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Everyone’s talking about study by Robert Gordon at Northwestern University that says America’s period of rapid economic growth is over forever.Blogger James Pethokoukis highlighted Gordon’s gloomy chart on the decline of growth in real GDP per capita.
We were struck by his arguments about how innovation in the U.S. has slowed to the point of prohibiting future economic booms.
Gordon cites transportation speed as an example:
“The audacious idea that economic growth was a one-time-only event has no better illustration than transport speed. Until 1830 the speed of passenger and freight traffic was limited by that of “the hoof and the sail” and increased steadily until the introduction of the Boeing 707 in 1958. Since then there has been no change in speed at all and in fact aeroplanes fly slower now than in 1958 because of the need to conserve fuel.”
Gordon says that the fact that the U.S. has already produced so many one-time innovations makes it less likely that we’ll be able to invent more:
“Heeding the warning of these forecasting missteps, let us assume that innovation
continues, with such marvels as the driverless Google car on the near term horizon. Research
on the genome will surely make progress in the fight against cancer and other diseases. But
research for new blockbuster drugs is encountering diminishing returns, with a substantial
numbers of failures and rapidly escalating costs of experimentation per successful new drug
If Gordon’s theory is correct, there isn’t much we can do to save the flailing economy.
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