Must-read: Paul Krugman: “Review of ‘The Rise and Fall of American Growth’ by Robert J. Gordon”
Must-Read: I need to read and then come up with my own informed view of the book that ruled the American Economic Association meeting earlier this month: Robert Gordon’s Rise and Fall of American Growth. But until I do, I am going to steal Larry Summers’s and Paul Krugman’s reviews. Here’s Paul’s:
Review of ‘The Rise and Fall of American Growth’ by Robert J. Gordon: “Herman Kahn and Anthony J. Wiener’s ‘The Year 2000’ (1967)… offered…:
…a systematic list of technological innovations Kahn and Wiener considered ‘very likely in the last third of the 20th century.’ Unfortunately, the two authors were mostly wrong. They didn’t miss much, foreseeing developments that recognizably correspond to all the main elements of the information technology revolution…. But a majority of their predicted innovations (‘individual flying platforms’) hadn’t arrived by 2000 — and still haven’t arrived, a decade and a half later.
The truth is that if you step back from the headlines about the latest gadget, it becomes obvious that we’ve made much less progress since 1970 — and experienced much less alteration in the fundamentals of life — than almost anyone expected. Why? Robert J. Gordon… has been arguing for a long time against the techno-optimism that saturates our culture… has argued that the I.T. revolution is less important than any one of the five Great Inventions that powered economic growth from 1870 to 1970: electricity, urban sanitation, chemicals and pharmaceuticals, the internal combustion engine and modern communication. In ‘The Rise and Fall of American Growth,’ Gordon doubles down on that theme…. Is he right? My answer is a definite maybe. But whether or not you end up agreeing with Gordon’s thesis, this is a book well worth reading….
Techno-optimists… [say] official measures of economic growth understate the real extent of progress, because they don’t fully account for the benefits of truly new goods. Gordon concedes this point, but notes that it was always thus — and that the understatement of progress was probably bigger during the great prewar transformation than it is today…. Gordon suggests that the future is all too likely to be marked by stagnant living standards for most Americans, because the effects of slowing technological progress will be reinforced by a set of ‘headwinds’…. It’s a shocking prediction for a society whose self-image, arguably its very identity, is bound up with the expectation of constant progress. And you have to wonder about the social and political consequences…