Episode 772: Small Change

May 19, 2017
Originally published on October 5, 2017 3:43 pm

Here is a thing we hear approximately every day: The world is changing faster than ever before. Robert Gordon doesn't buy it.

He's an economist who has spent decades studying technological change and economic growth in America. He argues that, contrary to popular belief, the world is not changing faster than ever before. In fact, it's not even changing as fast as it was 100 years ago.

He recently made this argument in a book called The Rise and Fall of American Growth. In the New York Times, Paul Krugman called it a "magisterial combination of deep technological history, vivid portraits of daily life... and careful economic analysis."

On today's show, we talk to Gordon. His argument has profound implications for everything from how the next generation will live to whether robots really are about to take our jobs.

Music: "Burning In Me," "Feels So Good" and "Nerd Disco." Find us: Twitter/ Facebook.

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JACOB GOLDSTEIN, HOST:

Here is a thing you hear - I don't know - every single day.

(SOUNDBITE OF MONTAGE)

UNIDENTIFIED WOMAN #1: The world is changing faster than ever before.

UNIDENTIFIED MAN #1: How about this? Boston researchers have developed a new supercomputer. They claim it can predict if a patient is about to die.

UNIDENTIFIED MAN #2: The high-tech bridge will be equipped with nano-articulated technology.

UNIDENTIFIED MAN #3: This week it's not cowboys versus aliens. It's humans versus robots.

UNIDENTIFIED MAN #4: The world is changing faster than ever. What used to take decades is now taking years or even months.

UNIDENTIFIED WOMAN #2: What you see right now is the illusion...

SALLY HELM, HOST:

And it is not only cheesy TV news. It is also cheesy podcasts. Here's one from 2015.

(SOUNDBITE OF ARCHIVED BROADCAST)

GOLDSTEIN: When you add up all the jobs he thinks are going to be left, there will not be nearly enough to make up for the vast number of jobs that machines are going to take over.

HELM: That was you, Jacob Goldstein?

GOLDSTEIN: It was me on PLANET MONEY. And, you know, this is - I'm just stating the spirit of the times. You know, everybody says this. The world is changing faster than ever.

HELM: And yet - and yet, there is one guy who does not say that - Robert Gordon. He is an economist. He knows an absurd amount about the history of technology. And last year, he came out with this big influential book. Paul Krugman, New York Times, called Gordon's predictions about the future shocking, said he makes a powerful case.

GOLDSTEIN: Gordon's case - the world is not changing faster than ever. In fact, he says our problem isn't too much change. It's too little. Hello and welcome to PLANET MONEY. I'm Jacob Goldstein.

HELM: And I'm Sally Helm. If Robert Gordon is right, then a lot of really smart people are wrong.

GOLDSTEIN: Today on the show, Robert Gordon's argument and its implications for everything from how the next generation of Americans will live to whether robots really will take all our jobs.

(SOUNDBITE OF NICHOLAS MICHAEL HILL, VON HEMINGWAY AND WILLIAM RIDDIMS' "BURNING IN ME")

HELM: When you talk to Robert Gordon, you quickly find out that he has stored in his brain every single technological innovation in American history.

GOLDSTEIN: Arranged by date.

ROBERT GORDON: There were no window screens. They were invented in the 1880s.

By 1929, the ratio of motor vehicles...

The automatic washing machine had been invented by 1920...

Amazon was founded in 1994.

HELM: Last year, Gordon took all of those facts and many more...

GOLDSTEIN: So many more.

HELM: ...And put them altogether in that book. It's called "The Rise And Fall Of American Growth." It is about 700 pages long, and it is actually fascinating.

GOLDSTEIN: We both read it. It's a good book, a good read. And we called Robert Gordon to talk about it.

HELM: All right, can you hear us?

GORDON: Yes I can.

HELM: Excellent. Hello...

GOLDSTEIN: Gordon tells the story about technological change not just for the sake of technology, but for how it really affects our lives. And he says, OK, to understand this in like the big long view way do a thought experiment. Say it's the year 1570...

HELM: Or 1670.

GOLDSTEIN: Whatever doesn't matter. And you've got some person living back then.

HELM: Delivery Man.

GOLDSTEIN: Was that even a thing?

HELM: Yeah.

GOLDSTEIN: Let's say it was. Delivering...

HELM: Totally. He's delivering fruit.

GOLDSTEIN: Did they even have fruit in 1570?

HELM: They totally had fruit, just apples.

GOLDSTEIN: So he's delivering apples. He's got - maybe he's got a horse. If he's lucky, he's got a cart. And, you know, think of his world. If he needs to cook something, he cooks over a fire.

HELM: Right. He's probably walking a long way bringing the apples from one town to another town.

GOLDSTEIN: When he has to go to the bathroom...

HELM: Just poops in a hole.

GOLDSTEIN: Poops in a hole in the ground. There's no, you know, running water. There's no flush toilets. This is his world.

HELM: OK.

GOLDSTEIN: OK, so we have our delivery man. He's in your head. His world is in your head. Now it's time for that thought experiment. Bob Gordon says imagine that delivery man lays down under a tree, falls asleep for hundreds of years. He wakes up. He's in the United States. It's the 1800s. He gets up. He looks around. And he sees a world that looks, like, not that different from the world he fell asleep in.

HELM: Yeah. There's still horses and carts. He's still walking a long way, cooking over a fire, pooping in a hole in the ground. So, you know, hundreds of years have passed and not that much has changed because up until about 1800 or so, things did not change that much from year to year or even from century to century.

GOLDSTEIN: Now thought experiment part two. Same delivery guy gets tired again in 1870, takes a nap for 70 years - short by his standards - wakes up in 1940. Gordon says he wakes up in a world that is completely transformed.

GORDON: They would not believe that you could pick up an instrument and talk to somebody a hundred or a thousand miles away on the telephone. They wouldn't know that to illuminate a room you could turn a switch. They would be flabbergasted to look up at the sky and see objects flying in the sky, some of which had...

GOLDSTEIN: No more pooping in holes in the ground, right? Now there are flush toilets.

HELM: There are cars driving around everywhere. Our guy even has a truck.

GOLDSTEIN: After hundreds of years of a horse and cart, now he's got a truck.

HELM: With just a cart. Now he's zooming around in a truck.

GOLDSTEIN: Now he's got a truck. Yeah, a kitchen now - a kitchen is like a thing, right? Now there's a refrigerator, which has never...

HELM: A stove. No more fire.

GOLDSTEIN: A stove. No more fire. You know, and if you go to a city, you look up and there are just, like, these ridiculous, impossibly tall buildings.

GORDON: The person who went to sleep in 1870 would have been completely astonished to go to New York City, ride a subway, come out of the subway and gaze up at buildings that were already 75 or even 100 stories tall in the case of the Empire State Building, which was built in 1931.

HELM: The man knows every single date for every single thing.

GOLDSTEIN: When was the Chrysler Building made?

HELM: And - but he - it's for a point, right? He has a point. And the point of this whole thought experiment, the going to sleep, waking up, going to sleep, waking up, the point is this - for hundreds of years, hardly any change at all. And then in this one lifetime, just this one single span, everything changes. There is just this complete transformation.

GOLDSTEIN: It really is just extraordinary how much changes how fast at this moment.

HELM: And most of those changes grow out of these two key things - number one, electricity and number two, the internal combustion engine. So, like, what today is just a regular old engine.

GOLDSTEIN: Economists call things like this - electricity, the internal combustion engine - they call them general purpose technologies. And the basic idea is there are these technologies that do all kinds of different things all across the economy. So you see that in this 1870 to 1940 period. You see them transforming sort of daily life. But they are not done yet. Electricity and the internal combustion engine, they still got more to give. Bob Gordon says, you know, in the next period, in the middle of the 20th century, they transform the way we work. They make work much more efficient. They let workers do a lot more. And he says you really see this starting right around World War II.

GORDON: The famous Willow Run plant that was built by Henry Ford, they were producing one bomber an hour by 1944 and '45. That was a gigantic...

GOLDSTEIN: Wait, they were making a bomber airplane in one hour?

GORDON: They were, of course, making a number of them at - all at one time.

GOLDSTEIN: Well, sure, but...

GORDON: But they were - but coming out the end of the factory door was one bomber an hour.

GOLDSTEIN: That's extraordinary.

HELM: After the war, American workers keep getting more and more productive. The government builds interstate highways...

GOLDSTEIN: Yeah, so that makes truck drivers more efficient. But it also means lots of other kinds of industries get more efficient 'cause they can, you know, move all their stuff around from one place to another.

HELM: Gordon says around the same time, electricity gives us another big productivity breakthrough. This one's more surprising.

GORDON: Air conditioning. Air conditioning created an - again, an enormous improvement in productivity, particularly for office workers trapped inside in the summer.

GOLDSTEIN: And do you see, like, when air conditioning gets to a sector or an office or a town that workers actually do do more?

GORDON: Yes. There are studies that show a distinct improvement.

HELM: All across the economy, year after year, productivity is going up. And not just anecdotally - the government actually tracks productivity. It tracks how much value an average worker is creating in an hour of work.

GOLDSTEIN: And this number - productivity, productivity growth - it doesn't get, you know, reported much in the press. People don't talk about it much. But economists are obsessed with it because in the long run, productivity growth is the way society as a whole gets better off. You know, productivity growth is the reason that people in the '50s and '60s are doing so much better than their grandparents. Tractors with internal combustion engines replaced horses. Food got more abundant. Builders started using electric power tools instead of hand tools and ordinary people could afford bigger, more comfortable houses. Same amount of work, more and better stuff.

HELM: Productivity growth is trucking along in the '50s and '60s. It slows down in the '70s and '80s and then gets another huge boost in the '90s from computers.

GOLDSTEIN: Computers.

HELM: Computers...

GOLDSTEIN: The Internet.

HELM: Exactly. And computers, they are a new general purpose technology.

GOLDSTEIN: Yeah, they're this new thing, this new technology that does all kinds of different things in all these different facets of life. And so in the '90s, of course, businesses are going online. They're replacing paper with computers. Workers are getting much more productive even after the dot-com bust into the early years of the 21st century. Productivity is growing really fast.

HELM: But then in 2004, something goes wrong. Productivity growth comes crashing down.

GOLDSTEIN: Did not play, you know, in the popular press as a disaster, but economists noticed. You know, it's like that moment in the movies where the - there's that one dog that just starts barking out of nowhere.

HELM: He's trying tell us something.

GOLDSTEIN: What is it, boy, productivity growth?

MARTIN BAILY: So I kind of thought it was maybe a temporary thing, and then we had the Great Recession. And I expected that as the recovery proceeded that we would begin to get productivity picking up again.

GOLDSTEIN: This is Martin Baily. He was the chairman of President Clinton's Council of Economic Advisers. And he has been studying productivity for a long time.

BAILY: So the - when I looked at, you know, 2010, '11, '12, '13, '14, '15, '16 and it still wasn't picking up, that's when I began to get really nervous.

GOLDSTEIN: So you're nervous now - if it goes through '16 that means you're nervous right now.

BAILY: I'm nervous right now, yes.

HELM: In the last few years, we've heard a lot about the rise of inequality, the idea that the economic pie is not being divided fairly. And, of course, that is important.

GOLDSTEIN: But Baily and other economists say we also need to figure out this other thing. We also need to figure out - why is the pie barely growing at all? Why is productivity growth so slow? They've come up with a name for this problem. They call it the productivity paradox.

HELM: And this is what the productivity paradox is. We have all of this amazing technology - robots, artificial intelligence, the cloud - and it should be making us more productive. That's what technology does. But when you look at the numbers for the economy as a whole, all that technology does not seem to be making a difference. It does not seem to be making us more productive.

GOLDSTEIN: And you hear this and you say there is no way that can possibly be true, right? It seems so impossible, which is why they call it a paradox.

HELM: Exactly. That's the paradox.

GOLDSTEIN: And there are a few different answers to this. Part of it - part of it could be maybe we are getting more productive, but we're just not measuring it right. You know, it's easier to measure productivity - output per worker per hour - when people are, say, making cars. But today there's lots more people working in hospitals, and how do you measure the productivity of a hospital worker?

HELM: Sure. But even if you account for that, economists say, it really looks like productivity is still growing much more slowly than it used to.

GOLDSTEIN: They say, listen, it doesn't feel true, but trust us. When we do the numbers that's what we find.

HELM: Robert Gordon thinks he knows what's going on. And his explanation, it goes back to the delivery guy who fell asleep in 1870 and woke up in 1940 and the world had totally changed.

GOLDSTEIN: Gordon says do another thought experiment. Compare that person to somebody who fell asleep in 1950 and woke up today. For the person who woke up today...

GORDON: What would have seemed new to the 1950 person would be everything to do with computers.

GOLDSTEIN: Of course, the computer is a huge deal. Laptops, iPhones are everywhere, all the magic that comes with that.

HELM: But then, Gordon says, think about everything else. Think about just, like, a normal house. Remember, that person who went to sleep in 1870 and woke up in 1940, they were shocked to see houses that had running water and refrigeration.

GORDON: The person going to sleep in 1950 and waking up today would only find one element of the kitchen which is new, and that is the microwave oven.

GOLDSTEIN: (Laughter) Not so great.

GORDON: The person from 1950 visiting us today would find our cars entirely familiar.

HELM: Yeah, our delivery guy went to sleep with the truck, wakes up with another truck. Maybe it's a safer truck. Maybe it has GPS now. But remember, last time that truck replaced his horse-drawn cart.

GOLDSTEIN: The last time when he went to sleep, New York City had streets full of horses. The tallest building was a church. He woke up to subways and skyscrapers. This time...

GORDON: Just the same subway system as existed then, same Empire State Building rising above everything else.

HELM: And, yes, he says, sure, the new World Trade Center is a little taller than the Empire State Building. But it's like with the car. It's just an incremental change. It's not some big revolution.

GORDON: More of the same rather than something new.

HELM: Gordon says the world just has not changed as much in the past 70 years as it did in the 70 years before that. Those big 20th century changes driven by electricity, the internal combustion engine, those were just a much bigger deal than the changes that have been driven by computers.

GOLDSTEIN: Gordon says computers and the Internet, they did give us that amazing decade in the late '90s and early aughts. That was when, you know, most people got the Internet. It was when Google came along. It was when smartphones came along. We had all that already, you know, 10, 12 years ago.

HELM: Since then, Gordon says, not that much has changed.

GOLDSTEIN: But the iPhone.

GORDON: Yes, one of the peculiar aspects of the last 10 years is that so much innovation has gone into the iPhone and all the associated apps. In fact, the record for productivity growth in the last six years is about as low as it's been in U.S. recorded history. So we have...

GOLDSTEIN: It's as low now as it's ever been as far as we know? Like, coming at this from the outside I really do find it shocking.

GORDON: That's because the main ways in which computers raise business productivity had already happened by 10 years ago. And the nature of the iPhone with most of its uses is in your personal space.

HELM: So sure, iPhones are a huge deal in our personal lives. But they haven't really fundamentally changed the way that most of us do our work. And other technologies - robots, artificial intelligence - he says they haven't changed work that much either.

GORDON: I play a game called Find the Robot everywhere in my life - when I travel, I get in an airplane, I go into a hotel. I see human beings do the same thing that they did 10 or 15 years ago. In office situations - going to the doctor, the dentist, the veterinarian - going into retail stores, going into restaurants. I see a large part of the economy that's operating in the same way as it did last year and the year before.

GOLDSTEIN: Gordon says this isn't just his little game of Spot the Robot. He says the numbers for the economy as a whole back him up. If, in fact, robots and computers were replacing humans in vast numbers, all those machines would lead to lots more output. And there would be fewer hours of human labor, so productivity would be going up really fast. But it's not. Productivity is barely going up at all.

HELM: Also, if robots and computers were taking all our jobs overnight, the number of jobs would be declining. But that's not what's happening. The economy has been adding millions of jobs per year, year after year.

GORDON: I tend to look at myself as a jobs optimist...

GOLDSTEIN: (Laughter).

GORDON: ...Even if I may be a techno pessimist.

(SOUNDBITE OF SACHA JAMES COLLISSON'S "FEELS SO GOOD")

HELM: OK. So that's Robert Gordon's story of the last 150 years, also the last 10 years. Obvious question - what's next?

GOLDSTEIN: We'll have that in a minute. Don't touch that dial. And by dial, I mean the globally connected supercomputer in your pocket.

(SOUNDBITE OF SACHA JAMES COLLISSON'S "FEELS SO GOOD")

HELM: When Robert Gordon thinks about the future, he thinks that the next 10 years - they're going to look a lot like the last 10 years, sort of incremental changes, things get better slowly but no big revolution.

GOLDSTEIN: When Gordon's book came out last year, this part, his claims about the future - that was what I think the most people sort of quarreled with. We asked Martin Baily about this. He's the economist who is nervous about the productivity slowdown.

BAILY: Robert Gordon has been fairly consistently pessimistic about productivity growth. And so far, he's been proven right. Is he going to be right in the future? It doesn't look like it because it looks as if - that technology really is moving ahead.

GOLDSTEIN: And I mean, you know, we're at the end of the show here. I'll - like, I'll weigh in. I have to say, I love, love Gordon's thought experiment about the guy falling asleep. It really - I think it really is a lovely way to think about technological change and to think - oh, we're not so special right now. But when it comes to the future, I mean, it feels to me - and to Baily and to many of the people who I talked to - like, Gordon probably is not right. It feels like things really are about to change in these big ways.

HELM: I don't know. I hear people talk about things being about to change in these hugely profound ways. But that all just kind of sounds like a vague dream to me. And then I think about Robert Gordon, who is just, like, down there in the dirt with all the details and every single date. And what...

GOLDSTEIN: He does know a lot of dates.

HELM: Yeah, every date. And what he's saying is, if you take the long view, you will see that slow, incremental change is normal. We had a thousand years of just horses and cooking fires. And then we had this really strange time, past couple hundred years or so, when things changed very quickly. And now? Maybe we're back to the way things have always been - to another era where change is slow, not a horse to a car, just an iPhone to a better iPhone.

(SOUNDBITE OF AARON KELLEY, DUSTY HENDRIX, JEFFREY W. WADE AND RUBEN AYALA'S "NERD DISCO")

HELM: Everyone that we talk to about the premise of this show wants to argue with us about this show. So if you want to argue with us about this show, please email us - planetmoney@npr.org, or you can find us on Facebook or Twitter. We'd love to hear.

GOLDSTEIN: Our show today was produced by Nick Fountain. Bryant Urstadt and Alex Goldmark are the two people in charge of productivity gains at PLANET MONEY. Special thanks to Joel Mokyr, Dale Jorgenson and John Fernald. All of them talked to me at great length about productivity and technology.

HELM: Also thanks to Teresa Ghilarducci. She gave us the idea for this show.

GOLDSTEIN: If you're looking for something else to listen to and you have kids and you want to listen to something with your kids, got good news for you. NPR just launched a new podcast for kids. It's from Guy Raz, who is great. The show is called Wow In The World. I'm very excited to listen to it with my own children. Again, it's called Wow In The World. You can find it on NPR One, at npr.org/podcasts or wherever you get your podcasts. I'm Jacob Goldstein.

HELM: And I'm Sally Helm. Thanks for listening.

(SOUNDBITE OF AARON KELLEY, DUSTY HENDRIX, JEFFREY W. WADE AND RUBEN AYALA'S "NERD DISCO") Transcript provided by NPR, Copyright NPR.