tag:blogger.com,1999:blog-582368152716771238.post8797426645702702091..comments2024-03-18T07:59:05.430-05:00Comments on The Grumpy Economist: Gordon on GrowthJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger48125tag:blogger.com,1999:blog-582368152716771238.post-67460656413767626672012-10-11T20:01:20.460-05:002012-10-11T20:01:20.460-05:00Great catch!Great catch!Larry Siegelhttp://larrysiegel.orgnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-69580163731509015012012-09-07T16:28:41.071-05:002012-09-07T16:28:41.071-05:00The stats you quoted are for EU 15, which includes...The stats you quoted are for EU 15, which includes UK and Ireland, whose policies are more like the US, and a number of lower income countries (Greece, Spain) who enjoyed more rapid growth in catching up to the rest of Europe. If you look at a high income European country, which pursued progressive policies, like France, and compare it to the US the GDP growth rate per person was much less from 1980 to 2011 (France went from $9987 to 35600 while US went from 12249 to 49000). I would also argue that US GDP growth per person shoud be less because of substantial influx of unskilled, and often illegal immigrants. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-27717204218147316802012-09-04T13:05:09.584-05:002012-09-04T13:05:09.584-05:00I've wondered how much of a permanent effect f...I've wondered how much of a permanent effect from the current very slow period of econoimc growth will be perpetuated via lower household formation and lower birth rates. A half generation of kids in their 20s might have permanently lower fertility rates as they struggle through economic and social uncertainty. Would this not be a permanent (or at least very long lived) shock to economic growth...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-87407133330446617632012-09-03T17:25:35.231-05:002012-09-03T17:25:35.231-05:00"cusp of several groundbreaking technologies,..."cusp of several groundbreaking technologies, in many areas."<br /><br />I would love to know what you are referring to. What ground breaking technologies are close?<br />Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-5008330825989635642012-09-03T17:24:02.857-05:002012-09-03T17:24:02.857-05:00The golden age of software development was before ...The golden age of software development was before software patents were recognized. The golden age of computer development was after the basic patent was struck down. The golden age of aircraft development was after the Wright brothers' patent expired. <br /><br />Invalidating software patents would probably be a net positive for growth. As for other areas - patents have a checkered historical record as to whether they help or hurt progress.Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-7193731813501030032012-09-02T22:27:55.504-05:002012-09-02T22:27:55.504-05:00Growth would not be a problem if the IP laws were ...Growth would not be a problem if the IP laws were repealed. The recent RIM and Samsung decisions show just how dangerous US courts have become and how they can stifle innovation. VangelVhttps://www.blogger.com/profile/18253765145016548748noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-67976750123828938552012-08-31T22:38:32.551-05:002012-08-31T22:38:32.551-05:00If you look at that chart, you'll notice that ...If you look at that chart, you'll notice that GDP/capita in England starts rising shortly after the Chartist reforms were implemented and worker conditions started improving in England. (The US numbers show the jump after WWI when the US government commandeered the economy and imposed labor settlements raising wages in a variety of industries.)<br /><br />I'm also suspicious about some of those six headwinds. <br /><br />(1) The Industrial Revolution was triggered by a tightening work force in the 18th century. Reducing the workforce is likely to improve productivity as it makes capital investment more attractive. <br /><br />(2) Education is a sorting mechanism. Stagnant wages, even in STEM jobs, are not a sign of educational deficiency. <br /><br />(3) I'll agree with the inequality issue. Slack demand doesn't encourage investment.<br /><br />(4) No nation has ever industrialized without some kind of protective wall. England used its military power as its barrier, but the US and every other nation used tariffs. <br /><br />(5) I think energy and environmental issues actually offer avenues for economic growth. If nothing else, cap and trade monetizes environmental quality.<br /><br />(6) Debt is a sign of belief in the future. When a company starts up or expands, it borrows and no one thinks twice about it. When the borrowing stops or the US balances its budget, then I'll worry.<br />Kaleberghttps://www.blogger.com/profile/05283840743310507878noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-68572600679843448612012-08-31T14:16:33.347-05:002012-08-31T14:16:33.347-05:00I agree with your post 100%, except for the first ...I agree with your post 100%, except for the first sentence, with which I don't agree :-)f4INjpjZhttps://www.blogger.com/profile/18237938708044718102noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-20018428417056057982012-08-31T12:26:29.588-05:002012-08-31T12:26:29.588-05:00In the midst of a financial crisis it is very easy...In the midst of a financial crisis it is very easy to come to all kinds of incorrect conclusions. it is also possible to overreact and do more harm than good. We won't know what is going on until around 2015-16 when the world has had time to fully adjust to the financial shock that began in 2008.<br /><br />To predict the death of growth based on the last few years is foolish. Let's talk again in 2016.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-753350706379657692012-08-31T10:36:29.815-05:002012-08-31T10:36:29.815-05:00I think you misunderstand the idea of "ceding...I think you misunderstand the idea of "ceding the frontier." It means that, if China is able to have long-term growth of 2.5%, then so can we. But, that doesn't mean that our contribution to that growth is insignificant. The more countries with innovating populations, the more quickly the frontier will be pushed outwards, and the larger long-run growth for everyone will be. Unless you believe that people in China are producing the exact same innovations as Americans, and so for both of us to innovate is just redundant. However, I don't think this is the case, especially given globalization and multinational corporations.Joshua Weisshttps://www.blogger.com/profile/10313541087554190148noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-17728293755777597072012-08-31T09:56:41.008-05:002012-08-31T09:56:41.008-05:00I cannot stress how much I agree with this post. I...I cannot stress how much I agree with this post. I agree with the source of prosperity, the role of printing and the future potential of the Internet. I also agree with the conclusions of the real headwinds as institutional barriers in the creation, dissemination and building upon of ideas. <br /><br />I will add that economic progress requires change, and change creates winners and losers, and that incumbents are often the primary losers. Incumbents are better organized than prospective future winners, and thus actively suppress change. Thus they actively suppress progress. As incumbents throw more sand into the gears of economic advance, the frontier of economic progress moves to somewhere without incumbents. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-51810888384861919812012-08-30T22:05:47.281-05:002012-08-30T22:05:47.281-05:00"What? Growth in Europe has been measurably l..."What? Growth in Europe has been measurably lower than growth in the US for thirty or forty years."<br /><br />Growth in GDP has, but not growth in GDP per capita which has been virtually identical in the EU and US since 1970 (http://www.asymptosis.com/u-s-versus-europe-whos-winning-now.html). The results stay the same even if you start from 1980 or anywhere in between so I don't want to hear anything about cherry picking. The data is from the OECD. This is even being generous since it doesn't include the Scandinavian countries who surely follow the "European model" and have had even higher growth in GDP per capita. <br /><br />The reason GDP growth in the U.S. has been higher is because the population in the U.S. has increased more over the time period (which is why GDP per capita is a better statistic to compare with since it controls for population growth). There are absolute differences in GDP per capita between the EU and the U.S. even though the growth rates have been the same which are primarily driven by the fact that Americans work more hours. That sounds like a "level effect" to me.Paulhttps://www.blogger.com/profile/09171128489655848952noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-71434066286067287892012-08-30T21:56:38.299-05:002012-08-30T21:56:38.299-05:00You have touched upon a very large area of recent ...You have touched upon a very large area of recent economic study. I think that patent and copyright law does need some revision.KyleNhttps://www.blogger.com/profile/15766641765942339253noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-75568604743169879622012-08-30T21:06:15.464-05:002012-08-30T21:06:15.464-05:00Mismeasurement of real GDP
Don't we have con...Mismeasurement of real GDP <br /><br />Don't we have confirmation that real GDP form the total collapse of federal and state tax collections, since 2007?Anonymoushttps://www.blogger.com/profile/07904132869021579763noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-82215734326912913312012-08-30T21:04:56.229-05:002012-08-30T21:04:56.229-05:00White just released a paper via the Dallas Fed in ...White just released a paper via the Dallas Fed in which he seems to argue that credit concentrates wealth in the hands of creditors, especially given the history of how the Fed has done it job.<br /><br />http://www.dallasfed.org/assets/documents/institute/wpapers/2012/0126.pdf<br /><br />On page 6 he also writes, "Finally, easy monetary policy also has distributional effects, favoring debtors over creditors and the senior management of banks in particular."<br /><br />What is your take on this?<br /><br />If we have had stagnation and income inequality, instead of now worrying about inflation, shouldn't we being following an easy monetary policy so as to favor debtors over creditors?Anonymoushttps://www.blogger.com/profile/07904132869021579763noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-12374564816360452672012-08-30T20:32:40.977-05:002012-08-30T20:32:40.977-05:00(1) "The optimistic lesson of growth theory i...(1) "The optimistic lesson of growth theory is that, no matter how badly you screw up level effects, growth will bail you out eventually."<br /><br />IMHO, the optimistic lesson is that, no matter how badly you screw up level effects, you can always return to the frontier by reversing your mistakes, e.g. China: Adoption of communism is "badly screwing up", but once communism is abandoned, catch-up growth (much faster than long-run frontier growth trend) brings you back to the frontier, i.e. all "level" type mistakes are completely reversible.<br /><br />Adopt any bad policy, you get a lower long-run level; abandon the policy, and you go back to the original long-run level.<br /><br />(2) "Do the distortions of a high-tax, regulated, crony-capitalist, welfare state, just screw up levels? Or do they reduce the spread of ideas behind long-run growth? My fear is "yes.""<br /><br />It follows from the logic of (1) that the regulated, crony, welfare state can only reduce long-run growth irreversibly if it is indeed adopted globally. If there is at least one place on earth that doesn't have the regulated crony state, it is this place that will then define the new frontier, and thereby allow other countries to catch up to that frontier at a later point in time.<br /><br />But take a look at Singapore or Hong Kong. Is there much new technology coming out of these two places that have lead the common indices of economic freedom for so many years now? I don't know any. AFAIK, both are only well known as business hubs. I see that Singapore has both a higher GDP per capita and a higher growth rate than the US, but it might just be that they are still catching up technology-wise, but their level is just much higher than the U.S.'s because of better governance.<br /><br />Of course it is also possible that those places are simply too small to provide for the economies of scale needed for innovation.<br /><br />f4INjpjZhttps://www.blogger.com/profile/18237938708044718102noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-37987613424247169142012-08-30T18:12:05.794-05:002012-08-30T18:12:05.794-05:00You brush off Gordon's points about education ...You brush off Gordon's points about education and inequality fairly quickly and apparently without much thought.<br /><br />First, it certainly seems that many innovations come and will come from educated people. Therefore, the more well-educated (emphasis on well) people we have, the more growth we will have. This definitely is a "growth" effect not a "level" effect.<br /><br />Second, a lot of inequality can be seen as a sign that our education system isn't working well. Should the distribution of productivity amongst people really look like our income distribution, or is the distribution just a result of many people not receiving enough education or growing up without parents that are forced to work too many hours to take care of their children?<br /><br />Alternatively, inequality can itself have a "growth" effect. Recent psychological research (although, granted, still far from conclusive) shows that those lower down in a hierarchy tend to become more depressed, overweight (a study on monkeys showed that being beneath others can actually cause more fat to collect around the stomach), and perhaps less productive. Therefore, a more unequal society may cause some to feel less motivated to come up with the next great idea. This is not a confirmed story, but it is certainly plausible and supported by some evidence.Joshua Weisshttps://www.blogger.com/profile/10313541087554190148noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-24095196828288618182012-08-30T16:01:51.820-05:002012-08-30T16:01:51.820-05:00Health science may continue to grow, but the IPAB ...Health science may continue to grow, but the IPAB will not allow insurance, Medicare, and Medicaid to pay for new treatments.Fat Manhttps://www.blogger.com/profile/09554029467445000453noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-19852796600869941322012-08-30T15:41:57.363-05:002012-08-30T15:41:57.363-05:00Dear Professor Cochrane,
How to trace the line b...Dear Professor Cochrane,<br /><br /><br />How to trace the line between sharing knowledge and intellectual property. I think patents are out of hand when apple reports that a black or white cell phone with curve ends is their property.<br /><br />Can't those excessive patenting prevent people to use old knowledge to produce new knowledge? Would protecting too much the innovator affect future innovations?<br /><br />Best,<br /><br />Juan D.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-13626995781147046432012-08-30T14:17:38.478-05:002012-08-30T14:17:38.478-05:00I do not think it proven at all that "inequal...I do not think it proven at all that "inequality" will effect growth one way or the other. But even if so? What is the be done? The United States has a much more progressive tax system than any or those nations do now. (here is a chart courtesy Greg Mankiw<br /><br />http://gregmankiw.blogspot.com/2011/03/what-nation-has-most-progressive-tax.htmlKyleNhttps://www.blogger.com/profile/15766641765942339253noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-89609376553840818922012-08-30T14:07:06.063-05:002012-08-30T14:07:06.063-05:00If growth is based upon innovation, then I do not ...If growth is based upon innovation, then I do not see it declining, but rather increasing as we are on the cusp of several groundbreaking technologies, in many areas. <br /><br />I think economic growth is caused mostly by such innovation, but also by investment by business and entrepreneurs. We may be in a temporary lull because of the reluctance of business to make new investments.KyleNhttps://www.blogger.com/profile/15766641765942339253noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-24580144269807289892012-08-30T14:05:05.156-05:002012-08-30T14:05:05.156-05:00"I don't think you can arguer Europe has ..."I don't think you can arguer Europe has suffered significant negative "growth effects"..."<br /><br />What? Growth in Europe has been measurably lower than growth in the US for thirty or forty years. If growth comes from innovation (vs. massive capital formation as in Asia) the worst thing you can do is to adopt European policies that restrict the process of creative destruction in both consumer and producer markets. Unfortunately that's exactly what "Progressives" want to do.Steamboat Lionhttps://www.blogger.com/profile/12645780586629716757noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-65280988717540440022012-08-30T13:13:10.277-05:002012-08-30T13:13:10.277-05:00I think a discussion of intellectual property woul...I think a discussion of intellectual property would be relevant. Bill Gates claimed that if software had been patented when he started out, he could have never gotten anywhere. Now software companies invest huge amounts in amassing patent portfolios so they can countersue when they inevitably cross someone else's patents. That's the perspective I get from reading folks in the software world, other industries will differ. Matthew Yglesias had an interesting post on how different conceptions of innovation will lead to different conclusions about the monopoly rents secured by the patent system, but I can't easily find it now.Wonks Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-85227982484764272012012-08-30T12:15:57.978-05:002012-08-30T12:15:57.978-05:00A few notes on GM crops. The 69 million U.S. hecta...A few notes on GM crops. The 69 million U.S. hectares (not acres) in 2011 was 43.1% of the world total of 160 million hectares. In 1996 the global total was only 1.7 million hectares.<br /><br />See also "In 2010, more genetically modified crops once again" (http://bit.ly/RqJr8F)<br /><br />"In the USA, the cultivation of genetically modified (GM) maize, soybeans and cotton continues its increase. In 2010, the share of GM crops increased to approximately 90 per cent. Fields planted with GM varieties added up to 64.3 million hectares."<br /><br />In other words, in the U.S. at least the GM revolution is essentially over. Note that it appears that GM crops have been adopted faster than hybrid corn was. See "A Farm Level Perspective On Agrobiotechnology: How Much Value And For Whom?" (http://agbioforum.org/v2n2/v2n2a01-editor.htm). Quote<br /><br />"Even the optimists among biotechnology proponents have been caught off guard by the extremely fast farm-level adoption of bioengineered crops. In 1999, just four years from commercial introduction, an estimated 40% of the total United States (US) corn, soybean and cotton acreage were planted with herbicide- and insect-resistant bioengineered crops. To put this level of adoption in perspective, one may consider it against that of the most dominant agricultural technology of the past—hybrid corn. "Peter Schaeffernoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-78580300005400744162012-08-30T11:56:33.396-05:002012-08-30T11:56:33.396-05:00Continued,
4. "US Educational Achievement on...Continued,<br /><br />4. "US Educational Achievement on International Assessments: The Role of Race and Ethnicity" (http://bit.ly/pnRSd4)<br /> <br />"The debate about the performance of US students on international assessments of educational achievement routinely fails to account for one consistently stark result: US achievement is bifurcated between a group of high-performing Asian and white students and an exceptionally low-performing group of black and Hispanic students. By summarizing results across 20 major international tests conducted since 1995, this research paper shows that when US racial and ethnic groups are separately compared with other countries, Asian and white students regularly perform at or near the top of international rankings, while black and Hispanic students typically rank at or near the bottom. Furthermore, the United States has a substantially larger minority population than all other developed countries, and minority status is not synonymous with internationally comparable factors such as socioeconomic level or immigrant status."<br /> <br />5. "The amazing truth about PISA scores: USA beats Western Europe, ties with Asia" (http://bit.ly/e1BN6o)<br /> <br />"What I have learned recently and want to share with you is that once we correct (even crudely) for demography in the 2009 PISA scores, American students outperform Western Europe by significant margins and tie with Asian students. Jump to the graphs if you don't want to read my boring set-up and methodology."<br /> <br />6. "The Hispanic Challenge" by Samuel Huntington (http://bit.ly/5ETHzJ)<br /> <br />The author shows little improvement in education attainment across generations of Mexican immigrants.<br /> <br />"The education of people of Mexican origin in the United States lags well behind the U.S. norm. In 2000, 86.6 percent of native-born Americans had graduated from high school. The rates for the foreign-born population in the United States varied from 94.9 percent for Africans, 83.8 percent for Asians, 49.6 percent for Latin Americans overall, and down to 33.8 percent for Mexicans, who ranked lowest."<br /> <br />7. "Honesty from the Left on Hispanic Immigration A provocative new book doesn’t flinch from delivering the bad news" (http://bit.ly/4CBWWT)<br /> <br />"Hispanics are underachieving academically at an alarming rate, the authors report. Though second- and third-generation Hispanics make some progress over their first-generation parents, that progress starts from an extremely low base and stalls out at high school completion. High school drop-out rates—around 50 percent—remain steady across generations. Latinos’ grades and test scores are at the bottom of the bell curve. The very low share of college degrees earned by Latinos has not changed for more than two decades. Currently only one in ten Latinos has a college degree."<br /><br /><br />Peter Schaeffernoreply@blogger.com