a technology guy.

    If he stuck to descriptive economics, as opposed to prescriptive economics and politics (i.e. telling the rest of us how we should run our lives, or, rather, how we should be forced to run our lives by the government), I'd have no problem with his poor forecasting ability.

    Krugman yearns to be the philosopher king – he was inspired to study economics by the socialist Isaac Asimov's technocratic vision of ultra-long-horizon forecasting, and routinely explains that Americans aren't doing X enough (for whatever X) and should therefore be forced to.

    The fact that you have to use (ancient) predictions he made about technology to try to discredit his economic credentials does not make a good argument.

    I don't try to discredit his credentials because I don't care about his credentials. I try (and, I think, succeed) in discrediting his reputation as someone who can tell the difference between his own ideas and a hole in the ground. The man is a pompous fraud who knows that we need 28% taxation rates to deal with demographic changes over the next century, and yet can't even make accurate predictions about one of the biggest sectors of the economy just seven years out.

    Where do you think that he gets it wrong?

  8. Craig says:

    Like everyone else at the NYT and most other publications, Krugman is basically just someone whose job is to write, and it hardly matters what he writes as long as it sounds good. The same principle applies to the lyrics of pop songs, for much the same reason: the audience simply isn't paying very much attention.

  9. James Pope says:

    Gosh Clark, it's a good thing Popehat has it's own Nobel Prize winner in yourself to take lengthy and measured analysis of the other Nobel Prize winners, so that the peanut gallery knows who to listen to on these matters that you are so obviously expert in.

  10. Xenocles says:

    I didn't know winning the Bank of Sweden prize allowed you to speak ex cathedra about all issues related to your field. Cool. It makes it a little complicated that the holders of such a diverse range of views as Krugman and Hayek are in the club.

  11. Clark says:

    @James Pope

    Gosh Clark, it's a good thing Popehat has it's own Nobel Prize winner in yourself

    Thank you for rebutting my point that Krugman's inability to predict the future juxtaposes oddly against his desire to plan the future. If only I had remembered that a bunch of academics have given him a shiny award I never would have said that the emperor has no clothes.

  12. Squidget says:

    Paul Krugman doesn't advocate Socialism that I know of. I would kind of hope we could do better than Fox News here and not just randomly throw out "socialism" to describe all the people whose ideas we don't like. As a term, it has an actual meaning.

    The idea that someone making an incorrect prediction outside of their field forever discredits their ideas within their field, even 15 years later, is…rather sketchy, to say the least. I doubt that you could find any living person who could not be similarly 'discredited'.

  13. Xenocles says:

    "Paul Krugman is an economist, not a technology guy"

    For some reason this reminds me of the marketing types who dismiss technical objections with a wave of the hand as "engineering problems."

  14. Marconi Darwin says:

    That would depend on the specific macroeconomic policy he is espousing, and not on a failed prediction of the future of the growth of the Internet stagnating.

    In "The Road Ahead" Bill Gates forgot to even mention the Internet, a mere five years before the World Wide Web took off. I'd still buy a copy of Windows from him, and he's not even running Microsoft anymore.

    Still waiting for the Austrian School of Economics stalwarts to either retract or double down on the runaway inflation we were supposed to have experienced starting late 2008.

    Would you use (forget buying) a product made by guys who thought Google was worth only a couple million dollars in the late 90s? You already are, if you are using Google products.

  15. mcinsand says:

    I've read enough of Krugman's theories to be comforted whenever we do not follow his recommendations. Sure, we might be suboptimal, but that's better than anti-optimal.

  16. Bear says:

    Marconi Darwin: "failed prediction of the future of the growth of the Internet stagnating." (emphasis added-cb)

    He said that in '98. His "prediction" was already falsified before he said it. Hell's Bell's, I'd already had my own personal web site (for saying things to other people) for years by that time. I seem to recall that I wasn't alone. I also seem to recall that I was already using the Internet for commerce.

    This isn't like watching the Langley failures and deciding that manned flight would… never get off the ground. It's like ignoring air recon and combat in WW1, and the beginnings of commercial air afterwards, and declaring that airplanes don't work because you couldn't fit enough propeller-pedalling passengers on a plane to get all that mass off the ground.

  17. Bastardo Viejo says:

    ROFLAMO! Paul Krugman had his picture taken looking content while drinking a glass of wine — what a silly bitch.

  18. Mark - Lord of the Albino Squirrels says:

    Well he was right about the growth part – the growth rate of the internet peaked right around 1998. It *has* been slowing since, well, the year he made this prediction.

  19. Griffin3 says:

    By my count, his predictions at the end, he's 1 for 6. And that last one was a gimme: that we we suffer a crunch in some resource. Kinda like predicting that, yes, we will have economic changes in the future.

    The problem is not that he made bad predictions. If I made predictions out of my field, I might so as poorly myself. The question that none of these critics are answering, is: If his predictions, for the last many years, are all so bad … why are y'all still listening to him?

  20. The growth rate was bound to subside when people noticed that it was a silly fad OR the First World was saturated.

    Has it gone negative yet?

  21. Aelfric says:

    This is wonderful fifteen-year-old quote mining which has showed up many places, and Krugman was 100% wrong about the technology. Would you care to show us examples of where he was substantively wrong about macroeconomics? For instance, how have his predictions been since, say 2008?

  22. CJColucci says:

    Every so often Clark has something to say. This isn't one of those times.

  23. James Pope says:

    Hey, Einstein was wrong about a few things too! I guess that means he was wrong about everything. What a loser.

  24. Xennady says:

    "This is wonderful fifteen-year-old quote mining which has showed up many places, and Krugman was 100% wrong about the technology. Would you care to show us examples of where he was substantively wrong about macroeconomics? For instance, how have his predictions been since, say 2008?"

    Hey, how about here:

    http://www.huffingtonpost.com/niall-ferguson/paul-krugman-euro_b_4060733.html

  25. Stephen H says:

    Economists love to point to their successful predictions, and tell us how invaluable they are. What they seem to conveniently forget are all the failed predictions they make. In reality, economists have the same kind of "hit rate" as psychics (http://www.skepdic.com/economicforecasting.html has a useful discussion, as does http://freakonomics.com/2011/09/14/new-freakonomics-radio-podcast-the-folly-of-prediction/).

    This is a good time of year to be thinking about predictions; there will be many forthcoming. I strongly recommend writing down ten or twenty at random, and then returning to them at the end of the year.

    Ultimately, while economics wants to be a science it is a craft – or at best, an art. Economic models are great at predicting what has happened in the past, but terrible with the future. Those few economists who predicted the GFC and are crowing from the rooftops missed the previous economic crisis and will almost certainly miss the next.

    For some reason we seem to have decided that "the economy" is all, and ignore "the society" and "the people". We ignore the failings of economists, and of the measures we use to show "progress" (such as GDP, whose failings its developers realised but we seem to ignore). We listen to people like Milton Friedman, who praises Dickensian England as a model we should aspire to. We happily accept what economists say are cause and effect, while ignoring the "externalities" they have ditched when creating their models.

    The sooner we put economists back in their box the better. The sooner they recognise their own limitations the better. And the sooner the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (to give its full name) is abolished – or joined by an equivalent prize for "Sculptures of Dead Cats" – the better.

  26. Ivraatiems says:

    Clark, that Amazon link isn't an affiliate link at all! What are you, some sort of communist?

  27. R. Penner says:

    It's times like this that Clark's posts make me appreciate Ken White (or rather his posts) all the more. When was the last time Clark bothered to form a thesis and argue for it rather than present his viewpoint entirely by innuendo?

  28. Stephen H: We listen to people like Milton Friedman, who praises Dickensian England as a model we should aspire to.

    No, post-Dickens. Oliver Twist and A Christmas Carol were published before the first major success of the free trade movement.

  29. Ivraatiems says:

    It's times like this that Clark's posts make me appreciate Ken White (or rather his posts) all the more. When was the last time Clark bothered to form a thesis and argue for it rather than present his viewpoint entirely by innuendo?

    Loathe as I am to defend Clark in anything, did you read the post he wrote just before this one? It's quite clear what his thesis is. No innuendo at all. You can accuse him of many things, but this particular accusation shows merely that you haven't bothered to actually read very much of what he's written anyway.

  30. Jack B. says:

    This is actually Krugman in very poor form. Krugman at his best would have advocated the US bombing the shit out of the internet so we could stimulate our economy by rebuilding it.

  31. picklefactory says:

    I forget, is this Popehat.com or PicturesMyTeaPartyUncleForwardsMe.com?

  32. mud man says:

    He was right in that it's clear most people have nothing to say that other people want to hear. His mistake was thinking that would matter to anybody.

  33. Head Stomp says:

    Oh, come on Clark! It's not like he said something completely ridiculous like "InterNet is evil."

  34. Bob says:

    So we can all dismiss Ron Paul for predicting hyperinflation over 30 years of disinflation, right? And Hayek for predicting that interest rates would rise under new deal deficit spending? And Keynes for thinking we would all have a 2 day work week? And Friedman for thinking base money would be an accurate target? Because the only alternative I can think of is that people who are sometimes or even often wrong might be worth listening to, but that would seem to require, like, thinking and engaging with their work. Which is unacceptable, obviously.

    Krugman is one of the most important living trade economists and a fun, readable advocate for new Keynesian economics (which, in most circumstances, doesn't even prefer fiscal stimulus! If you think he's Keynes reheated you are wrong). He's worth reading, if overly-dismissive of his critics and (in my opinion) often wrong. For example, I think he was much quicker than most of his conservative critics to suss out that big open market purchases would not be inflationary in this environment, or at least not over the medium term.

  35. Fasolt says:

    Maybe Krugman needs his Magic 8 Ball calibrated. I heard a lot of the economists switched to them after the Feds shut down Miss Cleo and the PRN.

  36. Dan T. says:

    I think Asimov eventually lost faith in long-term mathematically modeled predictions governing a vast plan for all humanity; his later additions to the Foundation series ('80s and '90s) revealed a vast shadowy conspiracy of immortal robots guiding human history through the galactic era, wherein the Seldon Plan was merely one of the attempts to accomplish their plan, and one which needed frequent tinkering by the Second Foundation and also by the robots behind the scenes. So it appears Asimov dropped the idea of scientifically predicting everything once and for all and making an immutable plan based on it, in favor of having a secret society of wiser intellects watching over us forever and pulling levers in the background to tweak our civilization.

  37. Dan says:

    I like your tasteful choice of a photo of him sipping wine. It really drives home the point that you don't like him, without contributing any sort of substance to the already insubstantial post. Classic Clark!

  38. Shane says:

    @Squidget

    You my think that you have stumbled into some sort of partisan back yard. You may want to look around and take in the lay of the land before you start jumping to conclusions, it may not end in a way that lowers your blood pressure and raises your knowledge and awareness of issues.

    Sit back read the WHOLE comment and if you must then respond, but be warned if you are armed with the usual political memes and one liners you have brought from whatever side of the isle that you hail from you are going to be in for a rude awakening. I would liken it to preparing for WWIII with a pack of condoms.

    BTW:

    Paul Krugman doesn't advocate Socialism that I know of.

    The Conscience of a Liberal

    Or for a clearer indication:
    President Obama’s plan to stimulate the economy was “massive,” “giant,” “enormous.” So the American people were told … Yet many economists, myself included, actually argued that the plan was too small and too cautious.

  39. Zem says:

    Forget the internet bit. The first fax machine patent was in 1843. The fax machine DID CHANGE THE WORLD. Business was next to impossible without it until something better came along.

    To not realise this, after it had already happened, shows the true depth of Krugman's analytical abilitity.

  40. Watercressed says:

    I try (and, I think, succeed) in discrediting his reputation as someone who can tell the difference between his own ideas and a hole in the ground. The man is a pompous fraud who knows that we need 28% taxation rates to deal with demographic changes over the next century, and yet can't even make accurate predictions about one of the biggest sectors of the economy just seven years out.

    Whatever happened to evaluating proposals on the merits?

    If you disagree with the 28% taxation rate, why not engage whatever arguments Krugman has for instead of playing silly reputation games?

    (I have no idea whether Krugman's policy is a good one, since I don't read his column)

  41. Brian says:

    The article is from June of 1998. I am glad you called him on his other prophesies:

    1. 1998 will mark a downturn.

    2. Inflation will rise.

    3. "Within two or three years, the current mood of American triumphalism–our belief that we have pulled economically and technologically ahead of the rest of the world–will evaporate. All it will take is a few technological setbacks or a mild recession here while Europe or Japan recovers a bit. "

    4. What you commented on.

    5. The role of IT will shrink

    6. Sometime before 2018, there will be a huge spike in oil and ag prices.

    Boy I sure am glad he was so wrong about everything in an article he wrote about the dangers of prognosticating.

  42. Shane says:

    @Marconi Darwin

    Still waiting for the Austrian School of Economics stalwarts to either retract or double down on the runaway inflation we were supposed to have experienced starting late 2008.

    I don't consider myself Austrian, but I do know this, inflation doesn't happen until the money enters the system. The way that the Federal Reserve pushes money into the system is threefold, but essential it must exit through bank lending. If banks are unwilling or reluctant to lend then the money that the fed has printed sits idle at the banks. However when the banks start to lend more if the fed hasn't done anything to pull that money back it will start to flood the economy jacking up inflation as the economy starts to accelerate. More intervention from the fed is then needed, and blah blah blah as the fed pushes and then releases the accelerator pedal of money supply.

  43. Mark - Lord of the Albino Squirrels says:

    @Shane

    Might want to check your link up there, it actually links to Krugman's piece on the Bush stimulus in 2001, not his piece on the Obama one from 2009.

  44. Paris S says:

    Forget the internet bit. The first fax machine patent was in 1843. The fax machine DID CHANGE THE WORLD. Business was next to impossible without it until something better came along.

    To not realise this, after it had already happened, shows the true depth of Krugman's analytical abilitity.

    Good, now you're close to understanding Krugman's point. Only problem, you figured out the importance of the fax machine without throwing away Clark's mistake of discounting the fax machine. Instead, you're trying to attribute that to Krugman. It may in fact be that the importance of the fax machine to business is well understood, and that Krugman was simply saying that they are equal in importance.

    As somebody who is a programmer, and has been using networked computers before the internet was public, I totally agree with him. Without the internet, Amazon might be a BBS with an 800 number. Why not? The internet doesn't get all the credit for the computerization of business, that would be silly. The computers are the big deal, the internet is the equivalent of the fax.

    I mean, not only is this post absurd on its face; being wrong in an offhand "prediction" tells us nothing other than that he is a professional writer with the courage to write a "predictions" post. Of course most predictions won't be accurate; if you stick to only things you're sure are going to happen, you can't possibly write an interesting post about it. Thinking that means he's wrong about anything, especially thinking that an economist being wrong in a prediction about technology would tell us about his abilities as an economist… wow, that's just "derrrrrr" territory.

    But then, to really drive how silly this whole form of attack is, it turns out that Krugman was totally correct, and Clark just doesn't know enough about the subject to even be forming a reasoned opinion, much less to be a credible source of it.

  45. Shane says:

    @Mark – Lord of the Albino Squirrels

    Thank you Mark! :)

    Correct link:
    http://www.nytimes.com/2009/03/09/opinion/09krugman.html

  46. Jason says:

    Apparently that's what Krugman thought.

  47. Brandon says:

    The point here about the fax machine is that its a means of communication, not a generator of wealth in its own right (other than for a few companies that make them). Its fairly obvious at this point that the internet does generate economic activity on its own.

  48. Conster says:

    Oh look, Xennady linked to an article (on HuffPo, a site that often links to Krugman's blog posts, even) that points out several actual mistaken predictions Krugman has made about stuff he's supposed to be an expert in, contradicting his attitude that he's infallible.
    If only Clark had provided that link and based a post on it, instead of using a prediction about technlogy by Krugman which turned out to be completely wrong (keep in mind you could probably fill an entire book with predictions about technology by influential people that turned out to be completely wrong) for a cheap zinger.

  49. Mark - Lord of the Albino Squirrels says:

    Thank goodness nobody else was undervaluing the internet economy in 1998 like Krugman. Isn't that right Pets.com sock puppet?

    Huh…now where did that puppet go…

  50. BC says:

    Krugman has been right about almost everything since 2000.

    And the nice thing about Krugman is that when he is wrong he admits it, shares his analysis of his mistakes, and attempts to adjust his models where appropriate so mistakes are not repeated.

  51. Decline to disclose says:

    @Shane:

    "President Obama’s plan to stimulate the economy was “massive,” “giant,” “enormous.” So the American people were told … Yet many economists, myself included, actually argued that the plan was too small and too cautious." was not a call for socialism, unless you believe that any stimulus spending at all counts.

    His point was that in order to avoid the recession the stimulus would need to be roughly equal to the output gap. C was dropping and G needed to pick up the slack. The 2009 stimulus, however, was not large enough to completely fill the gap (in a later post he estimated that it was about a third of the required size IIRC), and so needed to be increased.

    Even if you consider engaging in stimulus to be socialism (which is quite a stretch), saying that stimulus should be large enough to get the job done surely isn't.

  52. Decline to disclose says:

    I'd also add that there is a key difference between the prediction shown here and Krugman's policy recommendations. The prediction was, well, a prediction – and in a non-expert area to boot. It was based (largely) on his gut instinct. His policy recommendations, on the other hand, are based on his economic models (fairly standard New Keynesian models, with IS-LM as a starting point). They are not just his gut instinct.

  53. NI says:

    You know, Einstein thought that particle physics was wrong, so obviously we should pay no attention to anything else he said either. No one is 100% accurate when it comes to predicting; Krugman is right most of the time. Plus if low taxes and throwing money at the rich worked, the economy should have been booming when George W. Bush left office.

  54. Clark says:

    I love the fact that people are defending Krugman's predictive essay which is based on the core point that "most people have nothing to say to each other".

    …by leaving comments for someone they've never met in this thing called "a blog"…on the internet.

  55. glasnost says:

    Even if you consider engaging in stimulus to be socialism (which is quite a stretch),

    Not just a "stretch", but absolutely and totally false. Socialism is an economic system wherein the means of production are under the ownership of government. Stimulus spending is .. *any* government spending of any kind. All governments spend money. Spending more of it is not, in any way, socialism. Not remotely.

    Clark's problem is – and the reaction here in a libertarian blog to the Krugman post should be a clue about this – he has no idea what the difference is between things he knows something about and things he doesn't know something about. He seems to think his opinions and conversation assertions are as absolutely reliable as well-supported empirical arguments and can't seem to tell which one he's doing it. In short, he needs a dose of intellectual humility to match his admirable (no, really) self-restraint in the personal aspects of his writing.

    Clark, you don't appear to know aaaanything about economics. And, as many people have pointed out, everyone on earth will be wrong about many things, repeatedly. Having studied the matter professionally, anyone who makes technological predictions in bulk will reliably fail as the predictions increase in number, and it won't take long.

    Krugman has gained a lot of credibility for being basically right about economic events of the past decade. Most people see this as the juvenile potshot that it is. But I'll go further – someday, Krugman will be completely wrong about some economic matter in his core area – it happens to everyone. If you throw people out for being wrong ever, you're an idiot. It's wise to look at the whole record, and furthermore, the means by which people make assessments.

    The means by which you're making assessments are not smart.

  56. Eric Wilner says:

    Those who call this a "technology prediction" and thus outside Krugman's field are missing the point entirely.
    Krugman's prediction said exactly nothing about the technology of the Internet.
    It was about the social and economic implications of the newfangled means of communication, and an economist for whom those aspects are outside his field isn't much of an economist.

  57. J says:

    @Shane: The state throwing money at private firms is NOT socialism.

    "A socialist economic system is based on the organizational precept of production for use, meaning the production of goods and services to directly satisfy economic demand and human needs where objects are valued based on their use-value or utility, as opposed to being structured upon the accumulation of capital and production for profit."

    You do agree that our economic system is structured upon the accumulation of capital? Then you can't go around branding people socialists that have no plan to deviate from this practice. Show me where Krugman advocates abolishing private property, socializing enterprises or planning the economy around demand exclusively or stop pretending he is some sort of socialist since that would not be what the word socialist means.

  58. PonyAdvocate says:

    It is consummately easy to cherry-pick one thing someone said 15 years ago, show that as of 7 years later, he was wrong, and use that now to try to impugn all the things he has ever said. Some might call this intellectually dishonest. I hesitate to use this term, but I certainly think it's misleading.

    On a more consequential matter, for instance, Professor Krugman loudly predicted the recent Great Recession for two or three years before it happened. Contrast this with, for example, Ayn Rand acolyte Alan Greenspan, who not only failed to predict the Great Recession, but admitted to his own monumental blindness (stupidity?) in actually helping to cause it. And there are many other conservative economists who, more malignantly, helped cause the Great Recession by helping to effect policies that were favorable to their paymasters in the financial industry, although the policies were, as we have seen, so detrimental to the economy as a whole. So would you buy macroeconomic policy from such people?

    It's unfortunate that more people have not seen the documentary "Inside Job". If more people had, Wall Street would resemble the final scene of "Spartacus", except that instead of rebellious slaves, bankers and conservative economists would festoon the crosses.

    @BC

    Krugman has been right about …

    Everything you said.

  59. Shane says:

    People please do you really not know what socialism is?

    This is socialism, and this, and this.
    Socialism is an economic condition whereby the government owns some portion of the means of production, or in the most extreme case called communism, all of the means of production.

    As to Krugman if you didn't like my last quote from him how about this:
    (a) health care costs will have to be controlled, which will surely require having Medicare and Medicaid decide what they’re willing to pay for …

    But medical costs must be controlled somehow, or nothing works.

    And if a counterpoint is helpful to show what socialism is not, then:

    This is capitalism, and this, and this.

    Whether you like it or not Krugman is a socialist.

  60. Shane says:

    @glasnost

    Stimulus spending is .. *any* government spending of any kind. All governments spend money.

    You got the definition right, but you have no idea what it means. Yes governments spend money, but when they spend it on means of production then they become socialist as per your definition. A capitalist government can spend money on the military or the courts and still not lose it status as capitalist.

  61. Dan Weber says:

    Yep, this didn't take long to degenerate into the anti-Krugman people and the Krugman fanboiz.

    I like reading Krugman's economic analyses. I am unable to read him regularly because I dislike his total inability to have any introspection, his insistence that he is always right, his flaunting of his Nobel prize as proof he's right, his petty insults towards those who disagree with him, his imainging himself as the Cassandra that is always right about predictions but ignored, his comment section being moderated only slightly better than BoingBoing's or Brad de Long's.

    He's wonderful to read if you 1) already agree with him and 2) are looking to not ever be challenged in your own belief. I frequently agree with his economics, but economics is just too hard to predict to ever have even half of the overblown confidence he displays.

    I still re-read his Euro article written for the NYT *Magazine* from time to time. http://www.nytimes.com/2011/01/16/magazine/16Europe-t.html?pagewanted=all He does much better in a long-form technical-analysis magazine format than in a short get-my-fans-to-tell-me-how-awesome-I-am blog-post format.

  62. David C says:

    I mean, not only is this post absurd on its face; being wrong in an offhand "prediction" tells us nothing other than that he is a professional writer with the courage to write a "predictions" post. Of course most predictions won't be accurate; if you stick to only things you're sure are going to happen, you can't possibly write an interesting post about it. Thinking that means he's wrong about anything, especially thinking that an economist being wrong in a prediction about technology would tell us about his abilities as an economist… wow, that's just "derrrrrr" territory.

    I can buy that sometimes writers predict things without being sure. But did he actually say that he wasn't sure?

    If not, how do we know when to listen to him and when he's just writing an "interesting post"?

    Economics is inherently the study of how people behave, especially in large numbers. Being wrong on people's use of the Internet is relevant. And you can't really blame it on the prediction being about "technology" – all the technology was already in place when he made the prediction. There wasn't some unexpected breakthrough in computing power that made this possible.

  63. C. S. P. Schofield says:

    Some observations;

    Krugman is an economist. Until such time as economists can predict future economic conditions with better accuracy than meteorologists their claims that economics is a science are questionable. They should be accorded the respect and attention associated with other preachers of faith-based systems; theologians.

    Krugman is a Liberal Intellectual Academic, One Each. As such he makes all the mistakes that such people usually make, and is right about all the things that such people are right about.

    All nobel Prizes are tainted by association with the Peace Prize, which has been awarded to a wide variety of frauds like Al Gore, Rigoberta Menchú, and Barak Obama.

    If Krugman has said or written something that turned out to be an inaccurate prediction, then tiring it to his tail is fair play. He set up his booth as a prognosticator; he gets to live with the results. If he has since changed his prediction, then he slips the noose. If the prediction came true, then that enhances his reputation. If he didn't want to get quoted out of context he should have become a plumber.

  64. Decline to disclose says:

    @C.S.P. Schofield:
    Are you saying that meteorologists aren't scientists?

  65. twency says:

    Senator Jon Kyl: unemployment relief "doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

    Krugman on Kyl: "To me, that's a bizarre point of view–but then, I don't live in Mr. Kyl's universe."

    Textbook written by Krugman: "Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries."

    (Condensed from WSJ's Best of the Web Today, March 5, 2010. http://online.wsj.com/news/articles/SB10001424052748703915204575103720332317434)

  66. Justin says:

    Maybe we should just call this one of Clark's filler tracks.

  67. pjcamp says:

    I'd buy one from him before I'd buy one from Clark. Or from Alan "There's no housing bubble" Greenspan.

  68. Clark says:

    @pjcamp:

    I'd buy one from him before I'd buy one from Clark.

    It's for the best; I no more have a macroeconomic policy than I have a witchcraft policy…and for similar reasons.

  69. J says:

    "As to Krugman if you didn't like my last quote from him how about this:
    (a) health care costs will have to be controlled, which will surely require having Medicare and Medicaid decide what they’re willing to pay for …"

    So Europe is a completely socialist continent, right? Oh, but your missing a very important point:

    "in which the means of producing and distributing goods is owned collectively or by a centralized government"

    Not the case, is it? The medication this healthcare system provides is still produced by private companies and still produced for demand rather than central planning. The grand majority of those healthcare is provided to is also employed by private companies in a competitive market.

    Counterexample: military and police are owned by the government, their equipment is bought on a free market though. How can the state own the monopoly on force without being socialist, but not own the monopoly on health?

    In synthesis: if social market economy is still regarded as a form of capitalism, how can America's healthcare system be called socialist when not even going as far as social market economy?

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

    Capitalism does not correlate with free market, but private ownership, accumulation of wealth and production directed to profit.

  70. joshuaism says:

    @Clark

    I love the fact that people are defending Krugman's predictive essay which is based on the core point that "most people have nothing to say to each other".

    …by leaving comments for someone they've never met in this thing called "a blog"…on the internet.

    Oh come on Clark, we are not talking to each other. We are talking at each other. Nothing you have said in this post is of substantial interest to me or anyone else posting here. It is just another opportunity for us all to talk past each other. We're all just scoring points for the home team, ignoring the fact that no one is keeping score, there are no referees, and the clock is set to infinity. We are all just preaching to the choir here and all that can be established by these blog posts and comment sections is who brought the largest choir on a certain date.

    What I say here is of interest to maybe 1/50th of people visiting this page, half of whom I probably already know. And as most of us run ad-block plus at home and are usually reading and posting from work all of our shouting into the void clearly has little net economic impact.

  71. BC says:

    @Clark

    I haven't seen anybody here claiming that macroeconomics is a hard science, but if you look at it pragmatically then there is certainly a group of economists who have done a very good job of predicting the effects of policy decisions both in the US and Europe and another group that has a dismal record when it comes to getting anything right.

    You most likely can't respect the science of macroeconomics because the findings of the good economists, the ones that have been consistently correct, create a powerful argument for policy that doesn't agree with your political leanings. In other words, the math says your deeply held beliefs are wrong so the math must be wrong.

    I guess that if you were a born-again you would have compared macroeconomics to evolutionary biology rather than witchcraft.

  72. sinij says:

    Still waiting for the Austrian School of Economics stalwarts to either retract or double down on the runaway inflation we were supposed to have experienced starting late 2008.

    I would just settle for some trickle-down. Any minute now, right?

  73. C. S. P. Schofield says:

    @ Decline to disclose,

    I'm proposing meteorology as a minimum baseline.

    In general; I was reminded of a Thoreau quote "We are in great haste to construct a magnetic telegraph from Maine to Texas; but Maine and Texas, it may be, have nothing important to communicate.". So, Krugman is following in the footsteps of an American classic. On the other hand, both Krugman and Thoreau seem to have missed that simply because some people have nothing of import to say doesn't mean they don't want to say it at great length, or that fortunes cannot be made by selling them the opportunity to do so.

  74. CJColucci says:

    It's for the best; I no more have a macroeconomic policy than I have a witchcraft policy…and for similar reasons.

    Not having a macroeconomic policy is a macroeconomic policy — just a bad one.
    Or perhaps I misread you, and you mean you don't have either a macroeconomic policy or a witchcraft policy because you lack either responsibility or expertise and, therefore, it isn't your business to have one.

  75. Xenocles says:

    "On the other hand, both Krugman and Thoreau seem to have missed that simply because some people have nothing of import to say doesn't mean they don't want to say it at great length, or that fortunes cannot be made by selling them the opportunity to do so."

    Or that the content sometimes follows the opportunity. New technology often creates space for things that did not exist before and would not have arisen without it.

  76. Fensty says:

    You know that feeling where you've been waiting for a package for a few days (not obsessively enough to be tracking it, just that 'is it there today? Oh, nope, tomorrow maybe' when you get to the front door) and then it's there on the doorstep finally….but it turns out, it's addressed to your spouse/roommate/'occupant'? It might even have something in there for you – like, it's cookies from your wife's Grandma – but, it's not the thing you've been waiting for?

    Yeah. That's how I feel when there haven't been any new posts on Popehat for a few days, then I click in, and find one from Clark.

  77. eigenperson says:

    So we can all dismiss Ron Paul for predicting hyperinflation over 30 years of disinflation, right? And Hayek for predicting that interest rates would rise under new deal deficit spending? And Keynes for thinking we would all have a 2 day work week? And Friedman for thinking base money would be an accurate target?

    Bob:

    Of course we can.

    Economists repeatedly prove that they can't make accurate predictions about the economy. Since their predictions supposedly arise from their economic theories, those theories are unable to make accurate predictions. Therefore, we should dismiss the theories. And if their flagship economic theories are wrong, then what is the point of listening to economists at all?

  78. TGeek says:

    "The man is a pompous fraud who knows that we need 28% taxation rates to deal with demographic changes over the next century, and yet can't even make accurate predictions about one of the biggest sectors of the economy just seven years out."

    Two points:

    1) It's obvious that you disagree with Krugman's politics. I often disagree with him as well. However, that does not make him a fraud. I actually find him one of the more interesting economic voices from the left; vrs. say Robert Reich. Krugman is still one of the more articulate from his camp explaining the logic behind whatever it is they are advocating. Martin Feldstien being my choice on the right for the same reason. I can actually read an opinion piece by an economist espousing conclusions and arguing for policies with which I disagree. I can do this without coming to the determination that the author is a "fraud" and worthy of summary execution.

    2) If every economist's was summarily executed because their predictions 15 years prior were wrong; there would be no more economists.

  79. TM says:

    If every economist's was summarily executed because their predictions 15 years prior were wrong; there would be no more economists.

    If we started with the lawyers, this might be the basis of some sound economic policy.

  80. TGeek says:

    Marconi said: "In "The Road Ahead" Bill Gates forgot to even mention the Internet, a mere five years before the World Wide Web took off. I'd still buy a copy of Windows from him, and he's not even running Microsoft anymore."

    Spot on. "The Road Ahead" was published in 1995. Bill Gates was in the center of information technology at the time and even he didn't see the importance of the internet. This was largely do to the fact that almost no internet company was making money or even had a clue exactly how they would make any money. The advertising model which Google perfected 10 years later had not even been conceived. When Krugman wrote that article it was at the beginning of the Dot Com Bubble. This was a time when Internet companies growing at 1000% per year were going public despite having zero revenue, nonsensical business models and astronomical valuations. The skepticism was based on the lack of faith that there were commercial business models which could sustain-ably monetize the incredible growth in internet users. What Krugman and Gates failed to see at the time was the fact that whomever was the first to come up with a viable long term business model would stand to make Gate's sized fortunes. EBay, Google, Amazon… and, from the 1990s land of the dead, Apple. Allot of very smart people didn't see the 2000s coming.

  81. Paris S says:

    Before the internet we had local BBSes, and regionally networked computers. Without the internet, by now I would still be ordering my pizza online. Before the internet, we could send international "email" through fidonet. Once a day my local BBS would dial up the regional BBS and transmit all the messages; from there it was hourly updates to any major metro area in the world. For business use I could have dialed (local long distance lol) the regional hub BBS and had rapid data communications.

    Online catalog services like Amazon would exist by now even without the internet. Regional BBSes would still be interconnected, especially for business users. There would still be all the advantages of an updated electronic catalog and shipping at scale. You could build a catalog like Amazon even using the MajorBBS software that many local multi-line providers used. You would just write a DOOR plugin using PASCAL to render your markup. Networking exists without the internet, as does online business, markup, etc.

    I don't think most of you really even know the difference between "the internet" and the computers that are "on the internet." The internet is an actual thing, and it isn't a truck, and it isn't a website either.

    The internet is made of kittens.

  82. in-Texas-dept says:

    People who have nothing to say to each other on the Internet use an awful lot of words to say it.

  83. TGeek says:

    eigenperson said:

    "Economists repeatedly prove that they can't make accurate predictions about the economy. Since their predictions supposedly arise from their economic theories, those theories are unable to make accurate predictions. Therefore, we should dismiss the theories. And if their flagship economic theories are wrong, then what is the point of listening to economists at all?".

    Complex systems simply are not conducive to that kind of logic. Conditions in economies, industries and business change continuously. A valid point one day can be completely irrelevant the next. That shouldn't leave one to conclude that there is no value in careful analysis because that analysis does not always result in a prediction that is correct.

    If your Doctor misdiagnosed an illness would you give up entirely on western medicine? Doctors are wrong all the time. Like economics, medicine is not an exact science. I won't write off economists any more than I would take my kid to the local shaman because my doctor misdiagnosed his last sinus infection.

  84. James Pollock says:

    "Socialism is an economic condition whereby the government owns some portion of the means of production, or in the most extreme case called communism, all of the means of production."

    If so, then for most of the 19th century, the United States was socialist, as the government owned most of the land that made up the United States, and the land was the primary means of production of income. This lives on even today, as a great many "private" industries generate income by virtue of leasing land from the government: timber, grazing, mining.

    Why, St. Ronnie was a noted socialist, as his domestic policy included the controlling goal of increasing the production of economic activity from the government's assets (again, most notably, land) thereby increasing the government's role in economic activity.

    Apparently, the nuclear power industry is communist-controlled, as the government asserts ownership and control over refined fissionable materials.

    Sadly, (mostly for them), people who insist that they want their society socialism-free are doomed to eternal disappointment. Humans are social animals.

  85. James Pollock says:

    Economics works, when it does work, by modeling the behavior of millions of independent actors. The reason they get it wrong is that no model is as complex as the original system… meaning that there are ALWAYS overlooked or discounted factors.

    The Internet of the 1990's has almost entirely been supplanted… people no longer purchase Internet access on an open market from competing providers, for example, because dial-up service is dead. As, in short order, the landline business going to be. The long-term story of the Internet will be that it did not transform the economy as many tech prophets of the 1980's and 1990's predicted… with the notable exception of Blockbuster, the Internet has not killed off brick-and-mortar retail. There is a recoil from the extensive automation that the last couple of decades produced… a substantial number of people would prefer to wait in line to talk to a person than deal with website "support" or, God help us all, a voicemail tree.

  86. Grandy says:

    The long-term story of the Internet will be that it did not transform the economy as many tech prophets of the 1980's and 1990's predicted… with the notable exception of Blockbuster, the Internet has not killed off brick-and-mortar retail.

    Were we to measure the success of the internet in terms of "how much brick-and-mortar retail it killed off" – maybe we smoked meth for the first time before deciding to use this criteria. . . it's possible – then it certainly would be a failure.

    Rational men don't measure it that way. The predictions of "tech prophets of the 80s and 90s" are of no relevance (not that they were all predicting the same thing). The internet has had am inarguable – again, unless we're on drugs, or just you -impact on the economy.

    I think I have 6 or 7 different internet providers I can get "land line" service from, currently.

  87. neil says:

    Clark, is your thesis here that anyone who has ever placed a bet (for example on sports) and lost, is unable to be trusted on any topic because they failed to accurately make an accurate prediction days (or even minutes) out?

  88. barry says:

    From the heading I thought it was going to be about Murray Rothbard (a whole other kind of wrong).

  89. Terry says:

    Clark – I fixed the picture for you.

    http://www.nalroo.com/images/krugman1.jpg

    Terry

  90. Andrew MacKie-Mason says:

    A false prediction! Oh no!

  91. C. S. P. Schofield says:

    @Xenocles,

    And the content doesn't necessarily bear much resemblance to the expectations of the man (or men) who made the space. I'm told that Bell thought that the telephone would be used to pipe music into offices.

    @ General thought;

    Socialism is the theory that the economy is best run by consulting experts and then using the force of the State to make people follow the resulting plan.

    Capitalism is the theory that the economy will work itself out as everybody seeks their own self-interest.

    Thus, Socialism is an economic system motivated by fear, and Capitalism is an economic system based on greed.

    Since no economic or political system can do away with either greed or the kind of fear that even the mildest State inspires, no economic system will be free of either Socialism OR Capitalism.

  92. Xennady says:

    My problem with Krugtron isn't that he makes so many stupid and wrong predictions.

    My problem is that he's a partisan hack. I get the sense that if he happened to be an optometrist or a longshoreman or a homeless drunk he'd believe exactly the same things about politics- and no one would care what he thought about it.

    But instead he's a famous economist- and some people do pay attention to his political prescriptions. Which is too bad, because he seems to have no more sense than the average optometrist or homeless drunk, when it comes to politics.

    People listen to Krugman because they believe he brings some special insight into the subjects upon which he opines. That's why this hilarious prediction should matter to Krugman fans. It suggests that he has no idea what the blazes he's talking about.

    If he was half as smart as he thinks Krugman would have realized that he really didn't know what influence the internet would have upon the US economy- and he would have said so.

    I'd think better of him. But if he was the sort of person who could do that, he wouldn't be Krugtron. He'd be an obscure economist working obscurely, doing obscure work few would hear about.

    Instead, he's Krugtron, partisan hack.

  93. Shane says:

    @J

    So Europe is a completely socialist continent, right?

    LOL yes, of course.

    "in which the means of producing and distributing goods is owned collectively or by a centralized government"

    Not the case, is it?

    Wait, what? There is a country in Europe that doesn't own some part of the means of production. Really this isn't tough, if a country owns some part of the means of production then it is socialist … by definition. It can still have some part of it's economy that is capitalist, but if any part of it's means of production is owned by the state then it is socialist. Nitpicking the definition of socialist is like a person with no understanding of the law trying to twist the wording of a law to make it what they want it to be.

    The medication this healthcare system provides is still produced by private companies and still produced for demand rather than central planning.

    Just because the means of production for medication is not owned by the state doesn't mean that other areas of production are not owned by the state, and if ANY means of production is owned by the state then that state is capitalist, BY DEFINITION.

    Counterexample: military and police are owned by the government, their equipment is bought on a free market though.

    Read carefully my post. And think carefully about this:
    What do the military and police produce.

    This is a really simple definitional point about what is socialism. There is no moral conotation from me about what it is. I agree that throwing around the term has become a way to paint someone in a negative light but really socialism is a word and it's definition has existed for a long time. Calling Paul Krugman a socialist is equivalent to calling him a man. If you want to get up in arms about that and try to change the definition of man then have at it. You can record your complaint with the Mini-True and the new newspeak dictionary will reflect the new meaning.

  94. Shane says:

    @joshuaism

    Oh come on Clark, we are not talking to each other. We are talking at each other. Nothing you have said in this post is of substantial interest to me or anyone else posting here.

    Then why waste the time to respond in any way?

  95. joshuaism says:

    @Shane

    Then why waste the time to respond in any way?

    For the same reason people yell at the TV.

  96. Shane says:

    @Sinji

    I would just settle for some trickle-down. Any minute now, right?

    And just what exactly is "trickle-down", other than what happens when someone points a loaded gun in your face?

  97. Shane says:

    @joshuaism

    Then what is being said must have some meaning to elicit a response of that level.

  98. Shane says:

    @eigenperson

    Therefore, we should dismiss the theories. And if their flagship economic theories are wrong, then what is the point of listening to economists at all?

    Exactly, and the funny point is Clark gave himself away in his first comment on the post. I personally think he should have waited to laugh at the punch line because so many don't get it.

  99. Shane says:

    @Xennady

    My problem is that he's a partisan hack.

    Amen

  100. thewakinghour says:

    It's a pretty cheap shot, and out of the blue. If it had a bit of self-snarking, like the Popehat minion who dug it up and warmed it before serving also sniffing a glass of Chardonnay or eagerly about to pop a cracker heaped with Beluga into their snarking mouth, it would've been a lot more biting.

    It comes across as envy, here. Uncool and almost ironically so.

  101. Justin says:

    My problem is that he's a partisan hack.

    Just out of curiosity, do you think Michael Medved is a partisan hack?

  102. Justin says:

    @Shane

    if ANY means of production is owned by the state then that state is capitalist, BY DEFINITION.

    assuming you meant socialist, not capitalist.

    Now, you may be right–I'm no expert in economic theory, but so far as I can tell, this is nothing more than a forceful assertion without evidence/authority. I'm not finding any definition of socialism which makes it clear that, in comparison to capitalism, it is a "dominant trait".

  103. James Pollock says:

    The internet has had am inarguable – … -impact on the economy.

    And yet it's arguable. Instead of just stating your claim, back it up. WHAT impact has the Internet had on the economy?

    1. Streaming media (plus robots!) killed the video-rental industry.
    2. ???

    Show up an impact that the Internet has had that hasn't A) also been done without the Internet, or B) is not possible without it.

    The big buzz in the late 80's and into the '90s was "disintermediation"… the supposed fundamental change that the Internet was supposed to bring to the economy. Disintermediation has created some successful efficiencies, although not the same as what we thought it would back then… but by and large the Internet has expanded to fill niches that already existed, rather than creating new forms of value.

  104. James Pollock says:

    Just because the means of production for medication is not owned by the state doesn't mean that other areas of production are not owned by the state, and if ANY means of production is owned by the state then that state is capitalist, BY DEFINITION.

    Assuming you meant to say "socialist" rather than "capitalist", all you've done is assert that by your definition of the word, EVERY nation is socialist, thereby making it useless as a descriptor. Was that your purpose?
    Communist regimes are socialist. Monarchies are socialist. Fascist regimes are socialist. And, as previously mentioned, the U.S. has been socialist since founding. IF we use your defintion.

  105. James Pollock says:

    think carefully about this:
    What do the military and police produce.

    Well, the military may produce conquered land and peoples to labor for the nation (see Roman history); for most of history militaries were successfully operated for profit. In the U.S., see "westward expansion" and/or "Manifest destiny".

    Police, on the other hand, produce the type of ordered society where investment is possible. In a disordered society, one of the first symptoms is the flight of capital. This is not to say that having police causes capitalism; merely that a lack thereof can generally be expected to severely hamper it. Correlation, not causation.

  106. Shane says:

    @Justin

    assuming you meant socialist, not capitalist.

    I did, thank you.

    Now, you may be right–I'm no expert in economic theory, but so far as I can tell, this is nothing more than a forceful assertion without evidence/authority

    I linked three sets of definitions for socialism.

    I'm not finding any definition of socialism which makes it clear that, in comparison to capitalism, it is a "dominant trait".

    What "dominant trait"?

  107. Xennady says:

    "Just out of curiosity, do you think Michael Medved is a partisan hack?"

    I wouldn't call Michael Medved a partisan hack. As far as I know Medved hasn't changed his policy prescriptions based upon who occupies the Oval Office, nor does he pretend not to be a political advocate.

    That's what really grates me about Krugtron. Like so many other leftists he pretends his policy preferences are simply reality, instead of mere policy preferences, and pretends he is bestowing science upon the teeming masses of the unwashed when actually he is simply talking out of his anus.

  108. Justin says:

    @Shane

    I linked three sets of definitions for socialism.

    None of which suggest that in a society featuring a combination of socialist and capitalist traits (all of them), that the socialist traits "win" the economic system labelling competition.

  109. Shane says:

    @Justin

    I see what it is that you are saying.

    According to Wikipedia on Capitalism.
    "The term capitalism, in its modern sense, is often attributed to Karl Marx. In his magnum opus Capital".

    According to Marx the world would start at Capitalism move to Socialism and then finally reach nirvana at Communism. Socialism was the middle ground between Capitalism and Communism. A mixed system. Using this view Socialism has both elements of Capitalism and Communism, and was book ended between the two. Meaning that Capitalism and Communism were the extremes. Hence Capitalism had no communism in it's system and Communism had no Capitalism in it's system, they were for a lack of a better word pure.

  110. barry says:

    @Justin, This looks like the one drop rule, except with economics rather than race. And just as nutty.

  111. Xenocles says:

    "Read carefully my post. And think carefully about this:
    What do the military and police produce."

    Ideally these services are not profitable and count as waste. Necessary waste, I believe, but they still drain resources away from productive things. I consider them necessary waste because while they are non-value-added to any product those products would likely be impossible without them. (I come from the Lean view of things with respect to waste.)

    If they are productive or profitable the reason is usually immoral; think conquest, plunder, or asset forfeiture. (That's why I said "ideally" before.)

  112. Shane says:

    @barry

    This looks like the one drop rule, except with economics rather than race.

    Then perhaps you have a better definition that we might use? Or perhaps you are saying that like the distinction Negro, economic distinction is meaningless. If you think the distinction is meaningless then perhaps you should say such instead of providing insults as a form of debate.

  113. barry says:

    @Shane, Labelling the ends of a continuum is OK. The nutty part is thinking these labels are buckets which all examples can fit into. I don't think it's an either/or kind of thing.

    You seemed to be saying that one drop of socialist policy made an economy socialist.

  114. Shane says:

    @barry

    The nutty part is thinking these labels are buckets which all examples can fit into.

    The funny thing about words is that they are buckets of which all things containing the similar trait fit into e.g. red. The laughable part of what you are pinning me with is that I am well aware that Capitalism and Communism don't exist on this Earth. The only economic systems at play today are Socialist.

    I don't think it's an either/or kind of thing.

    Then what do you think it is? You can redefine words in ways that you see fit, I have no problem with that, but you must first define (or redefine) those words so that I (or others) know what your (new) definition is so that we stand on common ground.

    You seemed to be saying that one drop of socialist policy made an economy socialist.

    It does according to Marx, and as a part of common usage. For w/e reason Capitalism and Communism are considered pure and reside on opposite sides of the economic spectrum. I didn't just make that up.

    EDIT:
    Ooops Cuba is communist.

    From:
    The only economic systems at play today are Socialist.

    To:
    The predominant economic systems at play today are Socialist.

  115. Allen says:

    I have always thought Krugman was one of the more brilliant economists of our time. That is, based upon his work that got him the Nobel Prize.

    You really ought to read his work sometime, not his NYT column.

  116. James Pollock says:

    It does according to Marx, and as a part of common usage. For w/e reason Capitalism and Communism are considered pure and reside on opposite sides of the economic spectrum. I didn't just make that up.

    You just made that up. You have Marx's definition wrong, and the common usage wrong. Neither "capitalist" nor "communist" are considered "pure" by anyone, including both capitalists and communists, and they don't reside on opposite sides of the economic spectrum, at least, not the way I was taught it in high-school economics.

    There is an axis of economics, which ranges from "private ownership of capital" on one end and "public ownership of capital" on the other. There is also an axis of politics, which has "state control of markets" on one end and "free markets" on the other. No economy lives in any of the corners, and ALL economies have different measurements for different markets. For example, in the U.S. the measurement you'd get when measuring the market for T.V. sets would be different from what you'd get from the market for beer which would be different from the market for electricity… which would vary from place to place in the U.S., because in some places electricity is provided by public entities and in others it's private.

    Even in markets where the government attempts to exercise exclusive control (say, cocaine), there exists a thriving capitalist market.

    To argue that the existence of any element of socialism renders an economic system "socialist" goes beyond oversimplification into just simple.

  117. Dr. Wu says:

    Shocking! Krugman was wrong about something in 1998? Clearly a reason to discount his economic analyses.

  118. Aelfric says:

    Xennady–you pointed me to an article by someone who doesn't much care for Krugman. Could you point out, for me, where you think Ferguson correct and Krugman wrong? Much of it is a he said/she said, and I don't think Ferguson has acquitted himself well over the past five years. I should note–I am quite serious when I want to see Krugman wrong. I think in general he's a pompous ass and his Nobel Prize was a ridiculous political statement, and when I knew the academy had "jumped the shark," so to speak. However, as far as I can tell, Krugman has been substantively right about the macroeconomic implications of our current situation (since the 'Great Recession'). It may be that he's simply right when it comes to crisis economics; I am just rather bothered by people who won't accept that he was fundamentally right about some issues (the inflation danger being the most obvious example). I don't have to like Krugman. And I don't think he is always right (far from it). I do have to reckon with the fact that he seems to have done better since 2008 than the general Freshwater Economists.

  119. Lurker says:

    I like the macroeconomic policy from Genesis. Save during boom years so you can spend during lean years.

    Someone noted the similarity of macroeconomics to psychohistory already – free will and random chance screw them both over.

  120. TradeGeek says:

    James Pollock wrote:

    "And yet it's arguable. Instead of just stating your claim, back it up. WHAT impact has the Internet had on the economy?

    1. Streaming media (plus robots!) killed the video-rental industry.
    2. ???

    Show up an impact that the Internet has had that hasn't A) also been done without the Internet, or B) is not possible without it."

    Seriously?

    Exactly how do these qualifiers have anything to do with economic impact?

    By that logic the automobile had very little impact on the economy. It's a means of travel. Travel is possible without the automobile (You can walk or ride an ox). Therefore, it has had no economic impact.

    Intercontinental travel has been around since at least the 15th century. The modern airliner is therefore without economic benefit.

    One could transfer millions of pages of documents from New York to Los Angles prior to the internet. It would take roughly a week and would require several large trucks and several dozen workers. Verses one person with a $400 laptop and a $30/month internet connection. No value there.

    Simply because the internet didn't destroy industries completely is irrelevant to the economic impact. Electricity did not destroy many industries. However, it did change just about every industry on the planet. It's primary benefit was in productivity. Mechanization amplified the value of a man hour and drastically lowered cost of production.

    Today, one person with a PC and an internet connection can accomplish what once required an entire team of secretaries, clerks, couriers, mail room employees… ect.

    The fact that the same thing could be accomplished prior to the internet is completely and utterly irreverent to the value added to the economy.

  121. MBI says:

    Holy God, can Clark just be fired already? He brings the IQ level of this place down some fifty points.

  122. James Pollock says:

    I like the macroeconomic policy from Genesis. Save during boom years so you can spend during lean years.

    This only works on simple, localized economies. In larger ones, it doesn't. You go down to the bank and put your money in. The bank, seeing that it is a boom year, immediately has an opportunity to place those funds, and it does, fueling the boom… until they run into the problem that the boom is peaking, and there isn't anywhere safe to place the funds with, so they make risky loans… loans which, statistically, are more likely to default or be erased by bankruptcy. So the bust comes, and everybody wants their money back from the bank. But the bank doesn't have it… the funds are out on loan or have been lost, meaning a run on the bank, meaning the bank fails and depositors are out their deposits.

    You need the government to act as a counterweight to the private sector… spending when everyone is hoarding, and (here's where you get problems in the real world) cutting back when the private sector is thriving. The problem is that any time the revenues exceed expenses, the D's see it as an opportunity to launch another program, and the R's see it as an excuse to cut taxes. So the deficit spending in lean years goes on, while paying off the deficit in boom years doesn't happen.

    Someone noted the similarity of macroeconomics to psychohistory already – free will and random chance screw them both over.

    A key tenet of psychohistory is that it only works if the number of humans involved is so high that the effects of free will and random chance average out. Doesn't work with only billions of people; you need trillions.

  123. Cat G says:

    @MBI – As far as I know, this blog is a coalition of friends posting on topics they individually care about or wish to write about – no one can get fired. (I imagine, unless David, Pat, Ken, or Clark decided to just yank the server cables some day.) You shouldn't court pasting.

    Clark is doing his "job" – posting content that generates a discussion. As for any IQ lowering, I don't think that comes from the authors. And I can't say too much negative about a guy that appreciates The Moon is a Harsh Mistress, even if I sometimes disagree strongly with what Clark writes.

    TL; dr – don't court pasting.

  124. Grandy says:

    And yet it's arguable. Instead of just stating your claim, back it up. WHAT impact has the Internet had on the economy?

    A deeply ironic claim, given that you haven't actually advanced an argument that the internet has had no impact on the economy, beyond. . .

    "the internet has had no impact on the economy, beep boop boop".

    You make an argument, and then maybe I'll respond with commentary on how far it has impacted our lives, from things like Amazon.com, to the information store, to the impact on Big Gaming, telecommuniting in certain industries, impact on little guy businesses, and probably something about how the way we play is critically important to us as persons (and what the internet has done to that).

    Show up an impact that the Internet has had that hasn't A) also been done without the Internet, or B) is not possible without it.

    Neither of these things is in any way, shape, or form relevant to the argument. It does not matter that things were possible without the internet. What matters is how the internet changed them/added to them (or not, as the case may be).

    The big buzz in the late 80's and into the '90s was "disintermediation"…

    One of many buzz words. But we do not measure the success of things in terms of how well they did living up to the buzz words.

    Indie gaming is one person who would love to have a talk to you about the impact of cutting out part of the supply chain. Spoiler: it was huge, here. And then it started becomming a big deal for the greater game development community at large.

    but by and large the Internet has expanded to fill niches that already existed, rather than creating new forms of value.

    Where do you come up with this shit?

  125. Drakkenmensch says:

    but by and large the Internet has expanded to fill niches that already existed, rather than creating new forms of value.

    People sang for thousands of years before the phonograph was invented and had conversations even longer before the arrival of this tely-phone, so clearly neither has had any measurable impact or created value to human society. Now you little whippersnappers get off mah lawn!

  126. WTarkin says:

    Clark, you should be ashamed of yourself for attempting to disparage the economic forecasting ability of former Enron adviser Paul Krugman.

  127. JdL says:

    Thank you for rebutting my point that Krugman's inability to predict the future juxtaposes oddly against his desire to plan the future. If only I had remembered that a bunch of academics have given him a shiny award I never would have said that the emperor has no clothes.

    Score! I'm astonished at the number of Krugman defenders here. The man is an idiot, from everything I can gather. Unless I've missed it, he hasn't, for example, figured out that the current government program of printing $85 billion every month is inevitably leading the nation to financial ruin.

  128. Mark - Lord of the Albino Squirrels says:

    There seems to be a whooole lot of definition flabbiness going in this discussion. For example, this -

    One could transfer millions of pages of documents from New York to Los Angles prior to the internet. It would take roughly a week and would require several large trucks and several dozen workers.

    is true so long as your definition of "internet" includes all forms of electronic data transfer and/or computer networks. That is fair enough, but if the person you are talking to defines "internet" as basically Arpanet 2.0 (which seems at least as valid for a definition) then you are not really talking about the same things. Under *that* definition the above quote is obviously false.

    The same could be said for "impact" in the flabbiness department. Negative? Positive? Since we are discussing impact on the economy, maybe impact refers to employment, or productivity, or the stock market, or GDP, or….? The Black Plague and the invention of the internal combustion engine both had a huge impact on the world economy, but those two impacts were not exactly the same.

    With Krugman's prediction the wandering criteria for judgement and definitions strike again. As short term advice for a U.S. investor of 1998 or as a forecast for the rate of internet growth (traffic and/or number of users) his prediction earns pretty high marks. That said, as a foretelling for how the internet impacts society as a whole, this prediction might earn a D- or F.

    Okay, done with the fence straddling now, and will stop on a cynical rule of thumb:

    Don't trust the internet to tell you how important the internet is.

  129. Lurker says:

    A key tenet of psychohistory is that it only works if the number of humans involved is so high that the effects of free will and random chance average out. Doesn't work with only billions of people; you need trillions.

    It still failed miserably though, because random chance introduced a factor outside the scope of Seldon's predictions. It ended up much like macroeconomics today – constantly updating models and predictions to account for the influence of free will and chance, despite a galactic scale. (The law of large numbers only guarantees a particular result at infinity, after all)

  130. stillnotking says:

    I think we should give the NYT op-ed contributors a small plot of land — preferably not Manhattan, but that's negotiable if they insist — let them create whatever style of government and industry they want, from the top down, and see if anyone wants to live there.

  131. BC says:

    "Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?"

    - David Frum http://www.frumforum.com/were-our-enemies-right/

  132. David C says:

    is true so long as your definition of "internet" includes all forms of electronic data transfer and/or computer networks. That is fair enough, but if the person you are talking to defines "internet" as basically Arpanet 2.0 (which seems at least as valid for a definition) then you are not really talking about the same things. Under *that* definition the above quote is obviously false.

    I think if we use the Internet as it existed in 1998 (when the prediction was from) or 2005 (the target date of the prediction) that's good enough. There's no reason to go back to Arpanet.

    As short term advice for a U.S. investor of 1998 or as a forecast for the rate of internet growth (traffic and/or number of users) his prediction earns pretty high marks.

    Except he said "by 2005 or so" so it was not meant as a short-term prediction. I'd call that medium-term. And in 2005, Myspace sold for $580 million.

    Also, predicting that something will NOT happen in the short term, for some value of "short term", is ALWAYS going to be correct unless it is literally happening as you speak. I could predict that nobody will comment on this article for the next 7 years. I'd probably be right for a few seconds, or even minutes, but that would not make that prediction any less ridiculous just because I was right in the "short term" about a prediction that was not even meant for the short term.

  133. TradeGeek says:

    "is true so long as your definition of "internet" includes all forms of electronic data transfer and/or computer networks. That is fair enough, but if the person you are talking to defines "internet" as basically Arpanet 2.0 (which seems at least as valid for a definition) then you are not really talking about the same things. Under *that* definition the above quote is obviously false."

    You obviously don't understand fundamentally what the internet is. Of course there were means of moving data electronically prior to the framework which we know refer to as the internet.

    Example: in 1995 I used a data service which required a dedicated pear to pear connection. That was accomplished with what is known as a fractional T-1 line. It was a direct, copper line, connection from my office in CA to NY. It ran at a speed of 64 kilobytes per second. It connected my router to a server in Manhattan. I could only access the data which was on that one server.

    The Cost? Roughly $500 per month billed through three separate "Baby Bell" telcos who's territory my line traversed.

    That comes out to $7.81 per kilobyte/sec.

    Today? I pay $100 per month for 35 Megabytes per second. Which equates to .002 cents per kilobyte/sec.

    That is roughly a cost reduction (per kilobyte/sec) of 99.9997%. With the added benefit that I can access any server on the net, not simply the one single server my old T-1 line was tied to.

    The innovation that was the internet has nothing to do with a "new" technology but the re-conception and implementation of technology that already existed. Peer to peer networks were slow, expensive and required very expensive hardware. The scale and growth of the internet brought about extremely efficient use EXISTING infrastructure. The economic benefits have been astronomical. The social implications equally so.

    Airplane 2.0? If the Wright brother's plane was 1.0 and Airbus A 380 was 2.0. Then maybe you would have a point.

    That said, I will get off your lawn before you toss your walker at me.

  134. Malc says:

    @Paris S… (and others):

    I think you're confusing the social meaning of the word "the internet" (which refers to a single IP network) with the technical (which by definition refers to multiple connected networks). Your examples (BBS and Fidonet, for example) _are_ part "the internet" (technical use) because they can pass messages and data around, but they are not "the internet" (social use) we know today.

    An interesting observation is that, even using the "social use" definition, there are two "the internets" alive and well at the moment: one is an IPv4 thing, the other is an IPv6 thing, the former being better known than the latter!

  135. James Pollock says:

    You make an argument, and then maybe I'll respond with commentary on how far it has impacted our lives, from things like Amazon.com, to the information store, to the impact on Big Gaming, telecommuniting in certain industries, impact on little guy businesses, and probably something about how the way we play is critically important to us as persons (and what the internet has done to that).

    Very well.
    A) Amazon's big economic impact on the economy is caused by two things: Effective use of the decentralized warehouse model, and the Kindle, neither of which requires an Internet to function. Therefore, Amazon.com is NOT an example of the Internet having an economic impact.

    B) The information store existed prior to the Internet, and was available generally prior to the Internet. The only thing that changed is that you now pay your wireless carrier (i.e., the cell-phone company) for access to it instead of the information service provider.

    C) The impact of the Internet on Big Gaming is nil.

    D) Telecommuting? Seriously? What is the economic impact of telecommuting? If it's done right, the exact same work gets done.

    E) "Impact on little guy businesses"… again, nil, or indistinguishable from other forces (big box retailing, globalization).

    F) "the way we play is critically important to us as persons"… OK, how has the Internet changed that? Some people play by going out and interacting with actual persons, and some people play by retreating to the basement. When did that change?

    Neither of these things is in any way, shape, or form relevant to the argument. It does not matter that things were possible without the internet.

    I see. So, we'll just credit the Internet with any net changes that we see, whether those changes actually had anything to do with the Internet? How foolish I am for insisting that those "economic impacts of the Internet" actually be traceable to the Internet, and not to someone else? If our "economic impacts of the Internet" don't actually have to come from the Internet, then I concede now.

    One of many buzz words. But we do not measure the success of things in terms of how well they did living up to the buzz words.

    OK. Now go back and examine the actual concept rather than the "buzz word". That is, look at the expected results of disintermediation compared to the actual results of disintermediation, without ever applying any buzz word to it. In other words, you didn't address the point and I'm calling you on it.

    The previous hundred years or so built up a distribution model based on transportation and storage. Manufacturers made things, and sold them to distributors who transported them to warehouses near various markets, where the distributors broke them into smaller lots and sold them to wholesalers, who transported them to their warehouses and broke them into smaller lots and sold them to retailers, who transported them to their storage facilities, where they were broken into individual units for sale to the consumer. Each step in the process added costs, and markup for the middlemen. In theory, the Internet lets manufacters and consumers meet directly, eliminating the need for all this intermediation and transportation to warehousing facilities, allowing manufacturers to charge more, consumers to pay less, and pushing out the middleman. This is what fueled the late 90's tech bubble… the belief that getting first to market would provide an unassailable market dominance once people decided to shop online rather than in-person. But… it didn't work. Amazon was successful, not because it had online dominance, but because it had a strong, stable fulfillment backend. Craigslist displaced newspaper print ads not because it has online dominance, but because they didn't charge for the majority of the services it provides.

    The single biggest economic impact on the Internet is porn. Before the Internet, porn generated huge profits by exploiting most of the people who were in it, and directed most of those profits to a few businesses, mostly thought to be run by organized crime. After the Internet, porn generates huge profits by exploiting most of the people who are in it, and it directs most of those profits to a few businesses, which are mostly thought to be run by organized crime. Yes, the way porn is delivered to consumers HAS changed, from seedy downtown theaters to VHS to DVD to downloads. But the impact on the revenue model is… what, exactly?

    From a 30+ year career in IT, mostly.

  136. Malc says:

    @C.S.P. Schofield,

    Let's not forget other Nobel laureates, such as Kissinger and Teddy Roosevelt. Or Frank Kellogg, who created the Briand-Kellogg pact that in which states agreed not to wage wars of aggression! Brilliant! The end of war. In 1929.

  137. James Pollock says:

    It still failed miserably though, because random chance introduced a factor outside the scope of Seldon's predictions.

    In much the same way that the ideal gas laws fail miserably if you introduce a thumbtack to a rubber balloon. Seldon tried to predict the next 30,000 years from a fixed vantage point, and that failed a couple of hundred years in. But A) he was amazingly accurate (down to the hour of the day he should appear in the vault of the ages) for quite some time, and B) nothing stopped the Second Foundation from recalculating with new data, which they did.

    I can use a satellite navigation system to plan a trip from my home in Oregon to someplace in Florida. If a fatal accident closes a stretch of highway in St. Louis, and I have to find a new route (possibly one that contains the previous route calculation, and possibly a completely different route) does that mean that satellite navigation is a miserable failure?

    Heck, physics is a miserable failure… Those physicists can't even locate a particle and determine its exact velocity at the same time. If they can't be counted on to manage a single particle, how can we expect them to figure out how all those particles interact?

  138. Malc says:

    Kudus to @Shane for beating the "if you don't know what a word means, don't use it" drum!

    It is undeniable that, by every accepted definition of the word, Ronald Reagan and both Bushes were Socialist presidents (actually, G.W.Bush more than most, for his Medicare expansion), as were Carter, Clinton and (is) Obama.

    However, Cuba is not (economically) communist, and more than China is. Sure, it claims to be, but (like China) it also permits (encourages?) private ownership of the means of production. Sure, much of the non-state controller business is under the radar, but the legality of business is never a factor when discussing the economics of that business (c.f. Wall Street…)

  139. Clark says:

    @TradeGeek

    in 1995 I used a data service which required a dedicated pear to pear connection.

    I'll always fondly remember 1995 as the year that networking hits its apotheosis of deliciousness.

  140. Clark says:

    @glasnost

    Clark, you don't appear to know aaaanything about economics.

    What have I said about economics that you think is incorrect?

  141. Clark says:

    @MBI

    Holy God, can Clark just be fired already?

    Ken likes to make the analogy that this blog is his living room.

    I am friends with Ken. You, I think, are not. Thus, we have a case of a stranger insulting the host and his friend.

    I won't ban you…but I will point out that you are behaving rudely.

    He brings the IQ level of this place down some fifty points.

    I'm amused at your ability to rate intelligence.

    @Cat

    @MBI – As far as I know, this blog is a coalition of friends posting on topics they individually care about or wish to write about

    Exactly.

    Clark is doing his "job" – posting content that generates a discussion.

    Actually, generating discussion is a nice side effect, but I post what I want to post, as do the other posters. There is, IMO, a 2×2 matrix: good posts vs mediocre posts and high comment counts vs low comment counts. All four quadrants of the matrix are well represented here.

    This particular thread is a mediocre post (a quick upload of a JPG someone emailed me) that has spawned a lot of comment. I also generate all three other types of posts.

    I can't say too much negative about a guy that appreciates The Moon is a Harsh Mistress

    ;-)

    Thanks!

  142. TM says:

    @ James Pollock

    A) Effective use of decentralized resources at the very least requires a network to provide continual updates to the various decentralized nodes in order to maintain up to date information. If not the internet proper, some other form is required, otherwise at a certain point your speed of business is limited by the speed of updates. If it takes 24 hours to update the inventory levels at each warehouse back to the central shipping coordinator, and then 24 hours to dispatch an order from the shipping coordinator to the warehouse, next day delivery is extremely unlikely.

    C) See DLC, the entirety of the iPhone / Android ecosystems and MMORPGs. Sure there were LARPs before WOW, but again, see point A for a discussion on latency.

    D) Fundamentally, telecommuting disconnects the need of the worker to live where they work. The big picture economic impact might be small, but I assure you, for those workers who are employed in NYC and live in the country, it's a hell of an economic impact for them.

    E) Impact on small businesses, see software as a service, enabling subscription to hardware and software without needing the large capital outlays up front.

    F) If you're a teen, dealing with severe health issues which have had you kicked out of your school, and have you at home for days at a time, barely able to stand let alone run and play with the other children in your neighborhood, you might find that the internet has changed how you're able to play and interact with other people even in places hundreds or thousands of miles away in some rather significant ways.

  143. Malc says:

    @TradeGeek you example from 1995 illustrates your point perfectly well, however as a matter of fact your Fractional T-1 wasn't a direct copper connection: it was a switched connection, in which you got one (or potentially more) channel out of the 24 channels in a T-1, each channel being 64 Kb/s. The channels are created using time-division multiplexing, and the system could scale in a similar manner, so that 20 T-1 links (each containing 24 channels) could be aggregated on a copper T-3 OR carried on an OC-3, which is an optical link.

    Direct leased copper lines were available and usable for any analog signal that fit within the frequency range of human voice (because the signals would be amplified at repeater stations), but were far more specialized and expensive than most people needed.

  144. James Pollock says:

    People sang for thousands of years before the phonograph was invented

    Yes, they did. But they didn't record sound. Compare and contrast the difference between recording sound and not recording sound with the difference between recording sound as analog signals, and recording sound as digital signals.

    Who gets credit for the current market in recorded sounds: Edison, for inventing the wax-cylinder phonograph, or Sony and Philips, who invented the compact disc? Does the fact that there's no market for wax-cylinder sound recordings outside of Antiques Roadshow, while millions of CDs are sold annually make a difference?

    True, it does get trickier in the modern age, as cross-pollination has its effects. Take, for example, the Multi-User Dungeon: Originally invented on the Internet, first monetized on dial-up BBS, subsequently re-discovered and monetized on a far vaster scale on the Internet. (and THAT's a simplification.)

    had conversations even longer before the arrival of this tely-phone

    They even had LONG DISTANCE conversations, via semaphore signaling, postal service, and private messengers. This is another one of those cross-polllination situations. A substantial number of people have traded in their tely-phone service for wireless digital-signaling services which can provide voice services amongst many other options. Does the economic impact of cellular telephone service start with Bell, or with Marconi? What about the component services, such as SMS, which is surely influential in the rise of cellular service over landlines (and semaphores).

    In short, it's easy to point to something and say "there's been changes here, BIG changes" and being able to point to a specific thing as the source of those changes.

    Compare to non-computery but similar situations. Today, people are far less rooted to the communities of their birth than they have been historically. Is that because of the rise of the Interstate Highway System? Perhaps deregulated air travel? Globalization of manufacturing? National marketing such that it's impossible to tell a strip mall in California from a strip mall in Florida, because they have the exact same shops in them? It's possible to argue that any of these is a vital component, and it's possible to argue that any one of these is not vital.

  145. sixhonest servingmen says:

    Is it just me, or am I to 'thick' to appreciate the well rounded commentaries on economics and other academic pursuits of pleasure. For those who admit to being just a little bit thick, once again I think this may help -

    QUICK LINK GUIDE FOR RAPID UNDERSTANDING OF LIBERTY
    http://thereisnodebt.wordpress.com/2013/12/13/quick-link-guide-for-rapid-understanding-of-liberty/

  146. James Pollock says:

    Effective use of decentralized resources at the very least requires a network to provide continual updates to the various decentralized nodes in order to maintain up to date information.

    Railroads managed this trick 100 years before the invention of the Internet, and most businesses continue to do it via private network. Decentralized warehousing is in no way a result of the Internet. The Internet provides some evolutionary advances (VPN instead of dedicated circuit) but that's all.

    If it takes 24 hours to update the inventory levels at each warehouse back to the central shipping coordinator, and then 24 hours to dispatch an order from the shipping coordinator to the warehouse, next day delivery is extremely unlikely.

    And this is a retreat to a strawman. Yes, if your communications system were to revert to one that takes 24 hours to deliver a message from the warehouse to the headquarters, and 24 hours to return a reply, it would be VERY difficult to maintain a decentralized warehousing system. But… we've had this technology since the 1880's, and it's well-integrated into American business, so… wtf are you talking about?

    See DLC, the entirety of the iPhone / Android ecosystems and MMORPGs.

    DLC existed before the rise of the Internet (the early 90's) See "shareware", generally. The iPhone/Android ecosystems get their fundamental boost from wireless networking, not Internet, and MMORPGS (or MUDs as they were originally known) have been previously addressed.

    Fundamentally, telecommuting disconnects the need of the worker to live where they work.

    So does outsourcing. Which has the bigger impact on the economy?

    Impact on small businesses, see software as a service, enabling subscription to hardware and software without needing the large capital outlays up front.

    Well, besides the fact that what you describe isn't software as a service, it's platform as a service, my experience suggests that this is something that appeals more to large business than to small ones, as you have to be big enough to be in the virtualization realm at all, and that adds a layer of complexity that most small players are not prepared to deal with. That movement is in its infancy, though, so it may well have a large impact in the future. It's worth paying attention to for no other reason than Microsoft is spending big bucks on the initiative.
    However, you have the same problem there… to the extent that PaaS impacts the economy, is it the Internet that makes this have an economic impact, or is it virtualization technology that makes this have an impact? You could do PaaS on private networks, and you could also do it without virtualization (both have been done in the past).

    If you're a teen, dealing with severe health issues which have had you kicked out of your school, and have you at home for days at a time, barely able to stand let alone run and play with the other children in your neighborhood, you might find that the internet has changed how you're able to play and interact with other people even in places hundreds or thousands of miles away in some rather significant ways.

    But I'm not, and neither are most other people. I'm not arguing that the Internet has had no effect at all (because that would be stupid), I'm arguing that the Internet tends to get credit for changes that are as much, if not more, derived from other things.

    Virtual schooling has the possibility of changing American society in some pretty fundamental ways; is that a trend in and of itself or is it just the far end of the charter school movement? In higher education, distance education is a big player and getting bigger… but is it a response to the widespread availability of broadband Internet, or a response to shrinking budgets and increased competition? (and of course, if it IS the former, then digital divide becomes the defining interest in poverty eradication… but that's a different debate.)

  147. Mark - Lord of the Albino Squirrels says:

    @Tradegeek

    One could transfer millions of pages of documents from New York to Los Angles prior to the internet. It would take roughly a week and would require several large trucks and several dozen workers.

    Vs.

    in 1995 I used a data service which required a dedicated pear to pear connection. That was accomplished with what is known as a fractional T-1 line. It was a direct, copper line, connection from my office in CA to NY.

    So before the internet you used trucks, and after the internet got started you used a T1? Okay.
    I would have thought the direct transmission would have been more efficient than the trucks for you. Similarly, if the internet was/is better than T1 peer to peer why did you stick with the inferior means from the 1960's with the internet growing at the fastest rate that it ever has (1995)?

    @David C

    I think if we use the Internet as it existed in 1998 (when the prediction was from) or 2005 (the target date of the prediction) that's good enough. There's no reason to go back to Arpanet.

    I brought up Arpanet for the whole TCP/IP creation thing. That standardization is not an unfair starting point for defining what the internet is or was. Personally, I get more utility out of defining "the internet" as a language and its speakers (in actuality) or as a currency (in terms of how it has worth).
    Any definition somebody cares to spell out works for me honestly, but "the internet" seems to carry an abundance of different definitions – and that's just counting in this thread. Somewhere between THEGODOFALLCOMMUNICATION!!! and justthe"i"in"ip" is the most precise definition I can find here – which is an improvement over many discussions of "the internet" honestly.

    Except he said "by 2005 or so" so it was not meant as a short-term prediction. I'd call that medium-term. And in 2005, Myspace sold for $580 million.

    That might work better if Myspace existed in 1998. Internet companies – whether infrastructure companies or dot coms themselves – that actually existed prior to the collapse did not usually fair as well over that time period. That said, I do agree with you in a way: Krugman's prediction was better for investors in the short term and got worse the longer the term went.

    Also, predicting that something will NOT happen in the short term, for some value of "short term", is ALWAYS going to be correct unless it is literally happening as you speak.

    Not sure what you are referring to here – the internet growth rate part or the economy impact part.
    If the growth part, it has been correct from shortly after the prediction was made until the present. Which means it has been correct for over twice the amount of time you defined as "medium term".
    If the impact part, again, it depends on what you mean by impact. Nobody seems willing to say.

  148. James Pollock says:

    I brought up Arpanet for the whole TCP/IP creation thing. That standardization is not an unfair starting point for defining what the internet is or was.

    Dating the origin of the Internet is not an easy process, mostly because the Internet has multiple different things during its existence. For some things, it is reasonable to date the Internet's origin to the original BBN proof-of-concept project in 1969, for many others it is more reasonable to date it from the early 90's, when the "no-commercial-traffic" rule of NSFnet was cast off and the "Information Superhighway" was (re-)born as an engine of commerce.

    Edited to add:
    Specifically, the Internet has been:
    1) a proof-of-concept project to show that packet-switching is a viable method of managing communication links.
    2) a redundant, route-around-smoking-radioactive-craters method for routing critical national defense orders
    3) a method by which large datasets generated by academic research could be exchanged by researchers
    4) the engine of commerce we know today.

  149. Anton Sirius says:

    @Lurker "It still failed miserably though, because random chance introduced a factor outside the scope of Seldon's predictions."

    This is like saying Nate Silver has failed if he pinned the percentage of a candidate's win at 75% and the other person won instead.

    In Asimov's original trilogy (before he decided to tie his two most popular series together in a great big bow, anyway) the entire point of the existence of the Second Foundation is to get things back on track when the lesser probability outcome hits. You can hardly say Hari Seldon "failed" if he not only understood that his predictions were just probabilities, but created a system that could adjust for low-probability outcomes.

  150. J@m3z Aitch says:

    I don't think Pollack quite grasps the economic effect of reducing costs.

    Once upon a time a friend of mine was trying to explain his (former) job to some college students. He'd worked in shipping, matching up full containers with not-yet-full ships. The students were stuck on seekng him as a middleman, so they thought he was just an extra cost in the system. But as he pointed out to them, he made it easier for them to find each other, lowering their search (transaction) costs.

    I think they still didn't quite grasp it, but the point was that if they didn't find his services cost-effective they would have done the job themselves instead of paying him (well, his company). In the same way, the internet has been increasingly used not simply because it's cool, but because–even with the tech costs–it saves money. It doesn't have to work any fundamental change in business to have a very large effect on business and the economy.

  151. G. Filotto says:

    Well, after reading all the points and counterpoints, my personal, measured view is that people like Krugman should be used for Soylent green. Or mining of irradiated salt in Fuk-u-shima or something equally useful where he can spout all his BS without harm to actual people and other animals.
    Just saying, cause I felt Clark was being unfairly mobbed by a couple of people that were trying to defend the indefensible Krugman.
    Seriously people…economists have been of absolutely no practical use. Ever. Not any use that was good and positive for humanity at large I mean. It's right up there with bloodletting (literally sadly – ba-da-dum!) and ghost-hunting. All economists are frauds. Yes. All of them. And macro-economists are the vilest of the lot. Just my wallflower considered opinion, I'm not ACTUALLY trolling.

  152. @Terry – It took a second to catch it, but brilliantly done man. Brilliant.

  153. James Pollock says:

    "I don't think Pollack quite grasps the economic effect of reducing costs."

    I don't think you quite grasp what you're talking about, and I know for a fact you don't grasp what I've been talking about.

    IT is ALL ABOUT lowering costs for doing business. This is something that is LITERALLY covered in the first day of class when I teach IT management.

    Funny thing, though… IT lowers costs whether the Internet is involved or not, so attributing the lowered costs of implementing IT solutions to the Internet is, well, stupid. Stupid in exactly the way I complained about earlier.

    he made it easier for them to find each other, lowering their search (transaction) costs.

    It's particularly humorous that you feel you need to explain what a broker does, AFTER I went into detail describing disintermediation, which is exactly the process of replacing brokers (and their markup) with automated systems. IT has been involved in market-making for quite some time… the commodities exchanges and stock exchanges, for example, are heavily automated. Yes, it is possible to point to a successful market-maker on the Internet (eBay). No, that doesn't mean that market-making gets its economic impact from the Internet.

    True enough, today, you don't have to go the the mall to go shopping, because you can do it online… but that advance was made by mail-order, not Internet, retailing. Before there was Newegg.com, there was Computer Shopper.

  154. RogerX says:

    Paul Krugman is a regressive, statist hack who had one moderately interesting idea once, but now leverages the notoriety he received from his one interesting idea, via his wife/handler/agent/chief marketer, to pander to the masses using slightly restated socialist ideas masked as progressive populism.

  155. J@m3z Aitch says:

    Pollak,

    If everyone misunderstands you there are a limited number of explanations:
    1: you're wrong
    2: everyone else is dumb
    3: you're not making yourself clear.

    I think 3 is certainly atplay here. But I also think you seem to be assuming people are arguing against the significance of techno guy in general, which of course no one is. The issue is whether that particular technology we call the internet has been one of those economicaly significant technologies. You've been very energetic in your arguments, but haven't made a good argument that it hasn't. The fact that past technologies made a certain activity possible, or lowered its cost, is not–as a matter of logic–a rebuttal of the claim that the internet is a technology that has created new economic gains for firms. So if you want to be persuasive, you need to drop the "but they could do X way back when" argument, because it doesn't support your point.

  156. James Pollock says:

    The issue is whether that particular technology we call the internet has been one of those economicaly significant technologies.

    Yes. And if you want to argue that it has, you have to show that the range of technical innovations collectively known as "the Internet" are actually responsible for economically significant advances. Nobody's done that.

    Yes, there have been substantial changes in the American economy over the last forty years. Yes, the Internet has become more entwined in American society over the last 40 years… over the last 20 in particular. But where's the causation?
    Might as well argue that the rise of the Internet caused the Soviet Union to fall. (Before the Internet, there was a Soviet Union; now there is not. The Internet's role in the dissolution of the Soviet Union is inarguable.)
    Try again. What impact has the Internet had on the economy that can be traced specifically and primarily to the Internet? No fair giving "the Internet" credit for changes that happened because of other things, changes that would have happened even if the Internet hadn't.

    The fact that past technologies made a certain activity possible, or lowered its cost, is not–as a matter of logic–a rebuttal of the claim that the internet is a technology that has created new economic gains for firms.

    I do not understand how your logic works if pointing out that something else is responsible (or more responsible) for "new economic gains for firms" is not a rebuttal of the claim that the Internet is responsible for those gains. If I'm free to use your logic, whereby if the Internet has any economic impact at all, then it gets credit for ALL the economic impact, then the Internet is responsible for the spread of AIDS through the human population, the spread of world terrorism, and the housing bubble of the 2000's.

  157. James Pollock says:

    It's rather late in the thread, but I've been thinking about this and have a different approach to consider.

    Faxing isn't dead; there are still fax machines and they still do everything they did 20 years ago. The reason that faxing died out is mainly due to one factor… fax machines are tied to a standard that says they operate at 9600bps. That's way too slow by the standards of today's public.
    Now, the Internet of the 1990's was primarily conducted over dialup service, which places a 64k/s speed limit on connections, because that's all a voice circuit can handle. That limit imposed other limits on Internet content, as did the limits of memory and processor power commonly available (in 1995, the fastest processor generally available ran at .13 GHz, and system memory was measured in MB, all too often in single digits.)
    The dial-up Internet (that is, that portion of the current Internet that is workable at 64k/s with a 133MHz processor and 8-32MB of RAM) is today almost nil, even though a computer built in 1995 can still do everything it could do in 1995, it is today considered an unusable doorstop.
    Perhaps what is at issue is not a failure to grasp the significance of the Internet, but rather, the ability of the Internet to change, to assimilate other technologies. Put another way, perhaps the error was using the term "the Internet", instead of spelling out which parts of the Internet he was actually talking about. Where is Usenet today? (Twenty years ago, this argument would have raged in a newsgroup, not a weblog. But both are "The Internet". Forty years ago, it might have raged across the letters page of a print periodical. Frame of reference is crucial.)

  158. inode_buddha says:

    Well, I certainly wouldn't buy an economic theory from Krugman – some of his assumptions are unrealistic to say the least IMHO. Which in turn renders the theory unworkable.

    –HOWEVER–

    I don't buy any theories from the so-called "Right Wing" either. Last time I tried that, Newt Gingrich was Speaker, and all I can say 20 years later is that it has been an unmitigated disaster.

    You can end up an a gray dystopian future either way, through no fault of your own. But getting partisans to simply admit this is like pulling teeth. (This particularly goes for conservatives who, by definition, cannot or will not change)

    In krugman's case I think its an almost charming naivete, but the right-wingers seem to be actively malevolent against the society that supports them. Either way leads to failure IMHO.

    I can't take libertarians seriously any more that the Left simply because IMHO they are way too optimistic about human nature and market outcomes.

    I've been saying since the 1990's that the USA will fall in the same way the Soviet Union did, and for the same reasons: greed. Greed kills capitalism and free markets just as surely as it killed old-schol soviet systems. Don't believe me, just look at the bank bailouts…. Combine this with oversisze military-industrial complex and social safety nets that more and more are being forced into… when an economy collapses the politics often follow.

  159. Shane says:

    @inode_buddha

    With buddha in your name and the use of IMHO not once, not twice but thrice times, I am thinking you should have used IMO instead.

  160. boba says:

    re: trucks vs. internet circa 1998-2005, trucks, specifically a Toyota pick-up, had a bandwidth in the 100's of gigabytes. That is, it could carry a couple hundred tape reels a fair distance (like say from the data processing center to the off-site back up facility) at a reasonable cost (easily under $1,000) where as an OC-3 (155 mb/s optical connection, which was need to transfer the data in the window demanded) between the two sites cost $1000 per day (or thereabouts). Given that the need for backups was once a week, it was far more cost effective to keep the Toyota net running than to replace it with internet. Indeed, sneaker net; namely walking down the hall with the 1.54 Mb floppy was far more effective than the old 10 Mb/s Ethernet (or heaven's forbid – Token Ring!) in the development circles.
    Given the players in the game, telcos and cable companies, have the moral and commercial instincts of Barbary pirates, it is not that surprising that an economist would miss the potential of the internet. Moreover, because access of the internet must go through these agencies, its growth has been severely retarded, and only those with the wherewithal to combat said pirates (or are willing to play their tolls) get to play the game at all.

  161. Joe Blow says:

    An interesting observation is that, even using the "social use" definition, there are two "the internets" alive and well at the moment: one is an IPv4 thing, the other is an IPv6 thing, the former being better known than the latter!

    I'm guessing if Krugman ever found out about IPv6, he'd have an existential crisis that would cause him to (briefly) reconsider his core beliefs, before telling his wife to double down on whatever she said in the last column she ghost wrote for him.

  162. @James Pollock – maybe I'm misunderstanding your point and if so, forgive the confusion. If you're asking for proof that things changed economically b/c of the internet, I'd start with the music industry. We were cleaning out the garage the other day putting up Christmas stuff and my collection of 1200+ cd's sits out there. My daughter asked why I would have bought all of those, implying it was dumb, and as I answered I felt like one of those annoying dweebs I remember as a kid telling me how current music all sucks and how vinyl is where it's at. The internet specifically remade the music industry in several different regards. Distribution being the obvious one but also exposure – bands aren't forced to sit around and wait for a deal from a music company (that's still a factor, but you can make a mint without a 'deal' as Client #9's favorite sex worker can verify). The same seems true with media across the board – it's specifically the internet that's killed 'fish wrap'. Banking is another area that has been fundamentally affected – Ally bank couldn't have existed prior to the internet. There's a lot more, but it's that alone shows economic impact that's primarily b/c of the internet itself, not b/c of other things.

  163. CJK Fossman says:

    Wow, Clark really got y'all going, but nobody got his point.

    Krugman criticize Bitcoin. Bitcoin good. Bitcoin not evil government. Bad bad Krugman. Fling first available monkey poo at Krugman.

  164. James Pollock says:

    If you're asking for proof that things changed economically b/c of the internet, I'd start with the music industry.

    That's a start, but…
    Have the changes in the music industry happened because of the Internet, or did they happen because of other things, and the Internet just kind of happened to be there when it was happening?

    Start with the change in distribution. There didn't used to be a thing called iTunes, and there did used to be a thing called a "record store"… big change.
    Once upon a time, record sales were driven by singles… a band only had to come up with two and half minutes of salable material. Later, the "record album" appeared and was followed by the cassette and the CD, both of which had "single" formats, but which were not widely accepted (for a variety of reasons).
    Now, here's where I split off on a pet theory, which is based on anecdotal reports and personal observations from outside the industry. The record industry was plagued for decades with record albums that had one, maybe two good songs on them. People bought the CDs anyway, to get the one or two songs they really liked, and this inflated record sales, because people were buying albums when they really wanted singles. Record-industry types keep looking at this period as if it should be the baseline into the future, when it really isn't. iTunes showed that people WILL buy the music they want, but they're back to buying only the songs they want, rather than buying the whole album to get the ones they want. Record industry types see this as "lost sales", but it's really just a correction to people buying only what they want, and not having to buy extra because of the format. So if you're pointing to the "lost sales" as an economic impact, I'd argue that it's the format switch back to singles vs. albums that accounts for that.

    Or perhaps you were referring to file sharing. I have a quibble with that as an economic impact, as it's not clear that people that download music would have paid for it… it may be that people take it because it's free but wouldn't have taken it at all if it wasn't. (Of course, that's an oversimplification). More to the point, people were stealing music before the Internet came along… taping off the radio, bootleg tapes of live shows, copies of commercially-distributed media, etc. Plus, once again, I think there's probably a bigger culprit, which is the MP3 format. When there was no MP3 format, there wasn't much Internet traffic in music. On the other hand, there's a lot of MP3 copying being done without the Internet. So, again, the Internet is A factor, but it is not THE factor.

    Or perhaps the economic impact you mean to refer to is the ease with which music content providers can bypass the established publishing system. YouTube is a significant media for music distribution; the music videos that would have appeared on MTV in my youth now appear on YouTube, with about as many commercials involved. Again, however, it is not new that bands could sidestep the record labels in the quest for public exposure. Again, pet theory here, one of the purposes record labels provided wasn't bring good music to the market, but rather, declining to bring mediocre music to market. There are a lot of bands out there, some great, many good, many more meh. One of the tasks the labels provided was telling the meh bands that they weren't great. (Not to say that they always got it right… they certainly did not… but here were are twelve years into American Idol and they STILL get thousands of people who think they can sing as well as the folks with record deals. Some of them even can. But they don't stand out.)
    In terms of economic impact, the VAST majority of musical performers cannot make a living at it. The Internet has not changed this. At best, the Internet shuffles the ones who can a little bit. Just like under the old system, there are a few people who've been able to parlay an Internet presence into a lucrative career. But the vast majority don't, meaning that from a long enough view, nothing much has actually changed.

    it's specifically the internet that's killed 'fish wrap'.

    I'd challenge that straightaway; it's broadcast media that's killed 'fish wrap'. The end of newspapers was written on the walls with the success of 24-hour cable TV news. Early on, broadcasters avoided taking sides in anything because of the Fairness Doctrine. Once the Reagan administration did away with that, people could get their "editorial pages" from broadcasters, as well, and it's been a long, slow death spiral ever since. Portland, Oregon, went to a single daily paper in 1982, as the Oregon Journal was subsumed into the Oregonian. That wasn't the Internet… the Internet has caused piling on to a trend that was already irreversible, but it was very late to THAT party.

    Banking is another area that has been fundamentally affected

    There are very few industries more highly regulated than banking Changes in banking have a lot more to do with regulatory changes than with technology.
    I'd argue that the transformative change to the banking industry was the widespread adoption of the debit card for trivial transactions. It's the debit card infrastructure that makes Internet banking even possible.

  165. TM says:

    So, again, the Internet is A factor, but it is not THE factor.

    I think I've found the source of everyone's confusion. You keep asking for examples where the internet is THE one and only factor in the economic change, where as everyone else is talking about the internet as A factor in the change. If you're asking for only examples where the internet is THE factor, I think you're going to be sorely dissapointed, but only because economics doesn't work that way. I sincerely doubt you can find any major economic shift in history that was caused by a single factor.

  166. stakkalee says:

    So wait, CJK Fossman, are you saying that Clark intentionally baited his readers with a sensationalist headline that belies the actual nuance of his argument? Maybe Clark is more like Paul Krugman than he'd care to admit.

  167. James Pollock says:

    You keep asking for examples where the internet is THE one and only factor in the economic change

    Not the ONLY factor, just the PRIMARY factor. If a car crashes into a lightpole, A factor in the accident is the fact that the lightpole was built, another factor is that it was dark out, but the primary factor is the half-rack of beer the driver consumed before getting behind the wheel.

    I sincerely doubt you can find any major economic shift in history that was caused by a single factor.

    Conversely, I bet it's easy to name any number of major economic shifts that were caused by a single factor.

    Let's start with an easy one: American economic dominance in the post-war period was caused by the fact that American industry was almost totally undamaged by WWII.

    The collapse of the Aztec empire was caused by the arrival of the Spanish.

    See? Not that hard.

  168. James Pollock says:

    are you saying that Clark intentionally baited his readers with a sensationalist headline that belies the actual nuance of his argument? Maybe Clark is more like Paul Krugman than he'd care to admit.

    As a general rule, newspaper writers don't write their own headlines.

  169. J@m3z Aitch says:

    It seems to me that the internet interacts with a large variety of other technologies, rather than being a purely stand-alone technology. So Pollack will point to every example and emphasize the technology that the internet interacts with, and insist that therefore the internet isn't very important. And in none of this will he consider whether that other technology, standing on its own without the internet, could have had anywhere near the effect it has because of its interaction with the internet.

    In othet words, he's rigged the game to his own position. Others have to prove the internet's primacy of effect in an interactive structure, but he doesn't have to prove the primacy effect of other technologies's effect in that interactive structure; he just gets to assume it based on that technologies' very (sometimes prior) existence.

    That's logically fallacious, of course. Data transmission lines pre-date fiber optics, so by his logic fiber optics aren't a primary factor in data transmission. The airplane–including military aircraft and commercial airline traffic–predates jet engines, so jet engines can't be of primary importance in military aircraft today.

    If I've learned one thing from blogs over the past decade, it's that you can't engage in a useful discussion with someone who's rigging the game as Pollack is here. (But that doesn't imply he does so in other areas; I don't have anywhere near enough familiarity with him to make such an assumption. He may be an overall excellent commenter and this is his particular blind spot (I assume each of us has one or more)).

  170. ChicagoTom says:

    In othet words, he's rigged the game to his own position

    Or maybe he is actually correct in that people give "the internet" a lot more credit than it deserves in the economic impacts.

    I don't see what he is saying as rigging the game. I think he is making a pretty good case that in many instances where people believe the internet was the major impact on a market or industry, that the internet wasn't the primary or driving force as people tend to believe.

    That's hardly rigging the game to put out facts and draw conclusions and form opinions and to present those.

  171. James Pollock says:

    If I've learned one thing from blogs over the past decade, it's that you can't engage in a useful discussion with someone who's rigging the game as Pollack is here.

    You're still attacking me and ignoring my arguments. That says a lot.

  172. stakkalee says:

    As a general rule, newspaper writers don't write their own headlines.

    Indeed as a general rule this is true, but I think the Times' bloggers come up with their own post titles. At any rate, Krugman seems to suggest in the follow-up post that the joke was his.

  173. J@m3z Aitch says:

    No Pollack, I specifically attacked the structure of your argument and specified that the attack was on the argument's structure, not on you personally. I am sorry I wasn't clear enough about that.

    All you've argued at any point, though, is that there's some other technology that interacts with the internet; you've not yet shown that those technologies would have anything like their current effects without their interaction with the internet; you've only shown they have/would have some effect. So even if others haven't proven their point about the internet, neither have you. And your focus on "the primary factor" is too vague, too subject to subjective interpretation, for any argument you make to be falsifiable. That's part of how your particular argument is rigged.

  174. James Pollock says:

    No Pollack, I specifically attacked the structure of your argument and specified that the attack was on the argument's structure, not on you personally.

    Still not addressing any point I've made.

    And your focus on "the primary factor" is too vague, too subject to subjective interpretation, for any argument you make to be falsifiable.

    And your unwillingness to make any argument at all is, well, what?
    (What EXACTLY are you arguing?)

    Never mind. Your grasp of details is lacking.

  175. J@m3z Aitch says:

    Pollack,

    Pointing out your use of a subjective, unfalsifiable, standard is addressing your points. It's showing that you haven't proven your point because you're using a non-objective standard, one whose measurement you control.

    What am I arguing? I'm not really arguing that the internet is so economically important, but that your way of arguing against those who say does not dispove them because you are using a subjective and easily manipulable standard. No matter how sincerely you believe technology X is the primary factor, rather than the internet (and I assume yiur sincerity; I certainly don't accuse you of lying), the unavoidable fact is that you're controlling the interpretation of the standard–you determine, for each case, whether the net or techhnology X is primary–rather than clarifying a standard that each side can agree upon and interpret the same way.

    If we turn things around, maybe it becomes clearer. That is, you let me be the arbiter of "primary factors," and take the burden of persuading me that technology X is the primary factor. Would you feel that is a fair game for you to play? Would you feel that perhaps I would be less than wholly objective and fairly persuadable? If not me, anyone else here who has argued this topic with you.

    If you would not let any of us be the sole arbiter of "prinary factor" whom you have to persuade, how can you expect anyone else to accept you as the sole arbiter of "primary factor" who has to be persuaded?

  176. Shane says:

    @J@m3z Aitch

    He may be an overall excellent commenter …

    He is not. It would be useful for you if you just used a mental ignore on his posts. Trust me, nothing will be lost as far as perspectives that might be alternate and thus useful.

  177. J@m3z Aitch says:

    Regretably, Shane, I also don't know you that well, so I'll have to suspend judgement until such time as I become more familiar with you both. ;)

  178. James Pollock says:

    If we turn things around, maybe it becomes clearer. That is, you let me be the arbiter of "primary factors," and take the burden of persuading me that technology X is the primary factor. Would you feel that is a fair game for you to play

    Yes, that. Do that. Make a case that, for any X of your choosing, X has experienced significant economic effects that are the result of the Internet using any criteria you prefer .

    Hell, I'll give you one, as a freebie. The "Nigerian Letter" scam has almost completely disappeared, and that traces pretty much to the Internet, specifically, to email.

    how can you expect anyone else to accept you as the sole arbiter of "primary factor" who has to be persuaded?

    I don't recall doing that.

  179. Shane says:

    @J@m3z Aitch

    All good.

  180. Fasolt says:

    @boba:

    Your Token Ring comment made me think of something I tripped over one day back in the early 2000s. I used to work for a company where I went on service calls to people's homes or businesses to service their computers or computer networks. I went to one home where this guy, for some inexplicable reason, was using thinnet to network his 3 computers together. :Shudder:

    I have never seen thinnet in a home before or since.

  181. J@m3z Aitch says:

    No, Pollack, you don't understand. You're asking people to make an argument for the Internet that satisfies your subjective interpretation of primary. To turn that around, you would have to argue for the primacy of the technology contra the role of the Internet and satisfy my subjective interpretation of primacy. Go for it.
    setting yourself

    Barring that, I'm done here. Your arguments, such as they are, have been as unpersuasive to me as others' have been to you. In the absence of agreed upon standards, further argument is pointless.

  182. James Pollock says:

    Just because I haven't yet put enough walls of texts up here, here is another.

    Let us consider the economic impact of the Internet on music publishing by focusing on iTunes. By any measure, the iTunes music service has been very successful. But WHY? The simplistic answer is "because people wanted to buy music off the Internet", which, while demonstrably true, is far from a complete answer. Of course, we can also point to the fact that iTunes had a substantial library of choices, offered at competitive prices. I think it's non-controversial to say that had either of these been lacking, then iTunes would not have been successful.

    Alas, it is necessary to go to thought experiments to probe this question… meaning there are no definite answers, the borders are hazy, and it is entirely possible for different people to have substantially different interpretations of the exact same facts. In this matter, debating this topic is much like debating sports. In a matter of weeks, we'll know which team wins the Super Bowl, and that will be (largely) incontrovertible fact… but football fans will still be able to argue about why the team that wins, wins, and the teams that lose, lose.

    So, if the answer is "people wanted to buy music off the Internet" (with the unstated additional conditions "from a large selection" and "at a competitive price", then how about iTunes' competitors, which offered music sales on the Internet, drawn from a large selection, at competitive prices? Where is the Sony Connect Music Store today? The failure of the Connect service gives us fairly strong evidence that it took more than offering (competitive prices for a large content library of) music on the Internet to be successful.

    One fairly significant factor was the success of the iPod as a playback device. Most of the MP3 players sold were Apple-branded, and iTunes was (and still is) well-integrated with them. That brings up the question of what advances led to the development of the iPod. Standalone players of compressed music files did not originate with the iPod; there were MP3 players on the market before the iPod hit. The iPod was first to have truly mass-market success, but it's not a market that Apple created.

    Of course, digital music is an advance over what we had previously, and it took a substantial amount of time, effort, and money to convince the buying public that they even wanted their music in digital form. They were so successful at this, that they got people to go out and buy digital copies of music they already owned in analog formats. So, the music industry went to an all-digital format in the 1980's. Side note: The CD (digital) replaced the vinyl (analog) album for most applications, but nothing replaced the cassette (also analog). Consumer electronics companies had a technology that could have done it (digital audio tape) but the record companies were terrified of the copying ramifications of widespread adoption of DAT. Because of this, DAT players remained an expensive, recording studio professional tool rather than a consumer item.

    But the Internet existed in the 1980's, and it was populated by exactly the sort of people who thought nothing of infringing copyrights to share media. But the record industry ignored the Internet entirely. Music copying did NOT take off in the mid 1980's. The reason is that the bandwidth of the 1980's didn't really support copying raw binary data (math: A CD has somewhere around 650MB of data on it; the data rate is 16bits x 44,100 samples per second, plus error-checking overhead. The data rate for most Internet transfers at the time was about 9600bps.) Obviously, it is now quite economically feasible to transfer music over the Internet. What changed? Two things: data transfer rates increased, with most people measuring their Internet transfer rates in units of megabits per second, and some bright person figured out that sound files didn't have to be stored as raw data, but could be stored (and transferred) in compressed format. Thus, I think it's reasonble to point to the invention of the MP3 audio format as a significant factor in the success of iTunes, even though iTunes didn't use MP3 format. Without a compressed file format, it would have been far less economically viable to sell music as a digital download. Oh, it still would have happened… today's transfer speeds would support moving audio files around as raw binary data… but it would have happened later, and, possibly, even likely, had less market penetration than it does.

    Finally, the "it was all done before iTunes, and without the Internet" argument. In the late 1980's, I downloaded a huge collection of music from the QuantumLink data service… While this is not evidence that iTunes would have the same economic impact even if there was no Internet, it is certainly evidence that it could have been done without the Internet…. whether it would be as successful, or what types of changes would be necessary to make it successful in an Internet-free world, are left as an exercise for the imagination. (There was also a thriving market for music and graphics for the Amiga, which was largely transferred by a combination of user-group disk sharing and BBS downloads. The Atari ST actually shipped with MIDI ports in every system, making the ST a popular choice amongst professional musicians, but it never got much beyond a niche player in the U.S., although it sold well in Europe.)

  183. James Pollock says:

    No, Pollack, you don't understand.

    You seem to have settled on one misspelling of my name, after trying out a couple of others earlier. I suppose that's progress of a sort. In any case, repeating "you don't understand" as you continue to demonstrate non-understanding is, at least, humorous. Not very, but looking for positives here.

    You're asking people to make an argument for the Internet that satisfies your subjective interpretation of primary.

    Actually, I asked you (several times) to make an argument that uses YOUR subjective interpretation of primary. You have (unsurprisingly, at this point) declined to do so, AGAIN. From this, you apparently want me to be chastened, rather than simply assuming you're unable to do so for whatever reason.

    In the absence of agreed upon standards

    Which you ALSO declined to participate in…

    Barring that, I'm done here. Your arguments, such as they are, have been [...] unpersuasive to me

    Yes, the "declare victory and get the hell out" gambit. I, on the other hand, remain willing to defend my claims, on the off chance that anyone cares enough to address them.

    C'mon, Ken, the holidays are over. PLEASE write something new for us to think about…

  184. J@m3z Aitch says:

    we can also point to the fact that iTunes had a substantial library of choices, offered at competitive prices. I think it's non-controversial to say that had either of these been lacking, then iTunes would not have been successful.

    I think it's non-controversial to say that absent the internet, Apple wouldn't have bothered to license a substantial library of choices or offer them at competitive prices.

    Where is the Sony Connect Music Store today?
    The failure of some competitors is irrelevant. As your example indicates, they didn't connect other technology to the internet as well, but you're ignoring the importance of the internet to the existence of the IPod. There was an internet without the IPod; it's unlikely there would not have been IPod without the internet, or at least that it would have been as successful. And you haven't shown that had Apple (and no one else, either) dreamed up the IPod, that Sony Connect or other similar vendors wouldn't still be around (and of course Amazon has no Ipod, but I can still buy digital music from them via the internet).

    You're note that you were able to download music without the internet has little relevance, because you're a tech guy. You tech elites seem to regularly lose touch with the tech experience of us luddites out there in the real world. It isn't important that it could be done and that some technologically savvy people did it–what's important is what made it a mass market activity, one that techno-morons like me could do on a daily basis, rather than being restricted to a techno-elite

    Sorry, I get that the internet alone without these other technologies wouldn't have created a mass market in digital music, but you haven't persuaded me that these other technologies would have created a mass market in digital music absent the internet. Ultimately, that's what you have to persuade me (speaking just of myself, not others) of, in order to convince me that the internet is not a primary factor: that a mass market in digital music–particularly on a song-by-song, as opposed to album-by-album, basis–would have come into existence, utilized by the techno-dolts on a mass basis, without the internet. I don't see such an argument here.

    And that's my last on this. I think we have different standards for analysis of this. And I'm fine with that; I don't think there's an easy way to determine who's got the right standard (or perhaps, if there is no "right" standard, whose is better). But your flippant dismissals of everyone else's arguments, based on your own subjective standard–dismissals presented as though they were inarguable–well, that kind of arrogant argumentative approach always sets off alarm klaxons for me. Because there are better and worse ways to make arguments, and that's among the worse ways.

    But that's my idiosyncracy in the blogosphere. Often I'm less interested in whose claims are or are not right than in the structure and method of their arguments. It's not much appreciated, I find. It probably won't be here, either. It could be that I'm just a pedantic asshole.

  185. James Pollock says:

    I think it's non-controversial to say that absent the internet, Apple wouldn't have bothered to license a substantial library of choices or offer them at competitive prices.

    Sure, if you ignore that absent the Internet, someone DID offer a substantial library of music files, and offered them at competitive prices…

    As your example indicates, they didn't connect other technology to the internet as well

    Huh? Sony offers a full range of products that connect to the Internet.

    You're note that you were able to download music without the internet has little relevance, because you're a tech guy.

    Back then I was a liberal arts major in a state university. The QuantumLink service was marketed to non-technical people. Look it up.

    techno-morons like me

    Seriously? Your argument is that you're too ignorant to understand the argument I've made?

    you haven't persuaded me that these other technologies would have created a mass market in digital music absent the internet.

    That's not opinion, that's fact. The record industry convinced consumers that they wanted their music in digital format, then proceeded to sell them digital storage media and digital playback devices to play them with, all without Internet (OK, the Internet EXISTED back then, but it was still limited to those tech-elites you hate, while the market for digital music was most definitely not.)

    a mass market in digital music–particularly on a song-by-song, as opposed to album-by-album, basis–would have come into existence, utilized by the techno-dolts on a mass basis, without the internet. I don't see such an argument here.

    Is Wikipedia a reliable-enough source for you to understand that such a market existed?
    http://en.wikipedia.org/wiki/Cd_single

    It could be that I'm just a pedantic asshole.

    It could be. I know I am, and if I were prone to forget it, Shane would remind me from time to time. Or it could be that those alarm klaxons in your head are keeping you from concentrating.

  186. J@m3z Aitch says:

    Well, you seem to have gone to great lengths to misinterpret what I wrote. I think we're done here. I'm inclined at this point to think Shane was right. I'm relatively new here, still figuring out who's worth talking to and who's not. I think I've made gains in that today.

  187. James Pollock says:

    I'm relatively new here, still figuring out who's worth talking to and who's not. I think I've made gains in that today.

    …aaaaand back to attacking the person rather than the arguments.

    you seem to have gone to great lengths to misinterpret what I wrote.

    Someone once told me that if people are misunderstanding you, it's because you're wrong, everyone else is stupid, or you're not making yourself clear.

    What's really interesting is the barely-suppressed rage you seem to have for the "tech elites", while you've created your handle in leet-speak.

  188. J@m3z Aitch says:

    …aaaaand back to attacking the person rather than the arguments.

    It's a shortcut to attacking the same bad arguments over and over agsin. ;)

    the barely-suppressed rage you seem to have for the "tech elites",

    Thanks for that. It's always nice to have a good laugh.

  189. James Pollock says:

    Thanks for that. It's always nice to have a good laugh.

    Well, it's not as funny as your denial that CD's exist, but I'm glad you came away with something.

  190. Corkscrew says:

    If he stuck to descriptive economics, as opposed to prescriptive economics and politics (i.e. telling the rest of us how we should run our lives, or, rather, how we should be forced to run our lives by the government), I'd have no problem with his poor forecasting ability.

    The descriptive/prescriptive thing isn't really a meaningful distinction. Any map is also a navigational aid.

    Krugman's macroeconomic forecasting has actually been pretty impressive IMO – certainly over the last 5 years. The big thing for me was that he didn't get caught up in the hyperinflation phobia, which turned out to be utter bollocks.

    More importantly, as far as I'm concerned, is the fact that he "shows his workings". All his macro statements are pretty explicitly derived from a handful of formal models, which anyone can check themselves. Unlike most other pundits, he makes it easy for people to call him on any hypocrisies and errors.

    So, for example, his model suggests that more government spending is a good idea at the zero lower bound. But it also suggests that government spending can be safely cut when we're off the ZLB. (Safely from a macro perspective, anyway.) If Treasury yields rose to 10% and Krugman still wanted more spending, we'd all be able to point and laugh. Exposing oneself to that kind of correction is a very scientific attitude.

    Being a Nobel prize-winner may or may not be a good thing in a pundit. But being a trained economist means he's more aware of economic concepts that don't always make it into the blogosphere. I'm thinking particularly of the Paradox of Thrift here, which pretty thoroughly explains why austerity in Europe has been having such a negative impact on GDP and so little positive impact on debt ratios.

  191. Robert Johnson says:

    If you believe in Keynesian Economics, the USA should have been plunged into darkness by the Fiscal Cliff/Sequester. WIth y = C + I + G + X – M, and 7.8% unemployment, the decline of G finally being enforced as a result of the automatic spending cuts should have lowered the stock market. raised unemployment, and lowered GDP. Instead, the stock market went up every day for the first two weeks of March 1 through March 14 to the tune of 500 points or so, then went up another 1000 points or so during the next two months. Unemployment went down each month so we're now at 6.7% unemployment. Quarterly GDP growth rates have gotten bigger each month, and are now almost at 4%. All due to the legislation the GOPsters in the House enacted once the Tea Party guy and gals were seated in January 2011. Yet Krugman, Stiglitz, and other Keynesians keep their jobs just as neocons on foreign policy keep theirs, even after Iraq and the entire Arab Winter. Not surprised that Krugman's tech tips are no better than his economic policy advice.

  192. Jay Dubya says:

    When did Salon readers start showing up here? I feel obligated to politely ask all Krugmanistas to GTFO my Popehat (thx)

  1. December 29, 2013

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