The Future, the Internet and Economic Growth

[Commentary] I am an optimist about the potential of technology – particularly information technology – to spur growth and progress in society. But this view is not universal.

In fact, a debate about the growth of our economy and the broader world economy has been emerging recently and it relates directly to the role of the Internet and mobile technologies. The debate centers on the question of whether we are facing a fundamentally different economy – both in the U. S. and globally – than we have had in the recent past. This is a very important topic because much of the current debate around what to do to spur more growth centers on understanding how the economy responds to policy changes and to the actions of various actors, such as businesses and consumers. Some believe that the U. S. economy’s basic working fundamentals have not changed much in recent years. This is the view of Ben Bernanke and many others.

But others believe that the past 250 years may prove to have been a “unique” period of expansion that may not continue in the years ahead. As a result, they believe that achieving annual growth rates of three to four percent going forward will be much more difficult than in the past. Among those making this argument is Robert Gordon. You can read Gordon’s paper at the link, but in a nutshell he believes the waves of innovation over the last 250 years (including the Internet) have largely played out, and that while new technologies and innovations will spur economic growth, a host of other factors – an ongoing global debt crisis, demographic challenges, lack of access to educational resources – will tamp down economic growth for decades to levels as low as .5 percent a year.

Is Gordon right?