Is American economic growth over? Not so fast …


“Gordon’s paper has received widespread attention for his provocative thesis that U.S. productivity growth is essentially over and that the average American will be no better off, and likely worse off in the future.”

3 thoughts on “Is American economic growth over? Not so fast …

  1. Interesting perspective. I think the arguments here are made in a bubble, not factoring in externalities like climate change. Sure, technological advancement could reduce airline delays in the future if the future behaves as the past once did. What if airline productivity is affected by Climate Change? This article argues that it will be:

    If this winter is any indication of the future I would argue that all productivity will be affected (excluding the productivity of the snow-removal industry) . This should be factored into the analysis.

    Also, there is evidence that when income inequality grows beyond a certain level there are negative effects on growth:

    “However, more recent research suggests that while some inequality is necessary, too much inequality undermines growth: The research shows that the U.S. economy is probably at or near the point where the negative effects of inequality outweigh the positive effects.”

    • I tend to agree with Gordon’s premise that America’s best days in terms of growth are over. Many have argued that the “American Dream” is no longer a reality and that for most, the goal of achieving a higher standard of living than the previous generation is no longer achievable. While i think there will be plenty of innovation in the future, many will not enjoy the fruits of that innovation. As the article mentioned, the cost of higher education forces numerous talented individuals away from “white collar” and other professions such as engineering, science, and math. An emphasis on hard sciences (and perhaps a government subsidy for those students who do decide to pursue those fields) will help to both spur on innovation and provide the U.S. workforce with a supply of professionals in needed areas that will in turn stimulate the economy. While i do not believe things are as bad as Gordon implies, without some sort of incentive/subsidy which allows talented students the opportunity to pursue education in needed areas, the United States will not see the type of growth we witnessed during the 20th century.

      Here is an interesting article that touches on the problem of income inequality and the American Dream:

  2. OK, guys, I’ll bite. I guess I am skeptical about these doomsday predictions, because I am old enough to have read so many others (the earth is cooling! the earth is warming! we can’t feed the growing population! we’re not replacing ourselves fast enough!) that didn’t pan out. And I’ve read a lot of economic warnings that weren’t right either.

    The nature of disruptive innovation is such that is *isn’t* anticipated and *can’t* be foreseen. If human history teaches us anything, it should be that “conventional wisdom” is often wrong, and so are the predictions that accompany it.

    I’m not sure we’re correct when we say that “the next generation” will not live better than this one, but I do think it depends on what criteria we are using. Is it better health? Longevity? Access to information? If we’re just talking about buying stuff, perhaps not. But if we can get a lot more of the things that make life better without buying stuff, then perhaps that doesn’t matter.