Introduction: The Future of the U.S. Economy
For many decades, the United States has had the most powerful economy. Productivity, technology, and innovation have all advanced over this time. There has been discussion on whether the US economy has peaked or whether there is still room for progress. A large number of US economists have come forward to share their perspectives on economic trends and the economy's future. Robert Gordon and Erik Brynjolfsson are two of those economists. The former is a Northwestern University economist, while the latter is a Massachusetts Institute of Technology Sloan School of Management professor. According to Robert Gordon, there will be a dramatic slowdown in the economy of the United States over the next 40 years even with innovation, technological advances, and productivity increases. On the other hand, Erik Brynjolfsson, in collaboration with Andrew McAfee, has also provided his view on the same subject in his TedTalk regarding economic growth. In this paper, I will describe my position on the subject of economic growth and whether the economic growth is still possible in the U.S. or whether it has peaked.
Economic Growth Stagnation: Agreeing with Robert Gordon
I agree with Robert Gordon that workers will earn more money because companies will expand and prosper if productivity increased. However, like Gordon, I do not see an economic growth in the next forty years. In fact, the economic growth rate is at its peak and any more advances in technology and innovation will stagnate it or, worse still, lower it. For more than a decade now, productivity growth has been dismal. Gordon (2014) also predicts that between 1972 and 2013, incomes actually shrank, and it is not going to be any better. The economic showdown is real despite the fact that there are notable advances in technology, innovation and productivity increases. Technology and innovation are playing a significant role in this story. Other technological optimists, such as Erik Brynjolfsson (2014), have argued against this trend saying that the full benefits of cloud computing, apps and social media are not showing up in the measurements of the economy. As much as that could be true, it is apparent yet mind-boggling that their overall effect is minimal or can we say negligible (Gordon, 2014).
The Impact of Automation on Economic Growth
In many jobs nowadays, automation is reducing the need for people. Automation and robots replacing people seems obvious for everyone. The implication of this trend is that it will result in a stagnation of income and worsen inequality. In recent times, there has been a decline in the rate of employment following automation. This can be attributed to the impressive advances in technology such as automated translation services and improved industrial robotics. It should be noted that citizens contribute much to the growth of the economy. If they are unemployed or the employment rate declined for that matter, it means their contribution to the United States’ Gross Domestic Product will decline thus lowering the economic growth of the country. Erik Brynjolfsson (2014) suggests that it is that time people raced with the machine. He further adds that slowing down the technology will do more harm than good to the prosperity of the economy. I tend to differ with Erik Brynjolfsson because these machines will contribute too little to the overall growth of the economy. The fact that machines have been able to learn nowadays is a huge blow to the employability of individuals. For this reason, the economic growth in the U.S. has peaked.
The Negligible Impact of Social Media and Apps on Economic Growth
In his works The Great Stagnation, Cowen (2011) of the George Mason University also warned of the negligible economic impact the social media and apps had. These two elements adversely affect the rate of economic growth as they lower productivity. My basic economic understanding of productivity is the number of workers producing per unit time. This is, in some ways, the most ominous and compelling story that Gordon explains through the numbers (Gordon, 2014). The best way to increase productivity is to combine labor with capital such as software and equipment. Removing the contribution of labor from the equation will mean a huge decline or slowdown in the economic growth of the United States in the coming years. I agree that automation results in lowering the cost of production. However, its negative impact on the employment rates as it will put people out of work. There will be a dramatic slowdown in the U.S. economic growth following the advances in technology and innovation, specifically robots. To be precise, these advancements will not only cause the economy to slow down but also to crash. Economic growth in the U.S. is not possible since this is it peak.
The Dominance of Intelligent Machines and the Decline of Human Labor
Ford, M. (2015) observed that “intelligent algorithms were on their way to making white-collar jobs obsolete.” He added that data analysts, paralegals, and travel agents are in the firing line. This is the trend that the economy of the United States is heading. In the next forty years or less, robots are likely to replace taxi drivers, doctors, and even computer programmers (Ford, 2015). What he does is that he recommends a radical reassessment of the political and economic structure if at all the economic growth of the United States has to continue growing (Ford, 2015). I am particularly impressed with Ford’s recommendation on the radical economic reassessment. The imminent danger is that these powerful new technologies have been adopted not only for clerical, retail, and manufacturing works but also in professions such as education, financial services, law, and medicine. According to Gordon (2014), the combination of what he calls the “headwinds” facing the country and a lack of strong productivity to fuel economic growth will surely bring the economy of the United States to its knees. His prediction is that in the next forty years, there would a bleak 0.3% growth of median disposal per year. In such a situation, the advances in technology, productivity, and innovation will initially lead to a technological boom. However, people will not have enough money to buy the goods that the robots will have made (Ford, 2015).
Conclusion: The Dramatic Slowdown in U.S. Economic Growth
In conclusion, the economic growth of the United States has peaked. However, it will see a dramatic slowdown in economic growth over the next 40 years even with innovation, technological advances, and productivity increases. The future innovation is no match for the “headwinds” of demographic shifts, education stagnation, unequal income distribution, and high debt that will cause growth to remain slow in the United States. In the recent future, there will be a domination of intelligent machines from automobiles to robots to drones. These machines will make the value of human labor diminish at an astonishing speed with zero economic value. These advances will impact national incomes due to the rising unemployment they will create in the process. The rise in unemployment will in turn result in increased welfare costs since fewer people will have the capital to invest. As a result, there will be a notable fall in the production over time. A combination of these factors will make the economic growth of the United States slow dramatically - a disruptive technology.
References
Brynjolfsson, Erik. (2014, February). The key to growth? Race with the machines. [Video file].
Retrieved from http://www.ted.com/talks/erik_brynjolfsson_the_key_to_growth_race_em_with_em_the_machines#t-699439
Cowen, T. (2011). The Great Stagnation: How America ate all the low-hanging fruit of modern
history, got sick, and will (eventually) feel better. New York: Dutton.
Ford, M. (2015). The Rise of Robots. Technology and the Threat of Mass Unemployment.
New York: Basic Books.
Gordon, R. J. (January 20, 2014). The Demise of U.S. Economic Growth: Restatement, Rebuttal,
and Reflections. The Washington Post.
Retrieved from http://apps.washingtonpost.com/g/page/business/the-demise-of-u-s-economic-growth-restatement-rebuttal-and-reflections/823/
