Why our recent technology advancement is not a revolution to economy?

Recently, a Freakonomics Radio podcast “Yes, the American Economy is in a Funk — But Not for the Reasons you Think” provides a very good insight about how our recent technology advancement does not cause a economic evolution.

People have been fascinated by the Internet, the Apple products, and Telsa automobiles. But, as pointed out in the podcast, because their impact focuses on only small percentages of the overall economy and benefits small groups of consumers, those technical advancement does not bring us the economic growth as we experienced in previous major industrial revolutions. This is why the US economy is growing but at a slow pace. There is nothing wrong with our current pace. It is just not what people expected, when they feel we have so much technical advancement.

The podcast also provides a good justification, at the end, about why we do not need to worry about robots replacing our jobs soon. Check it out!

Our total spending on all electronic communications and computer devices, on entertainment, on the services that provide us with Internet services and telephone services, you add that up and it’s only about seven percent of the economy. That leaves the other 93 percent of the economy that has not been nearly so profoundly affected by the Third Industrial Revolution.

Well, when you think, for instance, of e-commerce, the convenience of being able to buy things from the comfort of our home is indeed a great step forward for some things that are amenable to that kind of buying. But so far, if we look at total retail sales, e-commerce only accounts for six to seven percent of total retail sales. There are still lots of things that people like to buy in person, including clothing that they want to try on. Things like automobiles. Lots of things are still purchased from traditional kinds of outlets.

Over the last 35 years, an amazingly high fraction of our economic progress has been siphoned in to the incomes of the top one percent of the income distribution. That’s a tremendously important feature that causes the slowdown. It’s not just the lack of innovation. We’re seeing plenty of innovation. But it’s the fact that not everybody is sharing in the fruits of that innovation.

the Third Industrial Revolution is wildly overvalued, or at least, overappreciated

There’s a considerable divide in those that look forward over the next 25 years, between those I call the techno-optimists, who think that we’re on the verge of revolutionary advances in technology and innovation, and thus fear that robots and artificial intelligence will be taking away jobs and leaving mass unemployment. As compared to me, where I think that new technologies are coming, but they’re occurring at an amazingly slow pace. There’s an awful lot of ordinary, everyday human activity that robots cannot come close to duplicating. And so I see the robots as much collaborating with and complementing human activity as replacing it. I think the idea that computers can win at quiz-show games is very impressive, but the artificial intelligence computers have not yet shown that they can match human judgments.  These innovations are coming, but they’re not black and white. They’re not going to arrive tomorrow all in one fell swoop.

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