Experts Keep Getting the Economy Wrong

Measurement is, of course, a key issue, but it's less clear than you think that these changes represent forward progress.

Device convergence is pretty handy, and the shift towards spacial minimalism suits me nicely.

Is having less time in shared physical space, fewer "third places" really good? Do virtual replacements -- and their tendency toward sorted-ness -- really replace them effectively?

But most of all, a narrower demand profile leads to people who are left out of the labor market (and an even larger number of people who may be included but are poorly rewarded).

Make sure any alternatie measure you suggest keeps an eye on these issues.

The author, in my reading, isn’t claiming these are bad changes. They are just saying that the changes require adjustments of how we manage the economy.

Some of those are good for moving towards an ecologically sustainable economy... but consumer "preferences" changing due to stagnating wages in the face of rising costs of living is not a good thing. Labor liquidity is vital for a fast adaptive economy.

The metrics show economic suffering because that's the reality, this complex dynamic system is still adapting to the internet revolution and many are being left behind thanks to the anti-competitive effects of QE.

Consolidation, optimization, and related vertical integration in manufacturing leaves people out of the value chain. Many roles will eventually evaporate without competition and/or new advancements. In general, growth follows an S-curve with market saturation and consolidation eventually inhibiting growth. I beleive it will get harder and harder to afford "more and better stuff" over the long term with the way our economic system is set up. I encourage people to take a look at the concept of binary economics which was fathered by Louise Kelso; his ideas gave rise to employee stock ownership programs. My ultimate point is: Labor will eventually evaporate and we, as individuals, should look towards ownership and invest our wealth in companies who will ultimately own production and services.

Those changes only represent progress if they represent preference choice. However I very much doubt that most people are preferring to have living standards lower than their parents.

In order to evaluate preferences you need to observer Choice.

It might be good for you and me say, because we can order stuff easily and cheaply ship it to us, but the economy is hurt because a whole lot of local jobs were eliminated without many replacement jobs - there's an hourly amazon delivery worker plus a truck driver to the center maybe. Before there were retail workers, managers, mall security and janitors, trucks taking stuff to the mall.

We don't have as good a jobs for a lot of those people.

I think the weird part is that as large successful companies are turning to vertical integration, at least many western societies are going the other way.

Love the list/bulleted way that this is presented. Obviously missing a lot of granular points, but at a high level, I think this is spot on

The best forecasts are always provided by market indicators. And these indicators seem to be agreeing that we are in stagnation territory, though we might still manage to achieve a nice "soft landing" that doesn't lead to slipping into an outright recession.

It's not only reasonable, but is becoming increasingly accepted. I finished this book a little while ago:

https://www.amazon.com/Rise-Fall-American-Growth-Princeton/d...

But it really said the same thing that many other economics books said. If you read Thomas Piketty, you know that inequality basically comes down to the end of growth. He starts with the mostly-factual premises that growth will remain stalled while capital returns will continue at their historical rates. I'm still unsure about the latter premise myself, but the former is undeniable.

But we also need to distinguish economic growth from quality of life improvements. Quality of life, necessarily, has to come from productivity improvements (not in the dictionary sense of those words, but in the macro economic sense). The US GDP could be partially buoyant due to immigration, and partially due to demographics.

To some of the points of the article - companies would invest more if there was an expectation that new technologies were fundamentally transformative. I don't get that sense.

It's reasonable (at least in the US and most other developed countries).

Economic output is the product of the number of workers and their productivity. The US population is aging (so Baby Boomers are retiring) and its fertility is low relative to previous generations (though higher than other developed countries). This means there US won't get the GDP tailwind from population growth that it used to.

The other place to look is productivity. This is, in large part, a function of technology innovation (and adoption) though there are over ways to make the workforce more efficient as well. Productivity growth has been below historical norms since 2008 and nobody really knows why. Whether this is a anomaly or a trend is an open question, and makes up most the game of predicting long-term economic growth.

Personally, I suspect overall technological progress follows an S-curve and will slow at some point. I can't claim to know where we are on the S-curve, but I'm skeptical that Big Data and AI will lead to the same productivity gains as computers, electricity, etc (I'm an ML engineer fwiw). I wouldn't be surprised if US growth stays is low relative to historical standards for the foreseeable future.

It's not an unreasonable hypothesis, but it's certainly not new, either. The same hypothesis was made five, ten, twenty, and more years ago. And it was wrong every time.

That doesn't mean it's wrong now, but it does invite further retrospection why people thought it might be the case then, why they ended up being wrong, and what potential blind spots might lead to this perspective today.

Actually, there's still massive growth in countries like India, China, but also Ethiopia. As other countries start improving their economy, the economic boom of post WW2 America seems to finally wear off while at the same time the computer revolution is making short work of old-fashioned manual labor.

That's great for humanity in general, as more people can have better lives, but it comes at the cost of luxuries to the already rich countries.

I expect the economy in the west to decline in the next 20 or 30 years as more developing countries are getting their economies in line. With China investing massively in the African continent and with the enormous natural wealth Africa possesses, we can probably expect Africa to turn into a major economic power somewhere in the next 50-100 years.

>What if we've entered an era where this is the new normal? Where the kind of growth we've seen in the past isn't something we can expect anymore?

You're not allowed to ever think that.

Growth will keep on forever, boosted by magic yet uninvented technology if it ever stalls, bypassing all physical resource limits, and at an exponential rate preferably. /s

If you really want to learn more, though, avoid all mainstream economists and pundits paid to promote state and business interests.

We're leaving capitalism to enter into a new type of society. Rentierism. Everything is already owned. Even things you currently own, or don't even exist, are being taken back from you so you can be charged rent for it. It's like feudalism, but you can have as many feudal lords as you want to live under--as a service.

It seems to me that the primary way that average people can get ahead (at least in America, I'm less familiar with other countries) is by investing; which requires growth. If that went away, I'd be afraid that new generations or people who aren't from rich families would be stuck.

I wonder if there are any thinkers that have developed a plan for prosperity without growth that doesn't rely on utopianism?

Yes, it's because of central bank policy since '08, which are equivalent to price controls of assets (bonds and mortgages aren't allowed to be too cheap). This directly benefits asset-holders in general and punishes everyone else.

In the past, central banks in this sort of situation might have actually printed money instead. Actual printing of money is good for inequality—it distributes liquidity throughout the economy, encourages inflation, which effectively transfers wealth from current nominal asset-holders to debtors, and depending on how the money gets printed (e.g. use it to pay for a progressive tax credit), it can directly reverse inequality.

Why didn't central banks print money? A main reason is because the way printing money works is it has to happen through well-capitalized banks, which didn't exist in the post-crisis era, and it was hugely politically unpopular to bail them out.

Also, most people don't understand the Rube Goldberg machine of central bank policy and would've opposed money printing or inflation, even if it would've been the key to a real, broad-based economic recovery.

Their lives aren't getting worse. Income grew last year.

A couple of things need serious addressing: cost of housing (almost entirely due to protectionist zoning laws), cost of education (starting to think boot camps and trade schools aren't such a bad idea after all) and cost of healthcare.

I think there's solutions for those three.

The inequality in the US is growing but not as fast as you might think from listening to the media: [1]. The real median household income has grown faster since 2010: [2] (the mean household size went from 2.59 to 2.53 during this time [3]) and I think that matters more to an average person than the GDP (as does unemployment like you said).

[1] https://fred.stlouisfed.org/series/SIPOVGINIUSA

[2] https://fred.stlouisfed.org/series/MEHOINUSA672N

[3] https://www2.census.gov/programs-surveys/demo/tables/familie...

It's what happens when you don't have to prove your expertness with measurable metrics.

Yeah that is weird. China was growing like gangbusters when they were saving 50% of their income.