The coming tech-driven productivity leap – Axios

The coronavirus pandemic hit the global economy hard in 2020, but the economy may be close to consolidating years of technological advances and ready to take off in a burst of productivity growth.

Why it matters: Productivity is the engine that makes the economy grow for everyone. If long-gestating technologies like AI and automation really are ready to fulfill their potential, we'll have the chance to escape the great stagnation that has choked our economy and poisoned our politics.

What's happening: Hidden in part by the human and economic suffering of the pandemic, 2020 saw a collection of remarkable technological breakthroughs, including a mRNA vaccine for COVID-19 and advances in AI language generation.

Context: In a blog post published last month, the economist Tyler Cowen added in a few others, including affordable solar power and remote work, and asked whether total factor productivity (TFP) a rough approximation of the effect technological and strategic progress has on economic productivity in 2021 "will be remarkably high, maybe the highest ever?"

Flashback: After a few postwar decades of scorching growth, labor productivity began to decelerate sharply in the 1970s, and aside from a period of 3% growth in the mid-1990s to early 2000s which economists attributed to the widespread effects of the computer it's stayed mired at about 1.2% a year ever since .

It looks increasingly possible that the last decade plus of sluggish productivity growth isn't a sign that the benefits of new technology have permanently plateaued, but that businesses were using the time to invest in and adjust to those new advances and that we may now be ready to reap the benefits.

What they're saying: "Often times in the short term it can be costly to invest in new business processes and skills, and during that time you won't see productivity rising," Byrnjolfsson told me earlier this year.

By the numbers: A survey by the World Economic Forum in October found more than 80% of global firms plan to accelerate the digitization of business process and grow remote work, while half plan to accelerate automation.

The catch: If those gains don't filter down to workers or worse, end up eliminating jobs without replacing them with better ones even a faster, more productive economy won't ameliorate the inequality-driven political divisions that have dogged the U.S. in recent years.

The bottom line: As bad as 2020 has been, we may look back upon it as the year that finished the launchpad for a new Roaring '20s.

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The coming tech-driven productivity leap - Axios