Robert Gordon is the Stanley G Harris Professor of Economics at Northwestern University. His 2012 paper “Is US economic growth over? Faltering Innovation Confronts the Six Headwinds,” sparked intense debate over the trajectory of growth in both the US and across western developed economies. In February, Gordon published a paper updating his views.
Jay Elwes: When did you first become concerned about future U.S. economic growth?
Robert Gordon: For 15 years I have been talking about how the recent inventions don’t measure up to the great old inventions of the late 19C.
JE: Why don’t they measure up?
RG: Life was utterly transformed between 1890 and 1930, and more so in the US than in the UK. The entire urban US was electrified. The house became networked from its isolation in 1870. By 1929 it was connected five ways through electricity, gas, telephone, running water and sewers, none of which existed in the 1870s. Those were extremely important transformations. The invention of the motor vehicle eliminated the horse and its droppings from urban streets. The entire panoply of communication and entertainment inventions that went from the telegraph to the telephone to the phonograph to the radio and then in right at the dawn of WW2, television, all of that happened in a very short time.
Something can’t be more than 100 percent of itself. You could only have the transition from a rural to an urban society once. You could only have the transition from 20 per cent infant mortality to near zero once. All of that was happening in those 50 years. And then in the early part of the post war years we completed the subsidiary inventions from the late 19C, with commercial air transport, air conditioning and the inter-state highway system.
So the difference is that we had, if you count them, at least five if not seven dimensions of an utter change in the standard of living. And it shows up in the productivity statistics as well. If you compare the last 40 years after 1972 and the 80 years before 1972, our productivity growth has been about 2/3 after what it was before. That’s an easy measure of the difference in the power between the second industrial revolution of the late 19th century and the third revolution of the past five decades which has centered on computers, communication, and digitalization. The third revolution has perhaps two dimensions, the computer part and the communications part that includes movement towards mobile devices and smart phones.