Technology Rules

Macroeconomic forecasting is too politicized. I don’t mean that in a partisan sense, though it may be so. The bigger problem is that forecasters spend most of their time thinking about central bank decisions and government policies. In the long run, those aren’t the most important factors. Not even close.

What really drives economic progress is human ingenuity and the innovation it produces. In other words, technology. I use that term in its broadest sense: applying knowledge to make life better. Nowadays we associate technology with electronic devices, but it’s much older. The wheel was an early technology. We progressed to steam engines, automobiles, telegraphs, radios, airplanes, computers, and more. Each (and a million others) boosted economic growth. Their combined effect brought us to where we are today.

Other forms of innovation improve life just as well. Something as mundane as pizza delivery has morphed into delivery of all types of foods. “Fast food” was an innovation. Home Depot, Walmart, Schwab, and a thousand businesses focus on making life a little easier in small ways, but they multiply to create a society that people living 100 years ago or even 50 years ago couldn’t imagine.

Governments and central bankers don’t generally invent technologies. At their best, they establish conditions that unleash human talents. At their worst, they suppress those talents. It is no coincidence China began its rise when Deng Xiaoping decided that “getting rich is glorious” and unleashed the population’s entrepreneurial bent. (That the country used it to create a panopticon surveillance state is a different matter. A century from now we’ll see how that works.)

At the same time, not every human welcomes every technology. The 19th-century Luddites had serious issues with automated looms taking their jobs. This is a classic quandary. Someone’s livelihood probably depends on the work your new technology will replace. It may (and should) enable growth that creates new jobs, but that takes time. The transitions can be uncomfortable, and more so when the pace quickens, as it is now.

We always discuss these issues at the Strategic Investment Conference, and the dialogue goes deeper every year. I consider this a critically important part of our mission. Technology develops in the background, often unnoticed amid the more headline-generating policy debates. But I really believe it is far more important.

This week we’ll review some of the SIC technology sessions and think about where the latest innovations will take us. (You can still get a Virtual Pass and view the full event, by the way.) It wasn’t just pie in the sky, either. We talked about real investment opportunities available right now.

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