Should-Read: When I consider how much time people spend on their smartphones—and how incredibly expensive it would have been in any previous decade to actually produce what the smartphone does—I do wonder about the math behind slow measured economic growth. The pessimists must die on the hill that everything smartphones do are close substitutes for things that were done cheaply in the past. But is that really the case? I want to see a sample of representative daily smartphone use patterns to assess this. And, of course, the very sharp Greg Ip thinks we ain’t seen nothin yet: Greg Ip: A Tech-Driven Boom Is Coming; Please Be Patient: “There isn’t a paradox: automation hasn’t advanced nearly as far as evangelists claim, and where it has, it’s often created more jobs than it’s destroyed…

…But that’s the past; what about the future?… History shows that technological breakthroughs commonly take decades to move the needle on economic growth. Blame it on false starts, costly implementation, human resistance, and simple math…. Lags… the cost and time it takes for businesses to adapt to new technologies, obstacles they see at work today. Online shopping came along in the 1990s but retailers struggled to adapt business processes to the internet. They needed to build complementary infrastructure such as fulfillment centers, and, the authors note, customers had to adapt their habits, as well….

What about AI? Banks first used machine learning—a type of artificial intelligence that spots patterns in massive data sets—to spot credit-card fraud in 1987. But to gain widespread acceptance first computing power had to get a lot cheaper, datasets a lot bigger, and lots of people had to spend lots of hours deciding what questions to ask and then training algorithms to answer them. Hype always runs well ahead of reality, bringing failure and dashed expectations.

Jeffrey Funk, an independent researcher, studied the predictions of breakthrough technologies made by MIT Technology Review…. Of 40 predictions it made between 2001 and 2005, most never became a market worth more than $5 billion by 2015, and only one—data mining—become a market worth more than $100 billion. Meanwhile, the magazine completely missed smartphones ($400 billion), cloud computing ($175 billion), social networking, e-books, fintech and wearable computing. Mr. Funk says the lists better reflected ​the hottest trends in scientific laboratories whereas commercial breakthroughs are more often extrapolations of existing technology….

A third of the rise in the S&P 500 stock market index this year is attributable to Apple Inc., Amazon.com Inc., Google parent Alphabet Inc., Facebook Inc. and Microsoft…. Perhaps the U.S. is at a point when technology and an economy growing solidly with low unemployment become mutually reinforcing. “Entrepreneurs are more willing to take risks, including investments in new technologies and new business models when the economy is running hotter,” says Mr. Brynjolfsson…

AUTHORS:

Brad DeLong
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