Why most economists' predictions are wrong.
By Paul Krugman

Everyone knows we are living in a time of spectacular technological progress--progress at a rate that nobody could have foreseen. But is what everyone knows really true?

Recently I went to the library and checked out a once-famous book, Herman Kahn's The Year 2000, published in 1967. The book is a favorite because it is a perfect example of overly optimistic economic forecasting. Kahn, presumably drawing on the opinions of pretty reasonable people, predicted that over the last third of the century living standards would double, despite a sharp reduction in work time. He thought that by 2000 a 30-hour workweek, with 13 weeks of vacation per year, would be the norm. He then went on to worry about the social implications of excessive leisure time. His prophecy didn't come true, but most Americans were too busy trying to make ends meet to notice.

Why was Kahn--along with almost everyone else--so optimistic? Mainly because he expected spectacular technological progress, which for the most part has not materialized.

No bots
Kahn provided a convenient set of tables listing 100 innovations that he considered "very likely" by the year 2000, plus 25 "somewhat unlikely" possibilities. And he actually fares pretty well. Among the very likely developments were many major technological changes that have taken place. He predicted, for example, that most people would have computers at home and that they would be able to use them both to search databases and to communicate. He also predicted pocket phones, VCRs, and home satellite dishes. Indeed, I can't think of a single important technological development since 1967 that was not on his list.

All of his errors were in the opposite direction. Many of the technological developments he predicted, like radical new power sources, dramatically cheaper construction techniques, and undersea cities, did not materialize. In fact, only about a third of his very likely innovations have occurred, by my count, mainly in areas involving information processing; two-thirds have not. (An example: though Kahn was skeptical that housecleaning robots would be available by 1984, he regarded them as more or less a sure thing by 2000.) And not one of the innovations he listed as somewhat likely has taken place--or seems likely to happen any time soon. In short, looking back at the future makes it pretty clear that technology has made less, not more, progress than expected.

How can this be, when information technology is making such strides? One answer is that input isn't the same as output. The raw power of computers has advanced at a stunning speed, but has this advance translated into a comparable improvement in their usefulness? Word processing, to take the most obvious example, hasn't fundamentally improved since the late '80s. And in the view of many people I know, WordPerfect 5.1 for DOS was actually better for their purposes than any of the bloatware that has followed.

Peaks in valleys
Another explanation is that when all is said and done, the technological progress we keep hearing about is occurring in only a small part of the economy. Silicon Valley employs something like one-third of 1 percent of U.S. workers, and information technology as a whole no more than 3 or 4 percent, unless you use a definition so broad as to be meaningless.

So never mind the hype. The truth is that we live in an age not of extraordinary progress but of technological disappointment. And that's why the future is not what it used to be.

Paul Krugman is a professor of economics at MIT.

If they need hit pieces like these, then you know they're threatened.

It's too bad that BBC doesn't allow user comments.

What a "democratic" way to operate.

Go troll somewhere else loser.

If they need hit pieces like these, then you know they're threatened.

It's too bad that BBC doesn't allow user comments.

What a "democratic" way to operate.

When Bitcoin really makes it big, I wonder if they'll write a book on Satoshi. Half of the book will be all of his posts on this forum. That would be interesting.

You all make it sound like this is some sort of game of who will come first to the finish line.

Roger and the other two presented their views, opinions and they respected each others opinions. I was glad that Roger was so calm without being agitated or anything, so he's good for PR.