Technology's Effect on Productivity - 6/30/16
For a number of years, economists have wondered why all the technical wizardry entering our lives appears to have such little impact on economic growth. As indicated by the New York Times, the issue resurfaced recently when the government reported both disappointing economic growth and continuing stagnation in productivity.
Productivity is measured in terms of output per hour. The rate of productivity growth in America between two thousand and eleven and twenty fifteen was the slowest since the five year period ending in nineteen eighty two.
Robert Gordon, an economist at Northwestern University, contends that the current generation of digital innovations simply does not yield the large economic gains of technological breakthroughs of the past like cars, planes, antibiotics and electricity. Other economists view this as sheer nonsense.
This group of optimists is led by economics like Erik Brynjolfsson and Andrew McAfee, co-directors of the MIT initiative on the Digital Economy.
They argue that there have always been lags between when technology arrives and when people and institutions figure out how to use it effectively. The implication is that gains from current technology trends will come – we just have to wait.