So I got a longer essay on ChatGPT, “AI” and Generators in general out (in German though) and the reactions and the broader current discourse (especially in the days after the GPT-4 release) got me thinking about why everyone is so quick to declare this a “revolution”.

Tech PR and reporting (sadly the distinction is a lot muddier than I’d like it to be) has been declaring revolutions a lot of course. It’s the business of selling technological progress as the sine qua non of the future. But even people outside of the tech-hype bubble keep declaring these systems revolutionary. Why?

On a technical level these machinations are impressive, the results not bad for what they are (a blurry JPEG of the web) but they mostly are just more advanced forms of automation. Text or image suggestions aren’t new per se and while these things have changed and will change work itself as well as the expected quality and properties of the output the changes have been evolutionary in the way that gains were slowly realized and captured by capitalism.

The automation pipeline isn’t just purely technical, it’s also social. Of course the tools we have and use shape it but also an understanding of what is “right”, what is accepted. In length, in style, in form. These are not just fashions but often times technological properties of platforms and tools crystallized into social traditions: The way YouTube’s or TikTok’s algorithms shape the form of content produced is a good example. This has lead to the term “content” being used affirmatively in a really weird way.

“Content” is a kind of alienating word. As a computer scientist it makes sense: You build a CMS and there’s stuff in there, let’s just call it “content”, it doesn’t matter. But calling oneself “content creator” or one’s own work “content” is different because it should matter what you do and create? But with structures being softly enforced by the tools, structures and rules that platforms and toolmakers provide it makes sense to feel this form of alienation. Because it’s no longer about you and your identity, only so long as it fits into the pipleline.

This pipeline now can do more. You can easily generate “Midjourney-style” images or “GPT-style” texts. They all kinda look alike, because they are the averaged and sanded down version of what’s on the Internet. They are what the pipeline can produce and will produce. But is this revolutionary? Not really. Again it’s just evolution.

I think the revolution narrative comes from a feeling of boredom and emptiness. Let me explain.

The last big techno-social revolution, the Internet was 20 years ago. It kinda popped into being for people and nothing ever was the same again. This feels exciting and also like one is part of history: We were the first generation exploring the Internet! How cool.

The last years of tech were … disappointing. Aside from gig-working platforms and a bit of rentier-capitalism nothing changed and none of those things was in any way shocking or mindblowing. Tech these days is super boring. People can’t even be excited by new iPhones anymore because every version is basically the previous version with irrelevant changes and updates. Which is normal. When something matures, things get slower, standards emerge and are hard to compete with.

In a time of the polycrisis people are desperately looking for a revolution, something new. Something (usually tech because we trained us to think of tech as the only thing that can bring change) that might even solve all our problems somehow. “AI to solve climate change”, “Bitcoin to solve poverty” and similar baseless claims.

We feel overwhelmed by our crumbling social, political and economical structures, the changing climate, the limitless suffering on this planet. In the west you also often have to add the stress of feeling kinda okay most of the time (affluent, well serviced etc.) while knowing that the polycrisis is going on. The contradiction is stressful. The talk of “the revolution” is a way to look away, to avoid the feeling of being powerless and scared and replacing it with hollow hopes of magic technologic futures.

The “AI revolution” is a psychological coping strategy. The “AI evolution” is a real movement that we’ll suffer under adding to many aspects of the polycrisis.

[The following is a talk I gave this afternoon as part of a faculty colloquium on “Radical Futures” at North Central College, part of the Intellectual Community series co-sponsored by the Faculty Development and Recognition Committee (of which I am chair) and the Center for Advancing Faculty Excellence and organized by my colleague Sean Kim Butorac.]

Since I teach in the Shimer Great Books program, I will begin with an experience teaching one of the all-time greats, Aristotle’s Nicomachean Ethics. In my ethics class this semester, we were discussing Book 1 and came to a passage where Aristotle had isolated three possible human goods that seemed to be good candidates for happiness—by which he means the human good that we pursue for its own sake, with no need for further justification or explanation. The first is pleasure, which is presumably self-explanatory. The second is honor, which we could paraphrase as respect or esteem. The third is contemplation, which we could see as a form of knowledge or understanding. In all three cases, Aristotle believes, it wouldn’t make sense to ask why we are pursuing these goals. Why do you want pleasure? Why do you want people to like and respect you? Why do you want to figure things out? The question doesn’t make sense.

The list feels pretty exhaustive, but Aristotle goes on to introduce a fourth possible candidate: money. Initially it seems to fit the bill—all things being equal, no one will turn down more money. But Aristotle points out that money is not truly an end in itself, but rather a pure means. We only want money because of the things we can do with it. And this, I point out, is an area where Aristotle is out of date. He can’t imagine living a life for the sake of stockpiling as much money as possible, much less orienting an entire society around it. We can.

The shift to a pure market society, to a kind of totalitarianism of capitalism, was so successful that it has become almost invisible to us. Like many other analysts on the left, I choose to call that transition—ushered in by Pinochet, Thatcher, and Reagan, and then adopted by virtually every governing party in the West and every international organization—the shift from the postwar Fordist economic model to neoliberalism. One way to gauge this shift is to think in terms of means and ends. In the postwar era, the existence of an alternative economic model in the form of the USSR—which at the time was experiencing the highest economic growth in human history up to that point—meant that capitalism had to justify itself. It had to prove that it was better, not just at stockpiling money, but at creating broadly shared prosperity that lays the groundwork for national greatness. And through a combination of heavy government intervention, very high marginal tax rates on the wealthy, and high union concentration, the capitalist system really did mostly fulfill its promises, at least for the stereotypical white suburban family. Hypothetically speaking, capitalism set itself an empirical standard that certainly included economic criteria but was not limited to them—in other words, capitalism was a means to an end.

Since the fall of the USSR, capitalism has felt increasingly unburdened by the need to justify itself. Instead, competitive markets are taken as ends in themselves and as models for every area of social life. The reason we want markets is not that they produce better results or they’re more efficient or whatever else—we want markets because we want markets. Market logic is self-evident, the final standard, the final word. It is no longer the means, but the end. And once money is set up as the ultimate end—not even personal wealth that someone could potentially use, but the depersonalized money of endless “economic growth” and endless increases in asset prices—then everything else becomes a means. Where once we made friends, now we network, in the hopes that our social contacts will advance our career. Where once we relaxed and had fun, now we practice self-care, in order to recharge and guarantee increased future productivity. And to bring it a little closer to home, where once we went to school to develop our full intellectual capacities, now we seek the hot job skills employers crave.

Of course, the “before” of this “before and after” dynamic is a bit simplified and idealized in my presentation. There were no good old days when people at large pursued only the highest ends with unmixed motives. Yet I would submit that in past eras, people were better equipped to discern that such ends existed and that the mixed motives were less than ideal. This comes through clearly, for example, in a famous essay by John Maynard Keynes, “The Economic Prospects of Our Grandchildren.” As is well known, this text predicts that within two generations, humanity would essentially begin “cashing out” of capitalism by trading productivity gains for reduced working hours so that they could spend time on what was really valuable in life.

By my math, this would have been my parents’ generation, so obviously this did not occur. But for my purposes, the most interesting thing about his failed prediction is how he characterizes the benefits of the transition. One of the architects of the postwar capitalist order, as well as a gifted financial speculator, Keynes proposes that once humanity has leveraged the immense productivity of capitalism to set itself free from economic necessity, it will be a relief to admit that none of those wealthy businessmen was really as admirable as we pretended they were, that there was something a little disreputable and sad about the way they’d chosen to live their lives.

The neoliberals did everything they could to squelch that insight, to the point where we are supposed to believe that an obviously broken and miserable man like Elon Musk is a genius-level benefactor of humankind, for instance. It’s easy to point and laugh at Musk’s pathetic army of admirers on Twitter, but we academics are guilty of our own distortions. The other day I was meeting with a major in our program, a very strong student who I had not had in class before. We wound up talking for a good half hour, and at a certain point the thought slipped into my head that it was a good thing I was doing this and making her feel so supported, because we really need majors…. A very rewarding part of my job, which I was doing for its own sake and even enjoying, suddenly felt like a cynical manipulation.

I know I’m not the only one to fall victim to this line of thinking, because I’ve heard similar remarks in many other discussions. For instance, once a faculty discussion about providing mentoring and support for students of color devolved into a reflection on the importance of reaching Latinx students for our bottom line. A question of justice becomes a question of finances. No one intended for that to happen—it just rolls right off our tongues.

And more broadly, of course, we are all well-versed in defending our disciplines in market terms. The humanities provide valuable job skills! Employers tell us they want liberal arts majors who can think on their feet! Liberal arts majors eventually catch up to and even exceed the incomes of their STEM counterparts! I understand that such rhetoric is tactically necessary, especially in a media sphere full of misinformation about the value of different fields of study. I also happen to think these things are true! But even though it’s true, it’s harmful to frame the value of education in such narrowly instrumental terms. I did not get into this line of work so that Johnny can get that big promotion years down the road or Suzie can contribute to better quarterly results for her department.

But of course Johnny and Suzie need to be able to get those employment outcomes, or else they aren’t going to be able to pay off the student loans that are financing their education here. And this brings me to another way in which the full-saturation capitalism that I call neoliberalism degrades our moral sense: it shrinks our political horizons. Once installed in a given area of life, marketization produces a feedback loop that constrains our choices within a very, very narrow range. And living a life where the most important choices about our lives and livelihoods are made by an impersonal mechanism—by everyone and no one—cultivates habits of deflection and irresponsibility. We aren’t making decisions or value judgments—we are simply responding appropriately to the demands of the market, and if we don’t, we will lose out to someone who does. In practice, this leads to the conformism of “best practices” that one of our colleagues criticized today—the alibi that we should do what everyone is doing because everyone is doing it.

I am not sure in detail how to get out of this self-reinforcing doom loop of marketization, though in my book Neoliberalism’s Demons, I suggest that we need to embrace the abolition of the market and the establishment of a system of democratic economic planning as a long-term goal. In our more immediate context, I would suggest that—beyond changing our rhetoric about the cash value of majors or the financial urgency of student retention—we need to find a way past our competitive zero-sum approach to curriculum design. Instead of outsourcing those decisions to student choices, we need to find ways to discuss, collaboratively and creatively, how we can best deploy the North Central faculty’s massive talents and expertise to deliver the kind of education we want our students to have. Our marketized system has deeply internalized habits of cynicism and fatalism in most of us, but as Aristotle teaches us, the only way to develop more virtuous habits is to practice.

Nostalgia is the feeling of yearning for a largely fictitious past. It is probably the defining feeling of the last 10 years.

I don’t mean that personally – I am not a very nostalgic person – but in general. Between the ongoing climate catastrophe, wars all over the planet, growing income and wealth inequalities it’s very much understandable that many people turn to visions of past glory. Of simpler times when everyone could afford to buy a house in their 20ies, everyone had a job that paid more than their parents’ did, etc. Of course that world never existed. But looking back tends to sand off all the parts that don’t fit what you need to feel and think the way you want to / need to feel at a specific time. All that being said … let’s talk about the Metaverse.

Metaverses

Quick sidebar at the beginning: When I say “Metaverse” I am not talking about crypto/blockchain/web3 stuff. I know that people in that space like to tie their (currently failing) vision to something that might hopefully drag them out of the hole but entangling those two things really doesn’t add much, it just muddies the waters.

“The Metaverse” (if you ask Meta) or “Metaverses” (if you ask a few others who hope that their future vision for the digital won’t be owned by just one company) describe immersive virtual worlds usually framed as Virtual Reality experiences. Defining characteristics of Metaverses are

• digital
• shared persistent state
• user representation through avatars
• a form of digital space
• high immersion

What do those mean? A “shared persistent state” means that the digital world the specific Metaverse at hand tries to create does not only “exist” when I am logged in but has its own internal logic and actions by other participants that keep going while I am not there: The system I log into after a few days off still remembers all I did and have but things also have changed in between. Other people build things, created things, destroyed things or drew dicks everywhere.

The representation of users through avatars might sound very unspecific – don’t we have avatars on every little website? – but the Metaverse avatar is your body, it represents you in the world and is not just “a picture to recognize you by”. This avatar can be heavily stylized, can be fluid in its properties and expressions and capabilities but at a specific time within the digital world this avatar is you.

Metaverses also are based on kind of a mimicry of space: A digital world doesn’t need things to be placed in 3D spaces that remind you of the physical world. It does make it easier for you to navigate those spaces because a lot of your intuition still applies but it’s also a kind of skeuomorph meaning a thing that keeps properties of its inspiration around that for the new thing don’t really make sense anymore. Distance, proximity, neighborhood or even just “a wall” don’t really map to the digital in that way.

Finally the immersion part. Which mostly means virtual reality these days even though it really doesn’t fundamentally need to. VR is a very blunt way to enforce immersion because your senses are either taken over (sight, hearing, a bit touch) and replaced by digitally generated inputs or are neglected by you due to lack of stimulus. Never fully of course which is the challenge VR glasses are always facing: You still feel the room you are in even though it doesn’t match your dominant experience at that time which is part of why VR often feels a bit alienating to people. The point of immersion in Metaverses is that they “take over” your perception and attention, you feel like you are there. And for some even good old World of Warcraft did that and WoW does check a lot of the Metaverse boxes.

So Metaverses want to create kind of a living digital world for people to immerse themselves in. Leaving “meatspace” and jumping fully into cyberspace to use a few older terms.

Midlife crisis and SciFi

I am a middle aged man in his 40ies. I am actually only 4 years older than Mark Zuckerberg so I was youngish when he was young. Snow Crash, the novel coining the term Metaverse, came out in 1992 so it and many other books about similar topics defined a lot of what kids our age got offered as “futures”. Stephenson’s Metaverse was a culmination of many ideas that were in the air and connected to many things existing in real life at the time in ways that felt like this really was the future. You could easily draw a path to all of us living in VR. And publications such as WIRED did.

Snow Crash’s Metaverse was an escapist fantasy even within the book itself: Faced with crumbling ecological, political and economic systems (remind you of anything?) people shifted parts of their life to the Metaverse. Which was hypercapitalist and exploitative (just as the real life) but allowed every individual to be a super hero, if they were just skilled enough.

Maybe there is a reading of Snow Crash where that wish for a sort of “new world” could be seen as a form of criticism of the economic inequalities and unfairness we are forced to live in but I don’t think that reading holds up. It’s hard not to read the book as an expression of what these days is sometimes called the “silicon valley ideology”, a negation of the social and political and an affirmation of radical individualism and market based everything. Capitalism needed a new frontier, a new world to conquer and the digital was supposed to create it (the “Frontier” in EFF is no accident!). And as a bonus you could be the conqueror!

It is also fascinating to see that the Metaverse in those books and newer works such as “Ready Player One” (which is basically the shallowest possible carbon copy of the idea) is always part of a dystopia. It’s very actively framed as a positive idea for society, it’s just a neat tech thing that makes inhabiting a late-stage capitalist world maybe kinda cool in parts. At least to a 14 year old.

Also: The 1990ies were a bit stale. The cold war had broken down, the “End of History” was proclaimed and everyone was kinda set up to believe we’d have to live in this frozen reality where every year would be the same, you’d just be older and a bit worse. Like AC/DC albums. Metaverse offered a way out. If this world was stuck, we could create a new one!

But something happened in the 1990ies. Yes, climate change was already happening and neoliberalism etc. but also the Internet, especially the Web happened.

The Web

While some people like to claim that nobody could see that the web would be a thing and that it was just a wonderful happy accident that is very obviously false. Not only did businesses see potential very early on but the people able to get on in some way did and fast. The promise of E-mail alone (being able to talk to/ask/annoy anybody on the planet basically for free) got people hooked, and all kinds of other offers emerged very quickly. Sure, they were not the corporate, friction-less experiences we have learned to expect today. Websites were janky and full of cheesy, stolen GIF animations. Every page was broken and unusable in different ways but it was a thing people – especially young people – jumped on quickly. If just for chat tools and downloading music (a bit later of course).

A few years later, especially after the iPhone kickstarted the whole connected mobile device thing the Internet is everywhere. The question that I still got asked while I was studying (“How many hours a week are you online?”) no longer makes sense: Offline is basically just a fail-state when your device or your ISP has a problem. The clean separation of “virtual”/digital and “real” no longer makes sense: We have integrated digital tools, modes of communication and being into our everyday life. Or as sociologist Nathan Jurgenson wrote in 2011:

Digital dualists believe that the digital world is “virtual” and the physical world “real.” This bias motivates many of the critiques of sites like Facebook and the rest of the social web and I fundamentally think this digital dualism is a fallacy. Instead, I want to argue that the digital and physical are increasingly meshed

https://thesocietypages.org/cyborgology/2011/02/24/digital-dualism-versus-augmented-reality/

Digital dualism is a very retro kind of view. Today we might actually call it nostalgia: The yearning for a time when we could just easily disconnect and be rid of all the distractions and ads and work emails that flow around us all the time. Where one could just be real. And there is merit to wanting a clearer separation of certain contexts and for being able to disconnect fully from work. Hell I paid a lot of money for this laptop so I wouldn’t have to use the machine I use at work. I get it. But the simple paradise of the real world of the 1980ies and 1990ies also never really existed. People weren’t all happier, healthier and hopeful. For some the emergence of the Internet would be a savior, would allow them to connect to nurturing and accepting communities. Everyone’s hell is another person’s heaven.

Regardless of all that Metaverses now have a problem. They are by definition digital dualism.

Metaverses as Digital Dualism

We have already talked about how Metaverses want to be an alternative world. A digital alternative to the “real” world, a place to go to when you don’t want to be in the limiting, annoying physical “real” world anymore. And maybe there was a world where that promise, that vision would have materialized. It’s just not ours.

For better or worse (I still maintain for better) we have decided that the Internet is real. That the things we do there are real and affect us and others in real and meaningful ways. Our “Internet self” isn’t as some people have argued “a second self” separate from us, it is us. We might show different facets of ourselves in different online context – just as we do offline – we might experiment with certain aspects of ourselves or expressions of ourselves. But it’s always us. My “tante” persona on twitter or mastodon is different from who I am at my job or who I am as a partner or father. But it is me. I can’t run from it.

Metaverse is a nostalgic idea that makes sense if you are my age. Because back then that was the future. We’d all fly around in blue glowing spaces and hack at code with virtual katanas. But that was – aside from super juvenile and based on a very dubious understanding of what masculinity should be – just a story that didn’t survive reality. It’s an artifact that made sense historically but nowadays is just … strange.

Many people believe that VR and therefore Metaverses never caught on because the tech just wasn’t there yet. The resolution was too bad, the 3D models not hi-res enough. We’d just need to wait for the next device to fix it and everyone would jump onboard. That was and largely is still true: VR devices are clunky, heavy, expensive, unpleasant to use, annoying to set up and require a lot of space many people don’t have. But it’s still not the reason Metaverse doesn’t capture people’s imagination. Claiming Metaverse is the future of the Internet is like claiming that genetically modified horses are the future of transportation. At some point in the past “faster horses” might have made sense but even adding something “techy” to it doesn’t make it work today.

Selling people who have to a massive degree embraced digital technologies for their everyday needs on a vision of a digital world that’s harder to use and that they are locked out of when they are not at home really only makes sense when you are as disconnected from real life as for example Mr. Zuckerberg.

The alternative that never was

VR is a technology that’s always “around the corner”. Like self-driving cars and “artificial intelligence”. It has found its niches though. In gaming, in architecture, as training environment. But the “alternative world”, the new frontier that VR was supposedly going to make possible is probably not gonna make it.

Depending on how you look at it Metaverses have existed since persistent multiplayer games such as MMOs or Second Life et al. were built and used. These things exist as escapism in small niches. But not as the kind of integrated part of reality that some past futurists and present nostalgists imagined or imagine. The fact that these self-proclaimed visionaries need to fall back to gimmicks from dystopian SciFi to be able to put forward any kind of vision is at the same time damning of the whole tech sector but also supports the analysis that tech itself has massively stagnated for decades now, especially after the breakout success of the Internet itself. That while there’s a whole lot of claims about “the new” not a whole lot of stuff that materially improves our lives or even just our productivity as society has been invented. The age of innovation theater. And if the thing you just proposed doesn’t gain any traction, just try in again, maybe just more of it. People will jump on board.

But people don’t. Because while a few techy (mostly) dudes will jump on every new thing actual people out there in the world don’t. They don’t want to run DAOs or tokenize their shits or play Tetris on their car’s screen while it runs over pedestrians (I think that is the Tesla sales pitch? I am never sure). People adopt things that they find value in for their lives. Ads can sometimes make something appear to be a thing when it’s not but those hypes never last: Crypto for example was hyped and had especially in the US some traction in marginalized groups but not because of the tech and what it could do but because of the promise of free money. You need to offer something people care about and that is rarely tech.

The Metaverse never came to pass not because of lacking tech but because of tech that worked massively well: The Internet has been so useful that it now is part of the real world. And the Metaverse idea only makes sense in a world where that didn’t happen.

A study came out recently from University of Chicago economists Austan Goolsbee and Chad Syverson showing that productivity in the construction sector has actually decreased over the past several decades, unlike nearly every other sector of the economy. This is a cause célèbre among the "just build more" crowd. There are even entire Web sites devoted to trying to understand the reasons why it happened and how to “fix” the problem.

Recently Ezra Klein summarized the paper in the New York Times. Klein summarizes the paper this way:

Throughout the 1950s and 1960s, productivity in the construction sector — how much more could be done given the same number of workers and machines and land — grew faster than productivity in the rest of the economy. Then, around 1970, it began to fall, even as economywide productivity kept rising.

Today, the divergence is truly wild. A construction worker in 2020 produced less than a construction worker in 1970, at least according to the official statistics. Contrast that with the economy overall, where labor productivity rose by 290 percent between 1950 and 2020, or to the manufacturing sector, which saw a stunning ninefold increase in productivity.

The slowdown in productivity could be due to underinvestment in construction, but they looked at that and found that it's not the case—investment consistently kept going up. They also speculated that it's a measurement error. But they found that this is not likely either. One reason why it's unlikely to be a measurement error is that the slowdown is not confined only to the United States, but is also seen across developed countries:

Adding weight to the idea that this isn’t a quirk of American record keeping is that the slowdown is international.

The Organization for Economic Cooperation and Development tracked construction productivity in 29 countries between 1996 and 2019. In 40 percent of them, productivity fell during that time...the only countries in which productivity rose at more than two percentage points per year were the Slovak Republic, Latvia, Estonia and Lithuania — poorer countries rebuilding after the crackup of the Soviet Union and the Soviet bloc.

As I noted previously, this slowdown across national borders indicates that it's unlikely that regulation alone is the cause of the housing shortage or building slowdown. Every country has a different regulatory environment, so it's hard to believe that every country in the world simultaneously began regulating construction too heavily, not to mention every locality inside the United States as well. In fact, the economists tried to correlate construction productivity slowdowns with the regulatory atmosphere and came up short:

So if it’s not underinvestment and it’s not a statistical illusion, what is it? Here, Goolsbee and Syverson seem stumped. The Wharton School of Business, for example, tracks building regulations across cities, and Goolsbee and Syverson tested regulatory burden against construction productivity. There was a slight relationship, but nothing impressive.

Klein wisely realizes that economists are useless in answering any real questions about the world, and decides to consult people actually working in the industry. He calls up a construction estimator who tells him the following:

“When I first started back in the ’70s, you did one estimate on a project,” he told me. “You put it in, you got your bid, and if you won, you began construction. By the time I left in 2014, you did three estimates for every job before you even put the bid in. That becomes part of the cost of the job.”

Or take the job site, he said. “The safety features on jobs when I started in the industry were not even noticeable. Safety on a job today is incredibly different. You don’t walk across a beam, you walk around on a pathway marked for you to stay safe so you don’t fall off the side of the building. By the time I retired, one thing that took place every day, on every job site, was a mandatory 15 minutes of calisthenics before you start your workday. That’s totally nonproductive, but it led to fewer work site injuries during the day.”

And behind all that is paperwork, and paperwork, and more paperwork. “The work we do today takes hundreds more people in the office to track and bring to completion,” he told me. “The level of reporting that you have to send to the government, to the insurance companies, to the owner, to show you’re meeting all the requirements on the job site, all of that has increased. And so the number of people you need to produce that has increased.”

Klein notes that building things out in the real world is a lot different that cranking things out of a factory or writing a bunch of code in virtual world of the computer:

It’s relatively easy to build things that exist only in computer code. It’s harder, but manageable, to manipulate matter within the four walls of a factory.

When you construct a new building or subway tunnel or highway, you have to navigate neighbors and communities and existing roads and emergency access vehicles and politicians and beloved views of the park and the possibility of earthquakes and on and on.

Klein misses some of the ramifications of this issue. Buildings are built outdoors. Even prefabricated components have to be installed outdoors. Climate change will affect this process, and in some places that will have negative consequences. For example, it’s already anticipated that it will be too hot to work outdoors for much of the summer in the Sun Belt—ironically the place where most U.S. construction has been concentrated for the last 50 years. Floods and wildfires will present similar hazards. That’s not really an issue for manufacturers or computer programmers.

Klein ponders the work of the late economist Mancur Olson. Based on Olson's ideas, he considers the possibility that maybe there are just too many stakeholders and vested interests in the construction process today who must be appeased and mollified at every step of the process, and this has only grown over time. Armed with this hypothesis, he once again consults his friend in the construction industry, who agrees:

“There are so many people who want to have some say over a project,” he said. “You have to meet so many parking spaces, per unit. It needs to be this far back from the sight lines. You have to use this much reclaimed water. You didn’t have 30 people sitting in a hearing room for the approval of a permit 40 years ago.”

This, Syverson said, was closest to his view on the construction slowdown, though he didn’t know how to test it against the data. “There are a million veto points,” he said. “There are a lot of mouths at the trough that need to be fed to get anything started or done. So many people can gum up the works.”

This also helps explain the curious finding that ends Syverson and Goolsbee’s paper. After looking at the states with the highest construction productivity, they note that the more productive states don’t seem to gain market share in the construction industry.

That doesn’t make much sense if you assume that the difficulties of construction are primarily the organization of manpower and materials. It makes more sense if you assume that the frictions are in navigating local regulations, community considerations, neighbors’ qualms and politicians’ interests. In the cities where I’ve covered politics closely, developers are fixtures in the local political scene. They have to be...

https://archive.is/GLbrD#selection-843.0-847.561

There are a couple of points I want to make here. First and foremost, it confirms the point I made over and over again in my previous two posts: housing is not a commodity like other commodities. That last paragraph especially drives the point home.

To reiterate what it says: if buildings were really just another commodity, you would expect businesses which construct them more efficiently to out-compete their rivals in other states. That's what happens with ordinary products. If I can make cars or appliances or frozen pizzas twice as efficiently as my competitor, I can lower my price and claim market share. But it doesn't work like that in the construction industry because buildings aren't widgets rolling off an assembly line that sit on a shelf. It's not like making cars or furniture or appliances or clothing. It’s unique every time, and specific to place. Treating buildings like any other commodity and expecting the same market dynamics to apply is a complete and utter fiction, and always has been.

It's refreshing to see a diehard neoliberal like Klein acknowledge this fact (even if it's not stated explicitly). But of course he can't bring himself to fully articulate the ramifications of this. Instead he just kind of shrugs his shoulders. But the implication is profound—if houses aren't just another commodity, than it's clear that impersonal market dynamics alone cannot—and should not—be relied upon to solve the housing shortage. This is anathema to neoliberals, so it goes unsaid. It's economic wrongthink.

As for the second point concerning how much more complex the construction process has become, how much red tape there is to navigate and how many hoops you have to jump through; well, as a construction industry professional, I have to agree with that assessment. But, of course, this just once again confirms the same point: buildings (including houses) aren't just like other commodities.

Once you comprehend this idea, it’s clear why productivity isn't rising in the construction sector like it is in other market sectors, and why that shouldn't come as a surprise. The fact that is is a surprise to economists is a sad reflection on the mental myopia and bounded thinking of today's neoliberal economists (note that the study came out of the University of Chicago—the crucible of neoliberalism).

The building process and buildings themselves are a lot more complicated than they used to be. Navigating the complex regulatory environment is a mind-boggling and baffling task for everyone involved, even for professionals like me who've been doing it for almost their entire career. Every architect I've worked with has felt the same way.

Klein invokes Mancur Olson (a favorite of neoliberals), but reading the article I'm much more reminded of the work of Joseph Tainter. Tainter's thesis is that civilizations gradually develop more and more complexity over time. They develop this complexity to solve various problems. It works in the beginning, but eventually more complexity gets you less and less results—less bang for your buck, so to speak. Eventually it even leads to negative consequences. That is, complexity brings diminishing returns over time.

But it's important to note that Tainter's doesn’t blame this on some singular villain or scapegoat. Rather it’s a self-directed cultural process that unfolds over time and has affected numerous cultures throughout history.

I think that's a reasonable explanation for the construction productivity stagnation. But if you think it's confined to that sector alone, you're missing the picture. I was thinking about that when I heard this statement from Art Berman on Nate Hagens' podcast:

"I've been in the oil business now for over forty years, and what I see is that this business has gotten increasingly complex, just like all other human systems. And what that has meant is that oil is harder to find, and when we do find it, it is much more complicated or complex—they're not the same thing—to produce, and of course that has implications for cost."

"But about halfway through my career, which is to say, in the Eighties, the industry became incredibly risk averse. In other words, it started getting a lot of pressure from investors, so we stopped taking risk. That ultimately led to the shale plays, which were viewed as a no-risk proposition: the oil's there, all you have to do is drill it..."

"The problem obviously with that is twofold: 1.) These are incredibly complicated reservoirs to drill and produce; and 2.) Once you're done with the shale plays, you haven't been exploring for 25 or 30 years, so what are you going to do?"

What's that got to do with construction? Berman's is talking about oil specifically, but as he notes, just about every process in our society has gotten considerably more complex, and construction is no exception. Berman notes the difference between complicated and complex. According to a quick search, “Complicated problems can be hard to solve, but they are addressable with rules and recipes. Complex problems involve too many unknowns and too many interrelated factors to reduce to rules and processes.”

Based on that definition, I would classify construction as both complicated and complex. Building construction is just about the most complicated activity we undertake as a society on a regular basis—I liken it to filmmaking or space exploration. Of course such an activity has to be highly regulated. Like it or not, a new building really does affect everyone around it. It has a big impact on everything from the traffic congestion, to the environment, to property values, to the density and character of the neighborhood.

Buildings are also a lot more complicated today than in the past. Buildings have multiple overlapping systems—structural, thermal, mechanical piping, air circulation, water delivery and disposal, natural gas, electricity and grounding, telecommunications, waterproofing, fire protection, landscaping and erosion control. Every building—except for maybe the most simple vernacular ones—is in effect, a "living building" with lungs, bones, nerves, a circulatory system, and waste products. If we were building the exact same buildings as we were sixty-plus years ago with no insulation and massive boilers with only windows for ventilation and no parking or handicapped provisions, we probably would be more efficient like other sectors of the economy. But we couldn't do that even if we wanted to.

The aversion to risk Berman mentions is also applicable to construction. As the complexity of modern construction has gone up, risk has risen in tandem. That's also different than a product which sits on a shelf, and this will affect productivity too. An enormous amount of time and effort is dedicated to dealing with risks and covering your ass when the shit hits the fan. Everyone wants to protect themselves, especially when there are lots of unknowns as there are with, for example, existing conditions. As a result, the construction process is much more drawn out than it used to be, and requires much more documentation. That’s just a feature of our economy, not some imaginary bureaucratic villian.

In other words, complexity is built into the construction process and we can't wish it away. Everyone wants to look for scapegoats here, but I don't think there are any. Of course, libertarians think that if we can just strip away all the regulations and red tape caused by evil government bureaucrats, that will solve all our problems—in other words, that we can turn back the clock. But that would just cause another set of problems that we would have to deal with. Reality always pushes back.

Another way of putting this is that you can't externalize the costs of the building process the way you can with other industries. Therefore, the costs are much more incorporated in the process and the externalities are much more apparent—and therefore easier to regulate—than in other industries. The makers of iPhones, for example, don't have to worry about the child labor and environmental destruction caused by cobalt mines in Africa, and plastic manufacturers don't have to worry about the forever chemicals they’re putting in our bloodsteams. If they did, would they be as “efficient?”

In fact, high energy costs and the regulatory atmosphere are related. One of the reasons buildings are a lot more complicated nowadays is that we've got to make sure they are insulated, airtight, and much more energy efficient than buildings of yore. We are also more concerned about the environmental impacts—and for good reason. We're forced to extensively document all of this by the authorities for compliance. That takes time. This was less of an issue in the past when energy was cheap and population was smaller, and it’s sure to only become increasingly strict as time goes on.

An extreme example is the LEED process, a voluntary protocol designed to produce more environmentally-friendly “green” buildings. I've never personally worked on compliance for a LEED project, but I am a LEED accredited professional, so I can tell you that the amount of information collection and documentation required for both the designer and the contractor is daunting. As just a single data point: all of the construction waste disposal must be documented by the contractor on a LEED project in order to determine how much waste was diverted from landfills. Nobody cared much about this before 1970.

Similarly, the accessibility requirements are much more onerous, but we as a society have decided that this is socially necessary. Buildings are also a hell of a lot safer. Sprinkler systems that were rare fifty years ago are now virtually standard. Far fewer people die in buildings than in the past, and when they do, it’s usually an older house that was not up to today’s standards. Plus we know about more issues that affect buildings and occupants like like radon, mold, and indoor air quality. Structural requirements are also more strict. If you want to know what happens without proper enforcement, take a look at what happened to people in Turkey when the earthquake hit. As the saying goes, “codes are written in blood.”

Turkey earthquake: Why did so many buildings collapse? (BBC News)

As buildings become more complicated, it takes ever more regulation and more inspection to ensure compliance, even as the ability of governments to do so is hampered by budget cuts and reduced tax revenue, which slows down the process. People need to remember that building codes are complex because buildings themselves are more complex and the expectations for them (safety, comfort, accessiblity, energy and water efficiency, etc.) are much higher than at any time in the past. As already noted, buildings built before 1970 (when productivity slowed down and energy costs increased) could not be built today.

While the design and construction process has benefited from advanced technology, it seems like increasing demands and complexity have eaten up all the productivity gains in something of a rebound effect. We used to marvel at the fact that the computer tools we were using were unimaginable to architects of past generations, yet it seemed like we were working harder than ever. The reason was because the demands of owners, the amount of documentation required, and last-minute changes just kept going up in tandem. In the old days, once the pencils hit the vellum, that was pretty much the end of it, and everything else would have to get solved in the field. Once again, the fear of risk (architects are one of the most sued professions) has forced down productivity (and profits).

This is sure to get worse as current industry professionals retire while the cohort coming in behind them is much smaller due to demographic changes. I'm already seeing increasing turnover and newer staff who lack the tacit knowledge and experience of their predecessors. Tacit knowledge is important, as Michael Polanyi pointed out. I don’t see it as anyone's fault, however, except perhaps the industry itself. They just took workers for granted due to the huge demographic windfall of the Baby Boom, got lazy and complacent, and failed to put in place appropriate mechanisms to properly train and equip the next generation. That’s true at all levels of the construction field, from architects to engineers to project managers to estimators to the guys working in the field. This will only become more acute in the future, I’m afraid.

I don't want to go into much more detail here because that would run to book length and bore readers (more than they already are). So to sum up, in reality the slowdown in construction productivity should not have been a surprise to anyone. It's only a surprise to simple-minded economists who see everything through the lens of idealized markets described in textbooks, even fictitious commodities like housing. Buildings have an impact on everything around them, unlike widgets or computer software. Productivity is going down because complexity is increasing society-wide, and lot of other industries can externalize their costs in ways that construction cannot. A lot of regulations exist because we live in a more complex society in a multitude of ways than even a few decades ago. We also expect more out of our buildings, including energy conservation. This process is under it's own control and not caused by any singular "villain" who can be identified, therefore it cannot be rectified, only dealt with, as is the case with so many of our other societal problems.