Why America’s Economic Growth May Be (Shh!) Over

[Paul Mobbs]

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I've sourced a copy of the original paper rather than the abstract pointed 
to from the article, and put it on-line at FRAW --
http://www.fraw.org.uk/files/economics/gordon_2012.pdf

P.



http://www.freakonomics.com/2012/10/04/why%2Damerica%E2%80%99s%2Deconomic%2Dgrowth%2Dmay%2Dbe%2Dshh%2Dover%2Da%2Dnew%2Dmarketplace%2Dpodcast/

Why America’s Economic Growth May Be (Shh!) Over, a New Marketplace Podcast

Stephen J. Dubner, Freakonomics, 4th October 2012


With the Presidential debate finished, we are officially in the final lap of 
America's second-favorite spectator sport. (Yes, football is better than 
politics.) Of all the talking that Barack Obama and Mitt Romney will do by 
Nov. 6, you can bet that a great deal of their breath will be expended on 
economic matters. Because that's what the President of the United States 
does, right — runs our economy?

Well, actually, no. The President has far less influence over the economy 
than people tend to think — as we've pointed out not once, or twice, but 
three times.

That, of course, won't stop the candidates from talking about their plans 
to "fix" or "heal" or "restore" our economy — all of which imply that we are 
in an economic doldrums that is sure to pass. But what if it doesn't? What 
if the massive economic growth the U.S. has experienced through most of our 
history is a thing of the past?

That's the topic of our latest Freakonomics Radio on Marketplace podcast. 
(You can download/subscribe at iTunes, get the RSS feed, listen via the 
media player above in the post, or read the transcript below.)

It is largely based on a recent paper by the Northwestern economist Robert 
J. Gordon, called "Is U.S. Economic Growth Over? Faltering Innovation 
Confronts the Six Headwinds" (abstract, PDF). It is an impressive and 
interesting piece of economic history; among the writers who have taken 
note of it are David Warsh and Tim Harford.

Gordon argues that we have essentially experienced three different 
Industrial Revolutions over the past couple centuries. The first (1750-1830) 
gave us steam power and railroads. The second (1870-1900) gave us 
electricity and all that went along with it; the internal combustion engine 
(and all that went along with it), running water and indoor toilets, 
communications, and much more. And the third, the digital revolution, has 
of course brought us computers, mobile phones, and the like.

Gordon's central argument is that, as impressive as this third revolution 
has been, in terms of productivity and other concrete economic gains, it 
cannot hold a candle to the electric revolution:

    GORDON: If you think about the great inventions of the last ten years, 
you think of iPods, you think of the iPad, iPhones, but each of those is an 
incremental improvement on what we already had. We had portable music in 
the form of CD players, that's been replaced by the iPod. You can carry a 
lot more music in your pocket on an iPod than you could on a CD player, but 
it's the same music. So that's an incremental, small-scale improvement. We 
had garden-variety cell phones before that. We had pay phones that you had 
to walk up to and put a quarter in. And now smart phones combine computer 
power with the ability to make a telephone call. But we're taking things 
that had already been invented and we're just repackaging them in a more 
convenient form. So that's the sense that these are not fundamental 
inventions on the scale of things like electricity or inventing the motor 
vehicle.

You'll also hear from recurring guest Tyler Cowen, whose recent book The 
Great Stagnation echoes much of Gordon's argument. But Cowen is more 
optimistic than Gordon that the U.S. can recapture its economic momentum, 
as the subtitle of his book spells out: "How American Ate All the Low-
Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel 
Better Again."


- -- 

.

"We are not for names, nor men, nor titles of Government,
nor are we for this party nor against the other but we are
for justice and mercy and truth and peace and true freedom,
that these may be exalted in our nation, and that goodness,
righteousness, meekness, temperance, peace and unity with
God, and with one another, that these things may abound."
(Edward Burrough, 1659 - from 'Quaker Faith and Practice')

Paul's book, "Energy Beyond Oil", is out now!
For details see http://www.fraw.org.uk/mei/ebo/

Read my 'essay' weblog, "Ecolonomics", at:
http://www.fraw.org.uk/mei/ecolonomics/

Paul Mobbs, Mobbs' Environmental Investigations
3 Grosvenor Road, Banbury OX16 5HN, England
tel./fax (+44/0)1295 261864
email - mobbsey at gn.apc.org
website - http://www.fraw.org.uk/mei/index.shtml
public key - http://www.fraw.org.uk/mei/mobbsey-2011.asc

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