There’s a general feeling among Americans that our good ole’ technological ingenuity has been — and will continue to be — the catalyst for economic growth.
And that, essentially, we are doomed.
Gordon’s paper is a response to the more bullish batch of “techno-optimists who currently believe that we are at a point of inflection leading to faster technological change.” He argues that the United States has been on a slow productivity decline for some time, and we face strong headwinds in the next 50 (like an ageing population, inequality, and debt).
Here’s Gordon’s conclusion (via the Washington Post’s Zachary Goldfarb):
Techno-optimists remind us that much of the innovation that originates in the U.S. travels around the world with blazing speed through purchases of smart phones and the software that has been developed for them. But other countries can have the free lunch of enjoying American innovation including thousands of smart-phone apps without being saddled with American socio-economic decay, poor educational test scores, massive student debt, high school drop-outs, rising poverty together with explosive growth of incomes at the very top, and the need to reform entitlement programs that are in trouble in part because the U.S. has refused to make medical care a right of citizenship. Today we can only guess which nations will replace the U.S. and remove it from its potential position of leadership due both to the size of its population and its world-leading real GDP per capita.
Gordon’s key chart of American productivity is below. It divides the 122 years since 1891 into four intervals (the length of which is indicated by the width of the bars). The green bar is productivity, the red bar is output per capita, and the grey bar is hours per capita.