Great Out the Gate?
In fact, income measures are most likely to understate growth during
times when a lot of new goods are introduced into the marketplace or
made more widely available, such as during 1870-1973. Thinking
carefully about measurement biases probably means that earlier decades
had even stronger growth, relative to what the diagram shows, compared
to the post-1973 period. It means that our recent relative performance
is in reality even worse.
He did not, however, answer my critique of his novel argument: When products are first introduced, they have little economic benefit; it’s the subsequent enhancement that really counts:
Merely bringing new inventions into
existence typically has little economic benefit; the subsequent enhancement is where most of the value lies. This is obviously true for the computer; I had a VIC20 in the early eighties that wasn’t even a workable word processor. But the same holds for older inventions.
Take the car. The earliest internal combustion cars,
introduced in the late 19th century, were just toys for millionaires.
It took decades of gradual improvements to make them a viable form of
transportation, and decades more to make them reasonably reliable and
safe. The same goes for airplanes. Thirty years after the Wright
brothers, trains and ships dominated long-distance travel. Planes were
still too bumpy and dangerous for the general public to stomach.
But why on earth would people switch to new technologies while they remain inferior to old technologies? Part of the answer is selection: If a new technology beats old technologies for any purpose, a few people will switch. But the main reason is probably just early adopter syndrome – the desire to start using the technology of the future long before it’s ready. We’ve all seen it.
My rule that product enhancement dominates mere product existence works well for a long list of standard inventions: cars, airplanes, phones, movies, television, and computers for starters. So now I’m looking for counter-examples. Name inventions that were “great out the gate” – that were immediately clear improvements over preceding technologies.
P.S. The original iPhone and iPad seem like plausible counter-examples. But I’m too old to judge. Do they qualify?