Can Technology Be Society’s Economic Engine? A Debate

Can Technology Be Society’s Economic Engine? A Debate

Read excerpts from the debate below.
COWEN: Median income in this country has not risen since 1997, and is up only about 25% since 1973. There has been no new net job growth over the last decade. Consider the losses we’re taking. There’s no more cheap energy. K-12 education is a mess. There are advances in healthcare, but we’re paying too much for it. The tech sector is struggling mightily to make up for those losses, but standards of living have not risen. Don’t obsess over stuff in the pipeline—it takes a lot longer than you think. The flying car is not coming anytime soon. Further gains will come, but they’ve been remarkably slow. Jobs are disappearing at a time when output is falling; the culprit is not enough growth and not enough progress.
BRYNJOLFSSON: There’s been more wealth created in the past decade than ever in human history. A billion people have been brought out of poverty. We are at record levels of productivity and productivity growth. We have record profits, and more billionaires have been created in the past decade than ever before. Jeffrey Katzenberg talked [at Techonomy] about productivity in animation, but it’s also happening in retail, manufacturing, finance, music, publishing, gaming. The winners are using technology to change the way things are being done. But this has been a tough time for many people. There are fewer people working now than in 2000. Ironically, this is a symptom of rapid technological change, not stagnation. Productivity growth in the past decade has been higher than it was in the ’70s, ’80s, and ’90s. Median wages are stagnating because the average worker is not keeping up with rapid technological change.
COWEN: What we have is a world where the sector that’s doing phenomenal things is making it easier to outsource production and labor, so the gains from technology are going other places.
BRYNJOLFSSON: As technology goes faster and faster, it’s important for us to change our institutions and skills to keep up, as we’ve done in the past. Technology is always destroying and creating jobs. Right now it’s destroying more jobs than it’s creating, because the pace of change is so rapid that entrepreneurs aren’t creating new industries to keep pace.
COWEN: Technology is outsourcing jobs, not destroying them. Advances in things like smart phones and information manipulation are wonderful for people in media, communications, and tech, but not a gain for the average person.The absence of progress in other areas is the big reason we're not creating more jobs in this country.
BRYNJOLFSSON: We’re getting more software, more robots, and more machines doing our work for us. It’s a complicated system, but it’s creating more wealth every year.
COWEN: If robots are doing so many wonderful things, why isn’t the average person’s standard of living going up? Are the United States and other advanced nations making progress through new technology in net terms?
BRYNJOLFSSON: The way that an economy creates value is by entrepreneurs coming up with new industries as old ones disappear. We have to create easier paths for innovation among lots of different people and lower the barriers to business creation. Our organizations and institutions are not keeping up with technology.
COWEN: We need to fix K–12 education and have real cost-control and accountability in healthcare; subsidize more science at the basic research level; and fix our budget mess, which we could do tomorrow if only we had the will to do so.
BRYNJOLFSSON: In 1990, people were talking about the productivity paradox during a recession, and then the 1990s had roaring productivity growth. In 2000, Nick Carr was saying IT doesn’t matter, and the 2000s had even better productivity growth. We are in a period of painful readjustment, but I think our best days are still ahead of us.
COWEN: Go back to the 1870s. When it came to innovation, they basically kicked our butt. It is urgent that we recognize the truth of this rather than running away from it. Overestimating our wealth and overestimating our rate of growth led to the financial crisis.


Tyler Cowen

Professor of Economics, George Mason University

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