28 December 2012

Recommended holiday reading – a provocative essay by Prof. Robert J Gordon (Professor of Social Sciences and Economics at Northwestern University, IL). The attached article is a summary of the more complete paper by the same author – see the link to the CEPR Policy Insight paper.

In this paper, Gordon challenges the long held view espoused by Nobel prize winning economist Robert Solow that economic growth is a “continuous process that will persist forever”. Prof. Gordon suggests that there have been three industrial revolutions thus far in the history of mankind:

1. steam engine, railroads

2. internal combustion engine, electricity, running water

3. computers, internet, mobile phones

Of these three, the second had the most profound effect on economic growth and Gordon extrapolates that economic growth rates may well revert to significantly sub-trend rates for many decades to come.

You may not agree with the arguments put forward in this paper but for the provocation alone, it is worth a read.