Here is a brief excerpt from an article written by Kenneth Rogoff and featured in an issue of BusinessInsider. To read the complete article, please click here.
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CAMBRIDGE – As one year of sluggish growth spills into the next, there is growing debate about what to expect over the coming decades. Was the global financial crisis a harsh but transitory setback to advanced-country growth, or did it expose a deeper long-term malaise?
Recently, a few writers, including internet entrepreneur Peter Thiel and political activist and former world chess champion Garry Kasparov, have espoused a fairly radical interpretation of the slowdown. In a forthcoming book, The Blueprint: Reviving Innovation, Rediscovering Risk, and Rescuing the Free Market, they argue that the collapse of advanced-country growth is not merely a result of the financial crisis; at its root, they argue, these countries’ weakness reflects secular stagnation in technology and innovation. As such, they are unlikely to see any sustained pickup in productivity growth without radical changes in innovation policy.
Economist Robert Gordon takes this idea even further. He argues that the period of rapid technological progress that followed the Industrial Revolution may prove to be a 250-year exception to the rule of stagnation in human history. Indeed, he suggests that today’s technological innovations pale in significance compared to earlier advances like electricity, running water, the internal combustion engine, and other breakthroughs that are now more than a century old.
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To read the complete article, please click here.
Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University and co-author of This Time is Different: Eight Centuries of Financial Folly.
Contact @ http://www.project-syndicate.org/.
To learn more about him, please click here.
I am intrigued by this argument… it sort of reminds me of the idea that all the “low-hanging fruit” is now gone, from Cowen’s The Great Stagnation.
Of course, how “low-hanging fruit” is defined is critically important. First, fruit must be grown. That is why I think Rogoff nails it when noting, “at its root, [Thiel and Kasparov] argue, these countries’ weakness reflects secular stagnation in technology and innovation. As such, they are unlikely to see any sustained pickup in productivity growth without radical changes in innovation policy.” Robert Gordon’s perspective on “stagnation” reminds me of Henny Penny’s paranoia. Countries that “sow” innovation will “reap” its benefits. That is also true of companies. Just before Thomas Edison began to register the first of his several thousand patents, the head of the U.S. Patent Office urged that it be closed down because “everything has already been invented.” Hmmm…..