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The Rise & Fall of American Growth

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Apache
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4:51p, 9/12/16
AG
I listened to a Freakonomics podcast produced a few months ago that really got me thinking. The premise:
quote:
Gordon challenges the view that economic growth can or will continue unabated, and he demonstrates that the life-altering scale of innovations between 1870 and 1970 can't be repeated. He contends that the nation's productivity growth, which has already slowed to a crawl, will be further held back by the vexing headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government. Gordon warns that the younger generation may be the first in American history that fails to exceed their parents' standard of living, and that rather than depend on the great advances of the past, we must find new solutions to overcome the challenges facing us.
The jist I got is that there isn't another Industrial Revolution out there to spur growth. Even the "Digital Revolution" bump in growth has come and gone. Now that computers & the internet have been nearly fully integrated into American business, growth has stagnated. According to the author, we're looking at 1-2% growth until something else comes along to spur the economy forward. Thoughts?

I invite you all to listen to it... also attached a link to the book at Amazon.


Podcast: Freakonomics podcast


The Rise & Fall of American Growth
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drill4oil78
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5:40p, 9/12/16
AG
Agree that my children will have a lower standard of living than we gave them growing up. Their only hope is that they inherit some wealth from their baby boomer parents, but our government will tax the hell out of what is left.

The only thing that will get real growth in our economy and the world economy is revising our tax codes and lowering rates, limiting regulations, and minimizing the size of government which is also out of control. Big government zaps the soul out of any economy. Just look at Europe and we are trying to become Europe for some reason.
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Apache
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6:26p, 9/12/16
AG
Appreciate the response, but the point of the book is that government policy will only affect growth so much. The real drivers of growth are innovations (such as the personal computer, internal combustion engine, telephone, etc) We have entered an age where there isn't a "big invention" that will greatly improve the way things are done.
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claym711
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6:28p, 9/12/16
AG
The next catalyst for high gdp growth is as unknowable as the previous two were before they occurred. Economic revolutions like those listed are extremely rare. That doesn't mean GDP won't continue to grow at a modest pace. We are now a mature economy.

We are currently in a low growth environment and will likely experience a recession. It's a normal cycle.

The baby boomer mantra that points at government as the source of all problems while thumping their chests over economic growth and hating on younger generations is beyond silly. Baby boomers gave younger generations all the entitlement and tax issues that exist. Debt to GDP and monetary policy and currency manipulation exploded under the "conservative" idol Reagan. Fact is that the government can absolutely spur growth, and not only by cutting taxes and reducing debt.
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Apache
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8:08p, 9/12/16
AG
What do you consider modest growth? 5%?
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MemorialTXAg
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In reply to Apache • 9:01p, 9/12/16
quote:
Appreciate the response, but the point of the book is that government policy will only affect growth so much. The real drivers of growth are innovations (such as the personal computer, internal combustion engine, telephone, etc) We have entered an age where there isn't a "big invention" that will greatly improve the way things are done.


That's what "economists" probably said right after they invented cotton gin as well. Safe to say that humans have not exhausted "the way things are done" in 2016.
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AgBank
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In reply to Apache • 10:40p, 9/12/16
AG
Interesting. I will listen.

this corresponds to an article on death rates to middle aged white men due to believed due to "declining health and fortunes". Source


----

OP, as a suggestion, Freakonomics isn't even close to as good as Econtalk.

Just my opinion, but Freakonomics is too painfully like listening to NPR. They dumb it down too much for their audience. Don't push back enough (play devil's advocate).
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The Fife
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In reply to Apache • 5:19a, 9/13/16
quote:
Appreciate the response, but the point of the book is that government policy will only affect growth so much. The real drivers of growth are innovations (such as the personal computer, internal combustion engine, telephone, etc) We have entered an age where there isn't a "big invention" that will greatly improve the way things are done.
I disagree, the author did not take into account the impact of AI and machine learning. At this point beyond google searches most don't see its impact, but this will continue to grow. Like the industrial revolution, lots of jobs will be displaced but lots of new opportunities will come up to take their place.

What will be interesting to see IMO is the consequences of technology advancing at a greater rate than people can be trained or retrained.
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Apache
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In reply to MemorialTXAg • 7:37a, 9/13/16
AG
I think Adam Smith & the Cotton Gin were both born around the same time, so it is possible. Economists are wrong all the time, to be sure.

He does mention AI, robotics, etc. as a potential for increased growth. But he says we aren't there yet with the technology & won't be for a while. In addition, he talks about while these developments have potential, the amount of growth they cause won't be capable of recreating the growth of previous revolutions.

Just a fascinating subject to me.... we take for granted how fast & far we've come in the last 100 years. My Grandfather grew up on a cotton farm where folks used oxen to plow when he was a boy. When he died people had been on the moon & the internet was exploding. Hopefully I can be around another 30-40 years to see how far we can go.

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Dr. Doctor
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In reply to drill4oil78 • 8:36a, 9/13/16
AG
I was thinking about this the other day whilst driving.

We have milked a lot of out of our current technology. But there doesn't look like there is the next 'replacement' that would drive growth.

Looking back, you had hand/animal power then steam. With steam, you started with wood, then coal, then oil. We kinda switched from using steam to turn something to just using the fuel to turn what we want (turbines, engines, etc.). But during the use of each fuel, the improvements came, gradually. Another way to think about it is ships. Started with a few sails and then ended with clippers (like 60 sails). The big leap was going from wind to steam/props.

We have pushed the IC engine a lot, but at the end of the day, it is still the same process as when it was first invented. What is the next growth/technology? I could see electric motor. What powers that would be the true 'changer'.

One fun idea is having a NG line to each house and everyone gets a fuel cell. You can use the NG to heat up water and the house, but then the rest of it is based upon electricity generated at the house. You can clean up NG to the point of fairly clean, but you get the bonus of no transmission loss of electricity. On demand power and NG pipelines tend not 'go out' during inclement weather. Couple it with solar (so NG at night, solar during the day), each house is an island and self-sufficient.

Side note:
quote:
Agree that my children will have a lower standard of living than we gave them growing up. Their only hope is that they inherit some wealth from their baby boomer parents, but our government will tax the hell out of what is left.

And this is probably me getting mad at clouds, but how is my life (late Gen Xer) worse than my parents? How is my standard of living worse than my parents? If you look at one aspect, I might agree with you (social mobility); but as an overall aggregate, my lifestyle is much better than my parents. If I look at what is spent, as a percentage, towards things, we have much more disposable income than previous generations. Life expectancy, education, etc. are all above our parents.

And if you want to live in a world of 'meritocracy' instead of 'aristocracy', you should be taxing death. But that delves into politics, which is another board....

quote:
The only thing that will get real growth in our economy and the world economy is revising our tax codes and lowering rates, limiting regulations, and minimizing the size of government which is also out of control. Big government zaps the soul out of any economy. Just look at Europe and we are trying to become Europe for some reason.
Big government is how you got to the moon. Big government is how you don't live 3 generations deep in a house (like the rest of the world). Big government is how you have the technological advances today after the 60's, since business got out of research. Big government is how you have lived past 35 years old (medical research). I can go on.

Before, you had Bell labs, GE, and a bunch of others doing actual, basic research. Stuff that is needed to be done to advance life (telephones, glass, material research, electricity, etc.). Stuff that takes 30 years to monetize. Name me a company that is doing that now. Most 'long term research' by major (or historical) companies is maybe 5 years, at BEST. Most is 1-2 years. I've worked for some of these companies (or gone into the research side). They have specifically stated "long term research is 5 years". These are blue chip, All-American companies that make up your mutual funds.

Europe is going the same way we are. We have developed everything. They have built roads, schools, cities, etc. Their birth rate is below replacement, hence the desire for immigration. There comes a point in which you cannot grow anymore. The US might hit that soon; then what do you do?

Why did China and Africa look great for growth? There was nothing there. So going from nothing to something is awesome. But once there, and if there is nothing that needs to be replaced, what do you do then?

Look up the different ideas on post-growth economics. One that I think is better is Post-Growth. There are others out there, but it will be something that needs to be addressed soon.

~egon
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AgBank
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8:46a, 9/13/16
AG
quote:
"everything that can be invented has been invented."

Charles H. Duell
the Commissioner of US patent office in 1899.
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jh0400
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In reply to The Fife • 4:25p, 9/13/16
AG
quote:
quote:
Appreciate the response, but the point of the book is that government policy will only affect growth so much. The real drivers of growth are innovations (such as the personal computer, internal combustion engine, telephone, etc) We have entered an age where there isn't a "big invention" that will greatly improve the way things are done.
I disagree, the author did not take into account the impact of AI and machine learning. At this point beyond google searches most don't see its impact, but this will continue to grow. Like the industrial revolution, lots of jobs will be displaced but lots of new opportunities will come up to take their place.

What will be interesting to see IMO is the consequences of technology advancing at a greater rate than people can be trained or retrained.


The issue with these new opportunities is that it will require a further specialization of the workforce, and there is a large portion of the workforce that doesn't have the aptitude to be trained to excel in the new economy. This skills gap is going to have a large impact on the middle class.
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smokeythebear
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4:58p, 9/13/16
AG
I think a big distinction that is missing here is why there is a shift from improving efficiencies to improving entertainment. There was a day when everyone's focus was building bigger, faster, better, and more efficient. This is what led to household appliances and going to the moon. Eventually, we realized going to the moon no longer improved our standard of living, so now most technological advances are focused on improving standard of living through entertainment. Facebook, iPhones, the internet, commercial airlines; these are all examples of HUGE technological advancements that aren't saving people from dying of starvation, but are simply allowing humans more freedom, easier access to entertainment, and instant access to information. If you grew up in Amercia in the 90's, life was pretty dang good. How do you improve upon that?
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DriftwoodAg
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5:05p, 9/13/16
AG
I don't see there being a problem with our kids not exceeding our standard of living, we have it really good
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smokeythebear
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5:17p, 9/13/16
AG
That being said, to answer my question above, one way you further improve the quality of life is through nanotechnology. The advancements in robotics over the last 50 years have in incredible and they are only going to speed up once we start getting atoms to work as circuit boards. The miniaturizations of processes across the world will lead to things like wearable health monitors. They will be able to scan your body regularly and administer drugs, procedures, or diagnosis instantly to prevent you from ever becoming sick. Complex and long surgeries will turn into "here swallow this pill" where nanobots will go into your bloodstream, seek out the injury, fix the injury, and leave through your urinary tract. In much the same way we slowed down building skyscrapers because of improvements in transportation, we'll slow down transportation because of improvements in communication (Skype, limitless cellphone data, holographic communication, maybe even actual teleportation!).

I also think we'll see a large movement to improving mental health of humans, rather than just the physical health of them. As life has become easier, we see depression, boredom, lust, gluttony, and apathy rise. I think these new educational tools and communication devices will help combat these and I expect there will be a new wave of emotional science built to further improve quality of life. One day, our children really WON'T be able to outperform us and we'll have to provide them with the tools to deal with that anguish accordingly.
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SWCBonfire
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5:02p, 9/20/16
AG
We have supposedly just begun to scrape the surface of nanotechnology and automation. Those will be growth industries going forward, accoring to:

http://waitbutwhy.com/2015/01/artificial-intelligence-revolution-1.html

The link is a long, two-part read w/ too much hyperbole, but interesting nonetheless.
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Dr. Doctor
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In reply to SWCBonfire • 8:04a, 9/21/16
AG
With automation, you can end up having a 2 edge sword. Look at autonomous cars (trucks actually).

If most of the larger fleets of 18-wheelers move to an autonomous driver, what happens to the 2 million+ drivers? Think of scheduling trucking so that they drive after rush hours near/in cities and any time during the non-crowded areas. Maybe a driver sits/rides to handle traffic situation or the actual last mile delivery, but with enough time and experience, the programming does more and more work.

There is work for the manufacturers of the new cabs, but what do you do with the now unemployed drivers? You have a big growth in terms of on area (Class 8 trucks), but you have a huge loss in another. Is that growth overall?

I think there will need to be some inefficiencies to handle people, unless we start shooting them into space at planets to populate the universe.

~egon
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JDCAG (NOT Colin)
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In reply to Apache • 10:57a, 9/21/16
AG
quote:
Appreciate the response, but the point of the book is that government policy will only affect growth so much. The real drivers of growth are innovations (such as the personal computer, internal combustion engine, telephone, etc) We have entered an age where there isn't a "big invention" that will greatly improve the way things are done.


As humans, we have a tendancy to show incredible short sightedness at what the future will hold. That's why those that think outside the box (and are many times ridiculed for it) become wildly wealthy when they make the next game changer.

Heck, not too long ago, the idea of a 100MB hard drive seemed needless. "We'll never fill that thing" was typically the response you'd hear. If we're that horrible at seeing the very, very, very small changes that would lead to that statement being ridiculous, then the notion that we can somehow definitively and exhaustively close the door on game changing inventions is hilarious.

I do think that there is an interesting point regarding the impact of our current and future advances with regard to employment (i.e. automation replacing humans), but the idea that we'll never again have a game changing invention seems right up there with the statements about computers being a fad.
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hangman
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11:18a, 9/21/16
I don't think anyone can predict when we are done with revolutionary advances. Machine Learning, driverless vehicles, new medical technologies, and a shift to different forms of energy all offer the potential for a continued revolution. The smartphones in our pocket started less than a decade ago. Only 50% of the world has internet access. I think if we figure out this wealth disparity thing everyone's standard of living will continue to increase.
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Roger That
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In reply to Dr. Doctor • 8:57a, 9/22/16
AG
quote:
With automation, you can end up having a 2 edge sword. Look at autonomous cars (trucks actually).

If most of the larger fleets of 18-wheelers move to an autonomous driver, what happens to the 2 million+ drivers? Think of scheduling trucking so that they drive after rush hours near/in cities and any time during the non-crowded areas. Maybe a driver sits/rides to handle traffic situation or the actual last mile delivery, but with enough time and experience, the programming does more and more work.

There is work for the manufacturers of the new cabs, but what do you do with the now unemployed drivers? You have a big growth in terms of on area (Class 8 trucks), but you have a huge loss in another. Is that growth overall?

I think there will need to be some inefficiencies to handle people, unless we start shooting them into space at planets to populate the universe.

~egon


What happened to all those field workers when the cotton gin showed up?
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Lt. Joe Bookman
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In reply to Roger That • 3:33p, 9/22/16
AG
quote:
quote:
With automation, you can end up having a 2 edge sword. Look at autonomous cars (trucks actually).

If most of the larger fleets of 18-wheelers move to an autonomous driver, what happens to the 2 million+ drivers? Think of scheduling trucking so that they drive after rush hours near/in cities and any time during the non-crowded areas. Maybe a driver sits/rides to handle traffic situation or the actual last mile delivery, but with enough time and experience, the programming does more and more work.

There is work for the manufacturers of the new cabs, but what do you do with the now unemployed drivers? You have a big growth in terms of on area (Class 8 trucks), but you have a huge loss in another. Is that growth overall?

I think there will need to be some inefficiencies to handle people, unless we start shooting them into space at planets to populate the universe.

~egon


What happened to all those field workers when the cotton gin showed up?
I know you're being sarcastic, but the cotton gin increased the amount of field workers (slaves) required since they could process cotton so much more efficiently. It did reduce the amount of workers (again, slaves) required to process the cotton.

quote:
However, like many inventors, Whitney (who died in 1825) could not have foreseen the ways in which his invention would change society for the worse. The most significant of these was the growth of slavery. While it was true that the cotton gin reduced the labor of removing seeds, it did not reduce the need for slaves to grow and pick the cotton. In fact, the opposite occurred. Cotton growing became so profitable for the planters that it greatly increased their demand for both land and slave labor. In 1790 there were six slave states; in 1860 there were 15. From 1790 until Congress banned the importation of slaves from Africa in 1808, Southerners imported 80,000 Africans. By 1860 approximately one in three Southerners was a slave.
Just as everyone else who has had their jobs eliminated due to change in technology (farmers, secretaries), drivers will need to learn a new skill and adapt. It is a little scary to think about with Truck drivers since there are so many of them. This is a pretty neat map showing just how many of them there are:


http://www.npr.org/sections/money/2015/02/05/382664837/map-the-most-common-job-in-every-state
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Diyala Nick
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1:25a, 9/23/16
AG
Crispr.

Longer lifespans and "health spans" means more wealthy consumers around longer spending more wealth.

My bet that the 21st century revolution will be at the cellular level (and will rely heavily upon Deep Learning and other ai).
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Harkrider 93
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In reply to Lt. Joe Bookman • 7:44a, 9/23/16
AG
Robotics/automation has happened at least since the assembly line. Somehow, the general population doesn't get hit the way many make it sound. Due to the past, I always question what kind of effect will robotics have. I get the shift of jobs and some won't be prepared.

I also wonder what kinds of things will change that we can't even fathom. Above, someone mentioned the memory card that was too big at the time that we now think is too small. Today, we see the truck drivers as all out of a job and that they have nowhere to go (in general). Maybe it doesn't happen overnight and there is enough time to train in other fields. Maybe some new areas open up that they turn to that we can't even imagine today.

I really don't have answer for the above thoughts. I just assume that we adapt because we always have.
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MouthBQ98
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10:27a, 9/23/16
AG
Technology alone will continue to improve standard of living by deflating costs for every day goods and services and making new options available. Kids today can do things only the very wealthy could afford a generation ago RE electronics, and many basic goods are steadily getting better and cheaper, though we fail to notice it.

Our problem is simply systemic debt, as public and private debt grows, it represents a risk that must be mitigated by more conservative economic decision making that in turn reduces growth potential. It is very basic but widely ignored as a cause.
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bmks270
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11:20a, 9/23/16
AG
I think it's a problem of education and mindset. Small minded population will mean no growth.
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Seven Costanza
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5:42p, 9/23/16
AG
I'm sure many of you have seen this, but it is pretty interesting:

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