Governments need to anticipate the side effects of technological change, and put effective policies in place, writes Michael J Boskin.
What do the leaks of unflattering email from the Democratic National Committee’s hacked servers during the 2016 US presidential election campaign and the deafening hour-long emergency-warning siren in Dallas, Texas, have in common?
It’s the same thing that links the North Korean nuclear threat and terrorist attacks in Europe and the United States: all represent the downsides of tremendously beneficial technologies – risks that increasingly demand a robust policy response.
The growing contentiousness of technology is exemplified in debates over so-called net neutrality and disputes between Apple and the FBI over unlocking suspected terrorists’ iPhones. This is hardly surprising: as technology has become increasingly consequential – affecting everything from our security (nuclear weapons and cyberwar) to our jobs (labor-market disruptions from advanced software and robotics) – its impact has been good, bad, and potentially ugly.
A FORCE FOR GOOD
First, the good. Technology has eliminated diseases like smallpox and has all but eradicated other, like polio; enabled space exploration; sped up transportation; and opened new vistas of opportunity for finance, entertainment, and much else. Cellular telephony alone has freed the vast majority of the world’s population from communication constraints.
Technical advances have also increased economic productivity. The invention of crop rotation and mechanised equipment dramatically increased agricultural productivity and enabled human civilisation to shift from farms to cities. As recently as 1900, one-third of Americans lived on farms; today, that figure is just 2%.
Similarly, electrification, automation, software, and, most recently, robotics have all brought major gains in manufacturing productivity. My colleague Larry Lau and I estimate that technical change is responsible for roughly half the economic growth of the G7 economies in recent decades.
THE PRODUCTIVITY ARGUMENT
Pessimists worry that the productivity-enhancing benefits of technology are waning and unlikely to rebound. They claim that technologies like Internet search and social networking cannot improve productivity to the same extent that electrification and the rise of the automobile did.
Optimists, by contrast, believe that advances like Big Data, nanotechnology, and artificial intelligence herald a new era of technology-driven improvements.
While it is impossible to predict the next ‘killer app’ arising from these technologies, that is no reason, they argue, to assume there isn’t one. After all, important technologies sometimes derive their main commercial value from uses quite different from those the inventor had in mind.
For example, James Watt’s steam engine was created to pump water out of coal mines, not to power railroads or ships. Likewise, Guglielmo Marconi’s work on long-distance radio transmission was intended simply to create competition for the telegraph; Marconi never envisioned broadcast radio stations or modern wireless communication.
But technological change has also spurred considerable dislocation, harming many along the way. In the early nineteenth century, fear of such dislocation drove textile workers in Yorkshire and Lancashire – the ‘Luddites’ – to smash new machines like automated looms and knitting frames.
Pessimists worry that the productivity-enhancing benefits of technology are waning
The dislocation of workers continues today, with robotics displacing some manufacturing jobs in the more advanced economies. Many fear that artificial intelligence will bring further dislocation, though the situation may not be as dire as some expect.
In the 1960s and early 1970s, many believed that computers and automation would lead to widespread structural unemployment. That never happened, because new kinds of jobs emerged to offset what dislocation occurred.
In any case, job displacement is not the only negative side effect of new technology. The automobile has greatly advanced mobility, but at the cost of unhealthy air pollution.
Cable TV, the internet, and social media have given people unprecedented power over the information they share and receive; but they have also contributed to the balkanization of information and social interaction, with people choosing sources and networks that reinforce their own biases.
Modern information technology, moreover, tends to be dominated by just a few firms: Google, for example, is literally synonymous with Internet search. Historically, such a concentration of economic power has been met with pushback, rooted in fears of monopoly. And, indeed, such firms are beginning to face scrutiny from antitrust officials, especially in Europe.
Whether consumers’ generally tolerant attitudes toward these companies will be sufficient to offset historic concerns over size and abuse of market power remains to be seen.
People are choosing sources and networks that reinforce their own biases
But the downsides of technology have become far darker, with the enemies of a free society able to communicate, plan, and conduct destructive acts more easily.
The Islamic State and al-Qaeda recruit online and provide virtual guidance on wreaking havoc; often, such groups do not even have to communicate directly with individuals to “inspire” them to perpetrate a terrorist attack. And, of course, nuclear technology provides not only emissions-free electricity, but also massively destructive weapons.
All of these threats and consequences demand clear policy responses that look not just to the past and present, but also to the future. Too often, governments become entangled in narrow and immediate disputes, like that between the FBI and Apple, and lose sight of future risks and challenges. That can create space for something really ugly to occur, such as, say, a cyber attack that knocks out an electrical grid.
Beyond the immediate consequences, such an incident could spur citizens to demand excessively stringent curbs on technology, risking freedom and prosperity in the quest for security.
What is really needed are new and improved institutions, policies, and cooperation between law enforcement and private firms, as well as among governments. Such efforts must not just react to developments, but also anticipate them. Only then can we mitigate future risks, while continuing to tap new technologies’ potential to improve people’s lives.
About the author: Michael J Boskin is Professor of Economics at Stanford University and Senior Fellow at the Hoover Institution. He was Chairman of George HW Bush’s Council of Economic Advisers from 1989 to 1993, and headed the so-called Boskin Commission, a congressional advisory body that highlighted errors in official US inflation estimates.