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Business

The Economics of Technological Progress

Paul Krugman

Lesson time 7:29 min

Learn the impact of technological expansion on the job market, the economy as a whole, and on the individual citizen.

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Paul Krugman
Teaches Economics and Society
Nobel Prize-winning economist Paul Krugman teaches you the economic theories that drive history, policy, and help explain the world around you.
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Around 2012 or so, it somehow rather became orthodoxy among a lot of important people. You had op-eds by Jamie Dimon or whatever, saying, structural modern technology, we have a workforce that's not suited for it, and there's no way we're going to get unemployment back down to the levels we used to have. And aside from the fact that I could give you very good economic analysis about why that was wrong, you could also say, gosh, there were a lot of people making exactly the same argument in the 1930s. Then, along came a big fiscal stimulus, otherwise known as World War II. And all of a sudden, not only did we need all of the workers that we had, but we needed Rosie the Riveter too, right? [MUSIC PLAYING] - At any given time there is a something that people think is what is the real economy and that the other stuff is fluff. And that view is usually pretty far behind the times. Takes a long time for people to catch up with reality. So if you go back, actually, before Adam Smith, there were the physiocrats in France. And what physiocrats believed was that agriculture was the real thing. These days, there are almost no farmers. And the reason is not because we don't grow lots of stuff, but because we're so productive at farming that we can feed the population with just a handful of people actually working the land. Somewhere I saw the claim that in America right now there are significantly more people playing World of Warcraft than there are farmers. Right? Farming is still important, obviously. We need to eat, but it takes very few people because we've become so productive. What came after farming was manufacturing. And manufacturing became more and more what the economy was about. So even in 1860 the majority of Americans were still on the farm, but by 1960 we were a manufacturing nation, where a third of the workforce was in manufacturing. And that was where wealth was generated, General Motors was the biggest company in the world, all of that. Mostly, we have less manufacturing for the same reason we have fewer farmers. We've gotten so good at it. We're still consuming lots of manufactured goods. And despite all of this globalization, most of them are made here. But it doesn't take very many people to make them because manufacturing has had a lot of technological progress. And so we've shifted our labor force into the parts of the economy where we haven't made that much progress, we haven't managed yet to replace nurses with robots, so we have lots and lots of nurses, but we have managed to replace assembly line workers with robots so we don't have very many assembly line workers. And, also, to a certain extent, as we get richer, what people want is services rather than stuff. We want health care, we want entertainment. Until recently, we had a lot of growth in retail. You need the people to sell us stuff. Now, that actually is in decline because of online shopping. But this is economic evolution. Like anyt...


Think like an economist

For Nobel Prize-winner Paul Krugman, economics is not a set of answers—it’s a way of understanding the world. In his economics MasterClass, Paul teaches you the principles that shape political and social issues, including access to health care, the tax debate, globalization, and political polarization. Heighten your ability to read between the lines and decipher the underlying economics at play.



Reviews

4.7
Students give MasterClass an average rating of 4.7 out of 5 stars.

Information was conveyed in a way that I understood and remembered, the animated stories helped a lot. Great overview for a complete noob.

The class gives a jargon free helicopter view of economics (and PPE), neatly mixing stories of economic history with fact, and dismissing fallacies. It's maybe a bit long, but very interesting. Thank you.

Really interesting and useful lesson by the life.

If I can achieve one thing that I've learned in this master class, I hope I can live up to the last 3 minutes of Paul's commentary!


Comments

Wen X.

"The real question is how to make people adapt to technological change". Changes happen all the time in history. How to make people adapt is the real problem.

Mark M.

I was enjoying the lesson and learned a great deal until Paul decided that he needed to slant his "economic" viewpoint with his liberal beliefs. The inequality gap chapter was especially appalling, and the "race" that he keeps referring to that people keep falling behind seems almost predetermined to him. No discussion about how to improve ones "speed" through education and training, only that more and more people are falling behind in the race. Immediately turned off the class and deleted it from my course list. Am as equally disappointed in MasterClass for allowing this slanted view, I was of the opinion that political views, party politics, and personal beliefs were outlawed.

A fellow student

7:00 - bringing manufacturing back to the United States will not create manufacturing jobs? I get it - we are very efficient manufacturers due to technology. But if we had more manufacturing plants, we would have more manufacturing workers.

Jim

Let's make America Great Again has put people to work. Obama wreaked the country buy growing government on the backs of the U.S workers.

Markus B.

The problem with the Hot Dog analogy is: In this world all the workers in both factories are also the total number of consumers eating the hot dogs. So the number of hot dogs that can be produced and sold is fixed. Therefore, if the productivity increases in both factories, you cannot "just produce more hotdogs" as no one will buy them. So: fewer people are needed to produce the same number of hotdogs. Therefore some workers get laid off. The ones not working can't afford to buy hotdogs anymore So even fewer hotdogs are needed Even more workers get laid off--who in turn cannot afford to buy hotdogs anymore, requiring even less workers, etc. It does become a feedback loop that eventually ends in total collapse Now, I am not saying that translates necessarily to the real world...but it MIGHT..if automation, truly invades all aspects of the economy not just portions of it, as it did in the past. ...and if that was the case, some more systemic shifts in our economic system may be needed.

A fellow student

I apologize if I'm mistaken, but it seems many of those disappointed in the class might not realize there is a downloadable workbook that not only explicates each lesson, but provides links to useful, much more intensive articles and other secondary sources. I admit I'm not the brightest student, but in order to learn such a complicated subject I'd be foolish to think a collection of 10 minute videos alone would be sufficient. Furthermore, I'd be rather presumptuous to discredit an expert in any field based on one summary explanation of a single facet of the subject, regardless of any perceived political bias. As someone admittedly ignorant, I've spent a good deal of time reading the additional material before even considering any critical stance. But this is only my experience, perhaps others are approaching this class from a level of expertise beyond myself, and, I might add, beyond the scope and intentions of the course.

Geno G.

I'm curious as to how lower taxes inspire entrepreneurship. This question rises from the belief that America is a great incubator of innovation. Is this just luck or is it a result of our monetary and fiscal policies?

Andy B.

Like others, I, too, am losing interest in this course. I don't feel that he is fully explaining his point of view and some of his perceptions seem to be at odds with what is actually happening. His idea that we are still manufacturing is simply not true. While it is true that automation has been adopted in factories across the country, most products are no longer produced in the US but rather abroad(the most confusing thing is that he mentions this in an previous video and is now contradicting himself??). Now, I agree with him that you cannot turn back the clock because these jobs were shipped abroad in order for companies to produce products more cheaply and remain competitive in the global marketplace. However, it would have been interesting for him to delve into the idea of self-reliant nations. Currently, with the COVID-19 outbreak, the US is struggling precisely because we do not have enough personal protection equipment, masks, swabs, etc. Even our pharmaceutical drugs are produced in China. These videos are not nuanced enough to give a proper understanding of the subject. He basically presents his opinion as fact in a few minutes. I expected something a little more enlightening from a paid course. Other free videos on Youtube will offer a far greater understanding on the subject.

Arthur Y.

I am also losing interest in this course for many reasons, mainly the integrity of the course and the political propaganda. His speaking skills aren't that great either, he sounds like he's in a tooth extraction interrogation, wtf, why does he sound so scared?

Fiona

I'm losing interest in the course because it's become political. As a learner, I shouldn't be able to tell how he votes (obviously Democrat). I'm not American, but both sides of politics have ideas that work and those that don't . Having balance is important.