2021年3月16日 星期二

We’re in for a lot of pluck

The next year will be great, but what then?
Author Headshot

By Paul Krugman

Opinion Columnist

If private-sector economists are anywhere near right, the U.S. economy is about to experience a spectacular boom. Economists surveyed by Bloomberg expect 5.5 percent growth this year; those surveyed by The Wall Street Journal expect almost 6 percent; Goldman Sachs expects 8 percent.

We haven't seen anything like this since the Morning in America boom of 1983-1984, a boom that lives on in conservative legend as proof of the magical power of tax cuts, even though every subsequent promise of a tax-cut miracle has failed.

But Ronald Reagan's boom wasn't all it was cracked up to be, and the same will to some extent be true of President Biden's. Rapid short-term growth will be a partial vindication of Keynesian economics, the notion that government spending can boost a depressed economy. But this kind of growth is only possible when the economy starts out way down, and the bigger test is what happens later.

To understand why forecasters are so optimistic, it helps to know about one of Milton Friedman's lesser-known analyses: his "plucking" model of the business cycle (a model that was somewhat at odds with his other work, but that's another story.)

Friedman suggested that we think of the economy's potential growth path — the maximum amount it could produce — as a tilted board, and its actual path as a wire string attached to that board. When the economy experiences a recession, it's as if someone pulled the string away from the board; when the recession ends, it's as if the string has been released, and springs back to the board.

ADVERTISEMENT

Ordinarily, the speed at which the plucked string springs back — the speed of the recovery — depends on how far it was pulled back. So you expect fast growth after a deep recession, which is what happened under Reagan — the double-dip recession of 1979-82 left the economy deeply depressed — and seems set to happen now.

This story doesn't always work. Recovery from the 2008 financial crisis was sluggish, partly because of an overhang of excess debt, partly because Republicans in Congress slowed the recovery with destructive fiscal austerity. But this time Democrats have pushed through a very aggressive stimulus, and in combination with the fading pandemic this suggests that we're in for a lot of pluck.

But then what? Springing back from a recession is one thing; achieving longer-run prosperity is something quite different. That is, what we really want to know is how things look after the plucking is over.

By that measure, the Reagan experience doesn't look that great. The recession — the downward pluck that made a couple of years of rapid growth possible — began in 1979. How did performance over the next decade look, and how did it compare with the previous decade (which also, as it happens, began with a recession)? Because income inequality surged, it depended on where you sat in the income distribution:

ADVERTISEMENT

Morning for some AmericansT. Piketty, E. Saez, and G. Zucman

For the bottom half of the U.S. population, the '80s were pretty bad: income stagnated or even fell a bit. For the middle class, they were ordinary: incomes grew at about the same rate as they had the previous decade. But for the affluent, and above all for the 1 percent, it was a great time. Which, of course, helps explain why the legend of Reaganomics continues to be promoted by right-wing propagandists.

Will Bidenomics do better? The American Rescue Plan is startlingly favorable to Americans with lower incomes. But a lot depends on whether key elements like the child cash allowance and enhanced health care subsidies become permanent, and on whether this big bill is followed by another big bill — this time one that invests in the future.

ADVERTISEMENT

Quick Hits

All about plucking, and why it's somewhat inconsistent with Friedman's other work.

Brookings has a sort of plucking picture of what the Biden package will do, basically getting us back to that board.

Mitch McConnell admits that a boom is coming, but says Biden has nothing to do with it.

Some Republicans are predicting runaway inflation, because of course they are.

Feedback
If you're enjoying what you're reading, please consider recommending it to friends. They can sign up here. If you want to share your thoughts on an item in this week's newsletter or on the newsletter in general, please email me at krugman-newsletter@nytimes.com.

Facing the Music

Quite the horn soloYouTube

No particular reason for this, just a few minutes of joy.

IN THE TIMES

Democrats, Pushing Stimulus, Admit to Regrets on Obama's 2009 Response

In pitching President Biden's relief package, Democrats have said their 2009 stimulus efforts under Barack Obama were insufficient. Those close to Mr. Obama have noticed.

By Astead W. Herndon

Article Image

What Biden and F.D.R. May End Up Having in Common

President Biden promised to be "the most pro-union president you've ever seen." Following through on that might mean going it alone.

By Steven Greenhouse

Article Image

17 Reasons to Let the Economic Optimism Begin

A reporter who has tracked decades of gloomy trends sees things lining up for roaring growth.

By Neil Irwin

Article Image

The Financial Crisis the World Forgot

The Federal Reserve crossed red lines to rescue markets in March 2020. Is there enough momentum to fix the weaknesses the episode exposed?

By Jeanna Smialek

Article Image

Need help? Review our newsletter help page or contact us for assistance.

You received this email because you signed up for Paul Krugman from The New York Times.

To stop receiving these emails, unsubscribe or manage your email preferences.

Subscribe to The Times

Connect with us on:

facebooktwitterinstagram

Change Your EmailPrivacy PolicyContact UsCalifornia Notices

The New York Times Company. 620 Eighth Avenue New York, NY 10018

歡迎蒞臨:https://ofa588.com/

娛樂推薦:https://www.ofa86.com/

2021年3月15日 星期一

On Tech: A.I. is not what you think

Plus, how to be an informed online shopper.

A.I. is not what you think

Adam Maida

When you hear about artificial intelligence, stop imagining computers that can do everything we can do but better.

My colleague Cade Metz, who has a new book about A.I., wants us to understand that the technology is promising but has its downsides: It's currently less capable than people, and it is being coded with human bias.

I spoke with Cade about what artificial intelligence is (and isn't), areas where he's hopeful and fearful of the consequences and areas where A.I. falls short of optimists' hopes.

Shira: Let's start with the basics: What is artificial intelligence?

Cade: It's a term for a collection of concepts that allow computer systems to vaguely work like the brain. Some of my reporting and my book focus on one of those concepts: a neural network, which is a mathematical system that can analyze data and pinpoint patterns.

If you take thousands of cat photos and feed them into a neural network, for instance, it can learn to recognize the patterns that define what a cat looks like. The first neural networks were built in the 1950s, but for decades they never really fulfilled their promise. That started to change around 2010.

What changed?

For decades, neural networks had two significant limitations: not enough data and not enough computer processing power. The internet gave us reams of data, and eventually scientists had enough computing power to crunch through it all.

Where might people see the effects of neural networks?

This one idea changed many technologies over the past 10 years. Digital assistants like Alexa, driverless cars, chat bots, computer systems that can write poetry, surveillance systems and robots that can pick up products in warehouses all rely on neural networks.

Sometimes it feels that people talk about artificial intelligence as if it's a magic potion.

Yes. The original sin of the A.I. pioneers was that they called it artificial intelligence. When we hear the term, we imagine a computer that can do anything people can do. That wasn't the case in the 1950s, and it's not true now.

ADVERTISEMENT

People don't realize how hard it is to duplicate human reasoning and our ability to deal with uncertainty. A self-driving car can recognize what's around it — in some ways better than people can. But it doesn't work well enough to drive anywhere at any time or do what you and I do, like react to something surprising on the road.

What downsides are there from neural networks and A.I.?

So many. The machines will be capable of generating misinformation at a massive scale. There won't be any way to tell what's real online and what's fake. Autonomous weapons have the potential to be incredibly dangerous, too.

And the scariest thing is that many companies have promoted algorithms as a utopia that removes all human flaws. It doesn't. Some neural networks learn from massive amounts of information on the internet — and that information was created by people. That means we are building computer systems that exhibit human bias — against women and people of color, for instance.

ADVERTISEMENT

Some American technologists, including the former Google chief executive Eric Schmidt, say that the United States isn't taking A.I. seriously enough, and we risk falling behind China. How real is that concern?

It's legitimate but complicated. Schmidt and others want to try to make sure that the most important A.I. technology is built inside the Pentagon, not just inside giant technology companies like Google.

But we have to be careful about how we compete with a country like China. In the United States, our best technology talent often comes from abroad, including China. Closing off our borders to experts in this field would hurt us in the long run.

If you don't already get this newsletter in your inbox, please sign up here.

ADVERTISEMENT

TIP OF THE WEEK

How to be an informed online shopper

A reader named Eva emailed On Tech asking about small software programs known as browser extensions, plug-ins or add-ons for Chrome, Safari and Firefox that claim they will save her money.

"I keep seeing ads for these browser add-ons like Honey (from PayPal) and Capital One Shopping," she wrote. "They claim they will automatically find and apply promo codes to save you money whenever you shop online. This sounds terrific, but I keep wondering, What's in it for them? They're not just doing this out of the goodness of their hearts. Before I sign up for these services, I want to know what the trade-off is. Can you help me find out?"

Brian X. Chen, the New York Times personal technology columnist, has this response:

Yes, there is always a trade-off. With free software, your personal data is often part of the transaction.

I'd advise taking a few minutes to research the company's business model and privacy policy.

More than a year ago, Amazon warned customers to remove the Honey add-on because of privacy concerns. Honey's privacy policy states: "Honey does not track your search engine history, emails or your browsing on any site that is not a retail website (a site where you can shop and make a purchase)."

Read between the lines: That means Honey can track your browsing on retail websites. (Honey has said that it uses data only in ways that people expect.)

The privacy policy for Capital One Shopping is more explicit: "If you download and use our browser extension, we may collect browsing, product and e-commerce information, including but not limited to product pages viewed, pricing information, location data, purchase history on various merchant websites and services, the price you paid for items, whether a purchase was made, and the coupons that you used."

That's a lot of information to hand over for software that automatically applies coupons. Whether or not that's a fair trade is up to you.

If you've found this newsletter helpful, please consider subscribing to The New York Times — with this special offer. Your support makes our work possible.

Before we go …

  • So. Much. Money. Everywhere: My colleague Erin Griffith connects the dots among digital art selling for $69 million, a mania for cryptocurrency and soaring prices of things like vintage sneakers. Basically, it pays to take financial risks right now, plus our brains are turning to goo in a pandemic. Related: Stripe, which makes the software plumbing for businesses to accept digital payments, is now one of the most valuable start-ups in history.
  • Facebook is studying our vaccine views: Facebook is conducting internal research about the spread of ideas on its apps that contribute to vaccine hesitancy, The Washington Post reported. The early findings suggest that messages that aren't outright false may be "causing harm in certain communities, where it has an echo chamber effect," The Post said.
  • How to keep Americans safe: The failures of U.S. intelligence agencies to detect recent digital attacks by Russia and China are causing American officials to rethink how the nation should protect itself, my colleagues reported. One thorny idea is for tech companies and U.S. intelligence agencies to collaborate on real-time assessments of cyberthreats.

Hugs to this

Go hug a cow. It might help.

We want to hear from you. Tell us what you think of this newsletter and what else you'd like us to explore. You can reach us at ontech@nytimes.com.

If you don't already get this newsletter in your inbox, please sign up here.

Need help? Review our newsletter help page or contact us for assistance.

You received this email because you signed up for On Tech with Shira Ovide from The New York Times.

To stop receiving these emails, unsubscribe or manage your email preferences.

Subscribe to The Times

Connect with us on:

facebooktwitterinstagram

Change Your EmailPrivacy PolicyContact UsCalifornia Notices

The New York Times Company. 620 Eighth Avenue New York, NY 10018

歡迎蒞臨:https://ofa588.com/

娛樂推薦:https://www.ofa86.com/