Comment by npalli | Hacker News Reader

Comment by npalli | Hacker News Reader

The book author, Robert Gordon has been on this "economic growth is over" Jihad since forever. I found a 1988(!!) paper where he is complaining that productivity has been slowing down for 20 years (in 1988), that despite the vast investments in computer technologies nothing is showing up in productivity statistics etc. etc. For an advanced economy like the US, economic growth boils down to productivity growth. Well, how did he fare since then. Pretty sure no one is going to say we stagnated between 1988 and 2015. It is clear that there was a huge burst of productivity in the period 1995-2005 when people figured out how to use computers to improve productivity. Curiously, Bob Gordon became silent in this period.

But then it slowed down after 2005 and now Bob Gordon is back with his theories about "productivity is over" and growth is finished etc. The new twist is that he claims today's technologies are not as important to productivity as the early 20th century were. Well, the 1988 paper has comments by William Nordhus who shows that in the period from 1900 to 1917 productivity growth was zero and it was very low between 1924 to 1937. For the whole period the productivity growth came in a burst from 1917-1924 and then 1937 to about 1948. The reason is productivity is based on combining technologies in novel ways and it doesn't proceed in a regular 3% manner like population growth or investment. It is likely "bursty" and non-uniform. I fully expect to see another explosion of productivity (and thus economic growth) as mobile/cloud/AI/ML start infiltrating the general economic system.

[1] http://www.brookings.edu/~/media/Projects/BPEA/1988-2/1988b_...

The 1995-2005 period that you say had "huge productivity growth" saw the TFP growth rate temporarily rise from 1% to 2%. [1]

If that's the best level of productivity growth that we can expect in upcoming technological revolutions, then I think the data you point to supports the author's fear that we won't be getting back to kind of growth that we saw in the past.

[1] https://www.imf.org/external/pubs/ft/wp/2015/wp15116.pdf

As productivity numbers go, 2% is huge!!. The actual number is 2.46% (from Bob Gordon's own figures) [1]. To put this in perspective, this is one of the highest growth numbers in the entire history of the US. Decade wise the only period that had growth larger than 2.46% was the '30s. The economy has grown about 15 times (in real times) since then. If we can get 2.46% on a 18 Trillion economy we will double our per capita in less than 30 years. This is in real terms. A truly astonishing accomplishment.

More importantly though, Bob Gordon is predicting that this number will drop to 0.2% due to six headwinds. In turn he suggests our per capita doubling will take a CENTURY going forward.

[1] http://www.voxeu.org/article/us-economic-growth-over

Thanks for your response, you make excellent points.

I agree that his worst case scenarios are silly, and would only happen in unprecedented circumstances that are far outside the scope of a discussion about productivity.

However, I think 2% is quite low compared to our expectations. It feels like we should be living in a revolutionary age where productivity growth is accelerating, and looking at the actual numbers has been sobering. We have incredible technology like AI, 3D printing, and robotics, but we haven't been able to leverage them to much effect. Much of our growth is coming from slowly expanding on the same simple techniques that the generations before us pioneered -- building ever bigger ships, creating larger marketplaces, extending education.

With finite resources on this planet, there are only two possibilities: either we can get used to overall economic growth slowing down, or we find a way to massively increase productivity to make up for the slack. I want to see the latter, but seeing the numbers convinces me that we won't get there on the road that we're on.

I think the reason 2% is viewed as low compared to expectations is not understanding how it compounds. 2% means a doubling of the economy in 35 years. 2% means that in the space of an average lifespan the economy will be almost 5 times larger in real terms. Now granted it won't be distributed evenly but if you told someone that the country will be 5 times more productive by the time their baby is 80 they'll be impressed.

That's before you consider the fact many countries have not yet experienced the productivity growth of electricity and computers to their full meaning they can achieve much higher than 2% growth.

Comments like this are why I come to hacker news. The "journalist" at Washington post made no effort to bring this up in his piece for Gordon's new book.

Very much so. Had a similar reaction to the "Aliens!!!1!!" megastructure articles of the last few days, "need to duck over to hn and see what someone not selling ad space has to say about that"

>I fully expect to see another explosion of productivity (and thus economic growth) as mobile/cloud/AI/ML start infiltrating the general economic system.

I don't see how I, personally, am supposed to be productive in a novel way with technologies that require a compute cluster and a Google-scale dataset to yield useful results (for instance, "big data" machine learning).

Yes, AWS is a thing, but that still ultimately sounds like the small entrepreneur with a novel idea paying resource-rents to a megacorp to get access to the opportunity to monetize his idea.

I think looking at the presence of the tech alone isn't enough to predict/correlate with broader economic productivity. The bottleneck really is the access to it in a legal (copyright), cost-effective, and scalable (special vs commodity hardware) sense. And those factors have a variety of paths to success depending on the tech in question and on the big business players and government policies involved at the time.

This is a big issue with pseudo-economist authors. On Audible, you can find dozens and dozens of books on bubble and crash is coming. All those title immediately tells me that author found exactly what he wanted to see. It's very hard to find subject matter which is unbiased and purely analytical.

Reply on news.ycombinator.com