When a Productivity Boom Meets a Tight Labor Market

Recommendable! Economics and the AI technology revolution.

Caveat: I did not read the entire, long article!

"Edmund Phelps, who died last week at 92, won the Nobel Prize in Economics back in 2006 for his work on the deep structure of unemployment, inflation, and expectations. But one of his most provocative ideas—the productivity business cycle—has still not received the attention it deserves. ...

The U.S. economy has come to an unusual crossroads. Productivity is accelerating, the labor market remains historically tight, and workforce growth has stalled.

Conventional wisdom treats the tight labor market and stalled workforce growth as warning signs that growth could be hampered. This has become one of the leading arguments for easing back on immigration restrictions and expanding foreign worker visa programs. We need more workers, the business lobby is constantly telling President Trump.

Phelps’s theory suggests something different: if productivity is arriving without a prior hiring boom, this may be the rare cycle that delivers gains in output without first producing an employment boom that has to be painfully unwound.

The heart of Phelps’s innovation theory, developed in the 1980s and 1990s, was deceptively simple and deeply counterintuitive. Productivity booms don’t necessarily begin when productivity gains show up in the data. They begin earlier, when entrepreneurs and investors come to expect future productivity gains.

When businesses see new technological opportunities, the shadow value they place on business assets rises—especially trained employees, installed capital, customer relationships, and organizational capacity. Companies rush to hire, train, invest, and expand in anticipation of future productivity improvements. This boom is real. Employment expands, wages rise, asset prices climb, and the economy accelerates.

But when the productivity gains finally arrive, they don’t necessarily produce a second boom. The hiring and investment that the gains would justify may already have taken place. The future has been capitalized in advance. The realized productivity gain then marks the end of the boom rather than the beginning of a new one.

The Great Depression as a Productivity Hangover ..."

Breitbart Business Digest

Edmund Phelps

Machine Learning & Artificial Intelligence are the greatest tech revolution since the Industrial Revolution

Who can argue with that? 😊 Robotics will increase the pleasure of leisure!

Every day now we more learn of:

• How fast and how far and wide ML & AI is being adopted around the world.
• New research breakthroughs in almost any field of science and medicine

An Expanded Curriculum For High Schools

Privatize Public Schools

There are no convincing reasons why high schools need to be run by government. Why are secondary schools in the US organized as public schools? I suspect for some historical reasons. Wikipedia had this to say “In France and much of Europe from 1650 to 1790 educational aspirations were on the rise and were becoming increasingly institutionalized in order to supply the church and state with the functionaries to serve as their future administrators.” (Emphasis added).

Privatization would also automatically take care of labor unionization of teachers issues and how labor unions have been extorting ever so willing politicians to agree to unsustainable, sometimes outrageous contracts and work rules to benefit teachers at the expense of students and the general public.

I am not an expert on the history of secondary education in the Western world, but a little research suggests that some of the oldest Western high schools were founded and run by churches, e.g. Royal High School in Edinburgh, Scotland, which was founded in 1128 AD and it is still in operation.

The Imminent Transformation Of High School Education

The exponential advances in information technology have the power to completely transform how we teach our children in the future. Purely theoretically, one teacher, let’s say the best in one subject, can teach all children of the world via the Internet. A few educators can put together exercises, questions etc. for all children. This concept would completely change the role of a human teacher in a local school. Anyway, what will local schools look like in 10-20 years? Do we still have a class room and one teacher per class? Several states have already setup virtual schools. I believe Australia has a long history of long distance learning.

Here is a recent article by the Hoover Institution on the subject titled “The End of Teachers Unions” by Terry M. Moe published on 7/18/2012.

Economics

Since I am not very familiar with the high school curriculum in the US, I kind of have to speculate. From my own high school experience in Germany, I know I was sort of brainwashed with leftist ideas and prejudices against free market economies along the lines that capitalists are criminals, workers are exploited victims, and government is the good guy.

I also remember well that economics was taught as a tertiary subject with little emphasis. Now, I speculate that the situation is not much better in the US. From my observations it seems children learn more from their parents about how a free market economy works than in high school.

To teach free market economics well is as important as mathematics or science so the next generations will appreciate the benefits of free markets and limited government more than previous generations. Too many of our elected representatives in the US Congress or state legislatures have not much a clue about economics. President Obama is hostile to businesses and he is absolutely clueless or ignorant of how a free market economy actually works.

Law

If my memory serves me correctly, then I did not learn much about law in high school. Only when I entered college to study economics I was systematically taught in law. Everything else I know about this topic is self taught.

Understanding of law is fundamental in a society that is governed by the rule of law. One cannot start learning about law early enough. How many high school children learn the inscription on the east pediment of the US Supreme Court building, i.e. “Justice The Guardian Of Liberty”? This inscription was chosen by Chief Justice Charles Evans Hughes in 1932. He was one of the great Justices who opposed the New Deal and prevented President Franklin D. Roosevelt from doing more damage. Unfortunately, the US Supreme Court’s document on the East Pediment does not contain much about the origin of the phrase “Justice The Guardian Of Liberty”. I wrote a separate blog about the inscription.

I would easily argue this inscription is the more important inscription than the more well known “Equal Justice Under Law” on the West façade or main entrance of the US Supreme Court.

If you look at some of the more recent decisions of the US Supreme Court, e.g. Kelo v. City of New London or ObamaCare, you doubt that even the supreme justices know the above mentioned inscription on the east façade of the building they work in.

If teenagers were already taught in law perhaps we had fewer bad decisions by the courts of justice.

Trading Assets

Too few teenagers ever learn how to trade assets like stocks, futures, forex etc. Those, who are so fortunate to learn how to trade in assets as teenagers happen to learn it most likely from their parents or from a close relative.

In a free market economy everybody should be able and comfortable to trade in assets. Capital markets are an essential part of free market economies about which every teenager should as much as possible.

Medicine

Why are children or teenagers not trained in basic medicine? High school students ought to know more about healthy life styles etc. Repeated first aid training would not hurt either. E.g. why is it an important to get two opinions from different doctors even of different disciplines in important medical situations? Trust your doctor, but verify. Where do you find reliable medical information?

The Mind Reader Applied To Suspected Iranian Agents Crossing The Mexican Border

Human Thoughts Are Private

Or as we used to say in German “ich bin doch kein Gedankenleser” (I am not a thought reader) meaning I don’t know what you were thinking.

At The Cusp Of Reading A Human Mind?

IEEE (Institute of Electrical and Electronics Engineers) just published an article titled “The Mind-Reading Machine” by Celia Gorman in IEEE Spectrum (July 2012). This article summarizes some of the latest advances of machines capable to read specific brain activity associated with, e.g. someone recognizing a person on a picture.

This is just another recent article I have read about advances in mind reading capabilities.

Iranian Agents Entering The US

From this article one also learns that the US Defense Department is already applying mind reading machines in the field. “According to Elbot (CEO of Veritas Scientific), the U.S. military used an earlier Veritas device called BrainTruth to test the thoughts of suspected Iranian agents crossing the Mexican border into the United States.”

I was stunned for a moment to read in this rather technical/scientific magazine that Iranian agents may already be entering the US. I was not yet aware of any actual cases. What are these agents up to?

Robots Made By Kids

Children Of The World Develop Robots

It appears that children and teenagers are more and more fascinated with the possibilities afforded by robots of all kinds. This could be a major reawakening of young people to explore technology and engineering.

The Evolution Of Robots Will Accelerate

It would be conceivable that the coming generations of young people will produce armies of robots to help humans with everyday chores etc.

My Next Pet Could Be A Humanoid Robot

Part Of Our Daily Lifes

With the advances in humanoid robotics accelerating it may be only a few years hence before we can expect to see such robots being part of our daily lifes.

Connected To The Cloud

This robot could be connected to the computing cloud and download any instructions etc. necessary for the task at hand.

How Many Personal Robots?

How many robots would one need or are necessary? How many robots would rich people acquire, an army?

Any Specialization Or Allround?

Home schooling would become possible for everyone. Will my robot be a four star chef serving me the most delicious meals from any cuisine of the world I can imagine? Would my robot be my personal doctor? I could go on and on …

The Exponential Development Of The Technological Revolution

Introduction

I am certainly not the first to make this claim (e.g. Singularity by e.g. Mr. Ray Kurzweil). However, this technological revolution may not yet be well understood by the inhabitants of this planet nor by myself.

Past Technological Revolutions Pale In Comparison

The ramifications and repercussions of this technological revolution are profound and will impact everything on earth in the foreseeable future. This technological revolution is like no other before in history in speed and impact. The diffusion of innovation and the adaption rate are already much faster than any historical precedent we know of. Just think of the cell phone.

For over five hundred years the book was basically the most important conveyance of human knowledge. Now the book as we know it is fast becoming extinct like the stone tablets and papyrus before.

Just take libraries for example. Do we still need those 100,000s of legacy libraries all over the world with millions of kilometers of bookshelves? Theoretically, one digital library with digital storage of everything ever written by humans would suffice.

Human Progress Like Rice On A Chessboard

Like Moore’s Law processing power increases, data storage increases, and ultimately the accumulation of knowledge and information. The acceleration of progress in science, medicine & technology, we are already witnessing today, is breath taking and just the beginning.

The Whole World Participates In This Revolution

Unlike previous, historical technological revolutions, which evolved over time and geographic space, this technological revolution is happening almost simultaneously worldwide and all people can and do participate across all continents.

Today, there are about 7 billion human brains participating in this revolution, billions of brains more than in any other previous revolution. Almost every human being today has already access to the entire human knowledge over Internet like the Wikipedia. Just compare this to the famous French encyclopedia of

This time it will not be a predominantly European & American, or Islamic, or Indian or Chinese revolution, but a revolution carried out by people of any cultural background and geographic location.

It will be a modern Renaissance, but much more powerful. This time people of all walks of life not only the scholars can participate. Thus, the obstacles for anyone to participate are greatly reduced compared to any earlier time.

The Evolution Of The Brain-Computer Interface Is Imminent

There is a distinct possibility that machines will soon be more intelligent than today’s humans. The famous Turing Test will likely be passed in less than 20 years.

However, I am not pessimistic. One day our brains will be augmented by computers. Can you imagine to have a memory such that forgetfulness is obsolete? Can you imagine to have a computer or network of computers work for you on a novel problem, while you sleep and you wake up to review what these computers came up with?

Being Envious

I truly envy the coming generations of humans. It is just mind boggling what the future holds in store. Very exciting Brave New World!