Almost seven years after the Great Recession officially ended, the U.S. economy continues to grow at a sluggish rate. Real wages are stagnant. The real median wage earned by men in the United States is lower today than it was in 1969. Median household income, adjusted for inflation, is lower now than it was in 1999 and has barely risen in the past several years despite the formal end of the recession in 2009. Meanwhile, the U.S. Federal Reserve Board and the Congressional Budget Office have taken more seriously the idea that U.S. productivity, one of the most important sources of economic growth, may stay low. And such problems are hardly unique to the United States. Indeed, productivity growth has been slow in most of the developed world for some time.
In the medium to long term, even small changes in growth rates have significant consequences for living standards. An economy that grows at one percent doubles its average income approximately every 70 years, whereas an economy that grows at three percent doubles its average income about every 23 years—which, over time, makes a big difference in people’s lives.
Some experts, such as the MIT economists Erik Brynjolfsson and Andrew McAfee, think that the current slowdown is a temporary blip and that exponential improvements in digital technologies are transforming the world’s economies for the better; others are more pessimistic. Chief among the doomsayers is Robert Gordon, a professor of economics at Northwestern University. His latest entry into this debate, The Rise and Fall of American Growth, is likely to be the most interesting and important economics book of the year. It provides a splendid analytic take on the potency of past economic growth, which transformed the world from the end of the nineteenth century onward. Gordon thinks Americans are unlikely to witness comparable advances again and forecasts stagnant productivity for the United States for the foreseeable future.
Yet predicting future productivity rates is always difficult; at any moment, new technologies
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