Discussion: (2 comments)
Comments are closed.
The public policy blog of the American Enterprise Institute
View related content: Economics
Is America suffering from technological stagnation? Is a lack of innovation undermining economic growth and our standard of living? It’s a popular thesis right now, one outlined brilliantly by economist Tyler Cowen in his recent Kindle ebook, The Great Stagnation.
But MIT’s Erik Brynjolfsson and Andrew McAfee see things quite differently. In their new Kindle ebook, Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, they highlight research that shows there’s been technological acceleration rather than stagnation — computers can now drive cars in traffic, translate effectively between human languages, and beat the best human Jeopardy! players.
But human skills have not kept up. And that’s the problem:
Workers whose skills have been mastered by computers have less to offer the job market, and see their wages and prospects shrink. Entrepreneurial business models, new organizational structures and different institutions are needed to ensure that the average worker is not left behind by cutting-edge machines.
So what should we biological entities do? Well, that is what I asked Brynjolfsson via email:
1. Clearly there is a major jobs issue at play here. But how confident are you that median incomes are stagnating and income inequality is exploding? I know the Piketty-Saez data, but in a 2009 paper, for instance, Northwestern professor Robert Gordon called the supposed sharp rise in U.S. income inequality “exaggerated both in magnitude and timing.”
Perhaps this is a matter of degree. Median wages are clearly growing more slowly than incomes at the very top. Depending on how you adjust for unmeasured quality etc, you may or may not call that “stagnating”. The American middle class is still relatively wealthy relative to much of the rest of the world. Bob Gordon’s work is excellent. There are debates about the timing and magnitude of the growing inequality, but I don’t think You can argue there hasn’t been any at all.
2. The book suggests the pace of technological change is accelerating, yes? If machines can learn and evolve faster than men, how will we ever catch up and “race with the machines?” Is better education, for instance, a solution or just a mitigating force?
Education is a mitigating force for sure, and to the extent it helps people adapt faster, perhaps more than just mitigating. We don’t need to win a race against machines. As the book argues in ch 4, the right approach is to race using machines. That means entrepreneurs need to keep inventing new ways combine technology and people to create new industries and innovations. There’s never been a better time to be a a talented entrepreneur and they will be needed even more in coming years as the economy undergoes faster creative destruction.
3. What is Tyler Cowen getting wrong about the pace of innovation and technological advancement? He makes it sound as if the last 30 years have only given us new ways to distract ourselves (like Facebook) and little else.
The digital revolution will be as big as the first and second industrial Revolution, if not bigger. We’re only in the early stages, but already productivity growing more rapidly. The late decade was the better for productivity than the1990s which was better than the 1980s. And using Facebook for entertainment is not inherently less worthy than watching movies or tv. Let people be their own judge of what gives them utility.
4. Your focus is mostly on IT, a bit on robotics. Those two areas are often mentioned along with nanotech and genetic engineering as the Four Big Technologies of the future. Any thoughts on how those other two technologies might intersect with your thesis?
They are all closely related and draw on massive improvements in information processing power. There are big waves of innovation in the pipeline. The bottleneck is our ability to adapt.
5. What will America look like in a generation if policymakers ignore your 19-pt agenda for adapting to the pace of technological change?
Change of this magnitude creates huge opportunities to shape the kind of society we live in. We can have an inclusive society where everyone has a chance to contribute or one that is increasingly polarized. I didn’t think it is a winning strategy for the elites to try to secede from the rest of America. We need to foster openness, flexibility, and opportunities for as many people as possible.
Comments are closed.
1150 17th Street, N.W. Washington, D.C. 20036
© 2014 American Enterprise Institute for Public Policy Research