I was going to finish up this post earlier, but I got diverted on the Internet. First, there were those amazing videos of people snow-diving in Boston. Then I did an interactive quiz on Buzzfeed called “What Would Your Puritan Name Be?” Next, I got caught up in a story on Vice’s Motherboard site about extraterrestrial super-computer robots, which was actually pretty educational, or so I told myself as I tweeted it to other people who should have been working.
Finally, I went back to the text of a speech given on Tuesday at the University of East Anglia, by Andrew Haldane, the chief economist at the Bank of England, that is causing a bit of a stir across the pond. Titled “Growing Fast and Slow,” it’s a characteristically sharp and erudite discussion of the forces that underpin economic development. The speech takes as its launching point the ongoing debate about secular stagnation, which I wrote about last month. But what caught the attention of British reporters wasn’t Haldane’s discussion of neoclassical growth theory, or the role of education in the industrial revolution, but a bit about the rise of the Internet, and how it may be hindering material progress. “Is Twitter bad for economic growth?” was the headline of an article in the Guardian.
I was keen to read Haldane’s argument, and it turned out to go a good deal deeper than providing mere examples of workers wasting time on social-media sites. The main issue is a neurological one, Haldane suggests. Technological advances, and the ubiquity of always-on media, may be undermining one of the key psychological prerequisites for economic growth: patience, and the willingness to put off current gratification for future gains.
If that sounds like a stretch, I should point out that Haldane has a reputation for extending the bounds of economic-policy debates to incorporate psychological, evolutionary, and moral considerations. After the financial crisis of 2008-2009, he said that Occupy Wall Street protesters “were right” about the banking system. Last year, Time included him in a somewhat arbitrary list of the world’s hundred most influential people, for which I wrote a little blurb about him.
In the pre-modern era, Haldane now reminds us, life was a daily battle to survive: short, unpredictable, and threatening. In this environment, patience was a virtue humans couldn’t afford, because “surviving on limited means absorbs huge amounts of cognitive energy. It causes a neurological focus on the near-term.” Eking out an existence took up virtually all of people’s mental energy; they had neither the resources nor the inclination to save and invest in projects that take a long time to come to fruition. And a society that doesn’t invest in capital equipment and the accumulation of knowledge won’t grow much. In Haldane’s words, “Poverty and impatience would have been self-reinforcing, in a Malthusian poverty trap.”
As societies developed during the Middle Ages, things began to change. Or, at least, they did in Haldane’s version of history. “In the run-up to the Industrial Revolution, society became more willing to wait than in the past,” he writes. “That, in turn, promoted saving, investment and, ultimately, sustained growth.” Part of the reason that people became more patient was that, in countries like Britain and Holland, their incomes were gradually rising above subsistence levels, Haldane says. Also playing an important role was technological progress, particularly the invention of the printing press.
Citing Nicholas Carr, the author of “The Shallows: What the Internet Is Doing to Our Brains,” Haldane suggests that the experience of reading may have “rewired our minds” to favor deeper thinking and more patient decision-making. “Technology was, quite literally, mind-bending,” Haldane suggests. This reshaping of our forebears’ mental processes helped to promote the development of intellectual capital (“creativity, ideas, innovation”), which plays a key role in modern economies. “Technology will have first shaped neurology and then neurology technology, in a virtuous loop. Slow thought will have made for fast growth,” he says. The world experienced this kind of fast growth in the quarter of a millennium after the first industrial revolution.
Haldane concedes that his argument is speculative. But he also pushes it further, saying, ”Just as the printing press may have caused a neurological re-wiring after the fifteenth century, so too may the Internet in the twenty-first. But this time technology’s impact may be less benign.” Rather than promoting thrift and deep thoughts, technology may now be crunching attention spans and accentuating “short-termism,” which Haldane identifies as an increasingly pervasive force in many areas of contemporary society, from reading habits (he mentions Twitter), to sports, to finance:
I should point out that Haldane isn’t claiming that Facebook and Buzzfeed are responsible for the recent slowdown in growth that many developed economies have experienced. His analysis is wide-ranging and conjectural. He acknowledges the positive impact of Moore’s Law (which observes that computer-processing power doubles approximately every two years), and the progress it is generating in robotics, genetics, data analysis, and other areas. Discussing the fashionable notion of computers eventually overtaking human brains, he says that, if it happens, “the sky becomes the limit innovation-wise ... With exponential rises in processing power, the economy could become ‘super-intelligent.’ And with close to zero marginal costs to expanding processing capacity, it may also become ‘super-efficient.’ ”
For now, though, our own gray matter remains in the ascendant, and, for some reason, it craves short-term distraction, which Haldane categorizes, along with declining population growth and rising inequality, as “headwinds” that may be limiting the economy’s potential. “Psychological studies have shown that impatience in children can significantly impair educational attainment and thus future income prospects,” he writes. “Impatience has also been found to reduce creativity among individuals, thereby putting a brake on intellectual capital accumulation. Innovation and research are potential casualties from short-termism.”
In response to this suggestive line of reasoning, of course, there are counterarguments that can be made. (With Haldane’s contributions, there often are. That’s one of the reasons they are stimulating.) If people are getting more impatient, and this is leading to less saving, shouldn’t long-term interest rates be going up rather than falling to historic lows, as they have done in the past decade? The rise of short-termism in financial markets and labor markets may reflect political and institutional developments, such as deregulation and the rise of shareholder activism. Perhaps attention spans aren’t getting shorter at all, but are merely being refocussed on digital, rather than analog, objects. (When my eight-year-old and six-year-old daughters play Minecraft, they don’t seem to have any problem concentrating for hours at a time.)
I could go on, but I won’t. I’ve had a sudden urge to check my Twitter feed.
