Summary: The FM website has a great record of providing unpopular but accurate forecasts to its readers, but a poor record of updating them. Once they become consensus insights we drop them. Another in a series about the next industrial revolution now starting; see the links at the end to other posts.
Today let’s revisit the slowdown in technological progress. My first post about this — 5 years ago — was wildly controversial. Now it is so uncontroversial that even the Chairman of the Fed can discuss it.
By Ben S. Bernanke, Chairman of the Fed.
Excerpt from his speech at Bard College, 18 May 2013.
Indeed, some knowledgeable observers have recently made the case that the IT revolution, as important as it surely is, likely will not generate the transformative economic effects that flowed from the earlier technological revolutions. As a result, these observers argue, economic growth and change in coming decades likely will be noticeably slower than the pace to which Americans have become accustomed.
Such an outcome would have important social and political — as well as economic — consequences for our country and the world.
This provocative assessment of our economic future has attracted plenty of attention among economists and others as well. Does it make sense? Here’s one way to think more concretely about the argument that the pessimists are making:
Fifty years ago, in 1963, I was a 9-year-old growing up in a middle-class home in a small town in South Carolina. As a way of getting a handle on the recent pace of economic change, it’s interesting to ask how my family’s everyday life back then differed from that of a typical family today.
If I think about it, I could quickly come up with the Internet, cellphones, and microwave ovens as important conveniences that most of your families have today that my family lacked 50 years ago. Health care has improved some since I was young; indeed, life expectancy at birth in the United States has risen from 70 years in 1963 to 78 years today, although some of this improvement is probably due to better nutrition and generally higher levels of income rather than advances in medicine alone.
Nevertheless, though my memory may be selective, it doesn’t seem to me that the differences in daily life between then and now are all that large. Heating, air conditioning, cooking, and sanitation in my childhood were not all that different from today. We had a dishwasher, a washing machine, and a dryer. My family owned a comfortable car with air conditioning and a radio, and the experience of commercial flight was much like today but without the long security lines. For entertainment, we did not have the Internet or video games, as I mentioned, but we had plenty of books, radio, musical recordings, and a color TV (although, I must acknowledge, the colors were garish and there were many fewer channels to choose from).
The comparison of the world of 1963 with that of today suggests quite substantial but perhaps not transformative economic change since then.
In the comments Patrick raises an important point. The great slowdown is a historical fact, an important event still occurring. We can see a few of its effects, such as how it contributes to the multi-decade stagnation of real wages for most American households.
How long will it last? Almost everybody sees this as the slowdown as a pause, not an end to progress. The subtitle to Tyler Cowen’s The Great Stagnation is “How America (Eventually) Will Feel Better Again.”
What will follow, slow progress or another burst of innovation? The future is an unknown country, and we can only guess. The August 2012 post discusses the extreme scenario of accelerated progress: the Singularity.
Posts on the FM website on the next industrial revolution
(a) About the slowdown in progress since WW2:
- Let us light a candle while we walk, lest we fear what lies ahead, 10 February 2008 — Compare the changes seen by Bat Masterson (1853-1921) with those in our lifetimes.
- Has America grown old, and can no longer grow? Or are wonders like the singularity in our future?, 28 August 2012
- Why America’s growth is slowing, and a solution, 28 January 2013 — Transport June Cleaver from her 1957 home to today’s equivalent; she’d be astonished at our lack of progress. Look at how we’ve underperformed futurist Herman Kahn’s 1967 expectations for the year 2000.
(c) Posts about the question of future growth:
- Good news: The Singularity is coming (again), 8 December 2007
- Has America grown old, and can no longer grow? Or are wonders like the singularity in our future?, 12 August 2012
- Is America on the road to zero growth?, 29 November 2012
- Why America’s growth is slowing, and a solution, 28 January 2013
- Ben Bernanke sees the great slowdown in technological progress, 20 May 2013
- Will 21st Century USA have a surprise boom, as did the 19th Century UK?, 23 October 2013
- Recommended: Looking at America’s future: economic stagnation, or will computers take our jobs?, 7 January 2014
- 50 years of warnings about the next industrial revolution. Are we ready?, 12 January 2014