Sunday, February 9, 2014

What else advances "one funeral at a time"?

The title refers to a quote by the great physicist Max Planck, "Science advances one funeral at a time."

I've been very interested in this quote for a long time, especially with regard to economics. But recently I've come upon and thought about some other important relevant areas.

I'm currently reading "The Second Machine Age", by MIT business economist Erik Brynjolfsson and MIT computer scientist Andrew McAfee. This is their second book on the crucial subject of revolutionary computer/robot/machine capability, which is only just beginning. I'm especially interested in this subject due to my primary career in personal finance. It puts already hard to get job and income security at even potentially much greater risk in the future. So as a good personal finance expert and teacher, it's very important that I learn as much as possible about this issue, and how people can defend against it. Especially young people where there's still plenty of time and energy to gain the needed education and skills, and as well parents, so they know the important education and skills to promote in their children.

That said, something recently really startled me on page 102. The authors talk about how electrification so profoundly increased productivity. It was the second great GPT (General Purpose Technology) after the steam engine. Yet, initially it did little for productivity, not until factory managers started to design factories for electrical rather than steam power. Electricity had the advantage that machines could be spread out and arranged in a horizontal, assembly line, pattern, as opposed to steam, where machines had to be placed close to the large central engine, both horizontally and vertically (on floors above and below the engine). The difference was profound, and revolutionized industrial productivity.

The quote that struck me was this:
Only after thirty years -- long enough for the original managers to retire and be replaced by a new generation -- did factory layouts change.
And then there's this from Paul Krugman today
It goes beyond what I said about second-order journalism; Rosen argues that there’s a value system at work, where being in the know about political maneuvering is considered all-important, whereas understanding the actual policy issue is for the drones.
This shows the incredible value of the Ezra's and Chait's and Krugman's. But will we have to wait for the old generation of editors and publishers to die off before a new journalism based on substance, expertise, and non-misleading (as opposed to "Balance") can really take over?

So this problem Max Planck alludes to appears to apply widely. There seems to be a significant danger of an entrenched and powerful older generation enforcing their status quo and refusing to allow or admit a new and better paradigm, despite strong evidence for it. The reasons? There are probably many. The older generation may not have the time or energy anymore to learn a new paradigm, so they certainly can be hurt by the old paradigm that they are top experts in, losing value. This can hurt badly both prestige and paycheck. And, people can become intellectually inflexible with age. It's something we have to watch out for and fight.

Moreover, older people are more risk averse and less idealistic than the young, making them less amenable to switching to a new paradigm. The positive externalites from trying a new paradigm can be enormous to the world -- and over generations -- as opposed to the benefits to just a lone individual over just one lifetime, which is not so long anymore for the grayhaired. These externalities clearly may not be anywhere close to fully considered. And the risks to the world and future generations are massively diversified and pooled compared to the risks to a lone individual of moving to a new paradigm

But whatever the reasons, we don't want to have to wait for the funerals, or retirements. That's a horrible gratuitous cost to the generation waiting, and to future generations that will always be behind where they could have been had we not waited so long to move forward. I'm hopeful that the internet and the digital revolution will greatly speed positive evidence-based change, and they seem to be. But we all should be vigilant about this problem and willing to fight it, including in ourselves as we get older.