Submitted by Nick Colas of Convergex
Supermodels And Other Productivity Measures
One of the livelier debates in economics at the moment relates to the intersection of productivity growth and the role of technology in modern society. At its core, the problem is a simple one: for all the smartphones, Internet access, apps and other technological advancements of the last decade, productivity growth is close to zero (0.3% in Q4 2016). One popular rebuttal from tech land is essentially “You economists are doing it wrong – missing critical items like free apps and other benefits of an interconnected world.”
Today we look this problem through a novel lens, measuring the inflation adjusted price of productivity-enhancing consumer items from the 1920s. The idea is that these products – cars, washing machines, electric refrigerators, sewing machines and typewriters – helped play a role in forming the golden age of U.S. productivity growth (1939-2000). Our conclusion: if current day technology is so helpful to productivity, why is it so cheap?
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