Gordon on growth 2

PBS covers Bob Gordon's The Rise and Fall of American Growth.



[Embedded video. These aren't picked up when other sources pick up the blog, so come back to the original if you don't see the video.]

PBS and Paul Solman did a great job, especially relative to the usual standards of economics coverage in the media.  OK, not perfect -- they livened it up by tying it to partisan politics a bit more than they should have, though far less than usual.

I don't (yet, maybe) agree with Bob. I still hope that the mastery of information and biology can produce results like the mastery of electromagnetism and fossil fuels did earlier. I still suspect that slow growth is resulting from government-induced sclerosis rather than an absence of good ideas in a smoothly functioning economy.  But Bob has us talking about The Crucial Issue: long term growth, and its source in productivity. The 1870-1970 miracle was not about whether the federal funds rate was 0.25% higher or lower. And the issue is not about opinions, like the ones I just offered, but facts and research, which Bob offers.

The issue of future long-term growth is tied with the issue of measurement, something else that Bob has championed over the years. GDP is well designed to measure steel per worker. Information, health and lifespan increases are much more poorly measured. This is already a problem in long-term comparisons. In the video, Bob points to light as the greatest invention. The price of light has fallen by a factor of thousands since the age of candles, to the point where light consumption is a trivial part of GDP. It's a worse problem as all the great stuff becomes free. I suspect that we'll have to try to measure consumer surplus not just the market value of goods and services.

And congratulations to Bob. The economics profession tends to focus on the young rising stars, but he offers inspiration that economists can produce magnum opuses of deep impact at any point in a career.

Disclosure: I haven't read the book yet, but it is on top of the pile. More when I finish. Ed Glaeser has an excellent review.

Update: Tyler Cowen's review, in Foreign Affairs