I am still clinging to the probably-vain hope that the slowdown in measured productivity growth is a problem of measurement. I cannot see anything that has happened in the world that would have eroded both the incentives and our collective ability to make the things we made last year 2% more cheaply this year: Martin Wolf: The long wait for a productivity resurgence: "We live in an age judged to be one of exciting technological change, but our national accounts tell us that productivity is almost stagnant. Is the slowdown or the innovation an illusion? If not, what might explain the puzzle?... Mismeasurement... diminished competition and expensive rent capture... new technologies are simply not what they are claimed to be...

...Artificial intelligence may be a revolutionary general purpose technology but, a century ago, several technologies arrived at much the same time. A complementary view is that progress is harder now: it takes more researchers to advance technology than it used to do.... Final[ly perhaps] this is the lull before a storm.... It takes time for a new GPT to transform an economy. Today, AI is in its earliest stages....

When I look at the weighty presence in the modern economy of labour-intensive service sectors, such as health, education and care of children and the elderly, I conclude that the technological transformation will be slow. If I am wrong, it will be disruptive. At the moment, however, we have the worst of both worlds: significant disruption but near stagnation in average incomes.... Our societies are built on an implicit promise of growth. If the choice were between no progress and disruptive advance, we must hope for the latter—and do our best to manage the consequences.


#shouldread
#economicgrowth
#equitablegrowth
#productivity

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