Saturday morning, Federal Reserve Chairman Ben Bernanke told graduating Bard College students why he believes the future will be better.
In theory, this is a pretty banal argument, especially in a graduation speech.
But it looks a little different coming from an conscientious academic.
Halfway through the speech, Bernanke presents the evidence of those who argue against this view — that actually, our best, most innovative days are way behind us.
In a footnote, Bernanke discusses the folks he’s really calling out.
Among them is Robert Gordon, who last year published a paper highlighting not one but six headwinds that suggest future growth will pale in comparison to the advances of the 20th century’s technological advances and subsequent GDP growth.
The headwinds are:
- the end of the “demographic dividend;”
- rising inequality;
- input price equalisation stemming from the interplay between globalisation and the internet;
- the twin educational problems of cost inflation in higher education and poor secondary student performance;
- the consequences of environmental regulations and taxes that will make growth harder to achieve than a century ago;
- the overhang of consumer and government debt
Here is the chart Gordon uses to make his case, showing real, relative GDP growth over the past few centuries.
It’s basically what Bernanke is arguing against:
…doubling the standard of living took five centuries between 1300 and 1800. Doubling accelerated to one century between 1800 and 1900. Doubling peaked at a mere 28 years between 1929 and 1957 and 31 years between 1957 and 1988. But then doubling is predicted to slow back to a century again between 2007 and 2100.
To be honest, it’s difficult to say whether Bernanke seals the deal versus Gordon. He basically ends up saying that he doesn’t really know what will happen, but that everything has always kept changing, so there’s no reason to suspect the future will be any different.
As he himself concludes in this less-than-ringing endorsement of coming advances in society, ” I wish you the best in facing the difficult but exciting challenges that lie ahead.”
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