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prosperity.
agreement among economic historians that some technologies are significant enough to accelerate the normal march of economic progress. To do this, they have to spread throughout many, if not most, industries; they can’t remain in just one. The cotton gin, for example, was unquestionably important within the textile sector at the start of the nineteenth century, but pretty insignificant outside of it.*
general purpose technologies (GPTs).
“deep new ideas or techniques that have the potential for important impacts on many sectors of the economy.”
be pervasive, improving over time, and able to spawn new innovations.8 The preceding chapters have built a case that digital technologies meet all three of these requirements. They improve along a Moore’s Law trajectory, are used in every industry in the world, and lead to innovations like autonomous cars and nonhuman Jeopardy! champions.
information and communication technology (ICT)
we are all in agreement, then why the debate over whether ICTs are ushering in a new golden age of innovation and growth? Because, the argument goes, their economic benefits have already been captured and now most new ‘innovation’ involves entertaining ourselves inexpensively online. According to Robert Gordon:
having
Another school of thought, though, holds that the true work of innovation is not coming up with something big and new, but instead recombining things that already
exist. And the more closely we look at how major
“All” Mullis did was recombine well-understood techniques in biochemistry to generate a new one. And yet it’s obvious Mullis’s recombination is an enormously valuable one.
The Nature of Technology, “To invent something is to find it in what previously exists.”14 Economist Paul Romer has argued forcefully in favor
Economic growth occurs whenever people take resources and rearrange them in ways that make them more valuable. . . . Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new . . . ideas were discovered. And every generation has underestimated the potential for finding new . . . ideas. We consistently fail to grasp how many ideas remain to be discovered. . . . Possibilities do not merely add up; they multiply.
Romer also makes a vital point about a particularly important category of idea, which he calls “meta-ideas”:
Perhaps the most important ideas of all are meta-ideas—ideas about how to support the production and transmission of other ideas. . . . There are . . . two safe predictions. First, the country that takes the lead in the twenty-first century will be the one that implements an innovation that more effectively supports the production of new ideas in the private sector. Second, new meta-ideas of this kind will be found.16
This progression drives home the point that digital innovation is recombinant innovation in its purest form. Each development becomes a building block for future innovations. Progress doesn’t run out; it accumulates. And the digital world doesn’t respect any boundaries. It extends into the physical one, leading to cars and planes that drive themselves, printers that make parts, and so on. Moore’s Law makes computing devices and sensors exponentially cheaper over time, enabling them to be built economically
Affinnova offers a very different approach. It makes use of the mathematics of choice modeling, an advance significant enough to have earned a Nobel Prize for its intellectual godfather, economist Daniel McFadden. Choice modeling quickly identifies people’s preferences—do they prefer a brown embossed bottle with
natural language processing, machine learning (the ability of a computer to automatically refine its methods and improve its results as it gets more data), computer vision, simultaneous localization and mapping,
natural language processing, machine learning (the ability of a computer to automatically refine its methods and improve its results as it gets more data), computer vision, simultaneous localization and mapping,
Trivial uses of AI include recognizing our friends’ faces in photos and recommending products.
working with chalk and slate to illustrate ideas. Our generation is poised to use digitization and analytics to offer a host of improvements. As our friend the technology researcher and professor Venkat Venkatraman put it, “We need digital models of learning and teaching. Not just a technology overlay on old modes of teaching and learning.”* We can’t predict exactly which methods will be invented and which will catch on, but we do see a clear path for enormous progress. The
Schumpeter put forward our favorite definition of innovation—“the market introduction of a technical or organisational novelty, not just its invention”—and,
Theory of Economic Development, “New combinations are, as a rule, embodied . . . in firms which generally do not arise out of the old ones. . . . It is not the owner of a stage coach who builds railways.”12 Entrepreneurship, then, is an innovation engine. It’s also a prime source
taxing something discourages its production.
but it doesn’t have to be since we can tax things
negative externality.
cleanly than they used to, they still give off greenhouse gases. It is an unfortunate fact of human life that some types of production generate ‘bads’ alongside goods. In cases like these,
By improving measurement and metering, the technologies of the second machine age make Pigovian taxes
Singapore has implemented an Electronic Road Pricing System that has virtually eliminated congestion.
Digital road pricing systems
could help us recapture that lost time while replacing revenues from other sources.
“Work saves a man from three great evils: boredom, vice, and need.” —Voltaire
other important things: self-worth, community, engagement, healthy
values, structure, and dignity, to name just a few.
work is beneficial.
his book Drive, Daniel Pink summarizes the three key motivations from the research literature: mastery, autonomy, and purpose.7 The last of these was emphasized by an older worker quoted in a February 2013 story about the pros and cons of the warehouse jobs online retail giant Amazon was creating in the UK: “It gives you your pride back. That’s what it gives you. Your pride back.”8 His view is strongly supported by the work of economist Andrew
found that joblessness lasting six months or longer harms feelings of well-being and other measures of mental health about as much as the death
due to the loss of income; instead, it arises from a l...
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The will of the world is first and foremost to have a good job.
Everything else comes after that.”10 It seems that all around the world, people want to escape the evils of boredom, vice, and need and instead find mastery, autonomy, and purpose by working.
The consequences of high neighborhood joblessness are more devastating than those of high neighborhood poverty. A neighborhood in which people are poor but employed is different from a neighborhood in which many people are poor and jobless. Many of today’s problems in the inner-city ghetto neighborhoods—crime, family dissolution, welfare, low levels of social organization, and so on—are fundamentally a consequence of the disappearance of work.
economists have developed interventions that encourage and reward work in ways that a basic income guarantee alone does not. The second is that innovators and entrepreneurs have developed technologies not only to substitute for human labor but also to complement
it. In other words, digital tools are not just taking work out of the economy; they’re also providing new opportunities for people to contribute work to
technology keeps racing ahead the best approach is to combine these two pieces of good news and try to maintain an economy of workers. Doing so will address all three of Voltaire’s evils and give us a much better chance of maintai...
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tax things you want to see less of, and subsidize things you want to see more of.
unemployment creates negative externalities, then we should reward employment instead of taxing it.
So it’s not the case that people cease to be valuable the instant computers surpass them in a domain.
They can be enormously useful once they’ve paired up to race with machines,
[W]hen Mitt Romney talked of cutting government money for public broadcasting in a presidential debate last fall and mentioned Big Bird, [Twitter] messages with that phrase surged. Human judges recognized instantly that “Big Bird,” in that context and at that moment, was mainly a political comment, not a reference to “Sesame Street,” and that politics-related messages should pop up when someone searched for “Big Bird.” People can understand such references more accurately and quickly than software can, and their judgments are fed immediately into Twitter’s search algorithm. . . . Other human
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So even though the algorithms are getting better, they can’t do it alone. This insight has led to new, technology-based ways to organize and accomplish work. In the middle
TaskRabbit,
