Image source, Getty Images
- author, Jonty Bloom
- Role, Financial journalist
We are often told that we are in the middle of a technological revolution.
The world of finance and work continues to transform and improve thanks to computers, the Internet, faster communications, data processing, robotics, and now artificial intelligence.
It turns out there’s a slight problem with all this: none of it seems to be reflected in the economic data.
There is very little evidence that all this technology makes us work better and faster.
In the United Kingdom, from 1974 to 2008, productivity – the amount of product produced by a worker – grew at an annual rate of 2.3%. But between 2008 and 2020, the pace of productivity declined to approximately 0.5% per year.
In the first three months of this year, British productivity fell by 0.6% compared to last year.
The picture is similar in most Western countries. In the United States, productivity growth between 1995 and 2005 was 3.1%, but fell to 1.4% between 2005 and 2019.
Image source, Getty Images
We still seem to be going through a wonderful period of innovation and technological development, but at the same time, productivity has slowed. How can this apparent paradox be explained?
It may be that instead of using technology to increase productivity, we use it to avoid work.
This includes activities such as messaging friends on WhatsApp, watching videos on YouTube, arguing angrily on Twitter, or simply mindlessly surfing the Internet.
There could of course be other, much greater factors.
Productivity is something economists watch carefully. Although it is a complex issue, given the negative impact of the 2008 financial crisis and current high inflation, there are two main explanations for the inability of technology to boost productivity.
The first is that we simply don’t measure the impact of technology well. The second reason is that economic revolutions tend to be slow-burning. for this reason, Technological change is already happening, but it may be decades before we see the full benefits.
“There’s nothing that doesn’t use digital technology, but it’s hard to see what’s going on, because none of that shows up in the statistics,” says Diane Coyle, professor of public policy at Cambridge University, and an expert on measuring productivity. “It helps us understand what’s happening.”
For example, a company that was investing in its computer servers and technology departments may now be investing in its own computer servers and technology departments getting help from external sources Both services are for a cloud-based provider based abroad.
The outside company obtains the best software, with constant updates, in a reliable and cheap way.
But in terms of how to measure the size of an economy, this measure of efficiency makes a firm look smaller, not larger. It is no longer seen as investing in this area of its technological infrastructure, which could previously be measured as part of its infrastructure. Economic growth.
Coyle gives an example from the 19th century Industrial Revolution that shows how productivity can be achieved Leave aside What statistics record.
The expert says: “I have a wonderful UK statistics yearbook from 1885. There are 120 pages, almost all of them on agriculture, and there are 12 pages on mines, railways and cotton mills.”
This occurred at the height of the Industrial Revolution, a period of the so-called “dark and demonic factories,” yet 90% of the accumulated data is from an older and increasingly less important sector of the economy, and only 10% corresponds to this sector. To what we now consider to be one of the most important changes in world history.
“The way we look at the economy is through a lens What was the case in the past“Not like today,” Professor Cowell explains.
Image source, Diane Coyle
The other reason is that the current technological revolution is happening Slow down Than we expect.
Nick Crafts is Emeritus Professor of Economic History at the University of Sussex Business School, UK. He points out that The massive wave of changes in economic behavior that we tend to think happened almost overnight took decades.The same thing could happen now.
“The steam engine was patented by James Watt in 1769,” he says. “But the first major commercial railway, the Liverpool to Manchester line, opened in 1830, and the foundation of the railway network was built in 1850. That was 80 years after the patent.”
Image source, Getty Images
The same pattern can be observed with the use of electricity. The time from the first public use of the electric light bulb in 1879 to the electrification of entire countries and the replacement of steam power was at least 40 years.
It is possible that we are experiencing a similar period of time now, as the world was between the peak of steam power and the full development of electricity.
The country and companies that make the best and fastest use of new technology will win the productivity race. This seems to be, as with steam and electricity, not only the technology itself, but also how it is used, adapted and exploited; In other words, how skilled you are.
Professor Quill is watching what’s happening. “There is a lot of evidence now that whatever the company, there is a growing disparity between those who can use technology and those who cannot.”
“It seems that if you have highly trained people, and you have a lot of data and you know how to use sophisticated software, and you can change processes so people can use the information, Your productivity will skyrocket.”
“However, in the same sector of the economy there are other companies that simply cannot do this.”
Technology doesn’t seem to be the problem, and in some cases it’s not the solution either. High productivity will only come to those who learn to use it better.
Now you can receive notifications from BBC Mundo. Download the new version of our app and activate it so you don’t miss our best content.
“Creator. Devoted pop culture specialist. Certified web fanatic. Unapologetic coffee lover.”