We have been discussing America’s declining birth rate (a crisis, say some: not so, say I), so I thought that I would post this somewhat relevant excerpt from a recent Economist piece that I happened to be reading on the (possible) decline of innovation in recent years:
Perhaps the most radical answer to the problem of the 1970s slowdown [in innovation] is that it was due to globalisation. In a somewhat whimsical 1987 paper, Paul Romer, then at the University of Rochester, sketched the possibility that, with more workers available in developing countries, cutting labour costs in rich ones became less important. Investment in productivity was thus sidelined. The idea was heretical among macroeconomists, as it dispensed with much of the careful theoretical machinery then being used to analyse growth. But as Mr Romer noted, economic historians comparing 19th-century Britain with America commonly credit relative labour scarcity in America with driving forward the capital-intense and highly productive “American system” of manufacturing.
Food for thought.
The relatively low levels of mechanization in some parts of the US agricultural sector allegedly dependent on cheap migrant labor may well reinforce Romer’s point (whimsical or not), as may the advances that the Japanese are making in the field of robotics.