In a Foreign Affairs essay, Martin Wolf has a retort for techno-optimists, contending that wearables are merely the emperor’s new clothes. One of his arguments I’m curious about concerns the statistical evidence that output per worker has recently decreased. How, exactly, does automation fit into that equation? Technology would seem to only improve productivity among workers if it’s complementing, not replacing, them. I do think Wolf makes a great case that “unmeasured value” has been a big part of life long before the Internet. The phonograph, after all, couldn’t be any more fully measured than the iPod. An excerpt:

…the pace of economic and social transformation has slowed in recent decades, not accelerated. This is most clearly shown in the rate of growth of output per worker. The economist Robert Gordon, doyen of the skeptics, has noted that the average growth of U.S. output per worker was 2.3 percent a year between 1891 and 1972. Thereafter, it only matched that rate briefly, between 1996 and 2004. It was just 1.4 percent a year between 1972 and 1996 and 1.3 percent between 2004 and 2012.

On the basis of these data, the age of rapid productivity growth in the world’s frontier economy is firmly in the past, with only a brief upward blip when the Internet, e-mail, and e-commerce made their initial impact.

Those whom Gordon calls “techno-optimists”—Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology, for example—respond that the GDP statistics omit the enormous unmeasured value provided by the free entertainment and information available on the Internet. They emphasize the plethora of cheap or free services (Skype, Wikipedia), the scale of do-it-yourself entertainment (Facebook), and the failure to account fully for all the new products and services. Techno-optimists point out that before June 2007, an iPhone was out of reach for even the richest man on earth. Its price was infinite. The fall from an infinite to a definite price is not reflected in the price indexes. Moreover, say the techno-optimists, the “consumer surplus” in digital products and services—the difference between the price and the value to consumers—is huge. Finally, they argue, measures of GDP underestimate investment in intangible assets.

These points are correct. But they are nothing new: all of this has repeatedly been true since the nineteenth century. Indeed, past innovations generated vastly greater unmeasured value than the relatively trivial innovations of today. Just consider the shift from a world without telephones to one with them, or from a world of oil lamps to one with electric light. Next to that, who cares about Facebook or the iPad? Indeed, who really cares about the Internet when one considers clean water and flushing toilets?•

Why didn’t Microsoft, the most powerful technology company in the world in 1995, own the Internet? Why was Barnes & Noble toppled by Amazon when B&N initially had so many more advantages? Because power and advantages and size are also barriers to adaptation. The dinosaur is large but unwieldy. There is a natural inclination to protect what has succeeded in the past even if it dooms the future. But these are mere corporations and it matters only to stockholders which one wins. But what about more important losses? Have we failed to counteract climate change for so long for these same reasons? Are we now the dinosaurs? From Martin Wolf at the Financial Times:

“In brief, humanity is conducting a huge, uncontrolled and almost certainly irreversible climate experiment with the only home it is likely to have. Moreover, if one judges by the basic science and the opinions of the vast majority of qualified scientists, risk of calamitous change is large.

What makes the inaction more remarkable is that we have been hearing so much hysteria about the dire consequences of piling up a big burden of public debt on our children and grandchildren. But all that is being bequeathed is financial claims of some people on other people. If the worst comes to the worst, a default will occur. Some people will be unhappy. But life will go on. Bequeathing a planet in climatic chaos is a rather bigger concern. There is nowhere else for people to go and no way to reset the planet’s climate system. If we are to take a prudential view of public finances, we should surely take a prudential view of something irreversible and much costlier.

So why are we behaving like this?

The first and deepest reason is that, as the civilization of ancient Rome was built on slaves, ours is built on fossil fuels. What happened in the beginning of the 19th century was not an ‘industrial revolution’ but an ‘energy revolution.’ Putting carbon into the atmosphere is what we do.” (Thanks Browser.)