Yes, I long for our great Golden Age as well.
REH From: futurework-boun...@lists.uwaterloo.ca [mailto:futurework-boun...@lists.uwaterloo.ca] On Behalf Of Keith Hudson Sent: Friday, August 02, 2013 8:47 PM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION Subject: Re: [Futurework] FW: Is economic growth a continuous process that will persist forever? At 02:21 02/08/2013, you wrote: Longing for Aristocracy again are you Keith. REH Naturally. KSH From: futurework-boun...@lists.uwaterloo.ca [ mailto:futurework-boun...@lists.uwaterloo.ca <mailto:futurework-boun...@lists.uwaterloo.ca> ] On Behalf Of Keith Hudson Sent: Thursday, August 01, 2013 11:51 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION; Arthur Cordell Subject: Re: [Futurework] FW: Is economic growth a continuous process that will persist forever? At 01:56 01/08/2013, Arthur wrote: Subject: FW: Is economic growth a continuous process that will persist forever? Hardly! In truth, economic growth as we know it, depended on a fluke. This was due to the availability of limited liability banks in 18th century England which hadn't occurred anywhere else in the whole of pre-history. (Such banks, able to accumulate large amounts of cash was the only necessary innovation needed for industrial take-off. It was no particular virtue of Englishmen that the IR started here and not anywhere else. More than 2,000 years previously, man was innovating other important elements -- the Greeks could do precision engineering, the Indians practical mathematics, the Romans steam-powered automata and the Chinese making steel. If they had had banks then any or all of these past civilization could have could have led to IR. All the above possibilities petered out very soon when some vital lynch pin of their cultures gave way. In contrast, ours has been going on for much longer. Something like 350 years. Until the mid-1980s. But also, since then, the real median wage for what I call the 80-class of the population has been reducing. Nominal wages have been going up. Since then, and just as well perhaps, there hasn't been any domestic good which has had the power of the television or the car in the past, in causing people to work harder and longer, or to save money. Keith ABSTRACT This paper [written in August 2012 and 25 pages] raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow's seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about "how much further could the frontier growth rate decline?" The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR's), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before. In contrast, IR #3 created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once - urbanization, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature. Even if innovation were to continue into the future at the rate of the two decades before 2007, the U.S. faces six headwinds that are in the process of dragging long-term growth to half or less of the 1.9 percent annual rate experienced between 1860 and 2007. These include demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt. A provocative "exercise in subtraction" suggests that future growth in consumption per capita for the bottom 99 percent of the income distribution could fall below 0.5 percent per year for an extended period of decades. Robert J. Gordon Department of Economics KateNorthwestern University Evanston, IL 60208-2600 and NBER r...@northwestern.edu _______________________________________________ Futurework mailing list Futurework@lists.uwaterloo.ca https://lists.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list Futurework@lists.uwaterloo.ca https://lists.uwaterloo.ca/mailman/listinfo/futurework
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