Technology and Economic Growth in the Information Age

Policy Backgrounders | Economy

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

Conclusion: A Future of Faster Growth

The very notion of economic progress is an artifact of the modern, technology-rich era. Until the advent of capitalism in the 18th century, the world's living standards changed only slowly. The French farmer of the 17th century lived, worked and died pretty much like the Roman farmer of the 1st century B.C.18 The same cannot be said for our world: living standards rise from generation to generation. We are in the throes of one of history's great bursts of technology, put to use quickly and effectively by a vibrant market economy.

"The very notion of economic progress is an articact of the modern, technology-rich era."

It would, of course, be good to have statistics that capture all the nuances of the economy as it evolves to meet our needs. That's probably too much to expect. Expense and complexity make a daunting task of tracking an American economy centered less and less on tangible output. Our measurement technology cannot keep pace with the rest of our technological progress. Relying on our existing measures, we're going to miss a lot of what happens in the economy as it moves into the 21st century.

We are fast departing a time when progress can be measured by GDP or any other simple tally of what the economy produces. If we become fixated on the numbers and fail to imagine the possibilities, we may miss one of the greatest periods of economic advancement in history. Worse yet, if we judge 21st century progress by 20th century measures, we may infer that our system is failing and in need of repair by government.

That is the bad news.

"Free enterprise is America's greatest welfare program"

Free enterprise is America's greatest welfare program. For more than two centuries, the system has worked to make our lives better. Whatever we've wanted - new and improved products, more leisure, better jobs, easier lives - it has provided in abundance.

The pessimists fret that our best days are behind us. They are wrong. We stand poised on the brink of a new era, one endowed with technology and teeming with opportunities. The future offers even faster economic progress.

That is the good news.

The views in this paper are not necessarily those of the Federal Reserve Bank of Dallas or the Federal Reserve System.

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.

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