ABSTRACT
The world is still at an early stage of the current information revolution, and its effects on economics and politics are uneven. As with steam in the late eighteenth century and electricity in the late nineteenth, productivity growth lagged as society had to learn to fully utilize the new technologies.1 Social institutions change more slowly than technology. For example, the electric motor was invented in 1881, but it was nearly four decades before Henry Ford pioneered the reorganization of factories to take full advantage of electric power. Computers today account for 2 percent of America’s total capital stock, but “add in all the equipment used for gathering, processing and transmitting information, and the total accounts for 12 percent of America’s capital stock, exactly the same as the railways at the peak of their development in the late nineteenth century. Three-quarters of all computers are used in the service sector such as finance and health where output is notoriously hard to measure.”2 The increase in productivity of the US economy began to show up only as recently as the mid-1990s.3
