Robert,
re; Krugman's remark "The truth is that we live in an age not of extraordinary progress but of technological disappointment."
Taken out of context it is difficult to know what he is trying to suggest. I can think of whole spheres of disappointment, that are arguably rooted in technology, and that run the gamut from difficulty in installing Windows to the continued existence of malnutrition. Not to mention a failed investment or two. One must always remember that disappointment is the sum of the difference between expectations and reality. I do not know what Krugman's expectations are or were but for my part, I continue to be amazed, with technology far exceeding most of my expectations.
To say "we do not live in an age of extraordinary progress" is likely and simply his use of the antithetical rhetorical device. I doubt if Krugman belives it. He must have a point to underscore.
In any case, it may be useful to read some comments as to the economic importance of information technology as follows. These are excerpts from a gov't report on IT. This leaves out technology influence on medicine, transportation, production, and a host of endeavors that have benfitted from advances in technology. By the way, I supply the link to the report at the end of the excerpts.
Best,
Stitch
THE DIGITAL REVOLUTION
In recent years, the U.S. economy has performed beyond most expectations. A shrinking budget deficit, low interest rates, a stable macroeconomic environment, expanding international trade with fewer barriers, and effective private sector management are all credited with playing a role. While the full economic impact of information technology cannot yet be precisely evaluated, its impact has been significant.
 Information technology industries have been growing at more than double the rate of the overall economy,they now represent 8.2 percent of GDP, up from 4.9 percent in 1985.
 IT industries by themselves have driven over one-quarter of total real economic growth (not including any indirect effects) on average over each of the last 5 years.
 Without information technology, overall inflation would have been 3.1 percent in 1997Cmore than a full percentage point higher than the 2.0 percent it was.
 Companies throughout the economy are betting on IT to boost productivity. In the 1960s, business spending on IT equipment represented only 3 percent of total business equipment investment. In 1996, IT=s share rose to 45 percent.
 In 1996, 7.4 million people worked in the IT sector and in IT-related jobs across the economy. These workers earned just under $46,000 per year, compared to an average of $28,000 for the private sector as a whole.
 At almost $56,000 per year, workers in the software and services industries were the highest wage earners. Earnings have been growing at a rate of 6.6 percent per year, versus 3.8 percent for total private sector employment. In 1985, 557,000 people worked in these industries. By 1996, the figure had more than doubled to reach 1.2 million workers.
The Internet's pace of adoption eclipses all other technologies that preceded it. Radio was in existence 38 years before 50 million people tuned in; TV took 13 years to reach that benchmark. Sixteen years after the first PC kit came out, 50 million people were using one.11 Once it was opened to the general public, the Internet crossed that line in four years.
Growing Economic Importance of the IT Sector
One of the most notable economic developments in recent years has been the rapid increase in the IT sector's (computing and communications) share of investment activity and of the gross domestic product (GDP). It grew from 4.9 percent of the economy in 1985 to 6.1 percent by 1990 as the PC began to penetrate homes and offices. The next spurt started in 1993, with the burst of commercial activity driven by the Internet. From 1993 to 1998, the IT share of the economy will have risen from 6.4 percent to an estimated 8.2 percent. With such rapid expansion, IT's share of total nominal GDP growth has been running almost double its share of the economy, at close to 15 percent.
What makes this rise in IT's nominal share of the economy even more remarkable is the fact that IT prices, adjusted for quality and performance improvements, have been falling while prices in the rest of the economy have been rising.
Computing power has been doubling every 18 months for the past 30 years. At the same time, the average price of a transistor has fallen by six orders of magnitude, due to microprocessor development. In just six years' time, the cost of microprocessor computing power has decreased from $230 to $3.42 per MIPS. No other manufactured item has decreased in cost so far, so fast.13
In 1996 and 1997, declining prices in IT industries lowered overall inflation by one full percentage point . Without the contribution of the IT sector, overall inflation, at 2.0 percent, would have been 3.1 percent in 1997.
Thus, in real terms, the expansion of the IT sector accounts for an even larger share of overall economic growth in the mid-to late-1990s. In recent years, IT industries have been responsible for more than one-quarter of real economic growth.
Companies throughout the economy are betting on IT to boost productivity and efficiency. In the 1960s, business spending on IT equipment represented only 3 percent of total business equipment investment. In 1996, IT's share rose to 45 percent . For some industries like communications, insurance and investment brokerages, IT equipment constitutes over three-quarters of all equipment investment.
Information technology supports high-paying jobs. In 1996, 7.4 million people worked in IT industries and in IT-related occupations across the economy. They earned close to $46,000 per year, compared to an average of $28,000 for the private sector.
The impact of IT is also reflected in the capital IT firms currently represent. The collective market capitalizations of five major companies, Microsoft, Intel, Compaq, Dell and Cisco, has grown to over $588 billion in 1997 from under $12 billion in 1987,15 close to a fifty-fold increase in the space of a decade.
Full report at: ecommerce.gov |
