[P2P-F] Fwd: Rapid technological progress vs. low productivity growth

[Michel Bauwens]

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From: <dailydigest at piqd.com>
Date: Fri, Apr 7, 2017 at 7:00 AM
Subject: Rapid technological progress vs. low productivity growth
To: Michel Bauwens <michelsub2004 at gmail.com>


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Rapid technological progress vs. low productivity growth
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Ryan Avent, economics columnist for The Economist, has written a
fascinating book called "The Wealth of Humans"
<https://www.penguin.co.uk/books/284165/the-wealth-of-humans/>. In this
short text, he discusses one aspect of labour in the 21st century: how
technological progress and low productivity growth fit together. This is
arguably one of the most important debates in economics at the moment. (Here
<http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech968.pdf>
is another take that I piqd for piqd.de by Bank of England chief economist
Andy Haldane.)

Ryan's argument is that technological progress is *not* too slow, as some
have argued. To the contrary, the combination of slow productivity growth
and rapid technological progress is not uncommon.

Returning to the industrial parallel, it was not the case that James Watt
developed his steam engine and everyone said “great, this technology is
clearly superior to everything else and we will therefore use it all across
the economy”. Rather, it was used in a small number of contexts in which
the economics (expensive labour, cheap energy) pushed business owners to
experiment. Then, over time, engineers improved the technology and firms
built up a wealth of knowledge about how to use it to make a buck. Then
eventually the technology was so good that it began to be adopted in places
where labour costs were not all that high.

He argues that today, "cheap labour is reducing the incentive to push new
technologies along a similar path". And technology has helped to keep
labour cheap, which has four consequences that he discusses in the final
sections of his piece: wages stagnate, bargaining power of labour erodes,
the whole economy suffers from a lack of demand, which all combined mean
that firms do not invest enough in turning technological progress into
usable businesses. It is a very good, thought-provoking read on an
important, if not the most important debate in economics at the moment.
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Source: Ryan Avent medium.com
<https://www.piqd.com/tracking/boom-bust/rapid-technological-progress-vs-low-productivity-growth/original?cid=627eed218b467b80645dd5ce5b66b877&source=DailyDigestEmail>
03/16/2017
The productivity paradox - Ryan Avent - Medium
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