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Silicon Valley has not prevented a slowdown in national productivity growth.

Marc Andreessen, the Silicon Valley entrepreneur and venture capitalist, says information technology is providing significant benefits that just don't show up in the standard measurements of wages and productivity. Consider that consumers have access to services like Facebook, Google and Wikipedia free of charge, and those benefits aren't fully accounted for in the official numbers. This notion -- that life is getting better, often in ways we are barely measuring -- is fairly common in tech circles.

Until recently, this debate was inconclusive. It consisted mainly of anecdotes, with individuals describing how important advances like the Internet were -- or were not -- to them personally. But now Chad Syverson, a professor of economics at the University of Chicago Booth School of Business, has looked more scientifically at the evidence and concluded that the productivity slowdown is all too real. These results are outlined in his recent National Bureau of Economic Research working paper "Challenges to Mismeasurement Explanations for the U.S. Productivity Slowdown."

Professor Syverson notes that a slowdown has come to dozens of advanced economies, more or less at the same time, which indicates it is a general phenomenon. Furthermore, the countries with smaller tech sectors still have comparably sized productivity slowdowns, and that is not what we would expect if a lot of unmeasured productivity were hiding in the tech industry.

Alternatively, consider the 2012 estimate of the gains from free Internet services made by Erik Brynjolfsson, professor of management at M.I.T., and Joo Hee Oh, assistant professor of management at the Erasmus University Rotterdam School of Management. They looked at how much time people spent on the Internet, and using that method they valued free Internet services at about $106 billion a year. That's less than 1 percent of G.D.P., and again it doesn't close the measured productivity gap. Professor Syverson considers other measures of Internet value as well, but all the different numbers keep circling back to the same conclusion: The productivity gap is real.

None of these remarks should be taken as a lack of appreciation for information technology. Arguably the Internet brought its biggest gains in the mid- to late 1990s, and in those years measured economic productivity was in fact very high. Information technology is still one of the most dynamic sectors of the American economy, and it probably will remain so, and grow yet more influential, even if its absolute impact is not as large as the optimistic revisionists suggest.


Facebook is the biggest productivity suck in the history of the planet. Many people spend hours every day "socializing" (feeding their ego) instead of doing their job. Half the people waiting at stop lights are on their phone not paying attention when the light turns green causing many cars to miss the light - that alone is probably a multi-billion dollar drag on the national economy over the course of a year. I regularly have to get people's attention from their phones to do their job. Shutdown Facebook for 1 quarter and these productivity numbers will double over night. Why doesn't everyone else see this?


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