Tuesday, June 30, 2009

Technological growth

From Practical Economics:

While technology is often made out to be the enemy of the worker, technological growth is a vital part of creating economic growth. Developing new and/or advanced technologies is a process akin to using building blocks. With each development or advancement, the stage is set for the next level that, in turn, fosters further advancements in technology. This system allows for continual acceleration in growth as knowledge builds upon itself in geometrically increasing proportions.

All societies develop new or improved technologies and advance as a rule of thumb, but a society that fosters a free and open market economic system adds an additional accelerant for creating technological advances. Because of the incentives and motivating forces that a free enterprise system offers, individuals are given the drive to find the advancements that people desire. The faster the advancement occurs, the greater the benefits; so anything that speeds up the process of technological advancement, within ethical boundaries, should be seen as efficient.

For example, advancements in the telecommunications industry from the time of the earliest car phone to today‘s voice activated digital communications network is extraordinary. Technological growth has produced countless increases in productivity that created efficiencies allowing the economy to grow. These advances were made possible not out of chance or governmental fiat (decree). They happened with amazing speed because the free market creates incentives for individuals to make breakthroughs in technology for their own benefit and with ruthless disregard for the life saving consequences they pass on to the society as a whole.

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