The New Economy and the

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The New Economy and the Revolution in
Information Technology Second Half.
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3. Economic data since 1991, what do they
mean?
Recall that productivity rebounded in the
late 1990s.

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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?
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Annual GDP from 1990 to 2001 in Real Terms.
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GDP Growth Rates 1990-2001
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GDP Growth Rates over Several Historical Periods
in the Past Century
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The recent slowdown in GDP growth rates has
alarmed many people.
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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?
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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?
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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
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Part 4 Where are we headed in the future?
If only Nostrademus were here, what would he
tell us?
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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.
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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.
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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.
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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.
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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.'
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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?
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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?
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Some summary comments by me and invited
remarks by you.