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Not only is this an historically weak recovery, but there are deeper signs of trouble. A big one: Productivity growth — a key indicator of technological innovation — has been basically flat since the Great Recession.
Are things ever going to get better? Or as singer-songwriter Merle Haggard once put it, “Are the good times really over for good?”
I discuss the long-term prospects for the US economy and American workers in this week’s podcast with economist Robert Gordon of Northwestern University. His research asking whether U.S. economic growth is “almost over” has been widely cited, and he was named by Bloomberg as one of the nation’s ten most influential thinkers. He is also author of the new book “The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War.”
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It was the patent system! – BINGO
The growth of a regulatory system the Byzantine Empire would have considered excessive seems to have escaped Mr. Gordon’s attention.
Amazing that both Pethokoukis and Gordon failed to even mention this overriding factor. Before the modern computer network the regulatory state lacked the instruments for control, and could be ignored when it threatened to encroach upon individual freedom. By 1970 government presumed to believe it had the capacity to control human freedom by regulation. That was the end of the awesome dynamo celebrated here.
It is the corrupt regulatory state which fostered the crony capitalist system at the root of income corruption as the power institution operated almost exclusively for the benefit of it’s constituents.
It is this that brought us to the solutions of the unimaginative progressive state.
Indeed, Gordon’s ‘solutions’ are plain silly. He first go to was to government fund pre-school education. He seems to think this is a no-brainer. But there’s no evidence widespread adoption of this produces any useful results at all. He wants more redistribution.
He also seems to work on a theory that all productivity growth derives from new technology, and now that all the new technology has been discovered (hah!) there shall only be limited productivity growth. Even though organisation inventiveness continues apace. How about something as mundane as container shipping?
And of course removing regulatory shackles would hugely boost productivity. As would shifting more of the economy from government to private provision.
And as for lauding the patent system, his own anecdotes revealed how people benefited from the system simply by beating others with the same inventions merely hours behind them.
Read Matt Ridley’s The Rational Optimist instead.
I was generally enjoying the discussion, but towards the 17-18 minute mark I started to notice a shift in tone. I made it through this comment but then just had to shut off the podcast when he justified high tax rates by pointing out that the US had great growth in the post WWII years with sky high rates. Evidently the growth in the US had nothing to do with the lack of capacity in worn torn Europe and Asia, and all else being equal the way to jumpstart growth is to just raise taxes. Really?
Like Chris, above, I also was enjoying the discussion and then noticed the shift to high taxes, income redistribution to education for 3 year olds, etc.
The latter part of the podcast made me question his forecast as discussed in the first part of the podcast.
I was also surprised by Professor Gordon’s embrace of left wing fallacies concerning wealth redistribution effects on growth, tax rates versus tax revenues, and per-pupil spending versus educational outcomes. Each of these fallacies have been blown apart multiple times by respected economists within his own academia. Up to that point, I was interested in his theories on growth, but immediately deflated upon learning that his ideological biases had taken hold.