Paul Krugman? Herman Kahn? Steven D. Levitt? Stephen J. Dubner? Apocryphal?
Question for Quote Investigator: Predicting the technological future is enormously difficult. Will society ever have flying cars, home robots, or cities on Mars? The opinions of enthusiasts, skeptics, and experts are highly variable. The record of most prognosticators has been poor. Apparently, during the 1990s when the internet was embryonic a prominent economist said:
It will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.
Would you please help me to identify the economist and find a citation?
Reply from Quote Investigator: In June 1998 Nobel prize-winning economist Paul Krugman published a piece in “Red Herring” magazine titled “Why most economists’ predictions are wrong”. Krugman discussed the overly optimistic predictions of futurist Herman Kahn:1
An example: though Kahn was skeptical that housecleaning robots would be available by 1984, he regarded them as more or less a sure thing by 2000.
Krugman’s article presented the following thesis:
The truth is that we live in an age not of extraordinary progress but of technological disappointment. And that’s why the future is not what it used to be.
Krugman took a skeptical stance about the transformational nature of the internet. Boldface added to excerpts by QI:
The growth of the Internet will slow drastically, as the flaw in “Metcalfe’s law”—which states that the number of potential connections in a network is proportional to the square of the number of participants—becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.
Below are additional selected citations in chronological order.
In November 1998 “The Guardian” newspaper of London referred to Krugman’s comment:2
… MIT economist Paul Krugman, who recently ruled that the Internet’s “impact on the economy has been no greater than the fax machine’s”. But he readily confesses that it is a great tool for “vanity-press publishing”.
In 2013 the website “Business Insider” stated that bitcoin aficionados were circulating the quotation in an attempt to discredit the opinions of Krugman. The journalist Jay Yarow contacted Krugman to obtain additional information about quotation:3
…. the point was to be fun and provocative, not to engage in careful forecasting …
But the main point is that I don’t claim any special expertise in technology — I almost never make technological forecasts, and the only reason there was stuff like that in the 98 piece was because the assignment required that I do that sort of thing.
In 2014 Steven D. Levitt and Stephen J. Dubner published “Think Like a Freak” which included the following passage:4
Smart people love to make smart-sounding predictions, no matter how wrong they may turn out to be. This phenomenon was beautifully captured in a 1998 article for Red Herring magazine called “Why Most Economists’ Predictions Are Wrong.” It was written by Paul Krugman, himself an economist, who went on to win the Nobel Prize. Krugman points out that too many economists’ predictions fail because they overestimate the impact of future technologies, and then he makes a few predictions of his own.
Here’s one: “The growth of the Internet will slow drastically … By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
In conclusion, this quotation should be ascribed to Paul Krugman. He wrote it 1998 in “Red Herring”. In 2013 Krugman explained that “the point was to be fun and provocative, not to engage in careful forecasting”.
Image Notes: Abstract representation of digital communications from Conny Schneider at Unsplash. The image has been cropped.
Acknowledgement: Great thanks to the anonymous person whose inquiry led QI to formulate this question and perform this exploration. Also, thanks to David Emery of Snopes who explored this topic in May 2018. Emery identified the citations in “Red Herring “ and “Think Like a Freak”.
- Website: Red Herring Online, Date: June 1998, Article: Why most economists’ predictions are wrong, Author: Paul Krugman, Publisher: Herring Communications, San Francisco, California. (On April 18, 2023 accessed redherring.com via Internet Archive Wayback Machine; snapshot dated June 10, 1998) ↩︎
- 1998 November 21, The Guardian, Section: The Editor, Other Articles We Liked, Quote Page 21, Column 1, London, England. (Newspapers_com) ↩︎
- Website: Business Insider, Date: December 30, 2013, Article: Paul Krugman Responds To All The People Throwing Around His Old Internet Quote, Author: Jay Yarow, Publisher: Insider Inc., New York. (Accessed businessinsider.com via Internet Archive Wayback Machine; snapshot date December 31, 2013) ↩︎
- 2014, Think Like a Freak: The Authors of Freakonomics Offer To Retrain Your Brain by Steven D. Levitt and Stephen J. Dubner, Chapter 2: The Three Hardest Words in the English Language, Quote Page 25 and 26, William Morrow: An Imprint of HarperCollins Publishers, New York. (Verified with scans) ↩︎