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article image1998 Paul Krugman article predicted Internet slowdown by 2005

By Andrew Moran     Apr 1, 2013 in Business
New York - Keynesian economist Paul Krugman wrote an article in 1998 that predicted that the Internet would experience a significant slowdown and the revolutionary global system wouldn't have much of an economic effect on our lives.
Writing in The Red Herring 15 years ago, Krugman discussed how most economists’ predictions are wrong. In the piece, he cited a 1967 book titled “The Year 2000” by Herman Kahn, which looks at what the future would look like for humans everywhere.
At the bottom of the article, Krugman made a list of prognostications, including two that have been completely off the mark.
The first is a prediction that the growth of the Internet would “slow drastically.” By the year 2005, Krugman states, the Internet’s economic effects wouldn’t have much bearing on our lives and wouldn’t do much on the overall realm of the United States or perhaps even the world economy.
“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!” wrote Krugman. “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.”
The second prognostication was the impact, or lack thereof, on the job market by the Internet. Krugman opined that the number of jobs in the Internet Technology field would drop gradually and then within a decade fall dramatically.
“As the rate of technological change in computing slows, the number of jobs for IT specialists will decelerate, then actually turn down; ten years from now, the phrase information economy will sound silly,” stated Krugman.
Indeed, everyone who uses the Internet understands how important it has become to our day-to-day lives. It has created an even bigger economic pie for everyone and it seems the Internet isn’t going anywhere.
Of course, Krugman is the same economist that wrote in the New York Times in 2002 that then-Federal Reserve Chairman Alan Greenspan needs “to create a housing bubble.” He has also pontificated that an alien invasion would save the global economy, the Fed needs to print more money and that gold was the reason Adolf Hitler rose to power in Germany.
More about Internet, Paul Krugman, the red herring, Keynesian economics, herman kahn
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