We know what productivity growth requires: investments in new technology. For previous generations, this was factories full of machines, first powered by steam and then by electricity. More recently it was the arrival of computers, which changed how work was organized within and across firms.
We often perceive the impact of new technology imperfectly and with a lag, and today is no different. We can see a wave of hardware and software innovations underway — technologies such as 3D printing and distributed ledgers will allow manufacturing and finance to become more dispersed — but it is hard to know exactly where it will take us.
Andy McAfee and I have just released a short e-book, Race Against the Machine. In it, we try to reconcile two important facts. 1) Technology continues to progress rapidly. In fact, the past decade has seen the fastest productivity growth since the 1960s, but 2) median wages and employment have both stagnated, leaving millions of people worse off than before. This presents a paradox: if technology and productivity are improving so much why are millions being left behind?
In the book, we document remarkable advances in digital technologies in particular. Innovations like IBM’s Watson, Google’s self-driving car, Apple’s Siri are turning science fiction into reality. Machines are doing more and more tasks that once only humans could do.