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3D printing, Ada Lovelace, AI winter, Airbnb, artificial general intelligence, augmented reality, barriers to entry, bitcoin, blockchain, brain emulation, Buckminster Fuller, cloud computing, computer age, computer vision, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, dematerialisation, discovery of the americas, disintermediation, don't be evil, Elon Musk, en.wikipedia.org, epigenetics, Erik Brynjolfsson, everywhere but in the productivity statistics, Flash crash, friendly AI, Google Glasses, industrial robot, Internet of things, invention of agriculture, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, life extension, low skilled workers, Mahatma Gandhi, means of production, mutually assured destruction, Nicholas Carr, pattern recognition, Peter Thiel, Ray Kurzweil, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, Skype, South Sea Bubble, speech recognition, Stanislav Petrov, Stephen Hawking, Steve Jobs, strong AI, technological singularity, theory of mind, Turing machine, Turing test, universal basic income, Vernor Vinge, wage slave, Wall-E
Some people argue that the fears are over-done because technology is not actually advancing as fast as the excitable folk in Silicon Valley suppose. It is true that economists have long struggled to record the productivity improvements that would be expected from the massive investments in information technology of the last half-century; this failure prompted economist Robert Solow to remark back in 1987 that “You can see the computer age everywhere but in the productivity statistics.” (Of the various explanations for this phenomenon, the one which seems most plausible to me is that there is an increase in productivity, but for some reason our economic measurements don’t catch it. When I started work in the early 1980s we used to spend hours each day looking for information by searching in files and phoning each other up. Now we have Google and the almost infinite filing cabinet known as the internet.)
23andMe, Affordable Care Act / Obamacare, Albert Einstein, big data - Walmart - Pop Tarts, bioinformatics, business intelligence, call centre, cloud computing, computer age, conceptual framework, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, Danny Hillis, data is the new oil, David Brooks, East Village, Edward Snowden, Emanuel Derman, Erik Brynjolfsson, everywhere but in the productivity statistics, Frederick Winslow Taylor, Google Glasses, impulse control, income inequality, indoor plumbing, industrial robot, informal economy, Internet of things, invention of writing, John von Neumann, Mark Zuckerberg, market bubble, meta analysis, meta-analysis, natural language processing, obamacare, pattern recognition, payday loans, personalized medicine, precision agriculture, pre–internet, Productivity paradox, RAND corporation, rising living standards, Robert Gordon, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, speech recognition, statistical model, Steve Jobs, Steven Levy, The Design of Experiments, the scientific method, Thomas Kuhn: the structure of scientific revolutions, unbanked and underbanked, underbanked, Von Neumann architecture, Watson beat the top human players on Jeopardy!
Productivity gains—more wealth created per hour of labor—are the fuel of rising living standards, and a by-product of the efficiency that technology is supposed to generate. The conundrum raised the question of whether all of the investment in, and enthusiasm for, digital technology was justified. Robert Solow, a Nobel Prize–winning economist, tartly summed up the quandary in the late 1980s, when he wrote, “You can see the computer age everywhere but in the productivity statistics.” Solow’s critique became known as the productivity paradox. Brynjolfsson, a technology optimist, has two answers for the skeptics. First, he argues, the official statistics do not fully capture the benefits of digital innovation. And second, he says that in technology, revolutions take time. To explain, Brynjolfsson points to his own work on technology and work practices, and to the research of others including a classic study by Paul David, an economic historian at Stanford.
autonomous vehicles, banking crisis, Bartolomé de las Casas, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labour market flexibility, labour mobility, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey
Or rather, to skyrocket, by an angle of around 90 degrees. Whereas in 1800, water power still supplied England with three times the amount of energy as steam, 70 years later English steam engines were generating the power equivalent of 40 million grown men.24 Machine power was replacing muscle power on a massive scale. Now, two centuries later, our brains are next. And it’s high time, too. “You can see the computer age everywhere but in the productivity statistics,” the economist Bob Solow said in 1987. Computers could already do some pretty neat things, but their economic impact was minimal. Like the steam engine, the computer needed time to, well, gather steam. Or compare it to electricity: All the major technological innovations happened in the 1870s, but it wasn’t until around 1920 that most factories actually switched to electric power.25 Fast forward to today, and chips are doing things that even ten years ago were still deemed impossible.
3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yield management
Apparently only the second half of the special century exhibited TFP growth that was substantially above average. We can state this puzzle in two symmetric ways: Why was TFP growth so slow before 1920? Why was it so fast during the fifty years after 1920? The leading hypothesis is that of Paul David, who provided a now well-known analogy between the evolution of electric machinery and of the electronic computer.14 In 1987, Robert Solow quipped, “We can see the computer age everywhere but in the productivity statistics.”15 David responded, in effect: “Just wait”—suggesting that the previous example of the electric dynamo and other electric machinery implied that a long gestation period could intervene between a major invention and its payoff in productivity growth. David counted almost four decades between Thomas Edison’s opening in 1882 of the Pearl Street power plant in Lower Manhattan and the subsequent upsurge of productivity growth in the early 1920s associated with the electrification of manufacturing.
More puzzling is the absence of any apparent stimulus to TFP growth in the quarter-century between 1970 and 1994. Mainframe computers created bank statements and phone bills in the 1960s and powered airline reservation systems in the 1970s. Personal computers, ATMs, and barcode scanning were among the innovations that created productivity growth in the 1980s. Reacting to the failure of these innovations to boost productivity growth, Robert Solow quipped, “You can see the computer age everywhere but in the productivity statistics.”18 Slow TFP growth in this period indicates that the benefits of the first round of computer applications partially masked an even more severe slowdown in productivity growth than would have occurred otherwise in the rest of the economy. The achievements of IR #3 can be divided into two major categories: communications and information technology. Within communications, progress started with the 1983 breakup of the Bell Telephone monopoly into non-overlapping regional monopolies.
In 2014, fully two-thirds of consumption expenditures went for services, including rent, health care, education, and personal care. Barber and beauty shops were joined by tanning and nail salons, but the ICT revolution had virtually no effect. A pedicure is a pedicure regardless of whether the customer is reading a magazine (as would occur a decade ago) or reading a book on a Kindle or surfing the web on a smartphone. This brings us back to Solow’s quip—that we can see the computer age everywhere but in the productivity statistics. The final answer to Solow’s computer paradox is that computers are not everywhere. We don’t eat computers or wear them or drive to work in them or let them cut our hair. We live in dwelling units that have appliances much like those of the 1950s, and we drive in motor vehicles that perform the same functions as in the 1950s, albeit with more convenience and safety. What are the implications of the uneven progress of TFP as shown in figure 17–2?
The Entrepreneurial State: Debunking Public vs. Private Sector Myths by Mariana Mazzucato
Apple II, banking crisis, barriers to entry, Bretton Woods, California gold rush, call centre, carbon footprint, Carmen Reinhart, cleantech, computer age, credit crunch, David Ricardo: comparative advantage, demand response, deskilling, energy security, energy transition, eurozone crisis, everywhere but in the productivity statistics, Financial Instability Hypothesis, full employment, Growth in a Time of Debt, Hyman Minsky, incomplete markets, information retrieval, invisible hand, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, natural language processing, new economy, offshore financial centre, popular electronics, profit maximization, Ralph Nader, renewable energy credits, rent-seeking, ride hailing / ride sharing, risk tolerance, shareholder value, Silicon Valley, Silicon Valley ideology, smart grid, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, total factor productivity, trickle-down economics, Washington Consensus, William Shockley: the traitorous eight
When so many ‘life science’ companies are focusing on their stock price rather than on increasing their side of the R in R&D, simply subsidising their research will only worsen the problem rather than create the type of learning that Rodrik (2004) rightly calls for. 1 From now on ‘pharma’ will refer to pharmaceutical companies, and Big Pharma the top international pharma companies. Chapter 2 TECHNOLOGY, INNOVATION AND GROWTH You can see the computer age everywhere but in the productivity statistics. Solow (1987, 36) In a special report on the world economy, the Economist (2010a) stated: A smart innovation agenda, in short, would be quite different from the one that most rich governments seem to favor. It would be more about freeing markets and less about picking winners; more about creating the right conditions for bright ideas to emerge and less about promises like green jobs.
3D printing, Airbnb, American energy revolution, autonomous vehicles, Bakken shale, barriers to entry, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population
This slice of history played out during a period that economist Tyler Cowen, of George Mason University, has labelled the ‘Great Stagnation’.8 A half-century of extraordinary gains in computing power somehow did not return humanity to the days of dizzying economic and social change of the nineteenth century. In 1987 the Nobel Prize-winning economist Robert Solow mused, in a piece pooh-poohing the prospect of a looming technological transformation, that the evidence for the revolutionary power of computers simply wasn’t there. ‘You can see the computer age everywhere but in the productivity statistics’, he reckoned, and he had a point.9 Productivity perked up in the 1990s but wheezed out again in the 2000s. And that, some seemed to conclude, was all there was. In the 2000s Robert Gordon began posing a thought experiment to his audiences: would they, he wondered, prefer a world with all the available technology up to 2000, or one with all available technology up to the present day except for indoor plumbing?
barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, clean water, computer age, Corn Laws, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, full employment, global village, hiring and firing, Howard Rheingold, income inequality, informal economy, invisible hand, Jane Jacobs, Joseph Schumpeter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Marshall McLuhan, McJob, microcredit, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pensions crisis, Ronald Reagan, Silicon Valley, spinning jenny, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population
Unnecessary documents with beautiful graphics are generated, delivering little additional information for a lot of extra effort. Impatient shoppers spend minutes waiting for an under-trained sales clerk to figure out how to enter a purchase on the terminal, which will control the inventory, and for their credit card to be validated. Economists have dubbed this the productivity puzzle. Nobel Laureate Robert Solow famously joked: ‘You can see the computer age everywhere but in the productivity statistics’.7 So why have computers not generated extra growth in output? There are at least three answers: under-measurement of the output of industries using information technology; over-estimation of the importance of computers relative to all other types of capital equipment; and over-optimism about how quickly new technologies spread. The first point is simple. The output of many industries that have been computerised cannot be measured directly and statistics for output are derived from measurement of the inputs used.
The Rational Optimist: How Prosperity Evolves by Matt Ridley
23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, Plutocrats, plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, wage slave, working poor, working-age population, Y2K, Yogi Berra
Moreover, for all their eventual sins, entrepreneurial corporations can do enormous good while they are young and growing. Consider the case of discount retailing. The burst of increasing productivity that countries like America and Britain rather unexpectedly experienced in the 1990s at first puzzled many economists. They wanted to credit computers, but as the economist Robert Solow had quipped in 1987, ‘you can see the computer everywhere but in the productivity statistics’, and those of us who experienced how easy it was to waste time using a computer in those days agreed. A study by McKinsey concluded that the 1990s surge in the United States was caused by (drum roll of excitement) logistical changes in business (groan of disappointment), especially in the retail business and especially in just one firm – Wal-Mart. Efficient ordering, ruthless negotiating, hyper-punctual time keeping (suppliers must sometimes hit a thirty-second window for deliveries), merciless cost control and ingenious responses to customers’ preferences had given Wal-Mart a 40 per cent efficiency advantage over its competitors by the early 1990s.
Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Clayton Christensen, collapse of Lehman Brothers, computer age, crowdsourcing, deskilling, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Google Glasses, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, knowledge worker, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, personalized medicine, pets.com, Productivity paradox, Ralph Nader, RAND corporation, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, the payments system, The Wisdom of Crowds, Toyota Production System, Uber for X, Watson beat the top human players on Jeopardy!, Yogi Berra
The history of technology tells us that it is these financial, environmental, and organizational factors, rather than the digital wizardry itself, that determine the success and impact of new IT tools. This phenomenon is known as the “productivity paradox” of information technology. 38 The name comes from the fact that Gross and Tecco decided to launch the organization while sitting in Harvard Business School’s Rock Hall. Chapter 26 The Productivity Paradox You can see the computer age everywhere but in the productivity statistics. —Nobel Prize–winning MIT economist Robert Solow, writing in 1987 Between the time David Blumenthal stepped down as national coordinator for health IT and became CEO of the Commonwealth Fund, he returned to Boston from 2011 to 2013 to manage the transition of Partners HealthCare from a homegrown electronic health record to the one made by Epic. “I took my own medicine,” he said, since now, in order to qualify for the HITECH incentives, it was his job to help Partners meet the very Meaningful Use requirements he had created.
airport security, availability heuristic, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, big-box store, Black Swan, Broken windows theory, Carmen Reinhart, Claude Shannon: information theory, Climategate, Climatic Research Unit, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, computer age, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, Daniel Kahneman / Amos Tversky, diversification, Donald Trump, Edmond Halley, Edward Lorenz: Chaos theory, en.wikipedia.org, equity premium, Eugene Fama: efficient market hypothesis, everywhere but in the productivity statistics, fear of failure, Fellow of the Royal Society, Freestyle chess, fudge factor, George Akerlof, haute cuisine, Henri Poincaré, high batting average, housing crisis, income per capita, index fund, Internet Archive, invention of the printing press, invisible hand, Isaac Newton, James Watt: steam engine, John Nash: game theory, John von Neumann, Kenneth Rogoff, knowledge economy, locking in a profit, Loma Prieta earthquake, market bubble, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, Monroe Doctrine, mortgage debt, Nate Silver, new economy, Norbert Wiener, PageRank, pattern recognition, pets.com, prediction markets, Productivity paradox, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, Saturday Night Live, savings glut, security theater, short selling, Skype, statistical model, Steven Pinker, The Great Moderation, The Market for Lemons, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, transfer pricing, University of East Anglia, Watson beat the top human players on Jeopardy!, wikimedia commons
In fields ranging from economics to epidemiology, this was an era in which bold predictions were made, and equally often failed. In 1971, for instance, it was claimed that we would be able to predict earthquakes within a decade,29 a problem that we are no closer to solving forty years later. Instead, the computer boom of the 1970s and 1980s produced a temporary decline in economic and scientific productivity. Economists termed this the productivity paradox. “You can see the computer age everywhere but in the productivity statistics,” wrote the economist Robert Solow in 1987.30 The United States experienced four distinct recessions between 1969 and 1982.31 The late 1980s were a stronger period for our economy, but less so for countries elsewhere in the world. Scientific progress is harder to measure than economic progress.32 But one mark of it is the number of patents produced, especially relative to the investment in research and development.
The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan
air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, new economy, North Sea oil, oil shock, open economy, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K
Our history suggests that the ceiling on the productivity growth of an economy over the long term at the cutting edge of technology is at the most 3 percent per year. It takes time to apply new ideas and often decades before those ideas show up in productivity levels. Paul David, a professor of economic history at Stanford, wrote a seminal article in 1989 that addressed the puzzle of why, in the famous words of Nobel laureate economist and then-MIT professor Robert Solow, computers were "everywhere but in the productivity statistics." It was David's article that heightened my interest in long-term productivity trends. He pointed out that it often took decades for a new invention to be diffused sufficiently widely to affect the levels of productivity. As an *Ten years later, in 1975, Moore revisited his analysis and reported, "I had no idea this was going to be an accurate prediction, b u t amazingly enough instead o f t e n doublingfs], we got nine over t h e ten years."