Technology and Economic Growth in the Information Age

Policy Backgrounders | Economy

No. 147
Thursday, March 12, 1998
by W. Michael Cox & Richard Alm


Technological Change Raises Living Standards


In this era of supercomputers, space travel and cloning, technology isn't always seen as a boon. Amid the modern world's hustle and bustle, nostalgia for the simpler ways of times past is not uncommon. Technophobes cringe at programming the VCR or installing new peripheral devices on their personal computers. Apocalyptic literature, science fiction movies and neo-Luddite rhetoric portray technology as a dark, dehumanizing force.

That is the technology of myth. The technology of reality is a vital part of what spurs economic progress and raises living standards. Stone Age "high-tech" was knowing how to strike flint on rock to produce a spark and ignite a fire. But even at that basic level, technology improved the lives of those who used it. They kept warmer at night, ate hot food and slept more soundly, worrying less about attacks by saber-toothed tigers and marauding tribes. Fast forward through the millennia, and the story is similar. Today's technology is much more complex, but it still makes those who use it better off. We are warmed by gas and electric furnaces, nourished by food heated in microwave ovens and protected by locks, alarm systems and 911 operators. Technology leads to new products and services that improve our everyday lives. It must. After all, every innovation must pass the test of the marketplace: if people don't want it, they won't buy it. There are plenty of patented inventions for which there wasn't much of a market, including the boomerang bullet, eyeglasses for chickens, coffins with escape hatches and fire escape suspenders.3


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