Don't Sell Innovation Short
Federal Reserve Chairman Ben S. Bernanke said technological change will
remake fields like health care and belie predictions that innovation will fade
and economic growth will wane.
“Pessimists
may be paying too little attention to the strength of the underlying economic
and social forces that generate innovation in the modern world,” Bernanke said
today in a speech at Great Barrington, Massachusetts. “Both humanity’s capacity to innovate
and the incentives to innovate are greater today than at any other time in
history.”
The Fed
chairman, who didn’t comment on policy or the U.S. economic outlook, rebutted
the view of academics such as Northwestern University professor Robert Gordon, who predicted U.S. growth may stall over
the next century in a paper published by the National Bureau of Economic Research last August. Innovation’s
contribution to higher standards of living will slow, and headwinds such as an
aging population and increased inequality will reduce growth, he said.
The
pessimists’ view is “sort of depressing,” Bernanke said in a commencement
address at Bard College at Simon’s Rock.
“As
trade and globalization increase the size of the potential market for new
products, the possible economic rewards for being first with an innovative
product or process are growing rapidly,” he said.
Commercial
applications of personal computers and biotechnology have “arguably thus far
only scratched the surface,” and they could contribute to a surge in
productivity in health care, Bernanke said.
“A strong
case can be made that the modernization of health-care IT systems would lead to
better-coordinated, more effective, and less costly patient care than we have
today,” he said. “Such advances could lead to another jump in life expectancy and improved health at older ages.”
Bernanke
is the father of a Simon’s Rock alumnus, father-in-law of an alumna, and his
wife, Anna, is a member of the school’s board of overseers.
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