Every few decades, a new technology comes along and people start asking whether it will change everything. In the 1990s it was computers. Today it's AI. But do these booms actually live up to the hype?
Robert Gordon asked this question about the 90s tech boom in a Journal of Economic Perspectives article. Between 1995 and 1999, the data looked great with output, growth, and productivity all increasing. It almost looked like we were heading into another golden age, maybe even a Third Industrial Revolution. But Gordon argued that growth from computers didn't spread throughout the whole economy. In earlier periods like the First and Second Industrial Revolutions, productivity growth came from investment and infrastructure that changed everything. Computers started to show diminishing returns, and the impact during the 90s was limited to leisure and parts of manufacturing.
Reading this in 2025, hindsight really changes how we see it. The author couldn't have known how far the internet would go and how it would shape globalization, communication, and basically every part of daily life. I understand where he was coming from because at the time, the computer industry didn't seem revolutionary like electricity or printing. If the internet had stayed small and stuck to manufacturing, I would probably still agree with him. But the influence of the internet went way beyond what anyone expected.
That makes me think about AI in the same way. Everyone is calling it the next big thing, and right now we don't know how far it will go. People and companies who specialize in AI are becoming very rich. On the other hand, we constantly hear that AI will take people's jobs and lead to universal basic income. Will it only drive up wealth for a small group of people? Does replacing people count as growth, or is it hurting the economy by cutting wages and spending power? Exploring this with data on which industries use AI, productivity changes, jobs, and unemployment rates would help us see whether it's a real turning point or just another hype cycle.