James Pethokoukis, at AEIdeas, recounted part of a response by Bill Gates to economist Robert Gordon’s view that we’re in a period of economic stagnation. Gordon sees the period from 1870-1970 as a special century during which
Economic growth really picked up after glacial advancement since pretty much forever. This had never happened before. Big thanks here to electricity, the internal combustion engine, and public sanitation. Second, things haven’t been so special since.
We’ve had plenty of inventions since 1970 but it’s been focused on the narrow sphere of entertainment, information, and communications technology. …Those innovations are everything that we talk about today, but in perspective they’re just a small slice of what human beings care about.
Gates’ response was, essentially, “No, it’s not. The digital revolution is much more than that.”
My own take on the matter, posted there, is reproduced in part here. Gates said,
How buyers and sellers find each other, how we amass information, how we can create models to simulate things before building them, how scientists collaborate across continents, how we learn new things—all of this has changed dramatically thanks to digital innovation.
All of these things, though, only represent engineering improvements, they’re not fundamentally new things, or new energy sources to help produce newly conceived things, the way the outset of the industrial and scientific revolution generated fundamentally new things and the energy sources with which to produce them in useful quantities.
Useful quantities: that brings me to my next point, introduced by Gates further to his response to Gordon.
How do you calculate the value of millions of pages of free information at your fingertips?
That’s not so hard. What’s the value of all the millions of dollars someone has in his bank account? Or the value of all the hundreds—or tens—of dollars an ordinary man has in his bank account? The answer here is that those dollars have no value at all until they’re converted into something useful by spending them. So it is that all of those millions of pages of free information have no value until they’re turned into something useful. The difference between dollars and information, though, is that our brains can only process so much information at a time—even with computers to help.
However. Gates added to his response to Gordon:
Implicit in Gordon’s analysis is that nearly all the big problems have been solved, and any improvements over the coming decades will be at the margins.
If I understand Gates’ disagreement here, I think he’s right. We haven’t solved all the big problems, only those that we conceive as problems. A man once said that if a thing has no solution, it’s not a problem, it’s an aspect of the universe in which we live. There’s a hint there.
I think the current economic stagnation—which in this context is a productivity/technological stagnation—is not the end, but an interruption during which we consolidate the progress we’ve made before we enter another period of explosive growth and development, another special century. And the start of that century may not be so far off. The pace of technology and productivity development has been enormously accelerated, so too has been intervening consolidation. Those computers, at the least, have made us faster than printing presses and…telephones.