Entrepreneur and venture capitalist
Marc Andreessen makes a thought provoking point in Tyler Cowen’s recent
article; Silicon Valley Has Not Saved Us
From a Productivity Slowdown. Claiming that the overall standard of life is
improving more so than what is statistically being reported, he backs his
argument with the advances we have seen in the Internet. We now have unlimited
access to countless search engines and social media websites though this is not
a component of growth in GDP or the overall standard of living. However, the
author notes that the primary concern at hand as the lagging growth rate of
labor productivity at a dismal 1.8 percent, in comparison with the ten year
rate of 2.8 percent. So while statistics may disagree, the standard of living
has increased with a lack of growth from labor and output, which seems to be an
observation provoking much debate.
http://www.nytimes.com/2016/03/06/upshot/silicon-valley-has-not-saved-us-from-a-productivity-slowdown.html?ref=economy&_r=0
I think what Marc Andreessen brings up in this article is very interesting. I am on board with what he is stating. Due to the increase of free internet access that consumers have, should definitely lead to an increase in the standard of living. They are able to access information that has not be available to them before. Even though GDP doesn't account for this figure now, I can see GDP accounting for this in the future.
ReplyDeleteI agree that this is article brings up a very interesting topic. However, when Jacob says “I think what Marc Andreessen brings up in this article is very interesting. I am on board with what he is stating” I have to disagree wholeheartedly. Actually, to be clear though the very beginning of the article talks about Marc Andreessen, the article in its entirety complete refutes what Andreessen believes. Furthermore, the rest of the article makes a mockery of Andreessen by comparing his “entrepreneurial” against the “Doctoral” opinion. For further clarity I will quote two further exerts from the article
ReplyDelete(1) “An additional problem for the optimistic interpretation is this: The productivity slowdown is too big in scale, relative to the size of the tech sector, to be plausibly compensated for by tech progress. Basically, under a conservative estimate, as outlined by Professor Syverson, the productivity slowdown has led to a cumulative loss of $2.7 trillion in gross domestic product since the end of 2004; that is how much more output would have been produced had the earlier rate of productivity growth been maintained. To make up for this difference, Professor Syverson estimates, consumer surplus (consumer benefits in excess of market price) would have to be five times as high as measured in the industries that produce and service information and communications technology. That seems implausibly large as a measurement gap.”
(2) “Or look at it this way: The tech economy just isn’t big enough to account for the productivity gap. That gap has caused measured G.D.P. to be about 15 percent lower than it would have been otherwise, yet digital technology industries were only about 7.7 percent of G.D.P. in 2004. Even if the free component of the Internet has become more important since 2004, it’s hard to imagine that it is so much better now that it accounts for such a big proportion of G.D.P.”
Hopefully this will clear up the issue that isn’t clear in the above summery. I can see how if you read the above summary, which only sums up the first two paragraphs, one could easily fall for the grossly unqualified opinion of Marc Andreessen. So that is to say, I completely disagree with Marc Andreessen, who is really a tech and entrepreneurial success story (Doesn’t know a whole lot about economics). Great insightful article, but is not only about “Claiming that the overall standard of life is improving more so than what is statistically being reported, he backs his argument with the advances we have seen in the Internet. We now have unlimited access to countless search engines and social media websites though this is not a component of growth in GDP or the overall standard of living.” (Part of original summary). Possibly in the future using the moto “nvllivs in verba” will help prevent this progressive problem.