After 150 Years, the American Productivity Miracle Is 'Over' (qz.com)

An anonymous reader shares an article on Quartz: Economist Robert Gordon has spent his career studying what makes the US labor force one of the world's most productive. And he has some bad news. American workers still produce some of most economic activity per hour of any economy in the world. But the near-miraculous productivity growth that essentially transformed the US into one of the world's most affluent societies is permanently in the country's rearview mirror. In his new book, The Rise and Fall of American Growth, the Northwestern University professor lays out the case that the productivity miracle underlying the American way of life was largely a one-time deal. It was driven by a flurry of technologies -- electric lights, telephones, automobiles, indoor plumbing -- that fundamentally transformed millions of American lives within a matter of decades. By comparison, Gordon argues, today's technological advancements -- Uber, Facebook, Amazon.com -- will touch the productivity of the American economy lightly -- if at all. And a combination of demographic factors, such as the aging of the US population, and sociological problems such as growing inequality and educational performance that's worsened in comparison to many other rich nations, will stymie economic growth for the foreseeable future.For those not following Gordon's work, he has been expressing these views for quite some time now. Here's his TED talk from 2013 It shouldn't come as a surprise that many strongly disagree with Gordon's views. Kevin Kelly wrote in 2013: I think Robert Gordon is wrong about his conclusion: According to Gordon growth has stalled in the internet age. This question was first asked by Robert Solow in 1987 and Gordon's answer is that there are 6 'headwinds' six negative, or contrary forces which deduct growth from the growth due to technology in the US (Gordon reiterates he is only speaking of the US). The six 'headwinds' slowing down growth are the aging of the US population, stagnant levels of education, rising inequality, outsourcing and globalization, environmental constraints, and household and government debt. I agree with Gordon about these headwinds, particularly the first one, which he also sees as the most important. Where Gordon is wrong is his misunderstanding and underestimating of the power of technological growth before it meets these headwinds. First, as mentioned above, he underestimates the value of the innovations that the internet has brought us. They seem trivial compared to running water and electric lights, but in fact, as billions around the world show us, they are just as valuable. [...] So the 3rd Industrial Revolution is not really computers and the internet, it is the networking of everything. And in that regime we are just at the beginning of the beginning. We have only begun to connect everything to everything and to make little network minds everywhere. It may take another 80 years for the full effect of this revolution to be revealed. In the year 2095 when economic grad students are asked to review this paper of Robert Gordon and write about why he was wrong back in 2012, they will say things like "Gordon missed the impact from the real inventions of this revolution: big data, ubiquitous mobile, quantified self, cheap AI, and personal work robots. All of these were far more consequential than stand alone computation, and yet all of them were embryonic and visible when he wrote his paper. He was looking backwards instead of forward." You might also find Freakonomics' Stephen J. Dubner views on this interesting.

Comments

Re:Much more than a false premise

[ChrisMaple]

The wikipedia article on productivity is a prime example of how experts will take a term well understood by the general public and warp it into something unrecognizable, the better to fool people and get themselves an undeserved income. Wikipedia mentions labor productivity as one factor of productivity, and the popular (and proper) understanding of productivity is labor productivity: the production of value per person.

Freedom is directly related to productivity because government regulations (reduction of freedom) makes production less efficient. Let's say I buy $11,000 worth of potassium ferricyanide for an industrial process. The bank reports the transaction to the feds because it's over $10,000, raising the bank's costs and wasting taxpayer's money.The chemical company might be required to report the sale to several federal agencies, such as the EPA and Homeland Security; another government expense and a burden on the chemical supplier. Maybe one of those agencies decides that the sale should be prevented, which is really expensive for everyone, or demands that I fill out a form explaining why I need the chemical and how I'm going to handle it to meet OSHA regulations. The DOT puts its hand in also, requiring that the chemical be boxed in containers of no more than 10 pounds each, with no more than 200 pounds carried on a single vehicle, with a signed form in triplicate taped to each box, using tape meeting a federal specification (which is no longer manufactured). And on, and on, and that's why freedom accompanies productivity.