Don’t you hate it when one of your heroes says something stupid?


New York Times columnist Paul Krugman (above), a winner of the Nobel Memorial Prize in Economic Sciences, has long been one of my favorite pundits, and I’ve quoted him on numerous occasions.

But, of course, Krugman is as mortal as the rest of us and therefore is capable of the occasional foolish observation. One such example came to my attention this morning when I read THIS PIECE about the history of the Internet, which includes the following passage:

In 1994, when [Gary] Wolfe [of Wired magazine] extolled the commercial energy of the Internet, it was still largely devoid of commerce. To be sure, the big Internet service providers like America Online (AOL) and CompuServe were able to capitalize on what was quickly becoming a voracious desire to get connected, but for the most part, that is where business began and ended. Because few companies had yet figured out how to make money online—Amazon, which got in early, in 1995, didn’t make a profit for six years—the Internet was often seen as a playground suitable for youthful cavorting, not a place for serious grownups, especially not serious grownups with business aspirations. “The growth of the Internet will slow drastically [as it] becomes apparent [that] most people have nothing to say to each other,” the economist Paul Krugman wrote in 1998. “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…. Ten years from now the phrase information economy will sound silly.”

Here Krugman was dead wrong. In the first five years of the new millennium, Internet use grew 160 percent; by 2005 there were nearly a billion people on the Internet. By 2005, too, the Internet auction site eBay was up and running, Amazon was in the black, business-to-business e-commerce accounted for $1.5 trillion, while online consumer purchases were estimated to be between $142 and $772 billion and the average Internet shopper was looking more and more like the average shopper.

Meanwhile, entire libraries were digitized and made available to all comers; music was shared, not always legally; videos were made, many by amateurs, and uploaded to an upstart site (launched in 2005) called YouTube; the online, open-source encyclopedia Wikipedia had already begun to harness collective knowledge; medical researchers had used the Internet for randomized, controlled clinical trials; and people did seem to have a lot to say to each other—or at least had a lot to say. There were 14.5 million blogs in July 2005 with 1.3 billion links, double the number from March of that year. The social networking site Facebook, which came online in 2004 for Ivy Leaguers, was opened to anyone over thirteen in 2006. It now has 850 million members and is worth approximately $80 billion.


1 Comment

  1. It’s hard to fault Krugman here. Technology can be hard to predict. Even technical gurus like Bill Gates and Steve Jobs have made some poor predictions. Check out the link below for examples:


    That’s why I’m so skeptical to really place blame or even find fault with the current debacle of the Obamacare exchanges sites that is all over recent news. Right wingers think this is some kind of proof that government run health care doesn’t work. Of course, they couldn’t be more wrong. The technical problems have nothing to do with the various arguments for and against government ran health care. Eventually, the various technical problems will be resolved, probably sooner rather than later.

    Designing and implementing large scale technology projects is hard, and it has nothing to do with political alignments. It has to do with project management. And find good ones is hard. Even technology firms that have a good track record sometimes screw up new roll outs of products or services. It happens.

    The ObamaCare exchange problems reminds me of the technical problems the Romney campaign had in their “Get out the Vote” technology solution. Early this year some media outlets were somehow praising Team Obama for using the “latest and greatest” tools and software and being on the cutting edge of technology, while Team Romney was still stuck in the 90s. The truth is that Team Romney had just as much tech saavy people as Team Obama, but the latter hired better project managers than the former. Technology, despite all the things it does to make our lives better, is very hard to manage.

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