Not so fast, say critics. The negative trends affecting the economy reflect deep social problems that resist change. “Rising educational attainment during the 20th century was an important source of productivity growth,” writes Gordon, “but the pace of that increase slowed markedly after 1980.” The truth is that we’ve been trying to improve schools for decades with, at best, modest success.
Or take the drain of prime-age men from the job market. The main problem, argues Gordon, “reflects in large part the loss of stable middle-income employment opportunities.” The result has been fewer marriages, more drug use and more suicides, writes Gordon. None of this is easily altered. Among 20 advanced countries, the United States has the second-lowest labor-force participation rate of prime-age men. Only Italy is lower.
We seem to have entered a new economic era — one defined more by the limits on our economic power than by its promises. The explosion of new technologies seems to have fooled us into thinking that a burst of innovation will magically restore our economic vitality. On the evidence, this is a mirage.
I use YouTube when I want a refresher on how to wire a plug or replace a bulb in my car’s headlight. Unfortunately, my children live on YouTube, it’s a substitute for TV but they also post videos of their own. However, it is hard to justify endless videos of cats or people falling over as being beneficial to the economy beyond being a distraction. If that is your measure of technological innovation then you really should get out more.
Cancer costs the global economy about $1 trillion a year. Even today that is still a lot of money. By comparison the global economy spends about $6 trillion on energy a year.
Immuno-oncology is already in the process of eradicating many forms of leukaemia and significant progress is being made in treating solid cancers like lung cancer which is the biggest killer. That has the potential to be truly revolutionary, but most especially from a productivity perspective. If people live longer healthier lives they tend to work longer and are more productive.
Within the energy sector improving battery chemistries, better solar cells and bigger wind turbines, NASA’s new miniature nuclear reactor, innovations in fusion all point to a more efficient production basis in future generations. An ability to control energy inputs represents a tailwind to productivity growth.
5G is a productivity enabler because it represents the infrastructure upon which the Internet of Things rests. The introduction of sensors, transmitters and monitors into just about everything represents an impending data flood that is going to require additional massive computing power to handle.
The automation of the assembly line may have started with high value items like cars but technology has improved to such an extent that clothing is on the cusp of being automatically cut, sown, stitched and packed with very little human involvement.
All of these can be considered powerful enabling technologies that will improve productivity rates for those with the skills necessary to prosper. However, they will do little of nothing for unskilled workers or for areas where unemployment and poverty is already a challenge. That is why we continue to see a revolt against the status quo and the rise of populism. People have seen their living standards decline and the political atmosphere is likely to become progressively more polarised until regular people get more money in their pockets. Quite whether that comes from social benefits or wages is likely going to depend on which parties come out on top in various countries. The classic way to give people more money is to increase wages and we are now seeing evidence that. That is not especially good news for productivity.Back to top