Engineering vs. Economics (a response)

Last week, Russ Roberts (of ever excellent Econtalk) wrote a blog post about economics and engineering. I was surprised by how much I disagreed, though not in the way you might expect.  His point: looking at the economy isn’t anything like an engineering problem. The economy is complex and emergent while engineering problems can be modeled very accurately by simple equations:

“Running an economy is not an engineering problem. There are no simple equations that describe its motion that are akin to the engineering problem of space travel.”

 The gap between economics and engineering is not so large as Russ makes it out to be, but the similarity is in the opposite direction from the normal misconception: rather than economics being captured by simple equations like engineering, engineering is more complex and emergent than most people (even engineers!) acknowledge, like economics.

 Sure, engineering theory can be captured by simple equations (“it’s just physics!”) but then, so can economics. It’s just easier to get to ‘the emperor has no clothes’ point in economics. You can write down the rocket equation, F = MA, do some orbital dynamics and say, “yup, that’s how we get to the moon” but this is what the wiring of the Apollo computer looked like:

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Just as in economics, the gap between neat equations and reality is huge. Non-optimal solutions are built on non-optimal solutions because technology has become so complex that you can’t just start from scratch. A huge amount of programming is done using Unix command line commands and the C programming language, both built in the 70’s and flash frozen into the system.

 “Ironically, in an unplanned economy, shopping is usually as straightforward and predicable as space travel. It becomes a engineering problem–what is the shortest route to the grocery–what is my optimal path through the store given my shopping list.”

 From my perspective, Russ’ wonder at how well the unplanned economy works, rings just as true for engineering.

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Optimism! It’s just more fun.

This week, Russ Roberts of the ever-excellent EconTalk is having a short essay contest. The prompt is to compare the visions of our technology-future as portrayed Tyler Cowen and Joel Mokyr (both guests on the podcast.)

Here’s my take on the matter, but I highly recommend you listen to both podcasts and form your own opinion.

Like the wise men and the elephant, Mokyr and Cowen focus on vastly different aspects of the same huge enterprise: progress in science and technology, past, present, and future. Mokyr focuses on the human experience – increased leisure and improved interactions – while Cowen focuses on our interaction with the world around us – gadgets and robots. A gross simplification would be to say that Mokyr focuses on the mental while Cowen looks at the physical.

Their different perspectives lead to different conclusions about the future: Mokyr is across-the-board optimistic while Cowen presents a greyer vision; he thinks some things will improve somewhat for some people. I find myself compelled by Cowen’s focus on the physical world, but convinced by Mokyr’s optimism and overall vision.

EconTalk is all about identifying biases and here are mine: I’m an aerospace engineer who also has a degree in history. Thus, I focus on how we interact with the physical world, but from more of a historical than aggregate economic perspective.

Mokyr takes a historian’s perspective and notes that there are many trends and improvements that are not captured in the data. While it ignores Cowen’s aggregate data, I find Mokyr’s (and Russ’) admonition to just ‘look around you and see the progress’ more compelling than the fact that GDP is not rising as fast and we don’t have flying cars yet.

Yes, we haven’t changed what every day technology can fundamentally do in the real world for half a century. Airplanes still fly and cars still drive the same way by exploding fuel to spin a shaft that drives turbofans or wheels. We still get to space by sitting on giant explosions. Our bathrooms are still serviced by water carrying tubes. We still build our houses out of wood, glass and concrete.

Looking at the surface, we haven’t made much progress. But delve deeper, look at the ways these familiar things do what they do and how they are made. Behind the scenes, there has been significant progress. Engines are far more efficient; pipes are made of cheaper, lighter and less-degradable plastics. On a walk today, I saw a house that had an entire corner built of only glass – impossible with the glass-making technologies of twenty years ago.

This type of progress supports Mokyr’s view that people will be able to do the same things that we could before, but ever cheaper and with more delight in our lives. My optimistic engineer’s twist on this perspective is a perhaps naïve prediction. This steady increase in freedom from drudgery will combine with a deep-seated human desire to affect the physical world and create a tipping point. Right now, we are seeing a lull in our physical progress – what Cowen identifies as ‘The Great Stagnation.’ True, there are fewer discrete jumps as we make our same planes, trains, and automobiles ever more efficient and our leisure ever longer. But (hopefully soon) these incremental improvements will add up to give us enough excess time and resources to again make discrete technological leaps. Don’t lose hope for flying cars, rocket packs, and moon vacations just yet.