Robert Gordon is a well known economist at Northwestern University who is profoundly pessimistic about the ability of our economy to grow in the future. In fact, he believes that the growth that occurred during the hundred years from 1870 to 1970 was something of a historical accident that will be difficult or impossible to repeat. According to an interesting new article in New York magazine, Gordon
believes we can no longer expect to double our standard of living in one generation; it will now take at least two. The common expectations that your children will attend college even if you haven’t, in other words, or will have twice as rich a life, in this view no longer look realistic. Some of these hopes are already outdated: The generation of Americans now in their twenties is the first to not be significantly better educated than their parents. If Gordon is right, then for all but the wealthiest one percent of Americans, the rate of improvement in the standard of living—year over year, and generation after generation—will be no faster than it was during the dark ages.
Wow, sounds awful. But why?
Electrical appliances allowed women of all social classes to leave behind housework for more fulfilling and productive jobs. Air-conditioning moved work indoors. The introduction of public sewers and sanitation reduced illness and infant mortality, improving health and extending lives. The car, mass media, and commercial aircraft led to a liberation from the narrow confines of geography and an introduction to a far broader and richer world. Education beyond high school was made accessible, in the aftermath of World War II, to the middle and working classes. These are all consequences of the second industrial revolution, and it is hard to imagine how those improvements might be extended: Women cannot be liberated from housework to join the labor force again, travel is not getting faster, cities are unlikely to get much more dense, and educational attainment has plateaued.
We’re not sure we find this argument convincing. Workforce participation, travel, urban density, and education did not improve substantially during the 1980s and 1990s, yet those two decades featured pretty good levels of growth. The cause was largely a revolution in computer technology, which has perhaps now run its course. But the future can perhaps exploit alternative sources of growth such as biotechnology, genetic engineering, nanotechnology, robotics, and other sources we cannot yet imagine. Nobody in 1850 imagined the revolutionary effects of electrification that transformed the 20th century.
In support of Gordon, the article cites Nobel Laureate Paul Krugman.
The classic example of the scale of these transformations is Paul Krugman’s description of his kitchen: The modern kitchen, absent a few surface improvements, is the same one that existed half a century ago. But go back half a century before that, and you are talking about no refrigeration, just huge blocks of ice in a box, and no gas-fired stove, just piles of wood. If you take this perspective, it is no wonder that the productivity gains have diminished since the early seventies.
Is this the sort of argument that Nobel Laureates nowadays find credible? That we can draw inferences about the next hundred years of economic growth by just looking around our kitchens? In any event, in our experience, our own kitchen is considerably different from the one our grandmother had in the 1950s. She had no automatic dishwasher, garbage disposal, coffeemaker, icemaker, microwave, or plastic wrap. Shopping for food in order to stock that kitchen was also a very different experience. In the 1950s, supermarkets were only just starting to become widespread, and they did not stock the same variety of foods; in particular, they did not sell ready-to-eat foods such as frozen dinners and microwave popcorn. Even more tragically, there was no access to craft beers.
But for the sake of argument, let’s concede to Krugman that kitchens have changed less in the last 50 years than in the previous 50. Why focus, however, on just the kitchen? How about the office? In a 1972 episode of the TV series Columbo, the late great Mel Ferrer plays a famous Hollywood writer. A scene shows him in his home office where Ferrer’s character does his work. His office has none of the following: computer, smartphone, cam, internet access, fax machine, scanner, copier, or printer. Just a landline telephone on the desk along with a mechanical typewriter. He keeps all his important records and information as hardcopies, stuffed into filing cabinets. Indeed, we can think of no significant aspect in which the office of the 1970s differs from that of the 1920s. (There were marginal improvements in the telephone, typewriter, and pen, and the ability to take dictation using a voice recorder.) Furthermore, we would argue that the typical kitchen has changed more in the last 50 years than the office did during the 50 years from the 1920s to the 1970s. And Ferrer’s filing cabinet is a reminder that storage of information has perhaps progressed more since 1970 than it did during the 1000 years prior to 1970.
In short, we don’t see how Krugman’s kitchen analogy proves much, as some aspects of life will inevitably change more rapidly than others.
As a counterpoint to Gordon, the article quotes Erik Brynjolfsson of MIT.
After factories were electrified, Brynjolfsson explained, “the amazing thing is productivity didn’t increase in those factories for 30 years—30 years!” It sometimes take a while for humans to figure out how to use innovations, he said, and perhaps we are just now beginning to comprehend the full possibilities of computerization. In Brynjolfsson’s view, we are now in the beginnings of the new machine age, an extended moment of revolution in artificial intelligence. “A child’s PlayStation,” he said, is more powerful than a military supercomputer from 1996; a chess program contained on a cell phone can defeat every grandmaster.
A.I. and robotics do seem to rank among the more promising sources of growth. Robots are already performing tasks that seemed impossible not long ago. For instance, Brynjolfsson cites “gardening” as a job that would be difficult for robots to do. But robots are already picking lettuce, and it’s also already possible to purchase a robot that will mow your lawn, so who knows?
Finally, returning to Robert Gordon in New York magazine, we have this bizarre passage.
[Gordon] kept talking about movies: The “We’re not in Kansas anymore” moment when The Wizard of Oz switches from black and white to “the paradise of full color.” The great three-year public frenzy about who would play Scarlett in Gone With the Wind, maybe the first full incarnation of the modern celebrity machine, which ended when three studio executives arrived at a movie theater in the San Fernando Valley and replaced the ordinarily scheduled feature with the new print. “There was a pause, and the movie didn’t start. And then the public-address system came on and said, ‘The program—’ ” Gordon stopped. He was crying. “You see how choked up I get about this,” he said. He rubbed his eyes a bit and continued. “ ‘The program originally scheduled for tonight has been replaced with Gone With the Wind.’ And suddenly they’re going to be able to tell their children and their grandchildren. This stuff is just so powerful.”
Crying about the debut of Gone with the Wind? Well, Gordon this year turns 73 years of age. Perhaps he should consider testosterone replacement therapy.