Between 1860 and 1900, inventors created the telephone, phonograph, moving pictures and air transportation. Thomas Edison tested the first practical lightbulb, Karl Benz built a workable internal combustion engine and David Edward Hughes transmitted the first wireless signal – and they did it during just one three-month period in 1879. The result was a golden age of economic growth from about 1900 through the 1960s, with a broad-based rise in incomes across the industrialized world.
In 1900, your kitchen lacked running water and electric lighting. Refrigeration required a daily visit from the iceman with a fresh, frosty block. By 1970, your kitchen featured running water, electric light, a gas or electric stove and oven, an electric refrigerator, a dishwasher, microwave and food processor. But take a look around your kitchen today, and what do you see? Basically, the same stuff. There may be a few more digital displays, and maybe an Amazon Echo in one corner. But the fundamentals that determine how long it takes you to make a meal and clean up afterward have changed hardly at all.
What Happened to Growth?
This wouldn’t matter if it were just about putting dinner on the table. The bigger concern is that, across the industrialized world, economic growth began to slow in the Seventies. Except for an upward bounce in the late Nineties, it has stagnated ever since. Economists blame it on a lack of growth in productivity – the ability of workers to make more per hour this year than they made last year. In a 2017 study, Robert Atkinson and John Wu reported that the last decade has seen the slowest growth in productivity of the last 75 years.
Which is truly weird. Productivity growth is the product of technology innovation. And we’re in a period of intense technology change, right? A wave of disruption that many fear will outpace our ability to keep up.
Except that, as reported by Atkinson and Wu, the economy is currently destroying and creating jobs at less than half the rate of the last half of the 20th Century. The five years from 2010 to 2015 saw the lowest share of jobs lost to new technology of any time in the past 150 years (except for a brief bump in the Fifties).
What’s Going On?
One possibility is that, since we began commercializing the Internet and creating gadgets like smartphones to access it, we have been busy inventing stuff that doesn’t really matter. As venture capitalist Peter Thiel has put it, “We wanted flying cars. Instead we got 140 characters.”
Alison Arieff, a contributing writer for The New York Times, published a wonderful list of the products, apps and services that she encountered over the course of a couple of weeks. They included a service that dispatches someone to gas up your car, a service that packs your suitcase for you virtually (whatever that means), an app to locate rentable yachts and a sensor for your child’s diaper that alerts you when it needs changing.
I tour a lot of incubators and accelerators in my work, and this list looks depressingly familiar. Intelligent Communities rightly put great emphasis on spurring innovation – but a distressingly large percentage of startups I see are busy making life marginally safer, slightly more convenient and a bit more entertaining. Some may make their founders some money. But far too many entrepreneurs aim, in the words of Ms. Arieff, to “provide for themselves everything that their mothers no longer do.”
The Real Disruptors
But there is good news for those us who are not getting rich by finding a substitute for Mom. The technology pipeline also contains major innovations with huge potential to restore broad-based productivity and economic growth: rapid and deep advances in artificial intelligence and natural language processing, driverless cars and trucks, robotics and 3D printing. Accenture estimates that artificial intelligence alone could, by 2035, add economic value worth $800 billion in Britain, $1 trillion in Germany, $2 trillion in Japan and $8 trillion in the US.
These are also the innovations, however, with the greatest potential to turn job markets upside down, and give job creation and destruction their 20th Century mojo again. That is the part of the great growth story of the last century that we like to forget: the vast number of jobs that vanished, never to be seen again, while the electricity, the automobile, the telephone and wireless communications created the jobs we recognize today.
If your own job is economic development and job creation, there is an important takeaway. In the coming disruptive return to growth, demand for your skills will be greater than ever – and so will the challenge to know the difference between innovation that matters and innovation just looks cool.