How Innovation Can Drive Future Growth and Address Economic Concerns in the Age of AI and Automation

  it is important to discuss the role of innovation, because innovation is not only related to A healthy economy is also related to a healthy society.
  What is the “role” of innovation? The period from the 1820s to the 1970s was a great era of innovation in the United States, and innovation extended to almost every field of society. As I argue in my book The Big Boom, this kind of innovation is a fascinating and sometimes exciting experience. People integrate innovation into their work and have a sense of taking action and achieving goals.
  In the United States, since about 1970, a secular slowdown in productivity growth—more precisely, in total factor productivity growth—has led to near stagnation in total labor compensation and national income, as well as considerable structural Variety. Household surveys show that an increasing number of economically active participants appear to be less satisfied with their lives.
  This change will ultimately bring about a shift in the political landscape. Many workers are dissatisfied and are expressing their frustration by voting against the parties that dominate the slowing economy. In addition, the Democratic Party has been pandering to several special interest groups – so-called “identity politics”, to the extent that the votes the Democratic Party receives from special interest groups are offset by the votes of those who are dissatisfied.
  Former President Trump’s political stance is opposite to that of the traditional Democratic Party and Republican Party. Trump seeks an economy in which everyone of working age contributes to the gross domestic product of the economy—with little or no regard for wage rates or other distributional issues, although he has expressed concern about what constitutes the rest of the economy. Favored by the white working class political base.
  In effect, Trump is practicing an ideology known as corporatism. This is a generally fruitless dogma for economic growth and personal satisfaction. Corporatists ignored people’s need to seek inspiration for exploration and discovery, making the popular belief in vitalism even more impactful.
  In France, President Macron is also no longer focused on distribution issues. He wanted France to return to rapid growth and prestige. To this end, he sought to create more competition for French industry by cutting back on social protections for employees, which were seen as discouraging new companies from entering industry.
  How will the further development of the digital economy affect the West and other countries?
  In the West, many technology experts fear that the development of artificial intelligence in their economies will lead to mass layoffs and long-term unemployment until wages eventually fall to lower levels. They are not only worried about the development of artificial intelligence in their own country, but also about artificial intelligence robots developed in overseas import markets. Technologists are not well-trained economists, so it is time for us to consider the role that some market mechanisms will play in determining the impact of wage rates and employment paths.
  Of course, the adoption of robots, whether AI-enabled or not, makes it possible to produce consistent levels of output with less labor. Yes, when artificial intelligence robots replace labor and are introduced into some industries, it will directly lead to layoffs and lower wages. But in my opinion, this is only the beginning of the story. What happens next?
  Its subsequent effects will be transmitted to other industries. In an idealized model, laid-off workers would seek jobs elsewhere, similarly depressing wages throughout the economy. This general fall in wages set in motion an adjustment mechanism. When wages fall, the return on investment rises and investment increases accordingly. The resulting increase in capital stock will have an upward pull on wage rates and employment in other industries.
  Another adjustment mechanism: Even if laid-off workers don’t move to other industries for one reason or another, wage cuts in industries adopting cost-saving robots will eventually prompt producers in that industry to lower prices if those firms don’t If they do, new companies will enter those industries, driving down prices there. A decrease in relative prices means an increase in relative prices in other industries. Although wages are not falling, these higher prices will be a force for output and employment in these industries.
  I’ll end with another thing: especially in Western countries, people are too focused on stability and the short term. I believe that if they embrace disruptive innovation and provide moral support for the cause of innovation, they can expect exponential growth in the coming decades.

error: Content is protected !!