Why is technology a blessing

The curse and blessing of new technologies

New strategies are needed to mitigate risks and at the same time to exploit the possibilities of new technologies.

During the 2016 US presidential campaign, the National Committee of Democrats' servers were hacked and the unflattering emails on them were released. A few days ago in Dallas, Texas, the warning sirens wailed for several hours. What do the two events have in common?

It is the same phenomenon that links the North Korean nuclear threat to the terrorist attacks in Europe and the US: They all reflect the dark side of actually useful technologies - the risks of which increasingly call for a decisive political response.

The growing problems caused by new technologies are also illustrated by the debate about so-called net neutrality, as well as by the dispute between Apple and the US Federal Police FBI over the unblocking of suspicious iPhones belonging to terrorists. This is hardly surprising: such technologies are becoming more and more influential.

As they affect more and more areas, from our security (due to nuclear weapons and cyber wars) to our jobs (job losses due to software and automation), their effect is not only beneficial, but can also be detrimental and perhaps even malicious.

Improve productivity

First, the good news: Technology has eradicated diseases like smallpox and greatly reduced others like polio. New technologies helped explore space, accelerate traffic flows, and create new opportunities for finance, entertainment, and many other areas. Technical advances have also increased economic productivity. Crop rotation and increased mechanization have dramatically increased agricultural yields and enabled human civilization to move from the countryside to the cities. In 1900 a third of Americans were still living on farms; today it is only two percent.

Electrification, automation, software and, most recently, robotics have also made decisive contributions to improving productivity. My colleague Larry Lau and I estimate that about half of the economic growth in the G7 economies can be attributed to technological change.

Pessimists worry that the improvement in productivity from technology may decline and never return to previous levels. They claim technologies like internet search and social networks will not improve productivity to the same extent that electrification and the rise of the automobile did. Optimists, on the other hand, believe that developments such as big data, nanotechnology and artificial intelligence could usher in a new age of technology-driven advances.

Sometimes the greatest commercial value of important technologies arises from applications other than those that their inventors had in mind. James Watt's steam engine, for example, was designed to pump water out of coal mines rather than to drive locomotives or ships. Guglielmo Marconi's work on the long-distance transmission of radio waves initially only had the purpose of competing with the telegraph.

But technical progress has also led to considerable distortions and harmed many people. In the early 19th century, textile workers in Yorkshire and Lancashire destroyed new machines, such as automatic looms and knitting looms, for fear of losing their jobs.

More repressions

Even today workers are being replaced by machines. In the industrialized countries more and more production jobs are being lost to robots. Many fear that artificial intelligence will result in further displacements. In the 1960s and early 1970s, it was widely believed that computers and automation would lead to structural mass unemployment. This never happened because the job losses were offset by new jobs.

In any case, this displacement of jobs is not the only negative consequence of new technologies. The automobile has increased mobility enormously, but at the cost of unhealthy air pollution. Cable television, the Internet, and social media gave people unprecedented power over the information they receive and share with one another. But these technologies have also contributed to the decomposition of information and social contacts, as people prefer sources and networks that reinforce their own prejudices.

Fear of monopolies

In addition, modern information technology is dominated by a few companies: Today, for example, Google is almost synonymous with searching the Internet. In the past, there was much stronger resistance to such a concentration of economic power for fear of monopolies. It remains to be seen whether the usually tolerant attitude of consumers towards these companies is sufficient to counteract concerns about size and the abuse of market power.

The dark side of technology becomes even more apparent when it makes it easier for the enemies of a free society to mediate, plan, and carry out their destructive deeds. The Islamic State and al-Qaida are recruiting young people on the Internet and providing instructions on how to carry out terrorist attacks. And of course nuclear power not only ensures emission-free electricity, but is also responsible for extremely destructive weapons.

All of these threats and consequential losses require clear political responses. Too often governments get caught up in narrow, short-sighted discussions and lose track of future risks and challenges.

Tendency to overreact

This can have dire consequences, such as cyberattacks that incapacitate power grids. Such an event could cause insecure citizens to demand excessive restrictions on technologies, which would come at the expense of freedom and prosperity.

What we really need are new and stronger institutions, effective measures and better cooperation between law enforcement, private companies and governments. It is not enough that such strategies only react to developments - they have to foresee them. This is the only way we can mitigate future risks, while at the same time using the possibilities of new technologies to further improve people's lives.

Translated from the English by Harald Eckhoff Copyright: Project Syndicate, 2017.

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The author

Michael J. Boskin
(* 1945 in New York) studied economics at Berkeley. He is currently Professor of Economics at Stanford University and a Senior Fellow of the Hoover Institution. From 1989 to 1993 he was head of the economic advisory staff of the then American President George Bush senior. [Project Syndicate]

("Die Presse", print edition, May 8th, 2017)