Mitchell’s Musings 4-10-17: Klaatu Barada Nikto or This Time It’s Different

07 Apr 2017 8:39 AM | Daniel Mitchell (Administrator)

Mitchell’s Musings 4-10-17: Klaatu Barada Nikto or This Time It’s Different


Daniel J.B. Mitchell


Usually, the phrase “this time it’s different” shows up when there are signs of irrational exuberance, as former Fed chair Alan Greenspan once put it, in the stock market. (We’ll get to “Klaatu barada nikto” later.) Someone comes along and says that today’s exuberance may seemingly look like past bubbles, but because of special explanation X, there is a rationale for the surge in market prices this time. There was a great deal of that type of thinking during the dot-com boom (which then proved to be a run-of-the-mill bubble when it burst). Similarly, the subsequent housing boom was rationalized as a new thing under the Sun until it disappeared into the Great Recession.


There usually is a market for both the rationalizing of excessive optimism and of gloom and doom. Basically, there is often money to be made out of both ends of the spectrum. There are folks ready to sell you on the latest investment fad. And there are folks ready to sell you gold and survivalist supplies to prepare for the supposed coming Dark Age. In either case, startling headlines sell. In contrast, there isn’t a lot of money to be made by saying that we really don’t know for sure what the future holds, but that past experience suggests that extreme predictions based on perceived current trends are generally wrong.


In downtown Los Angeles, you will find the Bradbury Building, said to be inspired when it was built in the early 1890s by the popular book, “Looking Backwards,” a Rip Van Winkle-type story about someone who wakes up in 2000 and beholds a utopian future. Suffice it to say that such a utopia did not turn out to arrive by 2000. And the Bradbury Building looks like the latest thing of the 1890s.

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LA’s Bradbury Building

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But we don’t have to go back to the 1890s to find misguided predictions. In the 1930 film “Just Imagine” – a comic view of what the world would be like in fifty years - folks seem to get around in flying cars in distant 1980. The city in which they get around has skyscrapers that look remarkably like those being built in the 1920s and 1930s.


Flying cars seem also to be common in “Blade Runner,” a film made in the early 1980s which takes place in the Los Angeles of 2019 (just two years from now). Folks in 2019 travel to distant planets and biotech has advanced to the point where sentient biological beings are manufactured. On the other hand, no one in 2019 has a cellphone. About the only thing “Blade Runner” has right is that the Bradbury Building – where the film’s climax takes place - is still around. (I think we can safely predict at this point that since the Bradbury Building is still standing in 2017, it will be standing in 2019, particularly since the building has been seismically retrofitted.)

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Flying car in “Just Imagine”

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Flying car in “Blade Runner”

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One could go on with such examples. In the film “2001,” made in the late 1960s, travel to the Moon on Pan Am seems to be routine. The manufactured sentient beings in the year 2001, however, are 1960s-style mainframe computers. But as in “Blade Runner,” there are no cellphones. When you want to make a call, you step into a phone booth and use the Bell System.

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Phone call in “2001”

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Despite this poor track record at technological forecasting, we are now being told that robots and computers are about to displace everyone. All jobs are at risk. No less than Bill Gates says we will need to figure out how to divvy up the income derived from a robot tax as we sit back and let robots do the work.[1] Or, if you don’t like that remedy, how about job quotas for humans so that some work that robots could do is nevertheless kept open for people.[2] We’ll need affirmative action for human beings.


Of course, the idea of scary robots has been around for a long time. The early 1950s film “The Day the Earth Stood Still” featured a robot named Gort who arrived in Washington, DC with a spaceman from another planet. Unless someone said the magic words Klaatu barada nikto to Gort, it would destroy the world. Luckily, Patricia Neal said them in the nick (nikto?) of time, thus saving the Earth.


The problem with the current robot panic is that we have been there before. In the 1950s, there was a similar “automation scare,” this one based on the entry of mainframe computers into the business world. And that scare, too, appeared in popular culture. The 1957 film “Desk Set” featured a room-size computer operated by Spencer Tracy – complete with tape drives, flashing lights, and printouts from an electric typewriter – that threatened to take the job of librarian Katharine Hepburn. Up to that point, automation had been thought of as something that only threatened blue collar types. But the 1950s automation scare suggested that white collar occupations were the next victims.

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Klaatu barada nikto

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The computers are coming! 

"Desk Set”

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The problem with the current automation/robot scare is not that technology doesn’t sometimes – even often – cause job displacement. The problem is the taking of a current perceived trend and projecting it to excess. And, moreover, there are various motivations at this time for doing so. The Trump election created a debate as to whether job loss in manufacturing was due to technological change or foreign competition and globalism. (The answer seems to be that both factors were involved but that the technology story predominates.) However, if you are a free trader, you want to emphasize automation and robots to head off “protectionism.” No point in renegotiating NAFTA if it’s all robots.


Moreover, particularly among the chattering classes, cellphones, laptops, etc., are especially visible and are popularized as “disrupters.” So there is also a market for learned discussions and popular news items forecasting that everything is about to change – and soon. Disruption, disruption, disruption. Displacement, displacement, displacement. The fact that the latest unemployment rate is down to 4.5% is disregarded. Also neglected is the evidence from our measures of labor productivity which don’t show any recent uptick in output-per-hour.

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Yes, I know. The productivity measures may be wrong. But when you look at the history of adjustments made to the output side of output-per-hour, the fact is that they get more and more aggressive over time. So if anything, when you look at current trends versus those recorded earlier, the relative growth in productivity is biased toward showing an uptick – and yet it doesn’t.


So let’s all calm down about disruption and displacement. And if a robot threatens, you know the magic words to say: Klaatu barada nikto.

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[1] https://www.fastcompany.com/40400920/one-san-francisco-politician-is-exploring-a-tax-on-robots 

[2] https://www.theguardian.com/technology/2017/apr/04/innovation-in-ai-could-see-governments-introduce-human-quotas-study-says  

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