Simon Johnson: evaluation

Transcript context

…Say we take the Industrial Revolution. There’s a new paper by Joel Mokyr in the Journal of Political Economy, and he argues in the areas where you had an Industrial Revolution, wages went up a fair amount pretty rapidly. Performance in England, as a whole, was mixed, but it was the areas that didn’t have the IR where wage performance was poor. Doesn’t it typically happen pretty rapidly that if you have sustained advances in technology, most people are much better off? We did talk to Joel a lot about that in writing the book, and he was immensely helpful. We used his work a lot. I think the distinct difference we would make, just in terms of those facts, is that if you look at how people lived in cities — for example, in Manchester in the 1830s, which Engels wrote about — whether or not you like Marx and Engels, that was a really good, powerful description of working-class conditions. It was bad, Tyler, and if you look at the conditions of workers and children working in coal mines in the 1840s, which was subject to a big investigation in the UK, it was also absolutely terrible and much worse than the conditions for children before the Industrial Revolution. Sure, Joel is right that some people definitely had some gains in some areas. But I don’t think that the living standards, taken in any modern sense, of people in and around the textile factories of Manchester or the coal mines of Northumbria or the town I’m from, Sheffield, which was steel that was just starting to emerge at that time — I don’t think people really saw much by way of gains until after the 1850s. Our view is, it took a hundred years for this really to pay off. Then it does pay off. Joel’s right about the importance of entrepreneurs tinkering with technology — love that take on the driving force, but that wasn’t enough to generate shared prosperity. It took a bit more than that. As we know, until fairly recently, there have been significant increases in wealth inequality in many Western nations. But don’t they coincide with a period of relatively low TFP, not relatively high? Productivity growth is pretty slow since 1973. Income inequality goes up. But the story you’re trying to tell in the book is, “Oh, you have a lot of tech advances, and then income inequality goes up.” But we’ve been seeing almost the opposite of that. The problem is not enough tech advances, so wages are somewhat stagnant until lately.…

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