Businesses have adopted new processes and technologies—and there are signs that they may pay off
THE PROSPECTS for a productivity resurgence may seem grim. After all, the past decade has featured plenty of technological fatalism: in 2013 Peter Thiel, a venture capitalist, mused of the technological advances of the moment that “we wanted flying cars, instead we got 140 characters”. Robert Gordon, of Northwestern University, has echoed this sentiment, speculating that humanity might never again invent something so transformative as the flush toilet. Throughout the decade, productivity data largely supported the views of the pessimists.
What is more, some studies of past pandemics and analyses of the economic effects of this one suggest that covid-19 is if anything likely to make the prevailing productivity picture worse. According to the World Bank, countries struck by pandemic outbreaks in the 21st century (not including covid) experienced a decline in labour productivity of 9% after three years relative to unaffected countries.
And yet, stranger things have happened. The brutal years of the 1930s were followed by the most extraordinary economic boom in history. A generation ago, economists had very nearly abandoned hope of ever matching the post-war performance when a computer-powered productivity explosion took place. And today, once more, there are tantalising hints that the economic and social traumas of the first two decades of this century may soon give way to a new period of economic dynamism.