04 January 2012

There is no great stagnation

One of the points that Tyler makes in his great book is that though there has been a US innovation slowdown of late, the internet is a technology which, though not reaping immediate economy-wide benefits in terms of jobs and revenues, is something which might just pay off more in the long-run. Let's hope it can be analogous to steam power:
Steam power is an example of a general-purpose technology (GPT), that is a technology that can be applied to a variety of uses. Other GPTs include electricity and computers. It takes decades to develop the potential of GPTs, so their contribution to economic growth takes place long after their invention. That was certainly true for steam. As late as 1800, almost a century after Newcomen’s invention, steam power made only a minute contribution to the British economy. By the middle of the 19th century, however, the potential of steam was finally being realized as it was applied widely to transportation and industry. Half of the growth of labour productivity in Britain in the mid-19th Century was due to steam. 
And lets hope it doesn't take us a century. From Global Economy History: A Very Short Introduction (thanks Tom for making me read it. Very good. As is much of the rest of the series, including the Economics one)

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