The U.S. economy is sluggishly recovering from the financial crisis of 2008-2009; and inflation-adjusted median income in the United States (per worker -- not household) has stagnated since the 1970's.
These two facts have caused some economists to ask if we have taken secular growth* for granted. The most famous of these economists is Robert Gordon from Northwestern University. What casual observers of history can sometimes forget is that most of human history was not an economic success story. Queen Elizabeth I may have lived better than Marcus Aurelius or maybe she didn't, but the fact that we can ask that question of people who lived 1400ish years apart tells much of the story. (As I frequently remind my friends, that $10 bottle of wine you feel cheap for buying is better than anything Louis XIV ever drank. We know that our standard of living is better than it was in the 17th century.)
In his much-referenced paper, Gordon breaks down what is colloquially known as the Industrial Revolution into three stages: IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones). He says that the IR #2 produced most of the gains from the Industrial Revolution and that IR #3 has run its course. The productivity boom that was supposed to result from the IT revolution never really showed up in the data. (I encourage you to read the full abstract, because there's a lot more to his argument.)
Brad DeLong from U.C. Berkely has a great forthcoming book (you used to be able to read the rough draft online for free but it looks like his publisher took that down) called Slouching Towards Utopia. In it, DeLong tells the story of the economic growth miracle of the 20th century which was the culmination of a process started 250 years ago in England when the steam engine was invented to pump water out of coal mines. While that growth was actually an historical anomaly, we have come to take it for granted and Robert Gordon is here to tell us that the fun may be over. At the opposite end of the spectrum, there is the theory of the technological singularity first posited by John von Neumann. According to this idea, artificial intelligence will eventually become advanced enough to enhance itself faster than humans could, thereby freeing scientific progress from the millstone of man's natural intelligence. The result would be a positive feedback loop of progress in every scientific discipline. Since Moore's Law seems to be fraying at the edges (link 2), this technological singularity would require a breakthrough in quantum computing or another technology that I don't really understand.
I'm going to propose a grey area in the middle, but first we have to discuss some Game Theory.
The most famous problem in Game Theory is the prisoner's dilemma. The second most famous is arguably the arms race, and it is on this problem that I'd like to focus. The classic example of an arms race game is two countries that have a significant chance of going to war with one another. Since it would be useless to have an army that just barely loses the war (because the damage in looting and pillaging would presumably be the same after one's army is vanquished), both countries will spend as much money as it takes to slightly outspend the other country. Of course, there are grey areas, and maybe your nation is an island like Great Britain, and you don't have to spend quite as much as Poland which sits, not very strategically, in the middle of the Great European Plain, but no matter. What makes this an arms race is that it is not your absolute spending but your spending relative to your potential enemies that determines your chances of success.
The United States and the Soviet Union wasted countless resources in a military buildup that might have been avoided had each side been able to guarantee to the other side that it would reduce its force by 90%. (Set aside the usefulness of the Cold War for one or both of the participants to solidify domestic political support.)
There are, of course, many real life situations that have arms-race-like dynamics, but I want to discuss one that doesn't get much attention and it's the one that takes place on America's roads everyday. Your safety in a vehicle is largely a function of your car's weight relative to that of the other cars on the road. It's only rational and you can hardly blame anybody for thinking this way when 30-40 thousand Americans die on our roadways every year. The result of this arms race is that we surround ourselves in massive steel cages and drive cars with bigger engines to transport these cages. If we chose to drive smaller cars, there might be even more deaths. After all, tractor trailers and trees stay the same size no matter what kind of vehicle you buy. The arms race on our roads costs us in the sticker price of automobiles, at the gas pump, and in carbon emissions.
What if there were a way of defusing this arms race?
The solution is almost ready and it's the autonomous vehicle. About 90% of auto accidents are caused by human error. No more human drivers means that we would have only 3-4 thousand deaths/year on America's roadways. Even on an individual basis, an average driver would be 45% safer in an autonomous vehicle since her vehicle would only cause 10% of the typical 50% of accidents she would cause. That is an invaluable gain in and of itself, but the overlooked benefit in much of the media is that autonomous vehicles will defuse the arms race in vehicle size. You would be able to drive (and the engineers would be able to design) a vehicle that fits your needs with much less regard for safety.
Apart from recent advances in solar power which remain somewhat uncertain, autonomous vehicles look like our greatest hope for carbon emission reduction.
But wait, you say. People buy cars for their maximum needs and so parents will be reluctant to buy a 700-pound two-seater when they may have to drive two kids to soccer practice. First, children over a certain age will be able to be driven to soccer practice by an autonomous vehicle and the parent can stay home. Second, cars that drive themselves will make car-sharing much easier, allowing people to buy a car that suits everyday needs and to rent for "surge demand" situations.
There will also be energy benefits from platooning (drafting, for the NASCAR fans), more sophisticated intersection management (computer drivers might not have to stop at stop signs when no other car is coming), and smarter navigation of roadways depending on traffic congestion. This technology will make travel cheaper, more convenient, and will likely help save humanity from the worst effects of climate change.
There are all sorts of objections to my argument, but none that I have heard is truly insurmountable. (see below for objections)
In summary, we can have much lighter vehicles (which might be easier to power with electricity or natural gas) and read or watch TV while we go to and fro. If the vehicles are in fact meaningfully smaller, they can be more cheaply parked. We will have drastically reduced emissions and fuel expenses. The roads will be safer, not just for drivers and passengers but for pedestrians and cyclists. Transit will be more convenient, much cheaper, and some of the lost productivity of people sitting in traffic will be recouped as that time can be reallocated to work or leisure.
Even grocery shopping should be made easier. Deliveries are only expensive because they require drivers who need to make wages. In short, this mobility revolution could vastly improve our standards of living by freeing up time and money.
Of course, autonomous vehicles would likely reduce GDP. If cars are cheaper, parking is cheaper (smaller cars, more spots, lower prices), and refueling expenditures are cheaper, then total spending in the economy would decline. It's also important to remember that autonomous vehicles would put taxi and Uber drivers out of work. But in the long run, this enhanced mobility would dramatically improve living standards and help humans avert the biggest threat to our natural environment yet. My real point is that if a non-expert in technology like me can envision this future using only adjacent technologies, then surely there are other opportunities as well.
*Secular growth is progress over decades, as opposed to cyclical growth which ebbs and flows with the business cycle.