Also, virtually every market is dominated by cartel, duopoly, or monopoly conditions, and companies are often satisfied with that position, so investment is down.
What he's saying is that all the fuss over Silicon Valley technology is not warranted when it comes to actual productivity gains.
This is a really important point because it suggests two different way of conceiving of technology: 1) how economists define technology, viz something that allows us to do more with less 2) what laymen consider technology: the latest gee whiz gizmo marketed by Silicon Valley
The economic definition is a lot stricter in some ways - and broader in other ways.
The takeaway is that in economic terms we really haven't experienced much technological evolution. I find that to be pretty believable.
What does productivity mean when your economy is increasingly powered by data, not money?
As a wild generalisation, there are two kinds of economic model - the political model, where the point is to use rhetoric to enhance power differentials between social castes, and the evolutionary model, which considers economic activity a proxy measure for collective intelligence and opportunity.
We're in a transition period where the former model is peaking and about to[1] crash, and the latter model is becoming more sharply defined.
In the former model an abundance of data is a bad thing, because the market value of any specific type of data crashes towards zero.
In the latter model an abundance of data is a good thing, because it increases the possibility of invention and innovation. And an abundance of data refinement tools is even better.
Which is a more accurate measure of productivity?
[1] For very poorly defined bounds of "about to". I'm guessing more than decade, less than a century.
What kind of "evolution" are you talking about? I think all you're pointing out is that Silicon Valley is extraordinarily bad at attributing value to data.
It's not the roll of economics to fix that problem. Economics deals with real things like people buying food and having to pay rent and pay actual taxes.
If Silicon Valley can't figure out a way to get translate "data" in to "thing I trade to my landlord so he doesn't call the cops", well, then Silicon Valley is wasting everyone's time.
For example, by 2005 (when the slowdown in Labor productivity began) most of the benefit of computers for most everywhere had been accomplished. Microsoft's dream of a PC on every desk was realized. Email was everywhere. For the average office worker, were there any major productivity gains from tech left? Nope.
Most tech improvement since then has been mostly about entertainment and mobility. Entertainment doesn't enhance the economic definition of technology, and the increase in mobile tech is probably a mixed bag in terms of productivity.
Prior to 2005, the productivity came from a revolution in computers and the Internet. Now we are just refining that revolution. To get high productivity gains, we need another revolution of some sort.
3D printing is nearly at prime time, which should greatly enhance manufacturing and design productivity. I don't know if that will have a great impact or not, but eventually there will be some disruptive technology that will bring real change.
But a car company doesn't need to reinvent production to save money per car. They can do that many ways without a single new robot to replace a person on the factory line. The fact of the matter is that if you look at the last three decades of growth it was all on the backs of cheap Chinese and Asian labor pools. Now those pools are demanding higher wages so we're pushing into ever smaller, cheaper labor pools. Eventually, the whole thing will come to a halt once African nations are at Brazil's level of development since they too will start demanding safer work, better wages, and a welfare state.
Then the real demand for technological productivity gains will be in full swing. Until then, we'll just exploit our fellow human being as best we can to get those sweet sweet metrics for Wall Street!
This is a fun thought-experiment.
http://www.mckinsey.com/business-functions/strategy-and-corp...