I keep thinking about the title and abstract of this 2006 paper:
Are Technology Improvements Contractionary?
Yes. We construct a measure of aggregate technology change, controlling for aggregation effects, varying utilization of capital and labor, nonconstant returns, and imperfect competition. On impact, when technology improves, input use and nonresidential investmentf all sharply. Outputc hanges little. Witha lag of several years, inputs and investment return to normal and output rises strongly. The standard one-sector real-business-cycle model is not consistent with this evidence. The evidence is consistent, however, with simple sticky-price models, which predict the results we find: when technology improves, inputs and investment generally fall in the short run, and output itself may also fall.
I haven't read the whole paper, and didn't understand all that I read, and from what I did read, I was feeling a little skeptical about their empirical approach. Yet I keep being haunted by the idea that they might be onto the real explanation of the boom.
Think about when the Great Depression happened. There had just been a wave of technological change. New appliances. Radios. Electrification. Above all, cars. The two decades before 1929 were the age of Henry Ford. The Grapes of Wrath, which I've just been reading, has a Luddite streak. Steinbeck is particularly savage against the Caterpillar tractors that made his Okie farmers redundant. Was Steinbeck onto something? Was new technology the heart of the trouble?
I went to a Borders bookstore recently that was closing, and bought some 30 books at 70-80% off. I fear being made redundant myself one of these days. Why pay a professor to lecture 40 students a week when there's Khan Academy? How many white-collar professionals, how many bookkeepers, have been made redundant by computers? Newspaper classified ads are made redundant by Craigslist. Etc.
Maybe the economy just takes quite a while to find new things for all those people to do. And it makes some mistakes along the way. Like building too many houses.
As in the 1930s, we've fallen into a trap where dissatisfaction with the slow process of recalculation has given an opening to interventionist politicians, who don't do any good at all. Capital is on strike. But this diagnosis of the current problem, if I'm right about it, points to optimism about the future. The new technologies will shape a new lifestyle, they'll penetrate everything and improve it, the internet age, the age of smartphones/smart-everything, will accelerate and spread until the rising tide finally lifts all boats.