Are We Doomed to Slow Growth?
A key question in economics today is: Does technological advancement, and the improvement in average people’s material conditions that it creates, continue upward at a steady rate? Or has it already peaked?
.. Economies that are stagnant lead to conflict; if the pie isn’t getting bigger, after all, the only way to improve your lot is to grab someone else’s slice. It’s telling to look at the current presidential campaign through this lens. Bernie Sanders is arguing that this stagnant-pie-stealing has been going on for some time, while Donald Trump says that he can keep outsiders away from our desserts altogether.
.. Gordon concludes that despite all the upheaval of the past 200 years, there have really been only a handful of fundamental steps forward: electricity, the telephone, the combustion engine, mass production, indoor plumbing, the conquest of infectious diseases and the computer. He argues that everything else, including the Internet and the smartphone, is simply a variation on these themes — and that for all our 21st-century talk of ‘‘innovation,’’ the pace of real transformative innovation has radically slowed during the past half-century.
.. There was an enormous upward shift in productivity between 1920 and 1970, a rate of growth unseen at any other time in human history. But after 1970, that growth slowed. Then there was another, lesser blip upward during the years surrounding 2000, as computers went mainstream and became married to communication, in the form of the Internet. If we exclude that blip, though, the past 50 years have seen roughly half the rate of productivity growth as the 50 that preceded them. Gordon argues that this relatively slow growth in productivity, together with rising inequality, helps explain not just the stagnation in American wages but the general feeling of anger and despair.
.. In the last century, the main way a person’s productivity rose was by going to work at a large company and doing what the boss said. Today, lots of people are finding ways to improve their own lot — and overall productivity — on their own.
.. The language of the current presidential campaign — when it’s coherent at all — is of taxes and regulation, immigration and carpet-bombing. It is the language of zero-sum stagnancy, not expansive, shared growth.