Tag: 50 things that changed the modern economy

Technology, Inflation and Day to Day Lives

You can hardly read a news source these days without reading one article or the other about inflation. There’s plain vanilla inflation, there’s shrinkflation, and there’s skimpflation. There is, one might argue, an inflationary spiral in coining terms related to inflation!

But as students of economics, I found a recent blogpost written by Virginia Postrel quite fascinating. She speaks about inflation being a formative experience as a young person growing up in the 70’s, and for this blog post, she asked some folks who were around then to speak of their memories regarding the inflation episodes of the 1970’s.

And what made this such an enjoyable read is the fact that day to day activities and behaviors changed due to inflation. It’s one thing to speak about how prices went up, and households cut back on their expenditures. But it is quite another to speak about how the lives of ordinary people changed as a consequence of inflation:

In the late 1970s, Tom Noonan, then around 20 years old, worked in a Winn-Dixie supermarket in Louisville, Kentucky. His job was to change price tags a couple of times a week. He’d go through the store with a box cutter and a pricing gun, slicing off the old price stickers and applying the new, higher ones. It’s one of the 1970s memories that came pouring out of my Facebook friends when I asked about their experiences.
Not every store was so meticulous. Many just slapped the new prices on top of the old ones. “I half remember peeling off price labels to get a lower price (maybe on a book?), not even realizing that what I was doing was wrong or illegitimate,” confesses Mike Schiffer, a law school IT manager born in 1968, in the Facebook thread. “I don’t think I really understood how prices were set or changed at that point.”

https://vpostrel.substack.com/p/from-the-archives-remembering-inflation

Which activities, tasks and chores have changed in our lives today because of the recent bout of inflation? How does inflation manifest itself in terms of how we lead our day-to-day lives? With barcode scanners, Tom Noonan’s job no longer need exist in most (but not all!) cases, and that is a good example of how you might want to think about the intersection of inflation, technology and day to day lives.

And if you’ll allow me a brief but entertaining digression: this would also be a good time to talk about, well, barcodes:

How vast mega-stores emerged with the help of a design originally drawn in the sand in 1948 by Joseph Woodland as he sat on a Florida beach, observing the furrows left behind, an idea came to him which would – eventually – become the barcode. This now ubiquitous stamp, found on virtually every product, was designed to make it easier for retailers to automate the process of recording sales. But, as Tim Harford explains, its impact would prove to be far greater than that. The barcode changed the balance of power between large and small retailers.

https://www.bbc.co.uk/programmes/p04k0066

Not just this episode – please listen to the entire series, and purchase the book if you can. This series remains a great way to understand how our day to day lives in the modern economy are impacted in surprising ways by inventions we take for granted. Such as the barcode, for one – but on an entirely related note, also check out the episode on shipping containers:

How a simple steel box changed the face of global trade. Shipping goods around the world was – for many centuries – expensive, risky and time-consuming. But 60 years ago the trucking entrepreneur Malcolm McLean changed all that by selling the idea of container shipping to the US military. Against huge odds he managed to turn “containerisation” from a seemingly impractical idea into a massive industry – one that slashed the cost of transporting goods internationally and provoked a boom in global trade. Tim Harford tells the remarkable story of the shipping container.

https://www.bbc.co.uk/programmes/b08jbd20

Both, of course, have a lot to do with inflation today – and both are not objects that would come up in an introductory course on economics, more’s the pity.

But a useful question to think about as a student of economics today is this: which of our day to day activities today are impacted by inflation in surprising and unexpected ways? Or put another way, what would be a good Tom Noonan example from today?

Thinking about this question is a good way to think about economics, but even better, economics in conjunction with technology and better-est of all, it helps you become a keener observer of life around you. An economic naturalist, if you will.

The Long, Slow, But Inevitable Death of the Classroom

If you read enough about Robert Solow, this quote coming up is but a matter of time:

You can see the computer age everywhere but in the productivity statistics

http://www.standupeconomist.com/pdf/misc/solow-computer-productivity.pdf

Much the same could be said about internet based learning technologies if you tried to measure it in colleges and universities before March 2020. We had lip service being paid to MOOC’s and all that, but if we’re being honest, that’s all it was: lip service.

Things have changed around a bit since then, I think.

We’ll get to that later on this post, but let’s go back to the seeing computers everywhere but in the productivity statistics bit for the moment. Paul David, an American economist, wrote a wonderful essay called “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox“, back in 1990.

I think of this essay as an attempt to respond to the question Robert Solow had posed – why isn’t the data reflecting the ubiquitousness of the computer in the modern workplace? Read the essay: it’s a very short, very easy read.

Paul David draws an analogy between the move away from steam as a source of power, back at the end of the 19th century.

In 1900, contemporary observers well might have remarked that the electric dynamos were to be seen “everywhere but in the productivity statistics!”

David, P. A. (1990). The dynamo and the computer: an historical perspective on the modern productivity paradox. The American Economic Review, 80(2), 355-361.

Adjusting to a new technology, it turns out, takes time.

Steam-powered manufacturing had linked an entire production line to a single huge steam engine. As a result, factories were stacked on many floors around the central engine, with drive belts all running at the same speed. The flow of work around the factory was governed by the need to put certain machines close to the steam engine, rather than the logic of moving the product from one machine to the next. When electric dynamos were first introduced, the steam engine would be ripped out and the dynamo would replace it. Productivity barely improved.
Eventually, businesses figured out that factories could be completely redesigned on a single floor. Production lines were arranged to enable the smooth flow of materials around the factory. Most importantly, each worker could have his or her own little electric motor, starting it or stopping it at will. The improvements weren’t just architectural but social: Once the technology allowed workers to make more decisions, they needed more training and different contracts to encourage them to take responsibility.

https://slate.com/culture/2007/06/what-the-history-of-the-electric-dynamo-teaches-about-the-future-of-the-computer.html

Again, please read the whole thing, and also read this other article by Tim Harford from the BBC, “Why didn’t electricity immediately change manufacturing?” The article, by the way, is an offshoot of a wonderful podcast called “50 Things That Made The Modern Economy“. Please listen to it!

But here’s the part that stood out for me from that piece I excerpted from above:

“Eventually, businesses figured out that factories could be completely redesigned on a single floor. Production lines were arranged to enable the smooth flow of materials around the factory. Most importantly, each worker could have his or her own little electric motor, starting it or stopping it at will.”

https://slate.com/culture/2007/06/what-the-history-of-the-electric-dynamo-teaches-about-the-future-of-the-computer.html

Colleges and universities are today designed around the basic organizational unit of a classroom, with each classroom being “powered” by a professor.

Of the many, many things that the pandemic has done to the world, what it has done to learning is this:

each worker learner could have his or her own little electric motor personal classroom, starting it or stopping it at will.

In fact, I had a student tell me recently that she prefers to listen to classroom recordings later, at 2x, because she prefers listening at a faster pace. So it’s not just starting or stopping at will, it is also slowing down or speeding up at will.

Today, because of the pandemic, we are at an extreme end of the spectrum which describes how learning is delivered. Everybody sits at home, and listens to a lecture being delivered (at least in Indian universities, mostly synchronously).

When the pandemic ends, whenever that may be, do we swing back to the other end of the spectrum? Does everybody sit in a classroom once again, and listens to a lecture being delivered in person (and therefore synchronously)?

Or does society begin to ask if we could retain some parts of virtual classrooms? Should the semester than be, say, 60% asynchronous, with the remainder being doubt solving sessions in classroom? Or some other ratio that may work itself out over time? Should the basic organizational unit of the educational institute still be a classroom? Does an educational institute still require the same number of in person professors, still delivering the same number of lectures?

In other words, in the post-pandemic world…

How long before online learning starts to show up in the learning statistics?

Additional, related reading, for those interested:

  1. Timothy Taylor on why “some of the shift to telecommuting will stick“
  2. An essay from the late, great Herbert Simon that I hadn’t read before called “The Steam Engine and the Computer“
  3. “The role of computer technology in restructuring schools” by Alan Collins, written in 1990(!)