http://online.wsj.com/articles/joel-mokyr-what-todays-economic-gloomsayers-are-missing-1407536487
> By > Joel Mokyr > Updated Aug. 8, 2014 6:22 p.m. ET > There is nothing like a recession to throw economists into a despondent mood. > Much as happened in the late 1930s—when there was a fear of so-called secular > stagnation, or the absence of growth due to a dearth of investment > opportunities—many of my colleagues these days seem to believe that "sad days > are here again." The economic growth experienced through much of the 20th > century, they tell us, was fleeting. Our children will be no richer than we > are. The entry of millions of married women into the workforce and the huge > increase in college graduates that drove post-1945 growth were one-off boons. > Slow growth is here to stay. > > What is wrong with this story? The one-word answer is "technology." The > responsibility of economic historians is to remind the world what things were > like before 1800. Growth was imperceptibly slow, and the vast bulk of the > population was so poor that a harvest failure would kill millions. Almost > half the babies born died before reaching age 5, and those who made it to > adulthood were often stunted, ill and illiterate. > > What changed this world was technological progress. Starting in the late 18th > century, innovations and advances in what was then called "the useful arts" > began improving life, first in Britain, then in the rest of Europe, and then > in much of the rest of the world. > > Enlarge Image > > A sample of graphene Corbis > > Why did it happen? In brief: Science advanced. One reason science advanced so > rapidly is that technology provided the tools and instruments that allowed > "natural philosophers" (as they were known then) to study the physical world. > An example is the barometer. Invented by a student of Galileo's named > Torricelli in 1643, it showed the existence of atmospheric pressure. That > scientific insight spurred the development of the first steam engines (known > as atmospheric engines). > > In 1800 another Italian, Alessandro Volta, invented the "pile"—the first > battery. It served primarily as a tool for chemical research, allowing > chemists to map out the newly discovered world of elements and compounds that > unleashed the chemical industries of the 19th century. > > In that fashion technology pulled itself up by its bootstraps: An invention > in one area stimulated progress in another. The germ theory of disease and > the subsequent revolution in medical technology might never have occurred > without improved microscopes. > > Compared with the tools we have today for scientific research, Galileo's look > like stone axes. We have far better microscopes and telescopes and barometers > today, and the digital codification of information has penetrated every > aspect of science. It has led to the reinvention of invention. Words like > "IT" or "communications" don't begin to express the scope of the change. Huge > searchable databanks, quantum chemistry simulation and highly complex > statistical analysis are only some of the tools that the digital age places > at science's disposal. > > The consequences are everywhere, from molecular genetics to nanoscience to > research in Medieval poetry. Quantum computers, though still experimental, > promise to increase this power by orders of magnitude. As science moves into > new areas and solves problems that were not even imagined, inventors, > engineers and entrepreneurs are waiting in the wings to design new gizmos and > processes based on the new discoveries that will continue to improve our > lives. > > In the speculation on what the new technologies will look like and do, robots > and artificial intelligence remain front and center, at once wished for (who > likes making beds?) and feared as job-killers. We haven't seen a fraction of > what is possible in information and communication technology. But the most > unexpected advances may come from less glamorous corners, such as material > science. > > Materials are the core of our production. The terms Bronze and Iron Ages > signify their importance; the great era of technological progress between > 1870 and 1914 was wholly dependent on cheap and ever-better steel. But what > is happening to materials now is a leap far beyond any of the past, with new > resins, ceramics and entirely new solids designed in silico, (that is, on a > computer) developed at the nanotechnological level. These promise materials > that nature never dreamed of and that deliver custom-ordered properties in > hardness, resilience, elasticity and so on. > > One example is graphene, a sheet of very thin carbon whose molecules can be > arranged to make it either the strongest or the most flexible material on > earth. It conducts electricity and heat better than any material ever > discovered. In the future graphene is likely to replace silicon in > transistors, solar cells and other applications we cannot yet imagine. > > Genetic modification is another area of expanding frontiers. Plants will be > designed to fix nitrates in the soil or to absorb more carbon dioxide from > the atmosphere and that can adapt to more extreme temperatures and rainfall. > These could be our best defense against environmental degradation, climate > change and other nasty side effects of earlier, cruder agricultural > techniques. "Nanobombs" that physically penetrate bacterial membranes are the > next weapon in mankind's never-ending war on microbes. > > The breakthroughs are not "on the horizon." They are here. The economy may be > facing some headwinds, but the technological tailwind is more like a tornado. > Fasten your seat belts. > > So: If everything is so good, why is everything so bad? Why the gloominess of > so many of my colleagues? Part of the story is that economists are trained to > look at aggregate statistics like GDP per capita and measure for things like > "factor productivity." These measures were designed for a steel-and-wheat > economy, not one in which information and data are the most dynamic sectors. > They mismeasure the contributions of innovation to the economy. > > Many new goods and services are expensive to design, but once they work, they > can be copied at very low or zero cost. That means they tend to contribute > little to measured output even if their impact on consumer welfare is very > large. Economic assessment based on aggregates such as gross domestic product > will become increasingly misleading, as innovation accelerates. Dealing with > altogether new goods and services was not what these numbers were designed > for, despite heroic efforts by Bureau of Labor Statistics statisticians. > > The aggregate statistics miss most of what is interesting. Here is one > example: If telecommuting or driverless cars were to cut the average time > Americans spend commuting in half, it would not show up in the national > income accounts—but it would make millions of Americans substantially better > off. Technology is not our enemy. It is our best hope. If you think rapid > technological change is undesirable, try secular stagnation. > > Mr. Mokyr is professor of economics and history at Northwestern University. > His most recent book is "The Enlightened Economy: An Economic History of > Britain 1700-1850" (Yale, 2012)." -- Kim Holburn IT Network & Security Consultant T: +61 2 61402408 M: +61 404072753 mailto:k...@holburn.net aim://kimholburn skype://kholburn - PGP Public Key on request _______________________________________________ Link mailing list Link@mailman.anu.edu.au http://mailman.anu.edu.au/mailman/listinfo/link
