Business Jobs Techonomy Events

Erik Brynjolfsson Argues that Tech is Major Driver of Economic Growth

In this session from Techonomy 2011, in Tuscon, Ariz., Erik Brynjolfsson, Director of the Center for Digital Business at MIT, argues that technology is a major driver of economic growth and productivity. Any lag in productivity, he says, is due to our inability to keep up with the changes in technology. This is Brynjolfsson’s argument in a debate with Tyler Cowen, an economics professor at George Mason University.

Brynjolfsson: But this is a very important question. What’s happening to technology and productivity growth? Arguably it’s the most important economic question before us. And I see many of the same symptoms that Tyler [Cowen] does, but I have a very, very different diagnosis. I don’t see stagnation in technology. In fact, I see a totally different thing happening. I see that technology is growing faster than it has before. Maybe that’s part of being at MIT, where I see things happening, or talking to the folks in Silicon Valley. VCs will tell you that this is the most disruptive time ever—just another VC just told me that this morning. There’s been more wealth created in the past decade than ever before in human history. A billion people have been brought out of poverty. We are at—despite what Tyler showed there—we are record levels of productivity, and productivity growth is also at near-record levels. And I’ll show you some data on that shortly. We are record profits; there are more billionaires being created in the past decade than ever before. And it’s hard to think of an industry that’s not being significantly affected. We heard this just a moment ago from Jeff Katzenberg, about the media industry and what’s happening to productivity in animation there. But it’s also in retailing and wholesaling, manufacturing, finance, music, publishing, gaming. In each one of these industries, the winners are the ones who are using technology to change the way things are being done. Computers, as Tyler alluded to, are winning at Jeopardy, they’re translating languages, understanding speech, driving cars.

Now, this has been a tough time for many people. Median income, as Tyler pointed out, has been stagnating. There have been a lot of people laid off.  Unemployment is up.  There are actually, as Tyler mentioned, fewer people working now than in the year 2000. But ironically, this is also a symptom of rapid technological change.  It’s not a matter of stagnation, it’s a matter of change happening so rapidly that the median worker is not keeping up. Let me show you some data about what’s happening in the long term trend. And so, this is not a productivity graph—we’ll get into that a little bit later—this is just what’s happening to overall economic growth, per person, for the past over century. And as you can see, it’s been growing steadily and exponentially—remarkably steadily. Now, there have been some blips there; you see the Great Depression, you see wars, but overall, every 35 years or so, wealth has been doubling. The economic output that we each have available has been doubling, and that was true in the 1800s, that was true in the first part of the century, that’s true more recently. Tyler may try and make something out of the fact that the slope is  slightly different in the last couple years here and there, but actually productivity growth in the past decade has been higher than it was in the roaring 1990s, which was higher than the 1980s, which was higher than the 1970s. The 1960s was slightly higher than the past decade, but overall we’ve had a steadily increasing amount of output per worker. So, technological progress is not the problem. The problem—the reason people aren’t keeping—the reason median wages are stagnating, is that the average worker is not keeping up with rapid technological change. So these billions that have been created, are—actually trillions that have been created in the last decade, are not evenly dispersed. There’s no economic law that says economic progress has to benefit everyone evenly. So what’s happened is that the average worker has not been keeping up, and a lot of them have been unemployed, and the average wage has been stagnating—or the median wage has been stagnating.

Tags: , , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *