Grow Econ

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Jordan, Jerry, “How to Keep Growing “New Economies””, Economic Commentary Series, Federal Reserve Bank of Cleveland, August 15, 2000.

Summary

-Innovations in technology have prompted many economists to reevaluate how technology changes the system in our economic environment as it produced unseen levels of positive economic prosperity.

-Some people contend that technology merely adds value to our economy solely as an instrument to speed up data processing, but is not a game change; on the other hand, economists should reevaluate the older models and theories of economics as they were not useful to provide a comprehensive picture in evaluating the economic landscape.

-Some technology becomes obsolete while new technologies are being born (eg. Typewriters and word processing software); some technology produces far greater output with lesser input than older technology (eg. Manual labor factories vs. computerized machine factories).

-Current economy with new technology is nothing of new as old elements and indicators are still in place to make determinations on health of economy.

-If the ‘right’ infrastructure and enforcement mechanism are set correctly in place by the government, they can be effective catalysts to increase certain technology’s output and change on its environment.

-The division between wealthy states and poor states is evident when the types of economic institution that each state elects to depend upon: wealthy states tend to have privatized economic institutions while poor states tend to have public economic institutions in place.

-Privatized institutions are sustained by the values (profits) they make; however, public institutions tend to not follow the same path (state subsidies are given).

-Elements of a successful, long lasting economy: stable currency, financially sound institutions, enforceable property rights, and generally accepted accounting principles. Ultimately, we must trust the government as we trust most...
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