The Map and the Territory by Alan Greenspan

Author:Alan Greenspan
Language: eng
Format: epub
Publisher: Penguin Group US
Published: 2013-09-20T16:00:00+00:00

THE TURNING POINT

The correlation between growing economic activity and growing weight of real GDP apparently peaked in the late 1970s. In recent years, the conceptual contribution to economic activity has reflected importantly the explosive growth in information gathering and processing techniques, which have greatly extended our capability to substitute ideas for physical volume.

In the years ahead, telecommunications and advanced computing will doubtless take on an even greater role. By expediting the transfer of ideas, information technology creates value by facilitating the substitution of intellectual for physical labor in the production process, much as the American railroads in an earlier time created value by transferring physical goods to geographic locations where relative shortages made those goods more valuable. At the turn of the last century, for example, we created economic value in the United States by moving iron ore from Minnesota’s Mesabi Range down to furnaces in Pittsburgh, where it was joined with West Virginia coal to produce steel. In today’s environment, economic value is increasingly created by fitting ever smaller silicon chips ever closer together with still larger data capacity than earlier, much bulkier units. At least to date, Moore’s law still prevails. (Though as Gordon Moore himself recognized, miniaturization has physical limits that some see approaching in the near term.39)

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