“By all appearances, we’re in a golden age of innovation. Every month sees new advances in artificial intelligence, gene therapy, robotics, and software apps. Research and development as a share of gross domestic product [of the U.S.] is near an all-time high. There are more scientists and engineers in the U.S. than ever before. None of this has translated into meaningful advances in Americans’ standard of living.” The question I address here is why.
For one thing, a lag follows big ideas before which they translate into increases in productivity related to labor and capital. Breakthroughs in electricity, aviation, and antibiotics did not reach their maximum impact until the 1950s, when “total factor productivity” stood at 3.4% a year. In contrast, the figure for the first half of the 2010s was a paltry 0.5% a year. “Outside of personal technology, improvements in everyday life” were “incremental, not revolutionary,” during this period. Houses, appliances, and cars looked much the same as they did twenty years earlier. Airplanes flew no faster than in the 1960s. This “innovation slump” is, according to the Wall Street Journal, “a key reason the American standards of living have stagnated since 2000.” What had been revolutionary breakthroughs in the last century were still carrying the day into the next by means of incremental change based on product improvements. It could take a few decades before the fruitful research in AI, gene therapy, robotics, and software apps reach marketability and thus can impact productivity and radically alter daily life.
To be sure, the computer-tech revolution had altered daily life even by 2010—the smart-phone is a case in point. Yet personal computers go back to the 1970s so even in this respect the marketable innovations by Steve Jobs and Bill Gates can be viewed as incremental rather than revolutionary in nature. Software apps are themselves responsible for incremental changes based on the smartphone, which in turn is based on the personal computer. Even amid all the high-tech glitter, the developed world in 2016 stood as if a surfer waiting between two giant waves for the next one to hit.
Artificial intelligence, gene therapy, robotics, and software apps were poised to give rise to the next wave—first one of revolutionary change and then, after a lag, another wave—one of raised living standards. Unfortunately, revolutionary innovation “comes through trial and error, but society has grown less tolerant of risk.” Furthermore, regulations “have raised the bar for commercializing new ideas.” Lastly, “a trend toward industry concentration may have made it harder for upstart innovators to gain a toehold.” In other words, the concentration of private capital may forestall the switch from continued incrementalism to revolutionary change. Breaking up oligopolies as a matter of public policy thus has more to it than merely preventing monopoly.
To be sure, companies and entrepreneurs in 2016 were “making high-risk bets on cars, space travel, and drones.” Add in advances in AI and medical research—which could make death no longer inevitable for human beings—and some serious changes in daily life and productivity can be predicted. Yet, as potentially momentous as these efforts at innovation are, decades could separate the inventions and impacts on daily life and productivity. I suspect the world in 2016 was truly between two waves—the first of electricity, the telephone, sound recording, the automobile, the computer, and the airplane—and the second of space/astronomy, medical research, and AI/computer technology. Colonizing Mars, rendering death not inevitable, and combining AI, robotics, and software apps could result in wave that would dwarf the one of the previous century. The advent of smartphones, having all the glitter of a revolutionary product yet being an adaptation of the personal computer, whets appetites to look for the “big one” coming up on the horizon. Indeed, we have little time to waste; that wave could bring with it technology capable of arresting and even reversing the accumulations of CO2 and methane in the Earth’s atmosphere. The interesting dynamic of being able to save this planet just as we are able to colonize another is like the related one of making death something less than inevitable—due to stem-cell research on organ replacement, genetic therapy, and advances on curing diseases—just as we make the Earth habitable for our species for the indefinite future. Meanwhile, we are like children who have outgrown their clothes, still playing with adaptations of twentieth-century toys.
 Greg Ip, “Economic Drag: Few Big Ideas,” The Wall Street Journal, December 7, 2016.