Thursday, January 10, 2013

In Which I Pretend I Know What I'm Talking About

Every blogger eventually becomes a crank to some degree or other -- you all know that, right? I've been at this for seven-plus years, so it's probably time for me to turn that handle another few turns and find something really nutty to obsess about.

Which is to say that I've had a thought lately that seems plausible inside my own head, though I'm sure it would be laughed at heartily by people who really know about economics. But, since I'm already typing, let me lay it out for you, and then you can explain why I'm wrong.

It's obvious that previous technological and organizational advances -- railroads, stirrups, the wheel, automobiles, the detailed division of labor, antibiotics, air conditioning, etc. -- allowed more business activity, and thus more jobs, more profits, and an expanding economy. That's the general mantra of progress, and it's a clear and obvious progression -- it may not have always seemed like a bigger economic pie to the Luddities who were thrown out of work at their looms, but there was definitely more products being produced, and a greater total value of products entering the marketplace (and there being exchanged for real money). Again, I'm no economist -- so I may be completely wrong about this -- but it looks to me like the transformation sparked by the Internet is very different: that its defining factor is that behavior that was previously part of a business process is being supplanted by similar behavior that does not generate revenue for anyone -- or, in some cases, generates substantially less revenue than the prior model did. Or, perhaps, some transformations are not as complete, so there's still some revenue attached, but not nearly as much as the pre-Internet version.

Some examples:
  • Classified ads, which generated tens of millions of dollars of ad revenue yearly for newspapers, are replaced with free-to-the-user websites like Craigslist.
  • Physical advertising -- primarily print, in newspapers and magazines, but some outdoor and other formats -- is replaced by a much smaller spend for online advertising.
  • CDs are replaced by downloads, and ad-supported radio is replaced by promotional streaming websites and, occasionally, by ad models that bring in, again, much less revenue.
  • Hardcover books are replaced with cheaper ebooks.
  • Local newspapers are replaced by mostly unpaid bloggers.
  • Software development companies are replaced by open source.
  • Journal publishing is under pressure by the concept of "open access" -- essentially that the public should get for free the research that their tax dollars helped fund.

(I'm not even touching piracy of digital materials, since that's completely separate -- what concerns me is the devaluing of the work and the goods, even when there's some chance of payment.)

In many of those areas, there's still some money -- actually, enough money that a few superstars can grab a lot of it. That, I think, has camouflaged the larger picture, or made it look like every other transition -- there are winners and losers now, just like the buggy-whip era! But there are only a few winners, and a whole lot of losers. And there are large areas where entire job categories have disappeared, and have only been replaced by unpaid hobbyists. Sure, there are a million food bloggers out there now -- but how many restaurant critic jobs have been lost to get there?

I don't see how this is a sustainable trend for any economy: that more and more activities are done for free by people who hope they're good, lucky, and popular enough to be among the few to actually get paid for it. And I don't have any answer to the problem -- we clearly can't go backward, and those old models are pretty well smashed now, and are being smashed in more and more areas each year. But I don't like the way things are going, and I don't see how we can get from here back to any kind of economy where well-paying jobs are increasing and I can hope that my sons will do something neat and interesting twenty years from now.

5 comments:

Alexx Kay said...

"In many of those areas, there's still some money -- actually, enough money that a few superstars can grab a lot of it."

My primary disagreement with you is in the second clause there. Or, rather, in the implication that this is a *new*, or even *increasing* trend in our current economy. In most of economic history it has been the case that "superstars" in a given field grab a disproportionately-large piece of the pie. And it is certainly still true today. New technologies often do increase or decrease this quality in their affected field(s).

I would claim that the vast majority of the economic effect of the Internet has been to reduce this monopolization tendency, rather than to increase it.

This tendency is not universal. Obviously Amazon has accumulated more monopoly book-selling power than any entity in at *least* several centuries. But, and I think this is a crucial point to make, they have only been able to do so by actually offering a better service than their competitors. I certainly don't agree with all their decisions or their politics. But if I want to buy a book, Amazon makes it easier to do so than anywhere else, by a *lot*. [By "easier", I include "cheaper", but it is by no means the only or even most important aspect.] Assuming that no huge SOPA-like shift changes the basic nature of the Internet, Amazon will only maintain their lead to the extent that they maintain that ease of customer experience, or else competitors will overtake them.

My own guess as to what the world will look like twenty years from now is that it will be much closer to the original ideas of Communism, where a substantial portion of the population has their basic needs seen to by some government-equivalent, while participating in gift-economy exchanges. I don't think the 20th century-style economy of salaries, monopolies, and expensive consumer goods will go away entirely (or even quickly), but I think it will no longer be as relevant to the people in the bottom third of the economy. [I fear that ideology will greatly slow the adoption of this model in the U.S...]

Andrew Wheeler said...

Alexx: I don't see that, honestly. Look at how many journalists we had a decade ago in the US -- particularly specialized categories, like editorial cartoonists, restaurant reviewers, and syndicated columnists -- and how many we have now. That's a lot of economic value utterly destroyed, and a lot of eyeballs moving from news to top ten lists about sideboob.

(And, sure, an Andrew Sullivan can go solo and possibly make a lot of money -- but I bet that he's making substantially less money from writing columns than similar figures like Art Buchwald, Mike Royko, and Russell Baker made in previous decades. That's my point about the superstars not being as high as they used to be.)

I also think you argue one thing at the beginning of your comment -- that the effect I posit is neither as strong nor a clear change from prior trends as I declare it to be -- and then spend the end of your comment essentially declaring that a large swath of people will entirely lose the ability to work for a decent living, but that somehow that will be OK.

On the dystopian side, that's "The Marching Morons," and the best case is something like Iain M. Banks's Culture. It sure would be nice to live in the Culture, but I don't see us getting there any time soon. And assuming that everyone else will somehow support people who can't find productive work -- and that those people will be content with their existence without productive work -- seems very shaky to me. (Even absent any accompanying demographic issues -- are the unworking more likely to be from some minority group? Or, as looks like, more likely to be men?)

I also don't know what you mean by "the 20th century-style economy of salaries, monopolies, and expensive consumer goods" -- the 20th century was a time when consumer goods saw a relentless lowering of costs consistently, and monopolies (in the economic sense) were relatively rare and fleeting compared with pre-capitalist times. Absent some magic-equivalent technology, resources will still be limited a generation from now -- in the case of some energy sources, possibly vastly more limited -- and so allocating those resources will still be the core of economics.

The Internet tends to push all information as widely and as cheaply as possible, and tends to turn everything into information as much as possible. That is indeed wonderful for individuals, but I've come to doubt whether it is nearly as good for civilizations.

Jo Walton said...

I think it's a different paradigm.

So that you're right about the classified ads etc, and right that it's different from the buggy whip/oil lamp thing, but the way the internet is affecting civilization is in making all forms of communication vastly easier, and that in itself has an economic effect and creates new divisions of labour.

There's two kinds of things with the economy. There's the thing where we're selling rocks to each other, or taking in each other's washing. I bake your cakes and you do my washing and we each pay but it comes out even, and it's better for both of us but it doesn't actually matter to the economy. Classified ads are like that. Money is going around, or is isn't, but that's all. It's only really education and invention that make new things and matter. And the internet lets people communicate faster and the ideas rub together.

I've thought a lot about the end of the Great Depression and what actually really got us (the world) out of it, and I am sure that it was the coiled spring of tech advances that nobody had been willing to put money into. All that stuff -- plastics, jets, transistors, fission, computers, all of that, came out in WWII because governments were throwing money at them suddenly, but they'd been there begging for investment that everyone was too afraid to give. If things had gone on without WWII those tech advances would have been lost -- and broadcast TV even. This is what actually happened at the end of the Roman Empire -- things were being invented but not invested in because of economic paralysis and they didn't spread. Waterwheels, for example.

And the Industrial Revolution took off because of new ways of capitalising projects. The concept of kickstarter as a funding method strikes me as equally revolutionary.

Is civilization worse because Fred Clark is writing Slacktivist and being paid via his tip jar instead of writing for a local Philadelphia paper? As long as he's getting enough money I'd say civilization is better. Different paradigm on all sorts of levels.

Alexx Kay said...

"Look at how many journalists we had a decade ago in the US -- particularly specialized categories, like editorial cartoonists, restaurant reviewers, and syndicated columnists -- and how many we have now. That's a lot of economic value utterly destroyed, and a lot of eyeballs moving from news to top ten lists about sideboob."

I don't think that some jobs becoming less valued is "economic value utterly destroyed". Value judgments aside, the fact is that more people want to read top ten lists than syndicated material of that sort. Editorial cartoonists are being supplanted by webcomics, restaurant reviews by crowdsourcing like Yelp, and old-style columnists by columnists on websites of all natures. And many of the webcomics artists and columnists are making a comfortable living at it).

"an Andrew Sullivan can go solo and possibly make a lot of money -- but I bet that he's making substantially less money from writing columns than similar figures … made in previous decades. That's my point about the superstars not being as high as they used to be."

Superstars are indeed making less than they used to, because the public now has more options available. I see this as a good thing. (And strongly agree with Jo Walton's last paragraph, above.)

"I also think you argue one thing at the beginning of your comment -- that the effect I posit is neither as strong nor a clear change from prior trends as I declare it to be -- and then spend the end of your comment essentially declaring that a large swath of people will entirely lose the ability to work for a decent living, but that somehow that will be OK."

The beginning of my comment was about my disagreement with your reasoning. The last bit was a hastily-tacked on summary of my views when taking similar prognostications. I'll try and explain that at a bit more length now.

Yes, there will always be limited resources. But we *already* have enough resources to easily guarantee subsistence level food and shelter for everyone. Some countries already do it. In countries like the US, which don't, there are already glimmerings of Internet-mediated social change that may fulfill that role. The Occupy movement didn't last long on Wall Street, but they've done more to help the victims of Hurricane Sandy than Congress or the Red Cross. I don't think it's *guaranteed* that we'll get a real safety net in place again in the U.S., but I think it *likely* that most of the world will have such systems in place within the next few decades.

"-- and that those people will be content with their existence without productive work --"

Well, that depends a lot on what you mean by 'productive', now, doesn't it? You may not be getting *money* for your work, but if you aren't spending all your energy on survival, there's nothing to stop you from Making Art. If you Make Good Art, it might eventually lead to money, but for lots of people (once they have enough to eat), contentment comes more from the creative act than the remuneration.

"I also don't know what you mean by "the 20th century-style economy of salaries, monopolies, and expensive consumer goods""

I'm talking about the way that many people value things solely in terms of dollars. As opposed to a more gift-oriented economy, where the joy of creation and sharing is more important.

(continued next comment...)

Alexx Kay said...

Real World Example #1: If England didn't have the dole, Alan Moore would be an office clerk, and not one of the greatest writers of all time. He was able to take a chance on an arts career, with a pregnant wife, because he knew they wouldn't starve.

Real World Example #2: In the Society for Creative Anachronism, I have seen calligraphers hone their skills for decades, producing better-than-museum-quality scrolls, with gorgeous artwork and copious gold leaf. If it were possible to even put a value on these artworks, it would be in the tens of thousands of dollars. And they are given away freely, without any expectation of reward, *as* a sign of respect to other members of the community.

Real World Example #3: I myself have put thousands of hours of effort into what amounts to amateur scholarship (e.g. The Cerebus Timeline and ). I share the results of that work freely. [There's a link for tips, but my 'earnings' for that come to pennies on the hour; money is clearly not my reason for doing them.]

This last example is the only one of the three that's particularly Internet-enabled. I wouldn't have been motivated to do all that work if it wasn't easy to share the results with others, but it *is*, so I *am*. The Internet seems to me to be increasing this sort of gift interaction.

If I wasn't worried about health insurance, I'd probably spend a lot less time on my ostensible 'career', and a lot more doing amateur scholarship of the sort that I feel is my unique (if highly niche) contribution to the world.

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