Category Archives: Technology

Book Review: Erik Brynjolfsson and Andrew McAfee – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

Erik Brynjolfsson and Andrew McAfee – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W.W. Norton, 2014)

This book from two MIT professors is part big-picture history, and art techno-optimism. McAfee is also the author of the excellent 2020 book More from Less, which is better-argued from a public policy perspective.

The opening chapter sets the historical stage. Living standards were poor and stagnant for nearly all of human history, from our birth as a species until about 1750 or so. If you put human well-being on a graph, it runs almost perfectly flat for thousands and thousands of years. Then it spikes sharply upwards starting around 1750-1800, like a hockey stick on its side. This giant wealth explosion is still happening today, and the authors believe it will continue for some time to come. This is one of the biggest changes in human history.

What caused it? Brynjolfsson and McAfee think it was technology. More specifically, it was the steam engine. Even more specifically, it was James Watt’s iteration of the steam engine. Steam power existed as early as ancient Rome, but it was mostly used for amusement purposes, and not industry. That changed in Watt’s lifetime. This was the start of Bynjolfsson and McAfee’s First Machine Age.

The Second Machine Age is the computer revolution. The First Machine Age revolutionized physical power. The Second Machine Age is revolutionizing mental power. Just as Watt’s steam engine took time to influence manufacturing, technological development, government, and culture, so too is the Second Machine Age. It is far enough along where they argue its fundamental difference from the First Machine Age is clear. But it is also early enough where its impact is only beginning to be felt. The future has almost limitless potential—and some tradeoffs.

The larger arc they draw is the right shape, though I don’t know that their need for two separate Machine Ages is much more than a useful gimmick for talking about technology. I would also submit that the true cause of both revolutions goes a level deeper than just technology. Yes, steam engines and computers are necessary for the two machine ages. Necessary, but not sufficient.

They need another ingredient in the mix: culture. Larger cultural values are difficult to quantify, which is why economists and many other social scientists do not use them. They are still significant, even if they are immune to regression analysis and other quantification. Statistically significant? No. Real-world significant? Very.

Culture shifted in the centuries leading up to Watt’s generation. People were gradually becoming a little more open to change, progress, and improvement. It showed in literature, trade patterns, philosophy, and a new prestige for science and its discoverers. That is why a technology that was already around now began to be used more differently—people allowed it, approved of it, and were willing to countenance large fortunes being made from it.

After setting up their two-machine-ages framework, Brynjolfsson and McAfee go on a tour of new and emerging technologies to see where the Second Machine Age might take us. They take a ride in one of Google’s self-driving cars, among other highlights, and draw encouraging pictures of some of the things new technologies could do for people over the next few decades.

One area where they fall short is their discussion of inequality. They are so focused on the mathematical ratio of the differences between rich and poor peoples’ incomes, that they forget to ask how people at the bottom are actually doing. They also focus almost solely on wage income, which is a significant mistake. This leaves out non-wage income such as employer-sponsored insurance, tuition assistance, free meals, company cars, and other perks that do not show up in income data.

More to the point for a book about technology, Brynjolfsson and McAfee should have asked a question similar to one Don Boudreaux likes to ask: would you rather have 1970-quality medical care at 1970 prices, or today’s health care at today’s prices?

Very few people would rather have 1970’s health care, even at its lower price. That means people view themselves as better off with today’s options. Most people would similarly answer related questions about televisions, computers, cars, appliances, and many other products that both rich and poor people consume.

In fact, society today has substantial consumption equality. Most low-income households have cars that drive at the same speeds on the same roads as wealthy people. They watch the same television shows and have similar Internet connections. More tellingly, rich people are not substantially taller or longer-lived than poor people. In the olden days, one could tell nobles and peasants apart at a glance by their height. Children of nobility got enough to eat, while peasant children were often so malnourished that their growth stunted. There were also substantial differences in infant mortality and life expectancy.

While the very wealthy have orders of magnitude more wealth than ordinary people do, they don’t consume very much of it. Nor do they keep it in a Scrooge McDuck-like vault. They invest it, in an unexpected type of income redistribution. When it’s invested, borrowers use that money to buy homes, go to college, and start businesses. The wealth doesn’t just sit there, people make use of it. It is a subjective question how much of this type of wealth is the “right” amount. But this positive use of wealth is something inequality scholars need to account for, and rarely do. In fact, invested wealth is where most of the capital that funds the amazing technologies Brynjolfsson and McAfee discuss in this book comes from.

They make another lapse in quoting a professional trade association for civil engineers in calling for more infrastructure spending. Of course civil engineers want more infrastructure spending, they have a vested interest in it! This is basic public choice theory. While they briefly acknowledge this conflict of interest, they also do not acknowledge the seriousness of the point, or look at data from less self-interested sources.

Their promotion of a Universal Basic Income (UBI) is similarly idealistic. This model, essentially a straight cash grant, is an objectively better system of poverty relief than the current welfare state. A UBI is easier to administer and more flexible for the recipients. A UBI also makes it more difficult for nanny statists to tell the poor what they shall eat, what things they may and may not buy, what types of health care they may receive, or where they shall educate their kids.

The trouble is politics. Again, a little public choice theory would go a long way in this discussion. Replacing the current welfare state with a UBI would be a fantastic tradeoff, both for the poor and for taxpayers. But the way politics works in practice, this would not happen. A UBI would be negotiated in a Congress led by people like Nancy Pelosi and Mitch McConnell, or whoever succeeds them in a few years. Real-world politicians are unlikely to enact a well-functioning UBI, nor will their constituents let them. Public sector unions whose members administer the current system will block any reform they possibly can.

Tis means any politically-possible UBI would be added on top of the current system, preserving the current system’s flaws and minimizing a UBI’s advantages. Unless this problem is addressed, a UBI risks causing more harm than benefit.

Brynjolfsson and McAfee are consistently a little too idealistic. Some of the technologies they explore in this 2014 book turned out to be flops, and others are still materializing. Similarly, they assume that their political reforms will actually work as they intend them to.

They are certainly right about the larger arc of progress and prosperity. And though I take their technological hyper-optimism with a grain of salt, it is also inspiring. Books like this one and by other thinkers such as Kevin Kelly give me confidence that my daughter’s life will be richer, longer, healthier, and frankly, cooler than mine. This is a source of happiness for me, and gives me inspiration to continue my work on improving economic policy and defending liberalism against populists who would tear it down for no good reason.

Book Review: Arthur C. Clarke – A Fall of Moondust

Arthur C. Clarke – A Fall of Moondust

A good old-fashioned disaster story, set on the moon. A moon rover carrying a group of well-heeled tourists across the Sea of Thirst gets swallowed into a sinkhole. The passengers are unable to radio for help–the regolith (moon soil) blocks their transmissions. They have few provisions, since they were on a short trip. Worse, the heat buildup inside the vehicle, plus a limited oxygen supply, means that help needs to arrive fast. Fortunately, the passengers include a world-famous retired astronaut who was trying to take a low-key trip, among other people with unexpected talents. Some clever scientists back at the base and on Earth are also able to suss out what happened to the missing vehicle, and are able to finagle a dramatic rescue.

The plot is formulaic and the characters are cheesy. But the setting is remarkable, the science is enjoyable—though I don’t think the bits about the moon’s surface hold up very well—and it’s a lot of fun. Not as substantial as Clarke’s usual fare, but if you’re in the mood for something light, one could do worse.

Book Review: Ashlee Vance – Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future

Ashlee Vance – Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (New York: HarperCollins, 2015)

This is an authorized biography, so take it with a grain of salt. Musk is an interesting person whose flaws and accomplishments are both outsized. I was also unaware that Musk is an immigrant, born and raised in South Africa—yet another data point in favor of loosening restrictions against immigrants, who tend to be more entrepreneurial than us native-born Americans.

Musk’s reliance on government subsidies and tax breaks do not get nearly enough attention, and dull some of his sheen. On the positive side of the ledger, Musk is easily one of the highest-profile practitioners of what the Mercatus Center’s Adam Thierer calls “permissionless innovation.” Vance’s stories of Musk telling off innovators and proving stodgy competitors wrong are satisfying; though not so much the stories of how he treats many of his engineers and other employees. His often-humorous trolling also adds some irreverence to a business culture that could use a little more of it; innovation itself is a tacit rebuke of past generations.

The ethos of permissionless innovation is good not just for business, but for politics and culture. Widespread delegitimization of regulators and their rules would do more to limit their power than just about any reform bill Congress could pass. This is an important point many reformers overlook. Individual rules matter, but the institutions that generate those rules matter more. But in the long run, what generates those institutions? Cultural norms. One of the reasons Musk left South Africa is because its culture, barely a generation removed from apartheid, is not exactly innovation-friendly or market-friendly—and its political institutions reflect that. America turned out be a much better fit.

Unlike many green entrepreneurs, Musk believes in what he is selling. He has put almost all of his own money at risk over the years, and has very nearly lost everything more than once. His frenemy and fellow PayPal alum Peter Thiel has had a longtime policy of not investing in green startups because they don’t pan out. Musk, though still subsidy-reliant, has so far proven an exception to the rule with Tesla. While its ultimate fate is still unclear, its recent listing on the S&P 500 bodes well.

One place where Vance’s too-frequent Steve Jobs comparisons make sense is that Musk has something similar to what Jobs’ friends and enemies called his “reality distortion field.” Jobs had a rare charisma and intensity that made people buy into his vision, and work impossibly hard to make moonshot projects happen. Jobs did it with Apple’s computers and phones, and Musk has done it with cars and rockets.

While Musk’s long-term dream of colonizing Mars is unlikely to come to pass during his lifetime, it won’t be because the technology isn’t there. Most of it already exists in his current line of space vehicles. I am not alone in being extremely curious to see what happens next.

Third Antitrust Suit against Google since October Based on Flawed Argument

This press release was originally posted on cei.org.

A coalition of more than 30 states and territories today filed an antitrust lawsuit against Google, alleging the search engine has abused its power in markets ranging from voice assistants to digital advertising in an attempt to maintain a monopoly over internet searches. The antitrust lawsuit is the third filed against Google since October.

CEI Senior Fellow Ryan Young said:

“Today’s antitrust lawsuit, the third against Google since October, has a major flaw: the dozen keystrokes argument. It is not difficult to type bing.com or duckduckgo.com into your browser. Google pays Apple as much as $12 billion per year to Apple to have Google be its default search engine. This is apparently not enough to prevent Apple from reportedly building up its own search engine.

“Nor was Microsoft’s similar default status for its Internet Explorer browser enough to stave off competition from Firefox, Google Chrome, Apple Safari, and other browsers. Just as Microsoft never actually controlled the browser market, Google does not control the search market. Consumers do.”

Read more:

Texas Antitrust Case Against Google would Harm Consumers and Small Businesses

This is a press statement originally posted at cei.org.

The State of Texas announced today it is filing an antitrust lawsuit against Google, alleging the company’s online advertising platform harms competition and allows Google to fix prices for advertising.

CEI senior fellow Ryan Young said:

“A company has monopoly power if it can raise prices, restrict supply, and still keep its dominance. Despite Google’s growth, digital ad prices have fallen by half over the last decade. At the same time, print ad prices have been increasing. Some newspapers have doubled their rates. Google and Facebook, which hold similar market shares, have made the ad market more competitive. Their innovation and price-cutting has made advertising more affordable than ever for small businesses who are struggling to find customers at a difficult time. Attorney General Paxton’s lawsuit would harm consumers and small businesses—precisely the opposite of what antitrust regulation is intended to do.”

Director of CEI’s Center for Technology and Innovation Jessica Melugin said:

“It’s hard to take seriously Attorney General Paxton’s claim that Google has, ‘harmed every person in America.’ Consumers have benefited from Google’s products, services and innovations, often for free. This suit is costly solution in search of a problem.”

Read more:

New EU Tech Rules will Chill Innovation and Harm Consumers

This is a press statement originally posted at cei.org.

The European Union today announced new rules it claims will change the way technology companies operate. The EU says the Digital Services Act and the Digital Markets Act “will create a safer digital space for users” and “level the playing field so that digital businesses can grow.”

Vice President for Strategy Iain Murray said:

“The European Union’s proposed new powers allow it to treat American tech firms as cash cows, to be fined whenever it finds them guilty of providing too much discretion to consumers or allowing too much speech. Its proposed veto on acquisitions will also chill innovation in the European tech sector as it will make the prospect of significant rewards for an acquisition-based business strategy less likely. Europe will act as an anchor on tech innovation, slowing progress and reducing consumer welfare worldwide. The incoming Biden administration should avoid making the same mistakes.”

Senior Fellow Ryan Young said:

“The European Union’s two proposed tech regulation bills have two fatal flaws. One is that, on purpose or not, they are trade protectionism under another name. Many of their provisions are aimed at the large U.S. tech companies. Taking them down a notch would give an opening to EU-based tech companies, the thinking goes. As with President Trump’s trade wars, this will harm consumers without actually helping the industry. The two bills also leave in place the EU’s stifling regulatory culture that is the root cause of Europe’s lack of tech sector innovation.

“The second fatal flaw is that the EU’s proposals would actually lock in the existing American firms’ dominance. They are the only companies that can afford the massive content moderation costs the EU is demanding, or the large fines. Startups that might one day dethrone today’s giants cannot afford these costs, and may not even bother trying to compete.”

Read more:

On the Radio: The Google Antitrust Case

This Sunday, November 8, I’ll be on the Bob Zadek Show to talk about the Google antitrust case. I’ll be on for the whole hour, starting at 8:00 AM PT/11:00 ET.

Bob’s website is here. If audio is put online afterwards, I’ll post a link.

Simon Winchester – The Perfectionists: How Precision Engineers Created the Modern World

Simon Winchester – The Perfectionists: How Precision Engineers Created the Modern World

After a brief appreciation of the notion of precision and how it differs from accuracy, Winchester begins with the story of longitude and John Harrison’s precision clocks. The general organizational theme of the book is chronological, with engineers’ precision capabilities increasing over time.

Winchester is at his best in the lengthier middle chapters. In one, he compares two different kinds of precision—those espoused by Henry Ford and by Rolls Royce. In a Ford assembly line, workers needed almost no skill to fit the precision-made interchangeable parts together in mass quantity on the precisely designed assembly line. The handmade Rolls Royce instead emphasized that every aspect of the car must be hand-made to the most exacting precision by the world’s most skilled craftsmen, to the point that its factory could muster just two cars per day, compared to a new Model T every 40 seconds at Ford’s factory.

His chapter about the birth of the jet engine and the mind-boggling precision needed for its fan blades and other parts is similarly excellent. And the chapter on optics, beginning with how lenses are made and climaxing with the story of the Hubble Space Telescope, its initial blurry pictures due an almost unthinkably small mistake, and its 1993 repair done in space, is also a tour de force.

From there, Winchester goes into the history of the transistor, which nowadays requires atomic precision. Before too long, quantum computers may bring precision requirements down to the quantum realm. The book ends by returning to timekeeping. John Harrison’s famous H-4 clock has since been surpassed by atomic clocks and time-based GPS systems so precise they must take the theory of relativity into account.

Kim Stanley Robinson – Blue Mars

Kim Stanley Robinson – Blue Mars (Mars Trilogy, Book 3)

The conclusion to the trilogy. With Mars now politically independent and boasting a population of about 12 million, Robinson devotes substantial time to constitutional design and how to design a political system from scratch. Politics and economics are clearly not his expertise, but just going through the exercise with him and his characters is a lot of fun. About a quarter of the way through, some of the characters take a trip to Earth for diplomatic purposes. A few of them are among the Earth-born First Hundred to go Mars, and they don’t feel as though they’ve returned home. Nirgal, a second-generation Martian, has his own troubles adapting to Earth’s gravity and open atmosphere.

Robinson also devotes a lot of time to aging. Most of the characters take longevity treatments, and members of the First Hundred are a good 140-150 years old at the beginning of the book, with their apparent physiological ages topping out at about 70. Some of them make it well past 200. But there are tradeoffs to longevity that affect their memories, both short-term and long-term, as well as a number of sudden deaths.

There are also points where beauty and science mix. Descriptions of imported and genetically engineered Earth and plant wildlife are surprising and comforting at the same time. As far as sunsets go, Mars’ atmosphere extends much higher than Earth’s due to low gravity, and has lots of light-reflecting dust. Combined with atmospheric thickening from terraforming, and the characters get to admire sunsets that linger far longer than they do on Earth.

Steven Levy – In The Plex: How Google Thinks, Works, and Shapes Our Lives

Steven Levy – In The Plex: How Google Thinks, Works, and Shapes Our Lives

A corporate history of Google from its founding up until 2011 or so. This book was written with the cooperation of Google’s founders, so it is not an objective history, nor should it be treated as such. It is still useful. A sequel may also be in order before too long. Since this book was published, Google has created its own parent company, Alphabet, and diversified into areas from video to maps to driverless cars. It is also undergoing multiple antitrust investigations, and growing ire from right and left populists could have massive consequences for consumer welfare, innovation, and for competition policy going forward.

Google has changed quite a bit since its early days, but anything violating the consumer welfare standard is difficult to find in here—though, again, this book is not an objective history. If anything, fear of regulatory reprisal put a damper on some of Google’s innovative ideas almost as soon as they realized the company would be a success. That, as opposed to market share for searches or advertising, is evidence of consumer harm.

Some of Google’s early mistakes and learning experiences still loom large today, such as its acquiescence to Chinese censorship.

Levy also has a forthcoming book on Facebook out in January 2020.