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Robert J. Gordon writes,

by far the most rapid MFP growth in U. S. history occurred in 1928-50, a phenomenon that I have previously dubbed the "one big wave."

MFP = multifactor productivity. Note that the Great Depression takes up much of this period. One view of the Great Depression is that it was a massive reallocation of labor and capital--a recalculation, if you will. By 1950, we have adapted much more to trucks and automobiles, so that we no longer need factories in big cities or farms surrounding them. The economic structure of 1950 looked completely different from that in 1928.

Similarly, I think that the economic structure in 2025 will look completely different from that in 2006. I cannot predict exactly what it will look like, and much may depend on how heavy-handed our government is over the next ten years. My guess is that, if left to itself, the economy would allocate more resources toward education, health care, and entertainment, but with considerable new technology applied to all three.

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CATEGORIES: Growth: Consequences

COMMENTS (4 to date)

Latest Comment

doggytwit writes:

"... the economic structure in 2025 will look completely different from that in 2006." This prediction is a safe bet.
In 2025 will the human brain be on the brink of becoming obsolete as a thinking machine?
Consider 4 quotations from Ray Kurzweil on YouTube:
(1) The spatial and temporal resolution of brain scanning is doubling every year.
(2) We will succeed in reverse-engineering the human brain in the 2020s.
(3) If you go to the year 2029 you will have the full maturity of these trends.
(4) Progress in technology is exponential — not linear.
— from Ray Kurzweil: How technology's accelerating power will transform us
"Ray Kurzweil is the best person I know at predicting the future of artificial intelligence." — Bill Gates
In 2025 what % of GDP will be spent on entertainment?

Posted March 22, 2010 12:10 PM

Brian writes:

Anyone who follows AI development know's that we will be nowhere close to reverse-engineering the human brain 20 years from now. I would bet 20% to 30% of my annual salary on it. We are reaching a point due to the complexity in decision making system's that the additional productivity is linearly at best in economic value.

Posted March 22, 2010 5:58 PM

Steve Roth writes:

Similar findings (re: '29-'41) from Alexander Field in "The Most Technologically Progressive Decade of the Century" (2003)

http://lsb.scu.edu/economics/faculty/afield/AER%20September%202003e.pdf

Posted March 22, 2010 7:41 PM

fundamentalist writes:

Gordon's data only goes back to 1891. Economic historians I have read, such as Higgs, place the era of highest productivity growth as the period 1875 - 1913. Nothing has touched that period since.

Posted March 23, 2010 9:34 AM

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