This page deals with economics and business issues,concerning Latin America, and the global economy.-
Saturday, February 06, 2016
Technology : the missing variable
What technology means for economic analysis?. It is surprising that very much of the unexplained exogenous source of growth,(aside from labor and capital rate of change) deals with total factor productivity, which may be affected by a variety of variables ,including technology change.Endogenous sources of growth instead, deal with human capital , innovation and business initiative, which have an impact on the quality conditions for economic growth. Usually the former than the later approach ,get the most when it comes to explain the economic growth trend against the potential output which allow the well known output gap. It is s, because it make easier to influence the design and implementation of economic policy.(Taylor´Rule).
Technology impact growth throughout factors productivity. Thus, all the technology progress since the nineties aplied to production and management, has increased productivity of both capital and labor,changing both the quality of capital goods, and the profile of labor demand increases toward better and different complementary skills.
Having said all the above, the main constraint for growth is still the resource scarcity.The premise is that technology, somehow it only change the way resources are mixed.Those which are freed in some sector, goes to other ones, given a total unchanged endowment.
But What if the technology becomes more efficient?.Let say to download 18 movies in one second, or within supermarkets throughout the lighting system, the manager send information to consumers iphone about the new bargaing in some specific aisle?.
Technology is about to surprise everyone of us changing from the wi-fi, to the light-fidelity (LI-Fi), which will increse the speed of data and information flow, to such an impressive level hard to cath up for human understanding abilities.-
Leaving aside the implication for the development of robotic of higher generation (intelligent machine), the fact which concern to the economcy as the science focused on solving resources scarcity, is that these will no be scarce any more.We will be plenty of resources because technology will widen up the available supply. Actually 1% of labor force, is able to supply food in developed countries. However, whithin the framework of knowledge society, information is what count the most. With the new faster pace of technology ability to cope with data volumen, economic agents will have more information they are capable of dealing with.
Thus ,the real problem will not be to maximize, because it will be out of reaching for humans, to be able to understand millions of data available at the light speed, in any monet in time (one second), before making a decision.
Therefore, the challenge will be to minimize losses from missing information.To minimize losses from wasteful of higher endowment of resources, such as for instance ; time.Tehcnology will free time for aditional uses,aside from the trade off between leisure and work.-
How well prepared is the economic sience for this new framework, away from resources scarcity as the key restriction, to be replaced by human understanding and emotions (feelings) as the new one?