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jim peden's avatar

Thanks for this. Hadn't heard of Modis but his idea of 'diminishing returns' as you describe seems very useful.

We suffer from the idea that because we *can* 'computerise' something then we *should*. This has led to the introduction of IT systems which do a worse job than their manual predecessors. For example, 'making tax digital (MTD)' enforces IT systems on businesses, together with the overheads that entails, to supply the taxman with half a dozen easily calculated numbers every three months. The simple job of posting a package from A to B has now become overburdened with reams of (electronic) documents which are utterly irrelevant. And all this bureaucratese has to be maintained and made even more complex when the next set of hobby-horse regulations shows up. No wonder businesses are struggling.

If it's this bad in the simple cases described above, how much worse will it be in complex cases. My guess is that we're already in the rapidly diminishing returns phase for most IT.

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Adam Grant's avatar

As I've suggested elsewhere, the relative stagnation of the last few decades compared to the decades before are largely a result of declining energy availability per capita. As of 2025, energy from oil acts as a multiplier on the rest of economic activity because of the ubiquity of oil and gas burning engines. Between the late 1800s and the 1950s, oil extraction technology improved faster than the decline in the quality of accessible oil reserves. Since then, oil has become harder to extract faster than the improvement in extraction technology, and the resulting oil has been shared over a larger fraction of a growing human population. So even though we as a species are pulling more oil out of the ground than at any time in the past, the amount of oil burned per human per year has been declining.

A good way to express the idea that oil is becoming harder to extract is EROEI, energy returned on energy invested, or how much energy you have to spend to pull energy out of the ground. EROEI has been declining ever since oil was discovered, although the decline has been mitigated by improving technology.

I'm optimistic that as humanity migrates to solar and wind power, energy availability per capita will start growing again, leading to a reinvigoration of progress. Indeed, growth in renewables are likely the main reason the wheels haven't completely fallen off the world economy.

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