Bernanke Says Pessimists Wrong as Innovation Spurs Growth
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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