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Krugman and Stross Transcript

Paul Krugman (PK). Nobel Prize winning economist and columnist for the New York Times.

Charlie Stross (CS). Hugo-winning science fiction author.

Anticipation World Con, Montreal, Quebec
August 6, 2009

Transcription by Edwin Steussy, Apogee Communications. Please send corrections to ed âoeatâ my last name âoedotâ com.

CS: Good evening, weâ(TM)re very pleased to be here and thank you very much for inviting us to talk.

PK: Yeah, this is different for me, but it should be a lot of fun. ⦠(Set up problems) ⦠What do you really think the world is going to look like, say, 30 years from now?

CS: Ummm, thereâ(TM)s a very simple answer to that and a misleading one, I think, and the simple answer is unless we are really, really unlucky the world in about 30 years time is going to look more complex. By really, really unlucky â" nuclear war, major plagues or similar â" the world in 30 years time after that is going to look a lot simpler, though not a good way.

PK: Right. Obviously what Iâ(TM)m thinking about is the technology. Given my perspective â" I was thinking about his coming up â" and thinking that â" maybe it was just my age or something, but things donâ(TM)t seem to have changed as much in the last 30 years as myself as a sci-fi reader would have expected them to. And I donâ(TM)t know if Iâ(TM)m missing something â" kinda that perspective.

CS: I think things have changed a lot in the last 30 years, but not in the direction that somebody 30 years ago would have expected. The 20th Century, and going back to the 19th Century, the real visible vector of change technologically was transportation speeds. You go back to 1809 and to get across the English Home Counties, the areas around London, you go via stagecoach and it would take you a couple of days to cross them, it would cost you probably about a monthâ(TM)s wages and cause you considerable discomfort. 2009, it costs about the same amount of money, it takes about the same time and the same amount of discomfort to get from here to New Zealand. The whole world has shrunk to the scale of the English Home Counties in 1809 over about two centuries. At the same time weâ(TM)ve gotten used to performance improvements in speed. Thereâ(TM)s this weird sort of political thing in the early 20th Century called air-mindedness. Everybody knew that flight was going to be the next really important technological revolution. They were all trying to find ways of making money from it or using it to demonstrate how important and modern and with-it they were and how on the cutting edge they were â" sort of like computers today with politicians. Who will never pass up a photo-op with a computer even if they donâ(TM)t even know how to type. Now the whole air-mindedness thing, the problem we ran into was ⦠it was sigmoid curve â" we had a slow start, a very rapid period of improvements where we went at about 20 years from biplanes to supersonic jets. And then the curve stopped going up â" it flattened off. And the reason it flattened off is all to do with energy. To go much faster, you need more and more energy inputs. Itâ(TM)s not a linear input increase but virtually an exponential one. We hit a point at which chemical propulsion wouldnâ(TM)t send us any faster. And for a variety of reasons including both engineering and politics, nuclear power wasnâ(TM)t an acceptable answer. And airliners today are slower than they were 20 years ago. However, the big difference is that everyone and his dog flies today, whereas 20 years ago, or 40 years ago more accurately, thatâ(TM)s where the term jet-set came from, its because those were the people who could afford to fly long distances.

PK: And yet, let me press on. What I kind of expected. Let me show my age here. What you came out believing if you went to the New Yorkâ(TM)s World Fair in 1964 w

He didn't exactly see the financial meltdown coming in advance

neither did anyone investing in the market that lost any money. the ability to predict market crashes has little to do with predicting things over the long term. the market recovers and people move on. the real reason why predictions of the future are more often wrong than not is because people have a tendency to expect what they think is interesting [flying cars] rather than anything of practical use. if you want an accurate prediction make one that is the result of several small practical steps away from what exists now. for example; I predict that hybrid cars [or some offshoot of them] will make up a majority of cars within 50 years. not a very exciting prediction but it's probably more accurate than expecting flying cars any time soon.

He didn't exactly see the financial meltdown coming in advance

He was pointing out back in September of 2007 (and perhaps earlier - I didn't check any further) that housing prices were far too high with respect to historical price-rent levels and that a reckoning was coming. You're right, he didn't predict the collapse - he just predicted the precursor and had been warning about the deregulation that turned it into a disaster.

That's not fair. Krugman predicted 11 of the last 3 recessions.

You, sir, are smoking crack.

Of all the economists to go after for having poor "prognostication skills" you couldn't have picked anyone worse, except for maybe Nuriel Roubini. The fact is that Krugman called the bubble in at least May 2005 [nytimes.com], warned of disastrous consequences in August of that year [nytimes.com], and continued to do so all the way to when the shit hit the fan. From his August 8 2005 piece:

"If housing prices actually started falling, we'd be looking at a very nasty scene, in which both construction and consumer spending would plunge, pushing the economy right back into recession. That's why it's so ominous to see signs that America's housing market, like the stock market at the end of the last decade, is approaching the final, feverish stages of a speculative bubble."

This is when Fox, CNBC, and the Fed were rah-rahing about how everything was fine and shouting down those who'd voice otherwise.

It was worse than even he suspected, as the bubble continued to grow [nytimes.com], he continued to point it out [nytimes.com]. For anyone who read his column and blog in the years leading up to this clusterfuck it was quite clear that Krugman had a very prescient and accurate prediction of the varied causes and effects of the chaos that would ensue along with numerous warnings not to let it happen. So the parent can shut his pie hole because he clearly hasn't read a word the man has written.

I invite anyone to Google and read Krugman's columns for yourself. Because this is insane backwards bullshit. The guy was crying his head off that this was going to happen.

but the big thing was the freight container.

He's right. There's a great book called "The Box", which is a history of modern shipping containers. Containerization reduced the cost of ocean shipping of manufactured goods by about 90%. Breakage and theft went way down, too.

A few decades ago, if you went down to the docks in New York or San Francisco, there were thousands of big guys lifting and carrying stuff. Not only did containers end that, they ended the ports of New York and San Francisco - both were replaced with new ports in New Jersey and Oakland. If you go to a container port today, you see very few people around.

The other big development that made international trade work was fax machines. With fax machines, you could send ordinary business paperwork to people far away. Even if they didn't speak your language, they could probably figure out a purchase order. So you could do the basics of commerce at a distance. This cut out many of the expensive middlemen in international trade. It used to be that to import something, you had to deal with an importer, who dealt with an exporter at the sending end, who dealt with the manufacturer, possibly with a wholesaler and a warehouse company somewhere in the chain. With fax machines and containers, you cut the deal with the manufacturer by fax, they filled a container, and the container came to you without any intermediaries who cared what was in the box.