The Productivity Paradox: Why Technology Makes the Economy More Efficient But Most People No Richer
Summary
The article argues that technology increases productivity and efficiency but does not translate into broader prosperity because gains accrue to capital and platforms rather than wages. It shows how consumer spending remains the ceiling, how labor’s share declines, and how mechanisms like monopoly power, Baumol’s cost disease, asset-price gains, and monetary expansion dampen deflation. It concludes with the capital lock-up and secular stagnation risks, emphasizing the need for policy and institutional changes to distribute productivity gains more broadly.