What Happened to the Internet Productivity Miracle?

With The New Yorker launching a new online science-and-technology hub today, along with our Elements blog, I thought it a good time to step back and look at the impact of the communications revolution in a broader way than asking whether Samsung is becoming the new Apple. (Although that’s an interesting question.) Ever since I joined the magazine, in 1995, the Internet and technologies associated with it have been transforming the American economy in ways too varied and myriad to retread here. Even now, though, almost twenty years on, there’s precious little agreement on what it all means for productivity growth and living standards, which usually amount to pretty much the same thing over the long term. (Over decades rather than months and years, wages and salaries tend to track productivity growth pretty closely.*)

Back in the late nineteen-nineties, there was a lot of optimism about the future, and it wasn’t all emanating from those lucky souls who had gotten in early on the I.P.O.s of companies like Yahoo and Amazon. Many economists, with Alan Greenspan prominent amongst them, believed that over time the heavy investments in new information and communication technologies (I.C.T.) that companies were making would lead to rapid growth in productivity and wages. There was much discussion of a third industrial revolution, with the Internet playing the role that the steam engine played in the early nineteenth century and electricity played in the late nineteenth and early twentieth centuries.

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