With first the recession and now very sluggish economic growth, people are understandably focused on improving the economy. How do we do this? N.C. State University economist Mike Walden responds.
“Well, of course … there’s a lot of discussion out there now, given we’re in the political season — ideas about new programs — new proposals — for accomplishing this. But when economists look at economic history and we try to come to a conclusion about what really drives improvements in the economy, we really decided that it comes down to one thing: improving productivity. That is, it’s getting more out of the same amount of resources — or even better, getting more out of less. That’s really how our country – and, in fact, any country — has made improvements in their standard of living over time. It’s that we’re more productive.
“And that gain in productivity usually comes when we’ve had great inventions, or innovations, or new discoveries. And, of course, you can go back in the last 100 years and talk about electricity. You can talk about the automobile. You can talk about air flight. You can talk about air-conditioning. More recently, you can talk about information technology.
“When you look at all those and when those have been deployed, you see a spurt in productivity improvements and standards of living. So, as we look ahead, I think we want to ask, Where will the productivity improvements come? And I think you can say they’re likely to come in areas like energy, technology, medicine and nutrition.
“And people who, again, use history as perspective and they look ahead and see we’ve got opportunities for gains and productivity, I think those folks tend to be very optimistic.”