Growth slowdown: Krugman's 'Big Meh'
In his NYT column this week, Paul Krugman has once again raised the apparent ‘growth slowdown’. In his words:
A growing number of economists, looking at the data on productivity and incomes, are wondering if the technological revolution has been greatly overhyped — and some technologists share their concern.
It’s true, a number of economists (possibly growing) definitely seem to believe this. In 2011 Tyler Cowen declared a Great Stagnation, and in 2012, Robert Gordon argued that we face six ‘headwinds’ to growth; for technologist-pessimists, Krugman quotes Peter Thiel complaining that ‘We wanted flying cars, instead we got 140 characters.’ – as if Twitter were the most impressive technology the 21st century has to offer. (‘We wanted flying cars, instead we got self-driving cars’ has less rhetorical impact.)
Like so many economic debates, I think the side you fall on has more to do with your innate disposition than a fair reading of the evidence, and so I should begin by declaring mine: I just don’t believe this hypothesis: at heart I’m a techno-optimist, and I’d need dramatic evidence to change my mind.
The Economist did a pretty good job of canvassing arguments for and against a couple of years ago, both theoretical and empirical. I have views on the theoretical arguments, too, but I want to focus on three reasons I don’t believe in the empirical income-based arguments for the technological growth slowdown.
This post got far too long, so I’ve broken my arguments up into separate posts.
It’s too soon to tell: income growth is not a neat story
GDP fails to capture many of the benefits of technology
Perhaps the mid-century growth spurt was just catch-up at work