The author and Financial Times columnist discusses his new book “Fifty Inventions that Shaped the Modern Economy” as well as the pace of productivity growth today, the impact of Brexit on the UK economy, and the astonishing success of his book and column “The Undercover Economist.”
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“Each of these inventions tells us a story, not just about human ingenuity, but about the invisible systems of the world.” – Tim Harford
EW: Tim, thanks so much for speaking with me today. I really enjoyed reading the book. It did what you always seem to do so well, which is bring together multiple strands into a coherent whole. If I could, I’ll start with the question everyone seems to ask, which is what was the genesis for this book?
TH: I had become very interested in reading technological histories. They’re always very fun to read. One recent one that I enjoyed was Stephen Johnson’s book How We Got to Now. I thought to myself that this form of looking back at the history of ideas and inventions hadn’t been done in my field of economics and that it would be a good idea to do it.
The trouble with economics is that it’s often quite abstract and theoretical and it’s hard to connect it to the human experience. I find that very frustrating because of course, you’ll know from your own experience that it’s highly relevant to how we live – human concerns like how we spend our time each day. So, it should be possible to write books that explore this connection and I realized, ‘OK if I do this as technological history, I can also teach lessons about economics.’ That was the idea with each of these inventions or ideas or concepts. It gives me a spotlight that I can shine that teaches an economics lesson, which is what the book is really about.
EW: There is a lot of concern these days about technology. Many workers are skeptical of technology and fear that their jobs could be replaced. Was there a motivation in piecing this book together in highlighting that progress should be embraced and not feared?
TH: It is something to be feared for some people and for some reasons and has been for a long time. I talk about the experience of the Luddites in the book. They often get bad press and it’s usually an insult to call someone a “Luddite” – it’s someone who just “doesn’t get it.” But, actually the Luddites were quite right to say that technology would deprive them of well-paid jobs and not deprive them of low-paid jobs. It’s very straightforward.
Interestingly, it wasn’t that their jobs were just taken away and then the jobs were done by machines. What happened is that the machines helped enable low skilled workers to do jobs that previously required a high level of skill. This was a case where the machines didn’t destroy jobs, but the machines were still against the economic interests of a certain group of people and they shifted, I talk about this in the book as well with many technologies, who the winners and losers were.
I think it’s a more subtle and interesting question than ‘Will the robots take our jobs?’ and focusing on innovation throughout history demonstrates that. One of my favorite examples is the gramophone. It’s not as if the gramophone is the world’s most important economic technology, but it teaches a very clear economic lesson: when it was introduced, suddenly some musicians were getting paid ten times as much as before and other musicians were out of a job. That’s not uncommon with technology.
EW: Some of the chapters are not built around technological innovations, for example, “The Welfare State.” I suppose I often got the feeling from the book of a great sense of optimism.
TH: Certainly the final chapter is optimistic. It’s about the light bulb, which is based on a famous piece of research by William Nordhaus who tracks how much cheaper it has become to provide light – which is, of course, a tremendously important resource. We can now enjoy a life late into the night and work in conditions that would have been impossible in the past. Many things are possible because light has become available.
I think we just underestimate how much progress we’ve made in this case because it’s absolutely extraordinary. The amount of light that would have taken our ancestors a whole week to produce can now be made at a fraction of a second. So, that makes me very optimistic.
I also discussed some previous technological failures, for example, lead in gasoline. Leaded gasoline was a regulatory failure and I wanted to understand why. I also have a chapter in the book on robots. They do work for us and enable us to enjoy life and haven’t taken all our jobs, but they possibly take our brains. I describe the Jennifer Unit, a very simple invention, that basically outsources the higher cognitive functions of human beings to a computer. You can wear headphones in a warehouse and the Jennifer Unit tells you where things are and even counts things for you, saying things like “take five,” “take five,” “take three” because the computer can count better than humans and makes fewer mistakes. But, this is a really grim vision of where we need humans because the person may have good vision and clever fingers, but we don’t need their brains.
I’m more concerned in the book with the future of things and all these trends that are around us. The book lets you explore the different aspects of innovation rather than just coming up with some grand thesis. The world is too complex and interesting for that.
EW: In the first chapter of the book about the plow, you start with the thought experiment of what if we had none of our modern technology. What would you choose to invent first? That’s a good way to approach this. How did you actually go about selecting the fifty inventions? Did you start with a longer list and narrow it down?
TH: It was a rolling list. I talked to friends and got this group together of academics, historians, and scientists and talked informally. Whenever I met someone I would ask them their view. But, there wasn’t a super-formal process and the initial list was well over a hundred. I keep adding to it as well. Somebody just recommended adding cling film, which I think in America is called seran wrap. That’s not an extremely important invention, but it does stand for something about how we’ve progressed in handling food.
Once I had a long list together, I just started writing about some of them, thinking, “I’ve got to do barbed wire,” “I’ve got to do the electric motor” and so forth. These are such fascinating stories. I knew I wanted to do the gramophone and double entry bookkeeping. Then other things popped up towards the end of the project. Paper was one of my favorites. It came along quite late.
Then I asked myself what I was missing and what regions of the world or industrial sectors I was missing.
It’s important to emphasize that the basic criteria were not the fifty most important inventions. The criteria were to find fifty things that tell a story and teaches us lessons about the way the economy works.
There were some quirky choices too because that adds to the fun. Alongside some more obvious ones like the diesel engine, which is incredibly important, and the Haber-Bosch Process, which is maybe not so well known but probably the most important invention of the century, there is also the computer game and the Billy bookcase.
EW: Looking back, is there one that surprised you the most that it made it on to the list?
TH: The one I took the most joy from was paper and I didn’t see that happening. I was going to write about the Gutenberg press because everyone said that I had to do that.
EW: Yes, that one surprised me the most that it wasn’t included.
TH: Of course it would be on any list if you were picking the most important inventions – it’s in the top ten, no doubt. But, there is no printing press without there being paper first.
Technically you can print on animal skin parchment, but economically you need a cheap, mass-produced product for writing to go on. So, I went for paper because many people would have ignored it. It shows that even though we focus on sophisticated technology, sometimes just making something cheap is the most important innovation.
You might say the same thing about shipping containers. That’s a 1950s invention and a 1850s technology. It’s not at all complicated, it was just getting all your ducks in a row so to speak and making it possible by making it cheap. We forget that innovation does not always look like the iPhone.
EW: While I was reading the book, I had Robert Gordon in the back of my mind, from Northwestern. About a year ago he wrote a book about declining innovation and productivity growth in the United States. I had the chance to speak to him a little while ago – he’s a great person. Maybe this is an unfair question to ask because of the way my mind connected to the book, but do you have a view on that? Are we headed towards a period of lower innovation and productivity growth that will stretch for decades because we’ve invented all the low hanging fruit?
TH: It’s a perfectly fair question. I don’t know that I have a good answer. I’ve been a fan of Robert Gordon for a very long time. I first got interested in futurology twenty years ago when I was just out of college. While I was thinking about writing about the future in a corporate context at a think tank for Shell, the big oil company, I was trying to figure out what the economy would look like out to 2050. The big issue was the worldwide “dot com” hysteria and the crazy valuations on technology companies. I found the work of Robert Gordon then, who nobody had seemed to have heard of, and it completely blew my mind. I have huge respect for him. I’m so glad to see that he’s broken through and people are paying attention to his book.
The question is, ‘Is he right?’ The history suggests that he is. The counter-argument is basically exponential growth based on Moore’s Law. When you have something doubling in power as our computers double in power every eighteen months, then the next couple of years will add more power than the entire cumulative history of computing. That’s true every two years. There’s a very powerful theoretical argument on this side.
But, when you look at the historical evidence it’s clear that Gordon has a very, very strong case. Productivity growth has disappointed for fifty years now. In my country, the UK, the employment rate is at an all-time high. We’ve never had more jobs, but we have a pretty stagnant economy and slow wage growth. That’s the opposite of what you would expect if the robots were taking the jobs away – you’d expect high productivity growth and mass unemployment.
EW: True in the United States as well.
TH: Yes. The United States is a bit more nuanced because although the unemployment rate is very low, the employment rate is higher because of low labor force participation. Productivity growth isn’t quite as bad as it is in the UK, but you can still make the same case.
So, that’s a long answer that basically says that Gordon’s a genius.
EW: On a different topic, I wanted to get your thoughts on the British economy. The other day I saw that the most recent growth in the UK was 1.7% and many economists expect that to continue to taper off as the year progresses to around 1.5%. Do you feel that the British economy is feeling the effects and uncertainty of Brexit?
TH: We don’t know what Brexit will look like and that may be part of the problem. The government is being vague about what it wants. Of course, even if the government did suddenly produce a very clear vision, the other twenty-seven EU member states also have a say.
There’s a political logic to the situation – we had this referendum where people voted – but it’s a very, very difficult subject now. I imagine that the uncertainty is having some impact and most reasonable scenarios of what might happen after the break suggest that there will be some harm.
I wouldn’t want to blame everything on Brexit, though. We’ve had a very slow recovery since the financial crisis. Low productivity growth. Persistent deficits. You’ve got to be a bit concerned about that. It’s a worrying time.
EW: The Undercover Economist has been wildly successful. Many people who are not professional economists, and many who are, get their understanding of economics from your book and column in the Financial Times. I was curious how you started and how you feel about the astonishing success that you’ve had.
TH: I feel very lucky. I remember when I finished writing the draft of The Undercover Economist. I never had a job in journalism and I didn’t have an agent or publisher. I just had this dream of writing a book about economics. I finished writing it at home and I went downstairs and said to my then girlfriend and now wife, “I just finished the book and I don’t know if anyone will ever read it, but I’m really glad that I wrote it.” I really enjoy writing and I love writing books.
That was the end of 2002 and the book was not published for another three years. It took me a long time to find a publisher. I didn’t know for a long time if it was ever going to be published. I think now it’s sold something like a million and a half copies or more around the world in more than thirty languages. It’s astonishing. I’m very lucky and I love my job.
I love finding human interest stories in different aspects of economics – in the numbers and statistics. The micro stuff that I talked about in The Undercover Economist is everywhere, but we economists should work a little bit to bring it out.
A friend of mine and colleague at the time, David Bodanis, had written a very good on physics called E=MC2.
EW: Great, great book.
TH: Yes, exactly. Fantastic book. I remember having coffee with David one day and I really admired the book so I said, “I wish I could write a book about economics that was like your book and has the same human characteristics with so much clarity and joy in the subject.”
He looked at me and kind of raised one eyebrow and didn’t say anything. The realization was that it was up to me. You don’t need to apply for a job to write a book, you just write the book. It was great to get that encouragement from this guy I respected.
A lot of science writers just naturally understand that it’s not just about clearly explaining science. You also have got to inspire curiosity and a sense of wonder and joy at finding stuff out. That’s what I always try to do in my writing. You want people to love getting smarter and think, “Wow!”
EW: It’s difficult to combine the brains of an economist and the brains of a journalist, so I think that’s why it is so rare. I actually think Paul Krugman is a terrific writer.
TH: He’s an amazing writer and of course he’s got the Nobel Prize as well. It’s great to go back and read some of his early stuff. Obviously, he’s much more interested in politics now, which is fine, politics are important. But, I love reading his early stuff and seeing how he explains economics.
EW: He’s one example, but there are few people that are great economists and great writers. So, you’re a rare person.
My last question for you is whether you have any germs of ideas in the back of your mind for your next book or will you take some time before embarking on your next project?
TH: The principle is to always find good stories that interest you and so that’s what I’ll be doing next. Exactly what that is, you never know.
EW: In the meantime, I’ll continue reading your column and looking forward to your next book. Thanks so much.
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