Zeev
I strongly agree with Mr.Mandel's who are strongly influenced by Schumpeter's innovation cycles:
The ability of Americans to thrive during the next 10, 20, or even 30 years does not depend on the budget deficit or the potential exodus of a few hundred thousand jobs to other countries. Rather, our economic future is inextricably linked to our ability to come up with more technological breakthroughs that equal the Internet in magnitude. Such large-scale innovations drive growth, create new jobs and industries, push up living standards for both rich and poor, and open up whole new vistas of possibilities. This is what I call "exuberant growth."
How can we be so sure of this? The lessons of history and economic research are very clear. Over the long run, economic progress in a highly developed country such as the U.S. depends mainly on technological advances. It was a succession of innovations -- including electricity, telephones, radio, automobiles, and antibiotics -- that revolutionized life in the first half of the 20th century. By contrast, the drought of economically significant innovations in the 1970s -- including the unanticipated failure of nuclear power as a cheap energy source -- helped pull down growth. It is no coincidence that the rise of the Internet in the 1990s coincided with the biggest rise in household incomes, and the biggest drop in poverty, in 30 years.
Perhaps most surprising, economists, who should be the biggest fans of growth, have mainly ignored or dismissed the importance of technological change. Textbooks, popular writings, and public pronouncements by leading economists tend to focus on topics such as the budget deficit, savings, and taxes, while giving short shrift to technology, the economy's main engine of growth (box). The result is to undermine public support for R&D funding and other critical policies for innovation. In this sense, the economics profession is, unintentionally, an enemy of growth.
alexander
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