advisors or radiologists. modern social media enable grievances to be amplified many times over. by contrast, the opportunities being created by the application of new technologies — and the broad, positive spillover benefits to the rest of the economy — are much harder to identify and measure. this brings me to my first policy implication : it falls to policy - makers to explain the process, and offer concrete evidence that it is unfolding as usual. we need to demonstrate that beyond the initial negatives are many positives, which are likely to dominate over time. we need to acknowledge that real people and businesses are being disrupted and require policy support. and we need to point to the new and different jobs that are being created and explain that the new incomes are being spent in a wide array of traditional economic sectors. in other words, when mushrooms grow, they have yeast - like second - round effects as the growers spend their incomes. we can do this now because the narrative around technological disruption is not much different from the disruption associated with globalization, which has been with us for some 20 years. but 1 / 3 bis central bankers'speeches beyond explaining and documenting these complex dynamics, we also need to be attentive to potential pitfalls, such as those connected with the rise of so - called superstar firms, as we discussed earlier here. these and other legitimate public policy concerns make it imperative that policy - makers reallocate some of the benefits of growth to cushion the impact on those who are directly affected by disruption, and help them adjust. all that being said, let us consider the possibility that we are living in a profound, global, positive expansion of aggregate supply — the product of digital disruption. as with all major supply shocks in the past, it could take a long time for us to truly understand that it is happening. still, we must conduct monetary policy in the meantime. we can start by measuring growth in the digital economy itself. one rough proxy for the digital economy — the computer system design and related services sector — accounts for close to 2 per cent of canadian gross domestic product today and has been growing by about 7. 5 per cent annually for the past five years. but that growth is likely to be only the tip of the iceberg — what we need to know is how it is spreading through other sectors and affecting aggregate supply. for example, in the automobile industry, advances in computer technology are driving improvements in quality and represent significant value added from one model year to the next

stephen s poloz : the fourth industrial revolution and central banking remarks by mr stephen s poloz, governor of the bank of canada, at “ changing market structure and implications for monetary policy ”, a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, 24 august 2018. * * * our discussions here in jackson hole have been wide - ranging, but a common theme throughout has been digital disruption. just about everything is being disrupted — from production, to consumption, to financial intermediation. we are in the early stages of what many are calling the fourth industrial revolution. that is because the deployment of digital technologies will alter the economy as fundamentally as did the steam engine, the internal combustion engine and the computer chip. i will use my time today to offer some preliminary thoughts on what all this might mean for monetary policy. let us begin with the obvious. the deployment of digital technologies will be very positive for economic progress. over time, these new technologies will find their way into everything — transforming existing firms and creating new ones. this will lead to new types of jobs in entirely new industries. where firms are successful, productivity will rise, and economic growth will be more concentrated in those sectors. the positive spillovers will spread throughout the economy. holistically, this is a predictable process, but the details are of course quite unpredictable. it is worth reflecting on an insight on economic growth offered by arnold harberger some 20 years ago. he argued that economic growth has always been more like mushrooms than yeast. in other words, economic growth is uneven, popping up here and there. this metaphor aligns well with joseph schumpeter ’ s notion of creative destruction. this insight is important in today ’ s context. as peter howitt has argued, it means that economic growth is naturally contentious, which introduces politics into the equation. if growth were evenly spread, in the way yeast causes dough to rise, everyone would be a winner. but because it is like mushrooms, the associated disruption means that some will lose out while others win. in certain conditions, the winners can even become superstars ; hence, the term “ winner takes most, ” as described in john van reenen ’ s paper here. it is human nature to focus on the negative. in the process of creative destruction, destruction gets more headlines than creation does. this is because the threats to individuals are concrete and easily identifiable — whether manufacturing workers, call centre workers, truck drivers, investment