Arnold Kling  

Major Economic Stories, Updated

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A year ago, I listed five stories to follow on a long-term basis. Now for an update.

1. Productivity. The latest data for the nonfarm business sector show the productivity index at 137.7, compared with 135.8 a year ago. That is an increase of only 1.4 percent. I think that we need to follow longer-term averages (five years or more), but the most recent trend, while not awful, is not particularly encouraging.

2. Cognitive Neuroscience. Interesting developments continue in this field. One that drew my attention earlier this year showed that strong political partisanship is associated with activity in the emotional centers of the brain, rather than with the reasoning center. More recently, BrainBlog has many interesting stories, such as this one on new research into how memories are replayed during sleep.

3. Solar Power. I did not see any dramatic stories on solar power this year. One would think that the rise in oil prices would start to move forward the date at which solar becomes price competitive.

UPDATE: A commenter points to this story.


A tiny chip similar to the solar cells carried by many satellites and other spacecraft today--including the surprisingly long-lived Mars Rovers--has shattered previous records for maximum efficiency in producing electricity from sunlight...this system could potentially generate electricity in the range of 8 to 10 cents per kilowatt-hour--roughly equal to consumer electricity prices today.

4. Cancer Therapy. See Randall Parker's recent posts here and here. The latter post deals broadly with the anti-aging potential of a strategy that focuses on reducing or correcting damage to DNA.

5. Mainstream Media Meltdown. There were a lot of stories this year about turmoil in the newspaper business.

Overall, I think that all five stories are still worth following.


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CATEGORIES: Growth: Consequences



COMMENTS (5 to date)
Timothy writes:

No major stories on solar energy? I beg to differ.

A tiny chip similar to the solar cells carried by many satellites and other spacecraft today--including the surprisingly long-lived Mars Rovers--has shattered previous records for maximum efficiency in producing electricity from sunlight. "This is the photovoltaic equivalent of the four-minute mile," affirms Larry Kazmerski, director of the Department of Energy's National Center for Photovoltaics in Colorado. "This is a disruptive technology that eventually could provide us, at least in the Southwest, with cost-competitive electricity fairly quickly."

Perry E. Metzger writes:

On solar power, you clearly have been reading the popular rather than the technical press. Judging just by the number of articles in EE Times describing new plants opening, new investments being made, etc., activity is very fierce indeed.

The current limiting factor in the market is that manufacture of monocrystaline silicon is going to have to grow by orders of magnitude to meet demand, from tens of thousands of metric tons per year to millions of metric tons per year. This will naturally take time to scale up. Given enough silicon, other things (like the specialized glasses needed for fronting solar power modules) will begin to become the blocking factor.

However, the good news is that even without much in the way of technical advances, the sheer scale increase is likely to bring substantial reductions in cost. Right now, solar cell production is tiny on the scale of the world's energy budget. It is growing very fast, however. I'll predict in another decade, it will become an "overnight success" that took decades, just like other technologies that everyone dismissed before they exploded, like fax machines or the internet.

spencer writes:

It's is difficult to untangle the secular and cyclical trends in productivity. The normal cyclcial pattern is for productivity growth to slow over the course of the cycle. That seems to be what we are seeing now and it is impossible to say if this will be reflected in a lower secular trend.

In the 1961-73 era productivity growth was 68% of real gdp growth. In the low productivity era of 1975- 95 this ratio fell to 55% and since 1955
it has been 82%. Over the past year productivity growth has been some 45% of real gdp growth. while this is low by secular standards, it is quite strong for a late cycle environment.

RogerM writes:

strong political partisanship is associated with activity in the emotional centers of the brain

Toastmasters International has a section on persuasive speaking that instructs the speakers to appeal to the audience's emotions first, then provide logic for the decision because people make most decisions for emotional reasons. As I've written before, this is also a finding of public relations research.

It's not just politics that we're emotional about, but most of the larger, important issues that make up our worldviews are determined first by emotion. If that were not the case, Darwinian evolutionists would have given up decades ago for lack of evidence.

Bruce G Charlton writes:

Cognitive Neuroscience - as a fringe operator in this field I would suggest that the fMRI and other brain imaging methods have been a _massive_ (and massively-expensive) disappointment over the past 20 years.

As far as I am aware these brain imaging methods have not led to any major scientific (and certainly not medical) breakthroughs - rather they are used in a very 'normal science' kind of way to confirm or incrementally-extend established knowledge.

I see reference to a new speciality of neuroeconomics which combines economics ideas with brain imaging technology - my cynical reaction is that the scientists are running out of biological ideas and the economists are trying to get into the big grant funding, heavy-citation game of biomedical science.

In a nutshell, brain imaging technology is a highly efficient method of generating money, media coverage, PhDs and professorships - which is why it continues to thrives despite mediocre outcomes.

I don't hold out great hopes of genuine scientific advance - at least not until the machines are cheap and common enough to let people with risky and intersting ideas loose on them.

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