The Great Productivity Puzzle
This is yet another review of Robert Gordon&#x27;s <i>The Rise and Fall of American Growth</i>. Incidentally, William Nordhaus also just published one.[1]<p>Of the good:  Gordon&#x27;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 <i>accelleration</i>, though continued growth, from 1950 to present -- compelling.<p>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.<p>His treatments especially of transportation, communications, healthcare, and household life are spectacular.  I recommend them highly.<p>There are some missing elements though.<p>Gordon never uses the phrase &quot;Maslow&#x27;s Hierarchy&quot; -- 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 <i>does</i> 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.<p>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.<p>Gordon&#x27;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 <i>overaccounts</i> by failing to take into consideration diseconomies.  It&#x27;s curious that Gordon <i>doesn&#x27;t</i> explore alternative quality-of-life measures suggested by many contemporary critics of economic orthodoxy.<p>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&#x27;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?<p>These aren&#x27;t easy questions.  They are, I&#x27;m finding as I research economic theory and its history, less ridiculous, and rather more explored, than I&#x27;d have thought.  There are some exceptionally notable departures and paths taken in economic theory over time, often poorly addressed in the current curriculum.<p>As with some of the infrastructure issues above, Gordon&#x27;s marked disinclination to pick up stones, particularly ones on which sacred cows seem perched, strikes me as a singular weakness of his book.<p>There are other authors, mostly neglected, who&#x27;ve explored this space.  Eric D. Beinhocker&#x27;s 2006 book <i>The Origin of Wealth</i>, Nicholas Georgescu-Roegen&#x27;s <i>Entropy and the Economic Process</i>, W. Brian Arthur&#x27;s work on the economy as an evolving complex system, and others.  I see the questions and explorations as deeply related.<p>________________________________<p>Notes:<p>1. <a href="http:&#x2F;&#x2F;www.nybooks.com&#x2F;articles&#x2F;2016&#x2F;08&#x2F;18&#x2F;why-economic-growth-will-fall&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.nybooks.com&#x2F;articles&#x2F;2016&#x2F;08&#x2F;18&#x2F;why-economic-grow...</a>  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&#x27;s an interesting exploration of limitations of economic measurement.