The prosperity of the US has always depended on its ability to harness economic growth to technology-driven innovation. But right now Big Tech is as much a part of the problem as it is a part of the solution.
Have the tech giants – Amazon, Apple, Facebook, Google, and Microsoft – grown too big, rich, and powerful for regulators and politicians ever to take them on? The international investment community seems to think so, at least if sky-high tech valuations are any indication. But while that might be good news for the tech oligarchs, whether it is good for the economy is far from clear.
To be fair, the tech sector has been the United States’ economic pride and joy in recent decades, a seemingly endless wellspring of innovation. The speed and power of Google’s search engine is breathtaking, putting extraordinary knowledge at our fingertips. Internet telephony allows friends, relatives, and co-workers to interact face to face from halfway around the world, at very modest cost.
Yet, despite all this innovation, the pace of productivity growth in the broader economy remains lackluster. Many economists describe the current situation as a “second Solow moment,” referring to legendary MIT economist Robert Solow’s famous 1987 remark: “You can see the computer age everywhere but in the productivity statistics.”