By Simon Bond

Joel Mokyr is the Robert H Strotz Professor of Arts and Sciences and Professor of Economics and History at Northwestern University and Sackler Professor (by special appointment) at the Eitan Berglas School of Economics at the University of Tel Aviv.

He specialises in economic history and the economics of technological change and population change. He is a director of the NBER and serves as chair of the advisory committee of the Institutions, Organizations, and Growth programme of the Canadian Institute of Advanced Research.

He also argues that GDP may not be the best indicator of economic growth, detailed below are some of his very thoughtful views.

"Economists are trained to look at aggregate statistics like GDP per capita and its derivatives such as factor productivity. These measures were designed for a steel-and-wheat economy, not one in which information and data are the most dynamic sector. Many of the new goods and services are expensive to design, but once they work, they can be copied at very low or zero costs.

That means they tend to contribute little to measured output even if their impact on consumer welfare is very large. Dealing with altogether new goods and services was not what these numbers were designed for, despite the heroic efforts by BLS statisticians. The aggregative statistics miss much of what is interesting.

Another characteristic of many of these goods is the ‘dumbing-down’ of the user; the ingenuity in a piece of modern technology such as a smartphone is fully frontloaded. A few thousand highly skilled and creative hardware engineers and a few tens of thousand software and application writers design it with incredible technical sophistication, so that hundreds of millions can use it without any.

For that reason, there are few jobs in the high-technology sector, but those that are there pay well. Modern technology often leads to winner-take-all outcomes, and the inequality implications in terms of income – though not in terms of access to the good itself – are worrisome. What we gain as consumers, citizens, viewers and patients we may lose as workers. The demand for labour ‘hollows out’ and the demand for medium-skilled labour declines unless and until new jobs are created to absorb those replaced by automatons and robots.

It is impossible to know if such jobs will be created at a sufficient pace. Our own time has created occupations that may have sounded incomprehensible or grotesque to our grandparents, from cybersecurity experts to video-game designers to canine psychiatrists. If the past is any guide, the future holds occupations that will look just as strange to us.

This very human shortfall of imagination is largely responsible for much of today’s pessimism. In many other respects, too, the labour-market outlook is not wholly bleak. The nature of the labour market is changing, to be sure, but if telecommuting and driverless cars can cut the commuting time for an increasingly urbanised workforce tormented by traffic jams, at least one major (and uncounted) tax on workers will be eliminated. Such an improvement would not be reflected in the aggregate output and productivity statistics. 

In short: technology is not our enemy, it is our best hope. It will never be painless, and there will always be those who draw the short straw in the vast lottery of creative destruction. But if you think rapid technological change is undesirable, try secular stagnation".