Implementing a new technology is difficult because the world works in a certain way already. We’re therefore disrupting those who work by the current rules and there will thus be some resistanceThe net effect is, if we record the costs of producing something but not the value of what is produced, a reduction in productivity. Yet we’ve some 1 billion people getting some to all of their telecoms needs from the work of 200 people. That’s quite obviously a massive rise in productivity right there. Part of our problem is therefore just the way we measure things. But there’s another problem too. We generally do vastly underestimate the difficulties of gaining something useful out of a new technology. It’s not the new thing which adds value, it’s what people do with it. That in turn is hugely influenced by two things the jargon calls path dependency and incumbency. What’s going to happen is hugely reliant upon what has already happened – that internet access in Bangladesh is largely on mobile phones is dependent upon the fact that there never was a widespread landline phone network before. The US and UK have much more cable and wire internet access because there was such a network before mobile phones, before even the internet. Incumbency just means that whatever the current arrangements are there are people who benefit from them. Those people therefore provide a certain resistance to changes in the way we do things. On Thursday, this newspaper had a super piece on YouTube tutorials and the like (web tutorials help Bangladeshi kids get their maths right) which neatly illustrates both problems for us. Our basic method of teaching, and this is even more so at university level, is actually a medieval technology. The one person up at the front, the teacher, reading out from a book, or explaining to the students, whatever it is, started because books were so expensive. Before Gutenberg and movable type in Europe, one single copy of a book took some full year of labour from two people. A book was therefore worth the same as two full years of human labour. Even the most exalted professor might therefore expect to acquire a library of say a dozen volumes in his life – and the students most certainly weren’t going to have a series of textbooks. Thus that medieval technological solution – the teacher reads out, or explains, the subject to the listening audience. Cheap printing should rather have replaced that but the university lecture lives on. It’s difficult to get an institution built around one technology to change. YouTube videos is bringing another such change. It’s possible for the student to sit through the same lecture as often as necessary to get the point across. This very much changes how education should be structured. For example, we simply do not want to measure education achieved by attendance. For attendance in one room, or a school, for a period of time is no longer the evidence we want that something has been learned. Why would it be when there is this other method of being able to understand something? That, of course, poses something of a problem for the education system we currently have. They currently mix and match two tasks, only one of which is actually teaching things to people. The other is providing a qualification, evidence, that something has been learned. Now of course, it’s possible to take this too far for not everyone is going to learn everything online. But what we almost certainly want to do is separate out those two tasks. Divorce the proof that something has been learned from the attendance for a period of time at a certain institution. It’s possible to think of ways to do this, say just the one system of public exams which anyone can take whenever, with anyone who wants to be able to contribute, in whatever manner, to people being able to pass them. That is, with this new way of teaching we want to be able to separate out the proof of what has been learned from the current system of teaching things to people. Note that this isn’t really a diatribe on how to reform education. It’s just an example. Implementing a new technology is difficult because the world works in a certain way already. We’re therefore disrupting those who work by the current rules and there will thus be some resistance. Think of the push-back we’d get if we announced that you don’t have to attend, or pay for, a school or university but you can still get your degree just by passing the exam? There will be at least some professors who will object, no? Technological advance is a wonderful thing and it is indeed what will make us all richer in the future. But it’s also not easy – that’s why it’s taken us 10,000 years and counting of civilisation to get even this far. Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.
We are quite obviously going through a massive technological revolution at present – Bangladesh imported 31 million mobile phones last year, a product that didn’t even exist at all well within my own adult lifetime.
The smart-phone has made mobile internet a possibility and that’s almost certainly the fastest adopted technology in the entire history of the human species. All of which is great of course, technological advance makes us richer and we’re just fine with getting richer.
However, the one great problem is that we can’t quite see is this is the normal economic numbers. If technology is changing, in a manner that adds more value, then we should see productivity rising.
Yet we don’t, not as much as we think we should be at least – so there’s something wrong with the story that the new technology is adding value. One answer here is that we’re just measuring stuff wrong. Hal Varian, the chief economist at Google, has pointed out that GDP does deal well with free.
The same is true of most of our normal economic statistics.
Take the case of WhatsApp. There is no charge for it, it carries no advertising, therefore the output doesn’t appear in GDP at all. There are some 200 people within Facebook who work on it so the costs do appear in GDP.
