Transcript Second Half. 3. Economic data since 1991, what do they mean?

The New Economy and the
Revolution in Information
Technology: Second Half.
3. Economic data since 1991, what
do they mean?
Recall that
productivity
rebounded in
the late 1990s.
Recall also that productivity growth is
one of two key factors in GDP growth.
So how well did GDP grow during the
late 1990s to the present?
Annual GDP from 1990 to 2001 in Real Terms.
GDP Growth Rates 1990-2001
GDP Growth Rates over Several Historical
Periods in the Past Century
The recent slowdown in GDP growth rates
has alarmed many people.
I think the questions everyone is asking
regarding these kind of data are:
1. Does the general upturn represent
the beginning of a new period of strong
growth--that is, is this showing a shift
in technology?
2. Does the very recent slowdown say to
us that the hopes for the new technology
were just a balloon that got popped?
First, take the second question: Does the
recent slowdown suggest that the promise
of a new golden age was a "bubble."
• The economist who claimed "what goes up
must come down when it comes to the
business cycle": Could he be right?
• The meaning of the NASDAQ crash, was
this a bubble bursting?
Second, take the first question:
• The upturn brought frequent informal
claims that this was so, that is, that the
upturn in the late 1990s betokened the
power of the new technology revolution.
• No research, academic article to my
knowledge has ever made this claim--like
they always say, the economy goes up
and it goes down…
Part 4: Where are we headed in the future?
If only Nostrademus
were here, what
would he tell us?
Are there fundamentals in place
for technology to take economies forward?
I believe so for these reasons:
1. Information technology has started a jump,
a discrete change: I think diffusion of
technology will be much more rapid from
now on. Possibly innovation will be sped up, too.
2. Political structures seem very dependent on information
or the control of it. I have got to believe that relationships
of all kinds will become more democratic and that this
will turn out to be more productive.
3. My hunch is that many more practical applications of IT will
be discovered on the par with its applications to B2B
trade, management of inventory to match production, and
some consumer sales applications (my comparison point here
is that all three of these applications have already proven
themselves.
4. Young minds will "light up", particularly in the third world.
5. Little pools of human work and interaction will be radically
changed forever and you and I may never even hear about
them. My example is my own field of economics: the computer
has been like a sideboard plow was to the farmer 300 years ago.
Perhaps I am over-optimistic, but to
summarize my viewpoint or attitude let me
quote the first words said to have been spoken
in a "talkee" motion picture back in the late
1920s, and that would be:
"You ain't heard nothing yet." Al Jolson.
Perhaps you will live to see how all this
turns out, but even so perhaps not.
Economists don't make estimates into
the distant future (e.g. 25 years or more)
One can only say that the possibility
exists for another major shift in the
productive capacity of mankind.
The recent downturn probably betokens
at most a new recognition by Nasdaq
investors that they earlier estimates were
too optimistic.
Professor Fogel's remarks:
"We have already reached the stage of human
development where material needs are
provided adequately at least a basic level and
that the distribution of material goods is
already and vastly improved over the past.
The more pressing need for humanity is
now to improve the distribution of spiritual
goods--especially the basic feeling that
'I am alive, I feel good, and I am worthwhile.'
But, if economics researchers can't come up
with reliable answers to how technology will
play out in the future, then I can only
report uncertainties at this time.
It follows that each of you may have the
missing information to help to put this
picture together?
Discussion questions:
• What paths will this technology revolution
take during your lifetime do you think?
• Will your line of business exist in 50 years?
• What business do you think it would be
smart to switch into right now?
• Will life be better because of the tech
revolution? Will your life be better?
• What new technology is likely to come into being
because of the information technology revolution?
Some summary comments by me
and invited remarks by you.