Is Growth Over?

http://krugman.blogs.nytimes.com/2012/12/26/is-growth-over/

by lkrubner • 14 years ago

41 23 14 years ago

krugman.blogs.nytimes.com

ErikAugust2• 14 years ago

Growth may not over but I've been thinking a lot of thoughts related to Krugman's final point. I think employment may generally decline and perhaps a skills gap will only continue to widen. Wealth disparity will widen also, perhaps.

michaelochurch6• 14 years ago

I think that humanity will eventually go to a basic income, first on a national and then on a world scale. I think national BI will follow the next real economic catastrophe (not 2008, but 1930s) and the global one will be possibly 50 years later. I'm optimistic on the long-term future, but I think we have at least one more Great Depression and, unfortunately, at least one big-ass war ahead of us.

BI will probably happen too late, but if we don't want to die, we will implement it. It used to be that it took a 22-year one-time investment to get people ready for the work force, but now it requires continual education, and without BI, people who lack independent income are going to be in trouble.

ErikAugust2• 14 years ago

Yeah, I agree - a basic income welfare system may be inevitable. One other thing to think about is - basic income allows for more people to live a life of independent experimentation/research. The effect might be quite positive on open source communities in technical fields but as well as the arts.

learc83• 14 years ago

I lean heavily libertarian, but my practical side says we should implement a basic income and do away with almost all labor regulations.

michaelochurch6• 14 years ago

Growth is not over, but the pace has slowed, due to decreased R&D investment. The reason for the 5-6% global growth of the 1950s-60s (which we haven't seen since then) is all of the research that was being funded during the Cold War. When research funding dried up, smart people (even in unrelated sectors) could no longer demand autonomy to the same degree, and the economy slowed as the empty suits took over (and redistributed all the wealth to themselves).

The overarching story is still faster-than-exponential. A lackluster (in comparison to what was before it) 50 years does not mean that growth is "over".

dmix3• 14 years ago

They are comparing growth from 1750-2012. I'm not sure how relevant the one productive decade (or two) NASA and a few other agencies had during the cold war is to the discussion of macro-economic growth.

Also do you have a source on the reduction in R&D investment in the economy from the cold war until now (for the entire economy)?

michaelochurch6• 14 years ago

It's hard to get those numbers, because of questions regarding how R&D is defined, but:

* Decent academic jobs have become extremely rare in the past 30 years. * Blue-sky corporate R&D has been slashed. * Worker autonomy is decreasing in most companies, resulting in low job satisfaction.

No one in the R&D world debates the contention that this contraction has been going on for 30+ years and that it's immensely destructive.

csense2• 14 years ago

> 5-6% global growth of the 1950s-60s

> The overarching story is still faster-than-exponential

I've heard a lot of people lately incorrectly using the word "exponential" to just mean "pretty fast." It has a specific mathematical meaning which you clearly don't know, but which you should know if you're going to throw around words like "exponential."

If growth over the period you're talking about has 6% per year as an upper bound, that's really saying it's bounded above by some curve of the form

  f(t) = k0*1.06^t

where k0 is the GDP at the start of your period. The function f(t) is an exponential function. So your growth is not "faster-than-exponential" since it's bounded above by an exponential function.

The only way you can get faster-than-exponential growth is if the percentage growth of GDP is itself growing every year. Needless to say this will eventually become ridiculously fast growth: If we started out with a GDP 1% a year in 1950, and say GDP advanced .5% per year after that, we'd currently be experiencing 31% economic growth per year. Insane!

michaelochurch6• 14 years ago

Actually, I do know what exponential means.

Faster-than-exponential means the rate of growth increases as time progresses, e.g. e^(e^t).

By "the overarching story is still faster-than-exponential", what I mean is that the rate of economic growth itself is growing-- taking the long (hundreds of years) view. In agrarian times, 0.1% per year was typical. By the 1700s, we were up to 0.3-0.5% per year. By 1825, 1% per year was typical. Now, global economic growth is about 4% per year.

If we started out with a GDP 1% a year in 1950, and say GDP advanced .5% per year after that, we'd currently be experiencing 31% economic growth per year.

It won't grow that fast. My guess is that the growth rate's own doubling rate is about once every 150 years or so (with noise) meaning we'll see 9-10% growth as the norm in the mid-22nd century. Obviously, there's some limit to this, but once humanity is post-scarcity (ca. 2120) who cares?

bloaf• 14 years ago

I think the biggest insight here is "Clearly, such a technology would remove all limits on per capita GDP, as long as you don’t count robots among the capitas." You could make the same point about slaves. I'm not opposed to the idea of robot workers, but I suspect that a robot-driven economy will look a lot like a slave-driven economy. Poor and unskilled workers will strongly resent that their jobs are going to robots, just as they did during slave times. Those fortunate enough to own robots will essentially live a life of leisure. The profitability of robots will be heavily reliant on exports, as robots can produce significantly more than they and their owners could consume.

batgaijin• 14 years ago

The unfortunate inevitability when welfare turns into negative income tax.

What's the difference? One acts like it's supposed to help you when you happen to not have a job. The other treats not having a job as an inevitability of the increasing incentive for automation.

See: 'Player Piano' by Kurt Vonnegut

pebb• 14 years ago

Growth in the developed world is over.

richcollins2• 14 years ago

So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.

The robots will create wealth for the people that don't own robots. If they can't afford this wealth the robots will never be created in the first place. It's no different than any other automation technology.

altcognito• 14 years ago

Only if those replaced by automation can provide value to society (employment). Assuming they will find jobs with ever increasing amounts of automation seems naive. Manufacturing and farming employed the VAST majority of people in the past.

richcollins2• 14 years ago

If the vast majority of people are unemployed there won't be anyone to support said automation and it won't exist.

kqr2• 14 years ago

Also check out Marshall Brain's essay Robotic Nation.

http://marshallbrain.com/robotic-nation.htm

artsrc• 14 years ago

What does "growth" measure?

If we buy a $7 kindle book rather than a $16 paper back does that halve GDP?

We have improved medical care that costs the same does that imply no growth?

If twice as many people use air travel, but it costs half as much does that mean there is no growth?

erikpukinskis• 14 years ago

I actually think we're just at the very beginning of the information revolution. The reason growth seems to have slowed is that we experienced a hype bubble. People (correctly) predicted that a globally connected network of pervasive computers would fundamentally change every industry, it just looks like it's going to take 50 or 100 years, not 5 or 10.

At the turn of the millenium people got tired of waiting and the speculative markets fell apart.

But the engineering continues. The friction separating the world's information is in mid-collapse, but the actual diffusion has barely even started.

csense2• 14 years ago

Anyone want to speculate on what's going to be IR #4? I'm thinking either biotech (an industry I know little about) or widespread Internet-enabled custom manufacturing of real-world stuff.

Space colonization will probably be another IR, but it seems like serious efforts at a permanent self-sustaining colony (that could survive indefinitely if something really bad happened and the human race on Earth was wiped out) are at least 50 years away.

Is Growth Over?

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