This post is about robots and the economy, but takes some detours first. Bear with me.
Robert Gordon and the End of Growth
There has been a very interesting discussion going on recently, prompted by an article by economist Robert Gordon of Northwestern University. Gordon’s article (“Is US economic growth over?”) makes the case that long-term US economic growth on the scale of the last century was due to one-time events and has run its course, with future growth prospects being much lower. He attributes the growth of the past few centuries to three distinct industrial revolutions. The first, beginning 1750-1830, was due to steam power and railroads. The second, 1870-1900, was due to electrification, internal combustion engines, running water and petroleum. The third, beginning around 1960, was due to the computer and the internet. Gordon makes the case that the second industrial revolution, from 1870-1900, was by far the most important, and that computers and the internet have had far smaller impacts on GDP. Combined with demographic headwinds, he sees much lower rates of growth in the next century.
Martin Wolf summarizes the pessimist’s case succinctly:
Unlimited growth is a heroic assumption. For most of history, next to no measurable growth in output per person occurred. What growth did occur came from rising population. Then, in the middle of the 18th century, something began to stir. Output per head in the world’s most productive economies – the UK until around 1900 and the US, thereafter – began to accelerate. Growth in productivity reached a peak in the two and a half decades after World War II. Thereafter growth decelerated again, despite an upward blip between 1996 and 2004. In 2011 – according to the Conference Board’s database – US output per hour was a third lower than it would have been if the 1950-72 trend had continued (see charts). Prof Gordon goes further. He argues that productivity growth might continue to decelerate over the next century, reaching negligible levels.
Robots to the rescue?
What interests me most is the responses that Gordon’s article has received. His position is very interesting, but likely wrong in one massive aspect.