For all the euphoria over the past 20 years about the rise of new types of tech, there is scant evidence that even in the country which has most aggressively invested in tech – the USA – labour productivity is actually enhanced by the application of technology. As this piece in the NYT says, “Innovations like cloud computing and artificial intelligence are hailed as engines of a coming productivity revival. But a broad payoff across the economy has been elusive…Productivity, which is defined as the value of goods and services produced per hour of work, fell sharply in the first quarter this year, the government reported this month. The quarterly numbers are often volatile, but the report seemed to dash earlier hopes that a productivity revival was finally underway, helped by accelerated investment in digital technologies during the pandemic.
The growth in productivity since the pandemic hit now stands at about 1 percent annually, in line with the meager rate since 2010 — and far below the last stretch of robust improvement, from 1996 to 2004, when productivity grew more than 3 percent a year.”
In fact, for the first quarter of CY2022, labour productivity in USA fell by 7.3%, the sharpest decline since the end of World War II – see https://www.bls.gov/news.
So, for now a debate rages between experts who are sceptical regarding the actual benefits conferred by tech investments and those who believe we are in a new era of economic progress: “The current productivity puzzle is the subject of spirited debate among economists. Robert J. Gordon, an economist at Northwestern University, is the leading skeptic. Today’s artificial intelligence, he says, is mainly a technology of pattern recognition, poring through vast troves of words, images and numbers. Its feats, according to Mr. Gordon, are “impressive but not transformational” in the way that electricity and the internal combustion engine were.
Erik Brynjolfsson, director of Stanford University’s Digital Economy Lab, is the leader of the optimists’ camp. He confesses to being somewhat disappointed that the productivity pickup is not yet evident, but is convinced it is only a matter of time.”
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