Read the news lately? You might be feeling a bit glum. But don't despair, there is some good news that might solve a lot of our problems.
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If this thing eventuates, it will mean higher wages, higher incomes, lower inflation, a lower cost of living, lower inequality - it's even good news for the environment and political stability in America.
They asked a simple question: how long does it take a new technology to start lifting productivity?
This is an important question for two reasons.
First, productivity growth is a wonderful thing. It's the thing that delivers all the great outcomes mentioned above: higher wages, higher incomes, lower inflation, a lower cost of living, lower inequality and, thanks to those things, more political stability given, as Keynes said, "economic extremes lead to political extremes".
The second reason it's an important question is because for the last decade or so we have experienced what economists call a "productivity paradox".
The paradox is that we've had massive advances in technology but haven't seen any increase in productivity.
Over the last few decades, an extra 3.5 billion people have gained access to the internet. The processing power of computers has increased exponentially while their cost and size have plummeted.
Smartphones are everywhere. Online businesses have flourished. Email, GPS and advanced software have become widespread.
The sharing economy is unlocking the full potential of idle cars and empty rooms and houses. Information and communication technologies (ICT) have reshaped many industries.
The accumulated history of human knowledge is now at our fingertips.
With all these advances in technology, what's happened to productivity?
Zip.
What gives?
There have been a bunch of different theories.
One theory from Northwestern University's Robert Gordon is simple: the advances in technology we have seen in recent decades just aren't that good. Sure, they might make us a little bit more productive, but it is nowhere near the sorts of advances we've seen historically (think: electricity, the automobile, penicillin).
Harvard's Jeff Frankel made a similar argument. He warned that some of these advances in technology are distracting us (think: smartphones) or are increasing the quality of our leisure time rather than making us more productive at work (think: Netflix).
The other argument - from Nobel laureate William Nordhaus - is that there a long lag times between technological advances and increased productivity.
These advances will boost productivity, we just need to be patient.
This is the theory Nokia Bell Labs wanted to test. They built a dataset on technological advances across history - such as those in energy networks, health and sanitation networks, transport networks and communication networks - and measured how long it took for these advances to start lifting productivity.
Using the results from this analysis, they calculated how long it will take for the more recent advances in technology to start boosting productivity.
Their results were striking. They predicted that, based on the adoption rates of these new technologies over time, we will see a rapid increase in productivity in the United States in the second half of the 2020s.
It was a bold prediction. Many at the time, including yours truly, were a bit sceptical that we would suddenly see a big increase in productivity given it's been so low for so long.
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There's just one problem with this scepticism: productivity in the United States has indeed started increasing. Rapidly.
Right on cue, just as the world enters the second half of the 2020s, productivity has started rising quickly in the United States. Hallelujah.
To put this into perspective, labour productivity in Australia increased by a cumulative 1.5 per cent in the last 10 years. In the United States, it has gone up by more than 15 per cent - 10 times more than in Australia - and mostly in just the last few years.
Economists are still unpacking what is causing this, but it is striking how seemingly accurate the prediction of Nokia Bell Labs has been.
Whatever the cause, if this increase in productivity continues as predicted, the implications are huge.
First, it means all the great things above could materialise. Higher wages, higher incomes and higher living standards are good on their own, but they would also hopefully calm down a turbulent US political environment.
Second, it could radically change the geopolitical landscape. The forecast on when China would overtake America as the world's largest economy measured at market exchange rates has been pushed back several times.
If productivity growth continues strongly in America, it could be pushed back indefinitely, cementing the global power of America.
Finally, and most importantly for Australia, if productivity is increasing because of tech adoption in America, then it will presumably happen in Australia, too.
It might happen later in Australia given our rates of tech adoption lag those in America, but it would nevertheless mean good times could be coming our way.
It's often said that there are no silver bullets when it comes to social and economic issues. This is undoubtedly true.
But if there was one thing that comes close to being a silver bullet, it's productivity growth.
And with the state of the world today, it can't come fast enough.
- Adam Triggs is a partner at the economics advisory firm, Mandala, and a visiting fellow at the ANU Crawford School and a non-resident fellow at the Brookings Institution.
