
The Great Productivity Puzzle - jseliger
http://www.newyorker.com/news/john-cassidy/the-great-productivity-puzzle?intcid=mod-latest
======
gumby
What frustrates me about articles like this (even professional ones -- this
simplifies for a general audience) is that they only look at one side of the
equation. Low inflation is the opposite side, and it's interesting.

Yes, GDP$ per unit hour has not gone up much, but the flip side is that the
economic value of the output has gone _down_. If you look in terms of PPP,
workers are doing better: fewer labor hours go into buying dinner.

The corollary is that fewer hours are required to produce PPP equivalent
product (e.g. a car) so fewer workers are needed (since the $ are not going up
at the same rate it looks like productivity is not). That's why the LFPR is
sinking.

A victorian era "smokestack" model isn't useful when looking at this world.
This is why automation really is likely to cut employment this time (in fact
it already is) and that's the real economic problem to be worrying about.
Which some are (e.g. the small UBI experiments under way) but it's still not
mainstream.

~~~
redwood
Completely agree: automation is already changing the employment landscape. The
number of people who tell me how the unemployed truck driver or factory worker
can become a robot designer boggles my mind. It's a total break-down in the
ability to see quantities vividly for what they are. I grew up in a field
where orders of magnitude were the first class citizen and it's clear that
order of magnitudes more people do mundane automate-able work than will be
able to contribute on the design side of the next era's production systems.

To your point: the way to fix these problems is to make sure that everyone,
irrespective of their ability to make money selling their labor, is able to
consume a fair amount. Hence the need for a basic income for all: the higher
the better. The quicker we break from the moralistic perspective that everyone
should "work" in a world where not everyone can, the quicker we can create a
world that is about "the pursuit if happiness" again.

~~~
gumby
Automation has always increased employment _in the long term_. And maybe it
will this time as well: the truck drivers will not become robot designers but
their kids could, instead of becoming truck drivers as well.

The fact is that we don't live in the long term so although truck driving and
coal mining are shitty jobs (and absolutely _should_ be automated or
eliminated) we have to take care of the current practitioners (both
financially and finding a way for them to preserve their dignity) as their
employment goes away.

Separately I don't think we'll need all that many robot designers either.

~~~
redwood
I could not disagree more. We are probably working the least hours as a total
number of waking hours of the total population than we ever have as a species.
Automation has always decreased the amount of work that needed to be done. Now
admittedly "work needing to be done" is different from "employment" but I
would argue that the less work that needs to be done, the less easy it is to
create paying jobs to pay people to do those non-things. Yes many of the
"workers" of the 1800s were domestic and not counted on wage payrolls... and
we had a lot of them shift into the "work force" and begin getting wages in
the 1900s. But that's not to say there is a net trend away from work _and_ pay
rolls. If we don't wake up and see this problem the inequality situation will
continue to get worse.

------
Animats
Something that's puzzled me for a while: why haven't we hit "peak office" yet?
Why are there still so many people working in offices? By now, we should have
many abandoned office blocks, much as we have abandoned factories in the Rust
Belt. But that's not happening. We have all this office automation, but too
many people in offices.

Are marketing cost and G&A (general and administrative) increasing as a
fraction of cost of goods/services sold? Perhaps it's the overhead of
capitalism. Advertising just moves demand around; where the savings rate is
low, it can't create it. There are a surprising number of products, from
movies to telephone service, where the marketing cost exceeds the cost of
providing the product or service.

One problem with a winner-take-all economy is that the cost of competition
goes up, because being slightly better at the margin becomes more expensive.
It's like sports; the additional input required for 1% more performance is a
lot more than 1%, once you're close to the record.

~~~
Jtsummers
> We have all this office automation, but too many people in offices.

I can't speak to the general case, but to my experience with big
corporations/enterprises.

Automation is rarely implemented, and when it is it's half-assed. And then a
year or two later they try again, but the old system remains, and now your
workers have to connect _two_ systems manually. And then a year or two
later...

Not my domain, I'm busy enough, but in one area of my org there are a _ton_ of
people whose job is, at its core, to manually synchronize about six databases.
They also interface with customers, so that part can't or shouldn't go away.
But they spend 80% of their time (estimate based on friends who worked there)
doing that manual sync. Every time someone had the same thoughts as me but the
power to do something tried to automate it, they ended up with an extra
database that was only partially connected to the rest.

Too many stakeholders, not enough leadership.

~~~
mc32
Maybe it takes an upstart to displace an incumbent rather than the incumbent
reinventing itself. So for example you have Amazon vs Wal*Mart, Tesla vs GM...
Now, some incumbets do have enough time to reconfigure (as WalMart is trying).

On the other hand... maybe corporations are better corporate citizens than we
give them credit for (i.e. not everyone is a "Chainsaw" Al Dunlap. who want to
shed workers as quickly as possible. Maybe some actually want to keep people
employed as long as they can.

~~~
iofj
Maybe people simply have different goals. For instance, it seems pretty
obvious to me that no mass-layoffs (and thus a limit on productivity increases
in that company) was a condition of the Obama administration's helping out of
GM, and the same goes for the various Euro governments who did the same.

[https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor...](https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization#Bailouts)

------
thedevil
A few rants (mixed in with a few half-baked ideas):

1) Economic progress from the industrial revolution is about quantity. We
learned to make a lot more stuff. The industrial revolution is not quite done,
but the impact is less and less every decade. We may never match that quantity
growth of stuff because we don't even want more stuff, we only want better
stuff. And we're getting better stuff and more variety.

2) Info. tech. IS being mismeasured and it's huge. We're not all imagining it.
The economics of info tech are REALLY good except in the official GDP numbers.
And arguing that it's not counted in economic measurements doesn't debunk the
mismeasurement claim, it supports/explains it. What's more, info tech
decimates a lot of industries - music, GPS, newspapers, travel agents, etc.
And self-driving cars are probably going to decimate the auto industry and
wipe out a lot of logistics related jobs. Everyone(A) will be better off but
official GDP will fall.

3) Wages aren't growing largely because the economy needs more skilled and
more managerial workers, but we don't seem to be producing a lot of them(B).
It's an awesome time to be a skilled worker. Good and growing pay and
billboard signs desperately seeking talent. There's no end to work that needs
to be done with the right skills. Meanwhile, unskilled workers aren't so
useful anymore. They were well off when anybody could sit in an assembly line
and produce a lot of stuff. But now unskilled workers don't really produce,
they mostly trade their time for other people's time (e.g. by cooking their
food) and they do so from a weak negotiating position. I don't see any of this
changing anytime soon.

(A) Everyone = the vast majority of people

(B) Anecdotal, I could be wrong

~~~
Spooky23
You're wrong about one thing... The low skill jobs didn't vanish. They moved
to places where wages and regulation (safety, environmental, etc) are less.

The people who made Fisher Price toys in East Aurora, NY were made redundant
by equally low/moderate skill workers in Mexico and later China. Your
undershirt was made in North Carolina until the late 80s, and shifted to a
variety of places until it hit the bottom -- Bangladesh.

The IBM people who assembled Power servers in Minnesota were replaced by
Mexicans. The Dell folks in North Carolina and Texas were replaced by
Mexicans, Taiwanese and Chinese.

What you characterize as low skill work and workers still exists and isn't
being automated away to the extent that the average HN commenter would
suggest.

I question the value to the consumer as well. The shoes on my feet are made in
some mega-factory in Guangdong. They cost more than the shoes I bought a
decade ago that were made in Maine, and are of similar quality. IMO there's a
lot of middlemen or some sort of self dealing going on -- producing shoes in
massive bulk should push prices down, not up.

~~~
ThomPete
Outsourcing is the last step before automation.

You have to follow your own rationale here trough.

What happens when mexicans become richer and also concerned about safety at
workplace because now they can afford to worry about it?

This is why even china is outsourcing to even cheaper places, robotics or why
when production sometimes comes back it's in fully automated factories.

~~~
Spooky23
> What happens when mexicans become richer and also concerned about safety at
> workplace because now they can afford to worry about it?

They get canned and the work gets shipped out to China.

------
buzzybee
I thought about this for a moment and then remembered something important. The
big driver of our economy today is to add a layer of customization and
modularity to existing processes via IT: Now you can get ala carte
information, or summon a cab from anywhere, plan and present social
arrangements with a minimum of formal overhead, or manufacture goods in
smaller runs than before. Physical processes like transportation increasingly
fit into a packet switching analogy - not driven by a particular modality of
capital and energy(bike, car, train, plane), but by protocols driving end-to-
end connectivity, like shipping containers.

This is not a process that creates value in the same way that using energy
more intensively, to spin wheels, lift objects, melt iron, or process
chemicals, grows value. In past iterations, we've always had a link between
energy intensity and industrial growth.

But now we have a huge demand for new designs that reconsider the same
processes, using a similar amount or less energy than before. The amount of
labor that can go into designing that stuff is similarly huge. But it's a
superstar situation - a few people make big breakthroughs by chance. We are
"less" productive on average, routine work doesn't reap the benefits, and
capital allocation doesn't have the guarantee of power it used to, in a world
where tiny software startups are constantly scanning for a new platform lock-
in opportunity. The economy stumbles from one speculative bubble to the next,
trying to resume a paradigm of the past. It's a very chaotic, disruption-
heavy, what-have-you-done-for-me-lately future that we've built for ourselves,
and it's made everyone a little more insecure even as it produces its share of
new wonders.

------
throw_away_777
Productivity increases are going to the top earners, as wages stagnate for
most of the population. [http://inequality.org/income-
inequality/](http://inequality.org/income-inequality/)

This has many reasons behind it, including political factors such as the
decline of unions and increase of free trade.

------
nostromo
I hear classic economic thinking is that productivity gains lead to higher
wages. But could the causation be reversed? Cheap labor tends to
disincentivize innovations that can lead to productivity gains.

Perhaps we're entering a period where there are simply too many people for too
few jobs. This keeps unemployment high, wages flat, and removes the incentive
for companies to invest in automation.

~~~
dredmorbius
That argument has in fact been made for why, e.g., the Romans didn't exploit
coal, which they had (from England) rather than human and muscle power.

Slaves were far too cheap.

A developing thought: the industrial revolution, writ large -- starting with
the Medieval industrial revolution of increased use of wind and water power,
was in many was a continuously ramping-up circumstance of living close to (but
not immediately at) the thresholds of subsistence, having available
opportunities for improvement, and having a gradually increasing degree of
technical complexity in tapping into those opportunities, which developed as
the challenges and opportunities increased.

If you're not testing your limits, you've got no incentive to improve.

If you've pursued some improvement, but are then contented with the results,
you'll continue in a "fat and happy" existence. This has occurred in several
places and times through human history.

If you're pushing at limits, and are aware of the concept of technological
advance, but the resources aren't available, you'll tend to slide into
decline. Arguably this happened to the UK following WWI. England had steamed
into modernity on the basis of its coal reserves, but switching to oil,
without (then-known) reserves, she stumbled and the United States picked up
the slack.

(Why the Middle East didn't exploit its own oil reserves earlier is a
tremendously interesting question -- whether for want of technology,
industrial capacity, or other reasons. I'm planning on looking into this.)

Another possibility is that the technological leaps are simply too great. The
Middle East question may have been a case of this, and the West (and world at
large) may face that conundrum in switching to renewable or sustainable energy
options.

------
hristov
The reason for this is deflation. Deflation in our economy is massive and far
under-reported. Deflation is especially great in areas where productivity is
rising.

The way economists measure productivity is by the monetary value of the thing
produced. Thus, productivity gets tied in with inflation and deflation.
Suppose you make widgets, and can make 10 of them per hour. Suppose you sell
each of them for $10 bucks. Now suppose inflation hits and the price of the
same widgets is all of a sudden $20 per hour. You still only make 10 widgets
per hour. But all of a sudden you are twice as productive according to the way
the government and economists measure productivity.

The opposite happens when deflation occurs. If your widgets all of a sudden
start selling for $5 per hour instead of $10, you will be considered by the
official economic analysis to be twice as lazy even if you work just as hard
and make just as many widgets per hour.

And there you have your problem. Deflation is hitting everything, but it is
hitting industries that benefit from productivity of new technology the
hardest. Take a serer cpu made today that can perform 100 times as much work
as a server cpu made about 10-15 years ago. Is intel considered a hundred
times more productive when they make this cpu that does 100 times more work?
Of course not. Their productivity is based on how much the cpu sells for and
since per cpu prices have held stable to slightly decreasing over that time,
intel's productivity for that particular cpu is deemed to have decreased as
well.

Or take pictures. Twenty to thirty years ago there were probably over a
hundred thousand people working in photo development shops making pictures for
people. Now about a 100-200 programmers (estimated) among Google, Apple,
Facebook and yahoo probably provide the vast majority of picture viewing
services in America. Is that a great increase of productivity? It should be,
because a hundred people are doing the same stuff a hundred thousand were
doing twenty years ago. But officially it isn't because picture viewing is
considered to be free, so no revenue is assigned to it.

So productivity growth is happening, but unfortunately it is accompanied by
large drops in pricing, which make the official measure of productivity look
bad.

Why are prices dropping? This has to do with something journalists do not like
to talk about -- wage stagnation, income inequality, etc.

------
joeyo

      . If Gordon is right, sagging productivity figures simply reflect 
      . the fact that scientific progress doesn’t have as much impact on 
      . the economy as it once did. Rather than waiting for productivity 
      . growth and wages to rebound of their own accord, Gordon supports 
      . policies designed to expand the size and quality of the labor 
      . force, such as raising the retirement age, letting more 
      . immigrants into the country, and expanding access to higher 
      . education.
    

Assuming for the moment that Gordon is right about the diagnosis, isn't this
remedy exactly backwards? If productivity (per worker?) is down, than surely
increasing the size of the labor pool is exactly the wrong medicine and will
result productivity per worker to decrease further. Increasing the _quality_
of the labor force through higher education, etc, makes sense. But how can
increasing the size of the pool lead to wage increases in the absence of other
productivity gains?

~~~
vasilipupkin
1) more people means more demand for stuff, means more incentive to produce
stuff, more competition to sell them stuff and higher economic growth 2) if
people want to come here, it's because they think they are not being as
productive as they could be where they are now.

~~~
joeyo
Regarding 1), more people means more demand for stuff only insofar as those
people have money to buy stuff. In any event, you have the causal chain
backwards:, increases in productivity allow for the support of a larger
population; a larger population does not (by itself) lead to productivity
increases. India has over a billion people, yet also much lower productivity
than the US, so population alone can't be the whole story.

Regarding 2), I have no doubt that potential immigrants think they can be more
productive in the US than elsewhere! But that doesn't imply that their
participation in the US labor pool will boost productivity further still.

~~~
vasilipupkin
The goal is not to boost productivity but to boost GDP growth of which
productivity growth is one component. A larger population, all other things
being equal, leads to more GDP growth. All things are not equal when you
compare India and US, so that comparison is not relevant. Compare US with
current number of people vs US with 10 times fewer people. Which one is better
?

~~~
joeyo
Assuming you mean GDP per-capita ... maybe? I suspect that GDP is highly
correlated with productivity, anyway. Which way does the causality go?

Why should the US not have many fewer people and why couldn't that be better?
There's nothing magical about 315 million people. A much smaller population
would be better for ecosystems, global warming, etc. I'd demand the proviso
that the population shouldn't be decimated overnight and that the age
distribution can't be too skewed (too many youth or too many old). But barring
that, I don't see why some lower population (even tenfold fewer) couldn't be
"better".

~~~
vasilipupkin
I am talking about better not in some sort of philosophical sense, but in
terms of GDP and GDP per capita

~~~
joeyo
Even then you haven't proven your point: might not GDP per capita go up if the
population goes down?

~~~
vasilipupkin
GDP per capita for those remaining indivuduals would only go up if those who
disappeard were somehow destroying GDP per capita for those who remained. How
is that possible in any reasonable state of the world ? As long as those who
disappeared where on average non zero marginal product, then their
disappearance would lower GDP per capita for the remaining ones

------
tunesmith
What sorts of constraints in our daily lives feel blindingly obvious, in terms
of wishing for a solution? I mean beyond true life-transition concerns like
finding new housing or new jobs.

In the past, I'm sure a clothes-washing machine must have felt pretty obvious
even if people weren't sure what it was. It's always been a pain to do laundry
and there had to have been a wish for some sort of contraption to make it
drastically easier, even before knowing what that contraption would be.

When I think of real constraints in daily life, I can only think of things
like - the effort of transition from waking to working, commuting, perhaps the
convenience of having nutritious food that improves your health, and... what
else?

What sorts of things do you think of when you say, "I wish I could just snap
my fingers and..."

~~~
roymurdock
Eating, exercising, sleeping.

One day we'll look back on these activities as we look back on hand-washing
clothing, drawing water from the town well, burning coal/wood for central
heating, etc.

The question is: what will "we" be at that point.

------
greenmountin
One approach to understanding low productivity that I find interesting is
covered in Jason Furman's very readable "Is This Time Different? The
Opportunities and Challenges of Artificial Intelligence" report [1] -- he's
one of Obama's lead economists.

In short, productivity growth may be lagging _because_ of AI etc; it's because
people have to spend time retraining for jobs not obsoleted by new
technologies. He briefly states his rejection of Gordon.

[1]
[https://www.whitehouse.gov/sites/default/files/page/files/20...](https://www.whitehouse.gov/sites/default/files/page/files/20160707_cea_ai_furman.pdf)

------
guelo
Yes, things like Google Search _must_ be increasing productivity. But at the
same time the amount of time dedicated to infotech entertainment addiction is
going through the roof. I wonder how much productivity the hours of
Facebooking at work is costing us.

~~~
TeMPOraL
Forgetting for a while the non-linear costs of distraction in cognitively
intensive jobs, I wonder if Facebooking at work is really costing us anything
at all? I'm having a hard time imagining that office workers of 20+ years ago
were that more job-focused than they're now.

But then again, the problem may be Internet in general - I can't imagine
people being able to do so many non-work errands while in the office if it
weren't for e-mail in particular.

~~~
cableshaft
I did data entry in an office with no internet connectivity (well it did, but
they didn't allow browser usage, we connected to mainframes to do our work)
before about 12 or 13 years ago.

When people wanted to zone out they read books, usually. Audiobooks were also
common. I brought the entire series of Discworld novels in on pdf, and managed
to read the entire series while I worked there. I also wrote a bunch of notes
down on paper.

Hell, when I was working in warehouses away from computers entirely I'd still
zone out during it and mentally work out some ideas for personal projects once
I was done with work. Sometimes I actually miss that, since I seemed to have a
lot more ideas then.

Point being, you don't need computers or internet for people to find ways not
to be 100% productivity machines.

------
darawk
Am I missing something or did the 'debunking' of theory #1 not hold any water?

> First, they said, mismeasurement has always been an issue in the
> information-technology sector, and it was just as big an issue in the period
> from 1995 to 2005, when productivity was growing rapidly.

If your hypothesis is that non-technological productivity growth has reached
its peak but technological productivity growth is accelerating, then this is
exactly what you'd expect. And you'd expect the mis-measurement issue to take
you much further from the mark then you do now.

Saying that mismeasurement has always been an issue completely ignores the
fact that how big of an issue it is relative to other factors may have
changed.

> Second, the productivity slowdown hasn’t been confined to sectors in which
> output is tough to measure: it has been broadly based

This is just stating the contradiction of the original hypothesis. If mis-
measurement is an issue, how do you know that it's broadly based?

> And, finally, many of the benefits that we’ve reaped from things like
> smartphones and Google searches have been confined to non-market activities

While true, it's hard to imagine that things like access to Wikipedia, Stack
overflow, instant global messaging, etc..Haven't significantly enhanced
productivity for a variety of office workers as well. Not to mention
automation technologies a la Amazon's Kiva robots and other factory automation
tech.

------
drusenko
Productivity increases when you save people time. When a job used to take 2
hours and now it only takes 1, productivity has gone up.

I wonder if the reason productivity is going down is that the current cohort
of 2010s technology companies may actually have the opposite aim: consuming
people's attention and time.

Things like social networking, advertising supported businesses, mobile
gaming, &c., aren't saving people time at all.

------
imglorp
I normally take a dim view of economics and this article is worse than usual.
My complaint is the massless, frictionless world of economics does not take
real world forces into account.

> technological advancement just ain’t what it used to be.

We're about to see millions of human roles vaporize when automated driving
hits home. This isn't like the dishwasher or desktop calculator. We've already
seen self checkout stations. How long until whole stores are automated? Eg:
[http://newatlas.com/go/5028](http://newatlas.com/go/5028)

> Many productivity-enhancing new technologies are capital goods—think back to
> the moving truck.

Bullshit as well. Hardware is rapidly approaching free as services dominate.
Plus most of our readers shift capex to opex by cloud hosting, for example.
Furthermore, offshoring and free trade means you won't invest in equipment
because you're not even making the widgets any more, in house.

> Look at what an ideal kitchen looked like in 1955

Mostly irrelevant when "instant gratification isn't fast enough". Our kids
can't even be bothered to microwave something in 30 sec, so prepackaged
convenience, dominates households.

Finally, what does corporate malfeasance (eg VW emissions, banking crisis,
LIBOR fraud etc) do to productivity?

I think this is a more honest assessment:
[http://www.businessinsider.com/alan-greenspans-mistake-
has-l...](http://www.businessinsider.com/alan-greenspans-mistake-has-led-to-
debt-and-stagnant-wages-2016-8?utm_source=feedburner&amp;utm_medium=referral)

~~~
dredmorbius
I think you're giving this article shorter shrift than it deserves. While I
don't feel it (or Gordon) quite puts its finger on the _cause_ , it does a
good job of quantifying the symptoms. Gordon does this at rather more length.

In particular, we're seeing challenges, from within the economic
establishment, of the prevailing view of the past 60 years or so that economic
growth is _normal_ and _perpetual_.

On your first point: Gordon illustrates this in exquisite detail, but the
_impacts_ of technological innovation (vs. the rate of innovative change
disrupting procedures, devices, companies, etc.) have fallen _tremendously_
over the past 150 years. Gordon looks at the period 1870 - 2015, divide
roughly into three (almost) 50 year periods: 1870 - 1920, 1920 - 1970, and
1970 - present.

In the first 50 years, you saw virtually _all_ the innovations you will find
around you today, in at least some form. Steam power, electrical generation
(and light, heat, motion, sound recording & transmission), radio, elevators,
cinema, sanitation and sewage (far more responsible for improved life
expectency than all the rest of medicine), elevators, skyscrapers, and most of
all, petroleum and its consequences: cars, trucks, power tools, plastics, and
more.

It's almost easier to list what didn't develop: TV, penicillin, DNA,
computers, lasers, nuclear power, gas turbines, and satellite launch
capabilities.

What developed from 1920 - 1970 were the _applications and utilisations_ of
those technologies.

Gordon notes that the home of 1920 was connected to five networks: water, gas,
electricity, sewage, and phone. I'd add two more: the postal and package
delivery networks, which whilst not fully end-to-end, provide the foundation
of the Amazon of its age, Sears, Roebuck and Company.

The _fundamentally new_ technologies from 1970 to present have been far fewer,
_almost entirely concentrated into communications, information and
entertainment_ , and have had vastly smaller impacts on work, home life,
health, and transport than the innovations of 1870-1920 and applications of
1920-1970. (Again: covered in detail by Gordon.)

On productivity-enhancement as capital goods: I'm finding your argument
unpersuasive. Capital equipment, _the energy to drive it_ , and its
organisation are key to productivity. Much now derives from _how pieces are
organised_ \-- WalMart and Amazon are as much logistical companies as anything
else. But yes, capital plays a huge role.

Of the kitchen, your third point: again, the contrast is the kitchen of 2015
vs. 1970 vs. 1920 vs. 1870.

In 1920 you may well have had a wood-burning stove (gas was being introduced),
no refrigerator, in some homes no running water (Gordon highlights the total
amount of _hauling_ that was required in the 1870 home: water, wood, and food
in, various wastes out, little arriving on its own).

The change 1870 - 1920, 1920 - 1950, 1950 - 1970, and 1970 - 2015 of kitchen
appointments has shown a tremendous fall in rate. That microwave your kids
can't be bothered to use didn't exist in the 1970 kitchen, but that's about
it.

VW's behavior may well be a consequence of firms pressurised to ever-
increasing returns in light of declining rates of growth, or of declining
absolute productivity.

~~~
mattclarkdotnet
Bravo. Too many people assume change is somehow the same over time.

------
mcguire
There is something radically wrong with how they measure productivity. I don't
know what it is, but the details matter.

I remember the first verse of this song, back in the '90s when economists were
wondering if information technology was a productivity _sink_. All of this new
fun stuff was everywhere, but productivity measurements were going down. At
the same time, just-in-time inventory management was acknowledged as the
greatest innovation since sliced bread---and you can't do that without
information technology. And the changes since then have only made IT more
central and that has reduced the friction to do essentially everything else.

------
wazoox
Problem: how is productivity measured? The example given is pretty
transparent, however, if a doctor sees 20 patients a day instead of 15, his
productivity is up, but does he do a better job overall? Productivity can
enhance up to some point; you can't indefinitely build more cars every day for
instance.

Final stance: there is no such thing as infinite growth on a finite planet.

------
jackcosgrove
I'll modify Gordon's hypothesis. New technology is no less productive than it
used to be. The difference is that new technology requires fewer humans in the
loop. That's why productivity is rising but wages are not.

------
chmike
The theories presented in this article consider USA economy as adiabatic. They
ignore the growth occurring in Russia and China, and how this has affected the
growth in Europe and USA.

------
dredmorbius
This is yet another review of Robert Gordon's _The Rise and Fall of American
Growth_. Incidentally, William Nordhaus also just published one.[1]

Of the good: Gordon's book is a tour-de-force of the past 150 years (nearly)
of economic progress in the US, and documents impacts on everyday life
meticulously and engagingly. I and numerous reviewers, several of whom I
strongly suspected to disagree, find the case he makes for a hump-shaped
growth curve -- that is an increasing accelleration from 1870 - 1950, followed
by a slowing _accelleration_ , though continued growth, from 1950 to present
-- compelling.

Gordon also makes a good case for several of the factors contributing to the
exceptionally vibrant growth from 1920 - 1950, including especially the
stimulus of World War II and the post-war recovery. But also the very
fundamental nature of many of the innovations brought online at the time.

His treatments especially of transportation, communications, healthcare, and
household life are spectacular. I recommend them highly.

There are some missing elements though.

Gordon never uses the phrase "Maslow's Hierarchy" \-- the pyramid of needs
that humans must have met, starting with food, clothing, and housing, and
extending through safety and security, social engagement, and self-
fulfillment. He _does_ address many of these individually, and notes that
early innovations tended strongly to address the base elements, and of the
importance of security and predictability (a tremendously under-acknowledged
failing of post-1970 economic experience) among individuals.

A possible defense of ongoing growth might be made by seeing the present
period as one of a consolidation and development of technologies -- say, very
large datacenters and broadband backplanes, as well as increasingly capable
mobile devices and programming tools for developing them -- which may see some
future breakout. Gordon seems in this, and several other areas, particularly
incurious.

Gordon's life work is largely focused on GDP measurement, and he leans very
heavily on this. His argument is that GDP underaccounts for true improvements
in lifestyle, an argument with some merits, though others argue that it
_overaccounts_ by failing to take into consideration diseconomies. It's
curious that Gordon _doesn 't_ explore alternative quality-of-life measures
suggested by many contemporary critics of economic orthodoxy.

More fundamentally, in not addressing them, Gordon raises some very profound
questions over the fundamental basis of economics. What is wealth? What is
value? How is value associated with cost and price? How should costs of
renewable vs. nonrenewable resources be considered? Is energy a fundamentally
different economic input? What is the relationship of energy to economic
growth? What is technology? What is the mechanism, or mechanisms, by which
technology does, and doesn't, promote increased productivity? What are the
market-mediated impacts of improved productity, particularly as expressed
through the Jevons Paradox, Giffen, and Veblen goods? How does one measure
quality? How does one measure the total capacity or capability of an economy?

These aren't easy questions. They are, I'm finding as I research economic
theory and its history, less ridiculous, and rather more explored, than I'd
have thought. There are some exceptionally notable departures and paths taken
in economic theory over time, often poorly addressed in the current
curriculum.

As with some of the infrastructure issues above, Gordon's marked
disinclination to pick up stones, particularly ones on which sacred cows seem
perched, strikes me as a singular weakness of his book.

There are other authors, mostly neglected, who've explored this space. Eric D.
Beinhocker's 2006 book _The Origin of Wealth_ , Nicholas Georgescu-Roegen's
_Entropy and the Economic Process_ , W. Brian Arthur's work on the economy as
an evolving complex system, and others. I see the questions and explorations
as deeply related.

________________________________

Notes:

1\. [http://www.nybooks.com/articles/2016/08/18/why-economic-
grow...](http://www.nybooks.com/articles/2016/08/18/why-economic-growth-will-
fall/) Nordhaus is cited in Gordon for his work on economics of both computers
and lighting, and addresses advances of lighting (and underaccounting of these
in GDP) in his review. It's an interesting exploration of limitations of
economic measurement.

~~~
drjesusphd
> Is energy a fundamentally different economic input? What is the relationship
> of energy to economic growth?

I am particularly interested in this. My intuition tells me that energy is
special because it is the only thing that the laws of physics says cannot be
recycled. And that, given enough energy, everything else can be.

~~~
FiatLuxDave
Technically, it is entropy sinks that you mean, not energy. Energy is quite
recyclable given a sufficient entropy sink.

~~~
dredmorbius
Exergy is energy available for work.

Entropy is the degree of disorder in a system.

Emergy is source energy (which must be defined in a formal definition, e.g.,
typically solar emergy) which is bound up in a particular product or energy
source.

------
djyaz1200
It's social media.

