Nobel Economists On The Impact Of Technology On Productivity
March 14, 2000
Personal computers and the Internet are improving productivity, but a panel of four Nobel Prize-winning economists threw cold water on the suggestion that technology is yielding some kind of new economy.
Speaking at a conference sponsored by the Milken Institute, the four Nobelists discussed the Internet, technology and the new economy.
"We've had one innovation after another," said Kenneth J. Arrow, professor emeritus of economics at Stanford University. "The telegraph marked the first time we could eliminate distance.... Electricity's most important impact was its use in the factory." The Internet, he said, is simply an improvement on telecommunications capabilities.
"Let me add a bit of caution to those who think we have arrived in a new world," said James M. Buchanan, professor emeritus at George Mason University in Fairfax, Va. "The closest analogy for the Internet today is the automobile in the 1920s." And while cars yielded many positive contributions for manufacturing as well as transportation, they didn't keep the stock market from crashing in 1929.
But Gary S. Becker, professor of economics and sociology at the University of Chicago, said the Internet will bring tremendous efficiencies because it allows for interaction on a much larger scale. For example, he said, a professor at a university who ordinarily teaches a course to 100 students could reach 100,000 students over the Internet.
And Lawrence R. Klein, professor emeritus of economics at the University of Pennsylvania, noted that policy-makers have underestimated the impact of technology on productivity. He said the productivity gains should continue for another 10 years.
Source: Alan Goldstein, "Milken panel evaluates impact of technology," Dallas Morning News, March 10, 2000.
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