From Paul Krugman:
Recently, Robert Gordon of Northwestern University created a stir by arguing that economic growth is likely to slow sharply — indeed, that the age of growth that began in the 18th century may well be drawing to an end. Mr. Gordon points out that long-term economic growth hasn’t been a steady process; it has been driven by several discrete “industrial revolutions,” each based on a particular set of technologies.
The first industrial revolution, based largely on the steam engine, drove growth in the late-18th and early-19th centuries. The second, made possible, in large part, by the application of science to technologies such as electrification, internal combustion and chemical engineering, began circa 1870 and drove growth into the 1960s. The third, centered around information technology, defines our current era. And, as Mr. Gordon correctly notes, the payoffs so far to the third industrial revolution, while real, have been far smaller than those to the second. Electrification, for example, was a much bigger deal than the Internet.
It’s an interesting thesis, and a useful counterweight to all the gee-whiz glorification of the latest tech. And while I don’t think he’s right, the way in which he’s probably wrong has implications equally destructive of conventional wisdom. For the case against Mr. Gordon’s techno-pessimism rests largely on the assertion that the big payoff to information technology, which is just getting started, will come from the rise of smart machines.
So machines may soon be ready to perform many tasks that currently require large amounts of human labor. This will mean rapid productivity growth and, therefore, high overall economic growth.
But — and this is the crucial question — who will benefit from that growth? Unfortunately, it’s all too easy to make the case that most Americans will be left behind, because smart machines will end up devaluing the contribution of workers, including highly skilled workers whose skills suddenly become redundant. The point is that there’s good reason to believe that the conventional wisdom embodied in long-run budget projections — projections that shape almost every aspect of current policy discussion — is all wrong.
Is Growth Over? - NYTimes.com
I need to find the source data from Robert Gordon. It’s a really, really interesting premise. Does it bolster or conflict with the notion that the Internet is not a media channel but a foundational technology? And, if we look at Amazon as an example (I hate Amazon, btw), then Krugman is right. The Jeff Bezoses of the world will get rich at the expense of a million small business owners, who will be wiped out. And in a world full of businesses that essentially brag about not having to hire workers, how does the vast non-entrepreneurial majority of citizens and workers find rewarding, reliable work?
I’m also going to reblog a post right after this one, a post that makes a similar, ominous point, although I’m not certain that the venture capitalist quoted in that post views it as ominous. It used to be a measure of success to be able to hire more people. Now, in some corners of the tech-focused economy, hiring more people is seen as a failing, especially by the investor class, which believes businesses exist to reward shareholders and not to improve the general lot of society in any way.
Sorry for the rant, but this is still crystallizing for me, and I haven’t built a concise, current opinion or predictive perspective on it all yet.