If technology is advancing crazy fast, why aren’t those advances showing up in the broader productivity and economic growth numbers? Or as economists Erik Brynjolfsson, Daniel Rock, and Chad Syverson describe this mystery in their 2017 paper “Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics:” “Systems using artificial intelligence match or surpass human-level performance in more and more domains, leveraging rapid advances in other technologies, and driving soaring stock prices. Yet measured productivity growth has declined by half over the past decade, and real income has stagnated since the late 1990s for a majority of Americans.”

But those researchers remain optimistic. “The breakthroughs of AI technologies already demonstrated are not yet affecting much of the economy, but they portend bigger effects as they diffuse.” And one possible role for policymakers is to remove barriers to the spread of productivity-enhancing technologies when possible. Which brings us to “What Happened to US Business Dynamism?” by Ufuk Akcigit and Sina Ates. From that paper:

Market economies are characterized by the so-called “creative destruction” where unproductive incumbents are pushed out of the market by new entrants or other more productive incumbents or both. A byproduct of this up-or-out process is the creation of higher-paying jobs and reallocation of workers from less to more productive firms. The US economy has been losing this business dynamism since the 1980s and, even more strikingly, since the 2000s.