Article Review on The Economics of Innovation
According to the “Has the ideas machine broken down” article, it is evident that the world, specifically the Silicon Valley is experiencing a great economic stagnation (n.p.). the situation has been evidenced by a decline in the income growth and the employment sector, which continues to record a decline in employment opportunities because of economic-related challenges. According to Tyler Cowen, an economist, there has been no notable growth since the year 2000. Additionally, new technologies no longer have the invigorating impact they had in the 80’s.
The second argument in the article is that little invention is going on judging from the number of patents filed in the recent years. To prove this point, Cowen cites the work done by Mr. Jones, an economist at Stanford University in 2002. Jones studied the contribution of various factors to the growth of per capita income in America from 1950 to 1993. Third, the pessimists argue that the recent progress rate is much slower compared to the 19th and 20th Century (n.p). An example is that the railways and steamships that replaced the horse-drawn wagons have merely evolved from steam engines to diesel-powered and electric trains. Also, highway travel has not evolved much.
Economists argue that the slow-down in innovation is a tactical move to prevent rapid and sudden unemployment due to the upsurge of robots in the workplace. Indeed, the new technologies that came with globalization stagnated income and drastically reduced employment opportunities and thus further rapid progress could worsen the case. Besides, the period between the 70’s and the 90’s could be considered as growth a pause as the earlier innovations had been exhausted and the aspects such as personal communication, computing, and biotechnology could not influence the overall growth of the economy. Moreover, globalization resulted in increased workers in companies, and the impact was cheaper labor costs.
To sum up, I believe that the ideas machine has not broken down as the pessimists put it. Instead, the decline in innovation is to create time for adjustment in a manner that will not affect the human labor and the environment. Additionally, it is meant to reduce the risks that may come with the revolutionary changes. For example, while high-speed cars can be created, will there be enough energy to drive them and still satisfy other energy needs? Similarly, robots can be designed to take control of offices, but the question is what will be left for humans to do to earn a living?
“Has the ideas machine broken down?” The Economist, The Economist Newspaper, 12 Jan. 2013. https://www.economist.com/news/briefing/21569381-idea-innovation-and-new-technology-have-stopped-driving-growth-getting-increasing