productivity

It's 2010. Where's my jetpack?

Innovation is Still the Answer

In gloomy economic times such as these, we naturally look around for sources of blame. Former saviors make easy targets.

The tech boom of the late 1990s was great for the U.S. economy: GDP rose, unemployment dropped, and median incomes even made their most significant gains since the 1970s. Most people understood this success was due to new technology–and to information technology in particular–and they expected IT to be a main driver of the economy for years to come. Our bold New Economy had arrived, with all the convenience and style of America Online.

But the 2001 recession shook our faith in technology, and in the aftermath of the 2008 financial crisis many have turned on our would-be robotic saviors. Their disillusionment takes on the forms of disappointment, fear, or both.

The disappointed see our IT revolution, chock full of smartphones and big data, and ask, what good has it made in the real world? Recent technologies have changed our lives, certainly, but not with the productive power of previous advances. Instead: we order takeout via the internet instead of the phone; we watch YouTube at work in … Read the rest

Is Technological Change Speeding Up? How Can You Tell?


JimPowers-FutureDriveIn-Small

Evidence of technological change is all around us—smartphones, self-driving cars, amazing drug discoveries, and even drone warfare.  With all of this novelty many futurists and other pundits breathlessly proclaim that technological change is speeding up. In  fact, some go so far as to claim that the pace of innovation is not only accelerating, it is accelerating exponentially (which, anyone with a rudimentary understanding of exponents can see, is utter nonsense). Peter Diamandis, author of Abundance: The Future Is Better Than You Think, argues thatWithin a generation, we will be able to provide goods and services, once reserved for the wealthy few, to any and all who need them. Or desire them.”

But is the rate of technological change really getting faster? Other commentators, including some notable academic economists, actually think the opposite—that we have run out of the “easy” technological advances and new breakthroughs will take much more work.

Questions about the rate of technological change may seem trivial—will I get one hoverboard or two?—but getting a handle on an answer is critical because in economic terms, technological change equals economic growth. And growth has powerful implications for … Read the rest

At least they're not steel toe

The Epistemic Sequester: Budget Cuts Kill an Important Statistical Program

After already slashing R&D funding, the Sequester is about to deliver another kick in the teeth to American competitiveness: it’s going to sharply reduce our ability to measure it. This one comes courtesy of the Bureau of Labor Statistics, which announced last month that the sequestration has forced it to eliminate its International Labor Comparisons (ILC) program, a neat little database that adjusts foreign data to a common framework, allowing you to compare the traded sector health and competiveness of the United States against that of other countries.

This may not sound like much, but in the nerdy world of competitive analysis economics, it’s huge. No one else provides this data to the same extent as ILC. The OECD does a bit,[i] but their data are rife with warnings about the perils of cross-country comparison among their indicators. Moreover, the OECD has little-to-no data on the big boys such as China and India, which renders its data useless for any “big picture” comparisons of our competitive health. Other organizations, such as the UN Industrial Development Organization, provide limited competitiveness data that is vastly incomplete.

In contrast, the ILC … Read the rest

No More Growth? Let’s not be so Hasty: An Assessment of Robert J. Gordon’s Recent Working Paper

The single most important question regarding the future of the U.S. economy is whether productivity growth will be robust going forward. Recently there has been vigorous debate over this question, with some like MIT’s Erik Brynjolfsson arguing for robust, and others like George Mason’s Tyler Cowen arguing for stagnation. The newest foray into this debate comes from Northwestern’s noted economist Robert J. Gordon, through a non-peer-reviewed working paper published by the National Bureau of Economic Research (NBER) entitled “Is U.S. Economic Growth Over?  Faltering Innovation Confronts the Six Headwinds.” Gordon’s paper has received widespread attention for his provocative thesis that U.S. productivity growth is essentially over and that the average American will be no better off, and likely worse off in the future. No wonder neo-classical economics is called the dismal science. Luckily, innovation economics can be called “hopeful” science, for as I will explain; I believe Gordon’s thesis is fundamentally wrong.

Gordon’s paper is framed in two parts. First he argues that productivity growth (output per hour) in the recent past has been weak and will cascade towards zero and remain there for the foreseeable future. Second, he asserts … Read the rest

TSA Officers

Road Congestion, TSA Congestion. What’s the Difference?

am flying to SFO this morning really early out of Dulles and as usual even at 6:00 AM there are long lines at the TSA checkpoint. Dulles has at least 15 security lanes but I have never seen them all open. When I asked a TSA staffer why, he said they didn’t have the budget to staff them all. And its likely to get worse as the TSA budget is cut this fiscal year.

The problem is so similar to our roads. We have massive traffic congestion because congress won’t raise the gas tax to build more roads-lanes. And it doesn’t seem that congress will increase highway funding or TSA funding anytime soon. So the answer should be clear; let users who want faster service pay more. On a lot of trips, I’d be happy to pay a small fee when I buy my plane ticket if that could allow me to wait in a shorter line. Others might not want to pay a toll but for the times they are late, they might be happy to pay a few bucks at check-in so they make their flight on time. Similarly, I’d be happy to pay a toll to drive on roads without congestion on the days I am running late. Some will say the new TSA-pre program will help but it will not be enough. It doesn’t add screeners, it only speeds things up a little bit for some people. The TSA toll program may not work at airports like Reagan National where all the screening gates are almost always manned. But at airports like Dulles and others, it will enable the TSA to fully utilize all screening gates and better provide their services. … Read the rest

TomFriedman

Note to Tom Friedman: Technology Creates, Not Destroys, Jobs

I should just get a macro for my computer so that when I type “Control T” it writes “Tom Friedman is wrong because” since he so often is, as I pointed out here. But in Today’s New York Times Op-Ed he does it again, only maybe even worse; blaming technology for joblessness.  When will he and others realize this is not the case. He writes that information technology “is more rapidly replacing labor with machines.” Well, if this were true, how does he explain the fact that productivity growth rates were much higher in the last five years of the 1990s than the last five years of the 2000s? And yet, unemployment was much lower in the 1990s period.

He then goes on to quote Davidson’s equally incorrect article in The Atlantic which rightly points to the devastating loss of U.S. manufacturing jobs in the last decade and blames technology. No. As we point out, it was the loss output due to decline in U.S. competitiveness, not automation, that was responsible for the big loss of manufacturing jobs. Manufacturing experienced about the same rate of productivity growth in … Read the rest

Bits & Bricks

Originally authored by Phil Bernstein, Vice President of Autodesk and cross-posted from the Digital Energy Solutions Campaign Blog. For ITIF’s take on bringing innovation to the contruction industry, check out Steve Norton’s coverage of the Bits and Bricks event here.

The construction industry is widely understood to have missed the productivity surge created by the digital revolution. Why is that, and what is the government’s role in stimulating innovation and change in today’s building industry, particularly in the digital realm? This week’s ITIF ”Bits and Bricks“ conversation suggested some provocative opportunities. The U.S. Government, between DoD and GSA, represents the world’s largest property owner, tenant and construction client combined. So anything they decide to do will move the needle in the otherwise highly fragmented and disorderly world of architects, engineers and builders. But how to focus?

Our panel explored a number of ideas and formed more questions than answers. Even the Government doesn’t act a single entity, so its influence is and will be felt in a variety of ways. But some common themes emerged from the discussion, including:

  • Identifying and sponsoring innovation research (an area traditionally
  • Read the rest

Cranes Over Downtown Washington, DC

IT is the Foundation for Better Building

We live in a wireless world of tablets, 4G networks, and cloud computing. But on construction sites, where the future is actually being built, making sure there’s place to plug in a microwave to heat up an abandoned cup of coffee is too often about as high tech as it gets. Despite innovations in recent years such as virtual design models, building innovation modeling and laser scanning, the construction industry may have the distinction of having lower productivity than it did 40 years ago. At best construction productivity lags far behind other sectors. “You really have to work at that,” commented ITIF President Rob Atkinson.

Atkinson was speaking at “Bits and Bricks: Transforming the Construction Industry Through Innovation,” an event ITIF co-hosted with the Information Technology Industry Council and Autodesk, that explored how IT can play a crucial role in making the construction sector more productive, innovative and globally competitive. Even in these recent bleak recession years, we spent some $1.3 trillion on “things that are built and how they are used,” according to S. Shyam Sunder, director, Engineering Laboratory, NIST – that is roughly 4.5% of U.S. … Read the rest

We need to better tell the innovation story

The innovation story is getting lost in the jobs story.  Case in point was the critique by George Mason University economist Russell Roberts on a comment by President Obama on technology and jobs (Obama vs. ATMs–Why Technology Doesn’t Destroy Jobs – WSJ.com).  Roberts takes the President to task for suggesting that some technologies replace workers and thereby create short term dislocation.  Roberts discusses at great length the benefits to wealth creation of technology-induced productivity.

I agree with everything he said about the power of productivity (while I disagree with his political potshot at the President).  But, when it came to tying technology to job creation, here is the best Roberts could do:  “Somehow, new jobs get created to replace the old ones.”

If we can’t explain the “somehow”, we will lose the policy debates.

Roberts more detailed explanation given was this: “Fifty years ago, the computer industry was tiny. It was able to expand because we no longer had to have so many workers connecting telephone calls.”  In other words, the computer industry grew because all those unemployed telephone operators (unemployed because of advances in computer technology) could … Read the rest

Does Technology Make Most Workers Worse Off?

Since the early dawn of industrialization, many have argued that new technological advances would make things worse for large swaths of the working class. Most famously, the Luddites in the 1810s in England destroyed the new textile machines that threatened their jobs. In the early 1970s, longshoreman in many US ports went on strike to stop the spread of containerization as the dominant form of transport of goods between countries, and they were no more successful than the Luddites in stopping innovations that reduce costs. More generally, in the 1950s and 1960s, many critics argued that “automation” would lead to a permanent class of excess workers.

The current crop of negativists are once again predicting the decline of middle class jobs and purport to have some data to back their claims up. The most prominent proponent of the “disappearing middle jobs” thesis is David Autor from MIT. In series of papers and presentations, he finds a U-shaped curve in which low and high end jobs are growing while middle jobs are declining.

It appears to be a convincing case until one looks more closely at his approach. First, the male … Read the rest