Re: Krugman looks back from 2096

From: Robin Hanson (
Date: Wed Jul 12 2000 - 07:38:04 MDT

I wrote:
>I've defended Krugman as a good economist on this
>list. So in all fairness I should share this
>future speculation of his I just came across:

Max More responded:
>Thanks for that link, Robin. A quick skim brings up some points that look
>sound and some that look dubious. I'll have to read it thoroughly later.
>Since I mentioned a while back that it seemed to me that Krugman, good as
>he is on many issues, does not "get" the New Economy, and I did not find
>time to dig up the sources of my disagreement, I will take this
>opportunity to point to one link that I just came across in a pile of
>stuff to read:

That article just has David Henderson complaining about failed short term
predictions of US GDP growth and oil prices. Most economists have been
surprised by GDP growth. And as Damien Sullivan noted, oil prices have
rebounded lately. I do agree that Krugman's prediction of rising resource
prices was the least persuasive of his six main prediction areas. But even
that isn't crazy - I'd give it at least a 20% chance of happening. wrote:
>Krugmann seems off-base in this 1996 article. In the 4 years since it was
>published the "information economy" has taken off, rather then taken a
>... Yet, if his people to people economy is so hot, why aren't people
>high school and leaping into these positions?

He was making a 100 year forecast, not a four year forecast.

> Finally Krugmann chose to ignore the impact
>of technology, all technology, not just computers.

Yes, economists tend to ignore specific technologies in making predictions,
and non-economists tend to focus on them, ignoring economic principles.
Considering both is better, but given one or the other, I prefer the
economists' myopia. wrote:
>Krugman: "...A world awash in information will be a world in which
>per se has very little market value."
>... an increase in supply decreases price only if demand does not
>increase commensurately. I can think of a great many factors, however, that
>will drive up the demand for information even as its supply increases. ... I
>think he needs to spell out--and defend--that assumption.

Yes, it depends on whether information is luxury or necessity. And yes it
be nice to hear more from him on this. But he did outline his reasoning in
the prior paragraphs. ("Third World families ... did not want to watch pretty
graphics ... they wanted to live in nice houses, drive cars, and eat meat.")
I'm not saying I'm persuaded, but his is a reasonable position to take.

As I've said, Krugman and most economists can be faulted for not understanding
specific technologies in more detail. But most futurists can be faulted for
not understanding much economics. The later sin seems much greater to me.

Robin Hanson
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030
703-993-2326 FAX: 703-993-2323

This archive was generated by hypermail 2b29 : Mon Oct 02 2000 - 17:34:25 MDT