The Nobel Prize winning economist Milton Friedman, in his seminal work Capitalism and Freedom, argued quite powerfully for the intertwining of political and economic freedom, asserting that a free polity and a free market were the foundations of economic prosperity everywhere. That thinking has guided much of the political and economic rhetoric on matters affecting the developing nations of the world.
During his tenure as Federal Reserve Chairman, Alan Greenspan added an additional element to the prosperity equation--technology.
During his tenure as Federal Reserve Chairman, Alan Greenspan added an additional element to the prosperity equation--technology.
When historians look back at the latter half of the 1990s a decade or two hence, I suspect that they will conclude we are now living through a pivotal period in American economic history. New technologies that evolved from the cumulative innovations of the past half-century have now begun to bring about dramatic changes in the way goods and services are produced and in the way they are distributed to final users. Those innovations, exemplified most recently by the multiplying uses of the Internet, have brought on a flood of startup firms, many of which claim to offer the chance to revolutionize and dominate large shares of the nation's production and distribution system.Technology makes life better for everyone. Technology raises everyone's standard of living, and ends crushing poverty.
We know this because Alan Greenspan has said so. We know this because experts and academics have said so. Research at the Federal Reserve Bank of Dallas states the case quite thus:
Technological progress is the key to a country’s long-term increase in its material well-being, the work of Nobel laureate Robert Solow and economist Trevor Swan showed in the 1950s. The contribution of factors of production, such as capital or labor, is only temporary. The Nobel Prize-winning work reshaped our understanding of why countries such as the United States exhibit sustained labor productivity growth, while others such as Niger and Zimbabwe become impoverished. Technological progress also might hold a key to understanding persistent differences in the rates of improvement in the standard of living among countries.
The science is settled, as it were. Technology is the magic elixir to bring prosperity to everyone. The secret for poor countries to climb out of poverty is technology. Technology powers economic growth, and economic growth powers rising living standards.
Except, of course, when technology does not power economic growth. Then technology can make life much, much worse. Then technology can foster new ways to exploit and disadvantage people and nations.
