Tuesday, July 24, 2012

Diminishing Returns To Technology

A classic case of the diminishing returns to technology can be seen in this story of genetically modified cotton use in India:
After collecting four rounds of data from more than 500 farms in total, Dr. Qaim and a graduate student, Jonas Kathage, looked at the farmers’ cotton yields profits as well as their household expenditures, a marker of the farmers’ standard of living.

They found that using the modified seeds increased the farmers’ cotton yields by 24 percent and their profits by 50 percent. Farmers’ harvests improved mainly because the genetically altered plants suffered less damage from insects, Dr. Qaim said; profits grew as a result of the larger yields.

Switching to modified seeds eventually yielded tangible improvements in the lives of farmers and their families, according to the researchers’ analysis. Growing genetically altered cotton had little effect on households’ spending in the initial years of the study, but their expenditures — including spending on health care and education — went up in 2006 and 2008. This suggests that farmers waited to see if their increased profits would continue before starting to spend more, Dr. Qaim said.

But as genetically modified seeds take over cotton production in India — in 2010, so-called Bt cotton plants covered about 90 percent of the land used to grow the crop in India, according to a report by the Central Institute for Cotton Research — farmers may cease to reap added benefits from their use, Dr. Qaim said. Because the modified seeds are used so widely, bollworms may develop a resistance to the toxins, he explained.

Although farmers are planting more and more acres with cotton, their productivity seems to have plateaued; cotton yields have not increased since the 2007-8 growing season.

“A technology can lift yields, but once you have lifted yields, what else can that technology do?” Dr. Qaim said.

And this brings to mind an old blog post about the refrigerator of the future from Matt Yglesias:
I have seen the refrigerator of the future. It's made by LG and it has a "blast chiller" compartment that can cool a room temperature can of soda or beer down in just five minutes. Awesome stuff. It also illustrates a pet point of mine, namely that the unequal distribution of consumption power tends to discourage innovation. LG's highest-end fridges are already beyond the means of most families, costing upwards of $2,500, and it's not as if super-rich people are going to go out and pay three dozen advanced refrigerators. Under the circumstances, the incentive to invest money in developing even better appliances is relatively muted. That doesn't mean we see no progress, of course. But it does mean that we see less progress than we might in a world where appliance-makers were confident that middle class families would have strongly rising disposable incomes and a hunger for cool new features.
I think Matt’s making a different point than he realizes. It’s less about how unequal incomes discourage innovation. It’s that innovations are giving us less and less tangible benefits for greater and greater costs. You’re spending a good five times as much for a standard fridge just so you can cool your beverages in five minutes instead of waiting an hour. Is that even necessary? I mean it's certainly convenient - I would have liked it this weekend after I bought my beer Sunday night, but is it worth thousands of extra dollars? (I just bought a new fridge for about $450)  I just made do with beer that was warmer than I would have liked, and I'm still here to write about it. This is what the pundits tout as ‘innovation’ nowadays – throwing massive amounts at technology at relatively simple problems that could be solved by a modicum of simple planning.

The critical point is, going from having no way to store and preserve food in the average domicile to being able to do so is a huge leap, one which we now take for granted. Putting these machines into every person's home is another huge leap. Making it progressively more efficient as we’ve been doing is helpful, but again, not nearly as transformative. Cooling down your can of Pepsi in five minutes? That’s much less of a deal. How can that even compare to not having a home refrigerator or freezer at all, as most households did less than one hundred years ago?

And that’s why innovation won’t save us – the innovations we are making are incrementally more and more trivial, and are costing us more and more.  That’s why people are turning up their noses at the super blast fridge – it’s just not worth the high costs of the appliance for such an incremental improvement. And across the spectrum that’s what we’re seeing – incremental improvements. Going from no automobiles to two cars for every person is huge. Better mileage is helpful. But once personal mobility is ubiquitous, what then? You can’t go much faster that thirty-five in the city and 60-70 on the highway without it becoming dangerous. Flying cars are probably suicidal. And the only effective result of Google’s self-driving cars is to put people out of work, at least under the current social arrangements. And what happens to the waste from those old cars and refrigerators?

Innovation is no longer growing exponentially, and that’s what’s required - exponential growth. this point is often lost. It’s not that improvements or innovations aren’t being made. They are – but they are much less transformative and much less significant. And in the case of Indian cotton, they diminish over time so that you're back to baseline. To suggest that we’ll be able to make such transformative leaps forever is ridiculous, but it’s one of the main concepts behind the idea that “innovation” will solve all our problems, political, environmental and social.

This terrific post by Lloyd Alter sums up the differences in world view so well, I just had to include it: Kitchens haven't changed much since 1959 (Treehugger):
On July 24, 1959, American Vice President Richard Nixon and Soviet Premier Nikita Krushchev had a debate in a model kitchen at a Moscow trade show. Nixon boasted of the consumer tech like dishwashers; Krushchev complained about American materialism. After Nixon described yet another labor saving appliance, Krushchev satirically asked if there was a machine that "puts food into the mouth and pushes it down".

Khrushchev: We have steel workers and peasants who can afford to spend $14,000 for a house. Your American houses are built to last only 20 years so builders could sell new houses at the end. We build firmly. We build for our children and grandchildren.

Nixon: American houses last for more than 20 years, but, even so, after twenty years, many Americans want a new house or a new kitchen. Their kitchen is obsolete by that time....The American system is designed to take advantage of new inventions and new techniques.

Khrushchev: This theory does not hold water. Some things never get out of date--houses,for instance, and furniture, furnishings--perhaps--but not houses. I have read much about America and American houses, and I do not think that this is exhibit and what you say is strictly accurate.


  1. This comment has been removed by the author.

  2. I actually heard once, and I don't remember where, that the reason most large-scale beers (Miller, Bud, Coors) are served chilled is to numb the taste buds so that you don't taste how crappy the beer is.

    Most microbrews are served just colder than room temp - the cellar floor temperature you're referring to. That seems to work well, it enhances the flavor. I imagine beer was mainly a way to preserve grains from the winter harvest (Oktoberfest), so it was stored underground during the cool fall and winter and drunk at those temperatures - around 50 degrees, I'd guess.


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