Wednesday, October 17, 2012

the american economy is running on empty...,

NYTimes | The American economy is running on empty. That’s the hypothesis put forward by Robert J. Gordon, an economist at Northwestern University. Let’s assume for a moment that he’s right. The political consequences would be enormous.
In his widely discussed National Bureau of Economic Research paper, “Is U.S. Economic Growth Over?” Gordon predicts a dark future of “epochal decline in growth from the U.S. record of the last 150 years.” The greatest innovations, Gordon argues, are behind us, with little prospect for transformative change along the lines of the three previous industrial revolutions:
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) from 1960 to present.
Gordon argues that each of these revolutions was followed by a period of economic expansion, particularly industrial revolution number two, which saw “80 years of relatively rapid productivity growth between 1890 and 1972.” According to Gordon, once “the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before.” Industrial revolution number 3, he writes
created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once – urbanization, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature.
Over most of human history, in Gordon’s view, the world had minimal economic growth, if it had any at all — and “there is no guarantee that growth will continue indefinitely.” Gordon’s paper suggests instead that “the rapid progress made over the past 250 years could well turn out to be a unique episode in human history.”
The United States faces “headwinds” that could cut annual growth in Gross Domestic Product to as little as 0.2 percent annually, which is one tenth the rate of growth from 1860 to 2007.


John Kurman said...

Yeah, I read Gordon's paper. He's got a book coming called "Beyond the Rainbow: The American Standard of Living Since the Civil War". There's a fair amount of cherry picking going in, the sense that he zero economic growth in the US and prior UK before 1750. I guess they are ignoring the whole Conquest of the New World, the introduction of the potato, and the massive surge in population in Northern Europe as a result. In any case, I kind of object to the whole "low-hanging fruit" analogy. Wrong analogy. It's not as if a unitary monod called "washing machine" is passively waiting to be plucked from the tree. Washing machine contains parts that go all the way back to Uruk, and some are even repurposed to a use alien to its original purpose). And clearly, progress, in fits and starts, is a series of nested logistic curves, with one technology taking over from the next. True, there are one-time dealios, but on the whole, Gordon ignores human ingenuity when it comes to workarounds and kluges. As to his dismal predictions of growth and the six headwinds against US (only) progress, aside from the fact that he ignores applications coming from commodified quantum mechanical equations, uber sophisticated Monte Carlo simulations, biotech, metamaterials, refrigeration into the ultracold regions, lasers, particle beams, you name it, his weakest objection is demographic dividend. There's no reason to think that people will cease porcreating and immigrating to the US, and therefore, if we can work on education, no lack of brains to throw at problems. His strongest objection is income inequality, which presents a huge problem of a hard bolus of stuck monies in the rectum of the upper 1%, soon to be cannibalized into the upper .00001%.

John Kurman said...

The other conception that Gordon ignores is treating GDP per capita with the exponential increase in population from 1750 on (US pop doubling approx every 40 years, but with people procreating at 'biological maximum' from 1750s - 1850s). In which case, that increase is even more astounding, unless you discount people as part of the GDP, which you can't (seeing as, if people are treated as self-replicating robots requiring inclusion in the technological increase, which you kind of have to do) his model is way too simple to adequately match what we saw - a pre-technological-Singularity Singularity involving hive monkeys.

John Kurman said...

Further, if the 19th century was all about taming and utilizing Heat, the 20th century was about utilizing Cold. And we are nowhere near done with that. Refrigeration technologies drove things to a degree that is still not recognized. It may be that, just for grisly speculation, severed heads chilled to a few billionths of a degree above absolute zero may be the quantum supercomputers we (not me, but maybe you all) been looking for. In which case, all bets are off for Gordon's rule-of-thumb predictions.

CNu said...

Have you ever peeped the Russian version of the space shuttle?

Now, while it's challenging (impossible) to launch many dozens of missions from Vandenburg/Kennedy, you can go buckwild at Baikonur

and evidently

That's what we do and how and where we do it.

I am SOOOOO convinced that there is a high-volume of activity taking place off-world right now - and that the soon to be culled marks are being misdirected away from what's really going on by idiot spectacles such as these

John Kurman said...

Ah, so that's where all the severed heads going.

umbrarchist said...

GDP == Grossly Distorted Propaganda

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