Paul Krugman: The Big Meh
Why hasn't the digital technological revolution had a bigger impact on productivity?:
The Big Meh, by Paul Krugman, Commentary, NY Times: ...Everyone knows that we live in an era of incredibly rapid technological change, which is changing everything. But what if what everyone knows is wrong? .... A growing number of economists ... are wondering if the technological revolution has been greatly overhyped... New technologies have yielded great headlines, but modest economic results. Why?
One possibility is that the numbers are missing the reality, especially the benefits of new products and services. I get a lot of pleasure from technology that lets me watch streamed performances by my favorite musicians, but that doesn’t get counted in G.D.P. Still, new technology is supposed to serve businesses as well as consumers, and should be boosting the production of traditional as well as new goods. The big productivity gains of ... 1995 to 2005 came largely in things like inventory control, and showed up as much or more in nontechnology businesses like retail as in high-technology industries themselves. Nothing like that is happening now.
Another possibility is that new technologies are more fun than fundamental. ...
So what do I think is going on...? The answer is that I don’t know — but neither does anyone else. Maybe my friends at Google are right, and Big Data will soon transform everything. Maybe 3-D printing will bring the information revolution into the material world. Or maybe we’re on track for another big meh.
What I’m pretty sure about, however, is that we ought to scale back the hype.
You see, writing and talking breathlessly about how technology changes everything might seem harmless, but, in practice, it acts as a distraction from more mundane issues — and an excuse for handling those issues badly. If you go back to the 1930s, you find many influential people saying the same kinds of things such people say nowadays: This isn’t really about the business cycle, never mind debates about macroeconomic policy; it’s about radical technological change and a work force that lacks the skills to deal with the new era.
And then, thanks to World War II, we finally got the demand boost we needed, and all those supposedly unqualified workers — not to mention Rosie the Riveter — turned out to be quite useful in the modern economy, if given a chance.
Of course, there I go, invoking history. Don’t I understand that everything is different now? Well, I understand why people like to say that. But that doesn’t make it true.
Posted by Mark Thoma on Monday, May 25, 2015 at 09:21 AM in Economics, Technology |
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