Aware many of you have no idea who i am so thank you for showing up out of the spirit of pure curiosity. I think it speaks very well of you and i know theres really big names at the festival and i feel honored to be among them so thanks for coming. Who am i to mark a few things around i write a column called the undercover economist for the Financial Times. At the pink newspaper thats really good. I recommend it. Thanks baxter. And the second thing is i present bbc radio so im present a show for the Bbc World Service called 50things that made the modern economy. Ive presented a show for bbc radio for aboutnumbers and how we think about numbers and how numbers lead us astray. And sometimes help us understand the world. And i also have a podcast with a gentleman called michael lewis, a gentleman called Malcolm Gladwell called Cautionary Tales which is all aboutthings going wrong , sometimes in amusing ways and what we can learn from them. So in between all that, i tried to write a few booksand im going to talk about what i learned writing one of them. The second thing i wanted to say is thank you to the Rancho Mirage writers festival. To jamie and the rest of the festival and thank you to jamie please, thank you. So jamie, email me 18 months ago and suggested that i fly across the world from Oxford England to cometo Rancho Mirage. Near palm springs, id heard of palm springs. Is it like palm springs or different . Its been a huge journey and i realized its only possible to fly in someone like me from a long way away with the support of devoted readers. The angels and all thepeople who supported this festival so thank you to all of you, i feel fortunate to be here. So i said i wasnt a fan of long preambles so obviously im a total hypocrite. Let me talk about this book of mine. The 50 inventions that shaped the modern economy. I dontknow whether you can see theslide or not. I can see a slide. Okay. Feel free by the way to put the camera back on me. Its just a patch shot, you dont need to look at that, put the camera back on me but i want to talk about the book as such, i want to talk about what i learned when i was working on. This is a project originally for the bbc where i take 50 different inventions that i found interesting. Not the most important inventions. Not the mostobvious inventions of the inventions that i felt had something to teach us. That there were stories behind these inventions and people ask me how did you choose them . I chose them because i thought they were interesting, thats the only criteria so what did i learn when i was doing this . I think it feels like an important question because at this moment, we are asking the questions about what technology does and how it shapes our society. And where coming up with a wide range of answers and for all of our understandable focus on politics and political debate, very often it is technology really shapes how we live, how our economy grows, how our Society Works read these answers to these questions matter. And when you talk to economists, theyre really into camps. Theres one group that says you know, this is a progress of computers, youre going to progress Artificial Intelligence. Its really possible that after about two centuries, of people falsely worrying that the robots are going to take the jobs. Its actually possible and what do at this time. And you people who live really hard, really to look at history making a compelling case that this could happen. At the same time, there are equally expert people, equally persuasive, equally compelling will look at the data and say the Unemployment Rate is at record lows. Productivity growth is extremely disappointing. We seem to be in the middle of a technological slowdown if the robots are going to take the job, will they please hurry up and do it. Because we need a few more robots around here. Go the im puzzled between these two views and ive been studying this debate for years and i still dont know the answers but this is the question that really illuminates a lot of debate. So trying to understand how Technology Works and how it shapes our lives i think is its not just a matter of curiosity although of course. City is the most important thing. The answers to these questions even if we dont know what the answers are, the answers to thequestions really matter. I said i would tell you what i learned working on this book. I learned that we make 2 big mistakes when were thinking about how Technology Works. The impact that technology has and i want to talk about the mistakes, the mistakes are always fun so let me show you an image from one of my favorite movies. This is an image from blade runner and some of you may have seen the film. When it came out in the 80s i was too young. Its a pretty traffic hardhitting punchy film. It still stands up, still a good film but if you look at the image i showed you, of what appears to be a beautiful woman smoking a cigarette which by the way, hopefully your old enough to know better. Do not do thisit looks cool in the movies, its a very bad idea. This is not a beautiful Woman Holding a cigarette. This is a machine. The robot. The robots name is rachel. Rachel is a replicant and a replicant is a kind of organic robot but its indistinguishable from a human with a mind that is indistinguishable from a human. Rachel believes herself to be human, spoiler alert. She thinks shes human, shes not. It takes a specialist played by harrison ford, our hero rick deckard. It takes a specialist with special equipment to tell the difference between this artificial creature, this piece of technology and a human being. And indeed so sublime, so seductive is rachel that deckard, the man whose job it is to retire rogue replicants , when he meets rachel, he falls in love with her. Or at least he has certain merges towards her, if not in part entirely clear but got strong feelings and you see here this is deckard calling rachel up. What do you do when you want to date a robot mark the answer is you do what youdo when you want to date anybody, you phone number. This the future, this being a future of Incredible Technology where we have Artificial Intelligence, where we havethese synthetic humans indistinguishable from the real thing , deckard phones are out on a pay phone on the wall of a bar. Theres something wrong with that so if we have a look at the image again for a moment its like because this film was made in the 1980s, and its set in los angeles you can see its got graffiti on. Because its a video phone, not a purely audio phone but this is a bone attached to the wall of a bar. And ofcourse she says no and hangs up. You can see the fonts of the future. This film isthat in 2017. Or 2019. So theres this weird divergence here. This unbelievably sophisticated technology, rachel, the organic robot and the absolute lack of progress of anything else. They do have flying cars but apart from that everything is the same. Theres this amazing lack of imagination about what else might change and i dont want to criticize blade runner because blade runner is a great movie and just in terms of storytelling you cant change everything because then the audience will have no frame of reference. They wont understand whats going on but i think its revealing you can conceive of a society where you have human level Artificial Intelligence. Where you have perfect, flawless genetic engineering and yet if you want to make a phone call you put coins into a box on the wall bar. And whats going on here . Is the basic mistake here . The mistake is partly that were trying to see into the future and its hard to see into the future, its complicated but thats not just the fundamental mistake. The fundamental mistake is very common. Its an obsession with the most complex technology we can envisage. If a technology would not have made our parents gas and say this is magic, this is sorcery, how does it work . If the technology doesnt do that we dont think its technology. Thats a big mistake and if we view all technology as incredibly sophisticated and complex, where going to profoundly misconceived the way that technological change works. An example. You want an example. Let me give you anexample. This is of course the gutenberg bible. And when i worked on the book , i went around and i talked to economists, to historians, technologists, scientists and i said what should i put in the book . Everybody said the Gutenberg Printing press. You must have the Gutenberg Printing press in the book i didnt put the Gutenberg Printing press in the book. Why not . Lets have a look at the Printing Press again or the bible again. This is this remarkable object. If you look at these dense black columns of text written in latin, the illustrations arehanddrawn but are seasonal organic illustrations. But the latin text, this is made by a machine. This is a remarkable technology. But when i look at it, what do i see . I see paper. No one ever gets excited about paper but the thing is, you cant have this without paper. Seriously you can, you can have parchment, parchment is made of animal skin, sheepskin cow skin you can make and you can print on department and in fact bird did print some of his bibles on department. Shortly before he went bankrupt and lost control of the Printing Press because the economics dont work on parchment. I did the math because im a geek. Im a proud geek. I did the math. You want to do a print run of bibles, maybe 2000 bibles, you need a quarter of 1 million she. To make it 2000 bibles. It doesnt work, it doesnt work. So you could say lets just print 50, with printed 2000 but if youre going to print 50 , what is the point of having a Printing Press . Its easier to just hand write the thing. So the economics of printing demand paper. Now, the history of paper i find fascinating. Its my favorite invention in the book. It was invented in china, a lot of things invented in china thousand years ago and initially it was used for wrapping stuff up but eventually its cheaper than self and its light of than wood and you can write on. And arrived in the islamic world around 1300 years ago. The Islamic Culture had a really driving litmus culture with no printing. It was all andwritten. But massively literacy and then the Technology Sat on the fringes of europe and it was partly a weather thing. How do we make paper that doesnt go moldy in the european weather. But that was a solvable problem. The real problem is europeans just werent very interested because most of us couldnt read or write. And the main demand for writing surface is to make bibles out of. And i dont want to go into much detail with the manufacturing process of paper. It does involve urine and stinky rags and is quite a dirty process. The third industrial process in europe making paper so if youre proposing youre going to make a bible out of stinky cheap paper, thats almost offensive. Thats like saying i thought of a cheaper way to make a crown for the king. We could make out of lead and pewterinstead of making an article. That would be cheaper but whats the point of cutting corners to make a crown for the king fmr same thing with the bible. Its a holy object, there are very few of themeveryone is handwritten. Who want to keep bible. Its pointless. And paper only came into your there was a commercial culture arriving around it. The italian merchants started to use it for contrast and to atone for letters and for accounts so you get the first water driven paper mills in italy. You can still buy Beautiful People paper in cipriani with the mountains coming down and driving these cameras that are pulsing these contracts and their making, it was something beautiful for a second wasnt it . And their making paper and paper spread to europe as an everyday commercial thing. And it arrived in what is now germany in the late 1300s and within half acentury , the gutenberg invents the Printing Press read absolutely no point in massproducing writing until you can massproduce a writing surface. So this is the first principle you might say of understanding technological change. Its the paper principle so once something has become cheapenough. Once something has become cheap enough, to make 20 paper out of. Then its cheap enough to change the world. We paper is everywhere. Its not just in the book read we went on it. We decorate our walls withit. Receipts, towel in, you go to the restaurants here. , dry your hands on paper. Its completely ubiquitousand it is ubiquitous because it is cheap. Not because itis complicated. Its 2000 years old. It is ubiquitous because it is cheap and still important and my argument is that one of the things that we missed about technological change as we miss the cheap stuff. Cheap simple stuffchanges the world. Sure im excited about Computers Read im a nerd. And pewters are interesting. Show me the cheap stuff and ill show you the stuff that is going to make a contribution while being wildly overlooked. Let me give you a couple other examples. The first time you see this picture youre thinking those are not very nice gentleman. This is not apicture of what you think it is. This is not the clan, this, these guys are cuttingbarbie wire. Theyve mastered their faces with a do not wish to be seen cutting barbed wire. Barbed wire. Thats an intriguing invention. Where did that come from . In the 1860s, i dont want to come here and lecture you on American History and i apologize for doing so but Abraham Lincoln signed of course thehomesteading. Hes trying to shift the center of gravity away from the south and towards the midwest. Its move the center of population, shift it away until you just show up in the midwest, put some fence around some land. Theres some people who were there first, dont worry about them. Put a fence around the land and farmout land for 5 years and then its yours, the homesteading act. Home settlers show up in the midwest and theres a problem. Not enough would. You need the wood for firewood, need the wood for buildings. You cant be building fences out of wood, its far too expensive so you could just put up ordinary wire but the longhorn cattle will barge right through that. Destroy your crops so heres an interesting lesson. We talk about Property Rights in economics and Property Rights are super important but theres Property Rights you have legally and theres Property Rights that you have practically because you have the ability to enforce those Property Rights so longhorn cattle, Pay Attention to president lincoln, theyre going to come and destroy your crops so this is an example of aninvention that everybody knew was necessary. They just didnt know how to do it. Some inventions like the laser famously people created an i wonder what we can do with this. Barbed wire we knew we needed barbed wire and two thirds of all applications were coming out of the midwest because of all the globally were coming out of the midwest. For a few years and then a gentleman called jf listen to called illinois, he gets a patent for what is recognizably remarkable. Barbed wire and you can still recognize it today. Its a string of wire, they have a shop that wrapped around it and another string of wire and you twist one and and a twist around each other and that stops the barbs moving backwards and forwards and its that simple and 10 years after he got that patent the us made 240 thousand miles of barbed wire. Enough to go around the earth 10 times. Because it was, this was solving a problem. Its just fencing. Its just fencing. We had fencing beforehand. We had the great wall of china, we knew how to build a wall for a very long time ago but this is a way to do it cheaply and again, the cheapness of it that changed the world. Heres another example. This graph is from the Financial Times best newspaper in the world. This is solar power and i apologize because this graph is now 4 years old so you live in the desert, you have solar power. We still struggle to imagine that solar power and work comes from nowhere. Overpower came from nowhere really. We expect now that nevada, casinos are willing to pay millions of dollars purely to not have to purchase power on the agreements they signed with local utilities. Not just that solar power is cheap, its that i will pay millions of dollars not to have to buy the fossil fuel power as i can plug in to the electric grid. What drivenness . You mustthink there must be some cool technological breakthrough. No, its just learning by doing. Bigger factories, more practice, more specialized tools. More attention to how we this stuff effectively. Moreattention to how we install it, snap together panels. It used to take two or four people a couple of days to install it on your, now its two or three people and it takes a couple hours to read this is thetechnology that gave us ikea furniture. Applied to solar panels and a very old idea learning by doing which originally identified in the aerospace industry. Agentleman called tp right in the 1930s. The second plane is 20 percent cheaper than the first claim. The next two planes are 20 percent cheaper and a second plane. The next four planes, 20 percent cheaper than the third and fourth planes, every time you double the output, the price falls by about 20 percent and some oxford academics down the road from me had started the learning by doing effect and they found absolutely ubiquitous any product you care to name the percentage there is everything from batteries to beer exhibits learning by doing the thing about solar power is when i looked at the 2016, 99 percent of all the solar power cells ever made had been made between 2010 and 2016. There was no Solar Industry before 2010 and theres this sudden rampin