Why America’s Economic Growth May Be (Shh!) Over: Full Transcript

This is a transcript of the Freakonomics Radio podcast “Why America’s Economic Growth May Be (Shh!) Over.

Kai RYSSDAL: It’s that’s moment every couple of weeks, we talk to Stephen Dubner.  He is the co-author of the books and blog of the same name.  It is the hidden side of everything.  Dubner, welcome back, man.  I missed ya.

 

Stephen J. DUBNER: I missed you, too, Kai. Thanks for having me.  I’m guessing you’re going to be in front of your TV tonight for the debate?

 

RYSSDAL: I am, yes.  Of course I am.  In point of fact, also live tweeting and it’s on marketplace.org.  So, if you’re lonely, you know where you can go. 

 

DUBNER: Very good.  You know the focus of this first presidential debate as you know is domestic policy.  So I am assuming we’re going to hear an awful lot about the economy.  Yes?

 

RYSSDAL: One would certainly hope, right?  That’s what we’re waiting for – for these two men, who want to be the most powerful man in the world, to help us fix the American economy, right?

 

DUBNER: So, Kai, let me say two things about this. The first, which I have said on your program before — and will probably say again –  is that the U.S. President has much less influence over the economy than we actually think.

 

RYSSDAL: Yeah, but we have to pretend.  Right?  Come on.

 

DUBNER: We have to pretend.  My second point is actually more heretical than that. My second point is this: There are people out in the world, who will argue with you that that the Great Age of American Economic Growth is … just … over. Here’s Robert Gordon, an economist at Northwestern:

 

Robert J. GORDON: We had a century of relatively rapid productivity growth between, say, 1870 and 1970. And then it slowed down. And a major puzzle for the economics profession was to figure out: why did it slow down?

 

RYSSDAL: OK.  A) Did they figure it out?  And B) what about computers and automation and technology and increased productivity?  Hello?

 

DUBNER: Excellent question.  So here’s the way Robert Gordon explains it.  There have been three Industrial Revolutions over the past couple of centuries. The first one was steam power and railroads.

 

RYSSDAL: Yeah, that was the Industrial Revolution.

 

DUBNER: That was a big one.  But the second one, that we’re most thankful for, included electricity, the internal combustion engine and the fuels to run it; clean water.  And his argument is that the computer revolution is just not as potent as the ones that came before it.

 

RYSSDAL: Hello!  Has this man never heard of the iPhone?  That changed my life, and there are people who will be amazed to hear me say that.

 

DUBNER: I’m glad it changed your life.  It has changed my life, too.  But his argument is this: what a lot of technology does is make things that already existed more portable and more flexible – our entertainment, our communication.  Obviously, we’re all thankful for that, but when you compare that to things like mass transportation and electricity, heating and air conditioning, the computer era does not produce those kind of gains.

 

RYSSDAL: OK, so not to get all downer on you here, but if the iPhone and all that it represents is what we have now to propel us forward, are we fundamentally doomed?

 

DUBNER: No.  And nobody’s saying that. What you are starting to hear, is that America’s Golden Age of Growth may have been exactly that – a Golden Age. Which, by its nature, cannot last forever. OK?  Tyler Cowen, an economist that you’ve had on this program before, has coined a name for the current U.S. economy.  He calls it “The Great Stagnation.” That said, Cowen is a big believer that new technology — artificial intelligence, for instance — will lead to further growth. He thinks that Robert Gordon’s prediction therefore is probably a little bit too grim:

 

Tyler COWEN: I think our ability to forecast future growth has never been all that great.  So, about the future I’m actually fairly optimistic.

 

RYSSDAL: Which is great.  But what if, Dubner, right?  What if Gordon’s right?  And what if you’re right?  And the greatest growth is behind us?

 

DUBNER: Well, look — it may be.  Again, these are predictions.  And you know how I feel about predictions – they’re mostly worthless.  It may be, however, time to start thinking about the U.S. economy not so much in terms of never-ending growth, which we’ve been trained to do.  But in terms of a different word – which is sustainability, essentially. Which isn’t necessarily the worst thing in the world.            

 

RYSSDAL: And of course that’s what we’re going to hear the president and Governor Romney talking about tonight, right?  Not about growth at all?

 

DUBNER: Are you kidding me?  No.  First of all, they both need to preserve this fiction that the President controls the economy. But, beyond that, to get on TV and say, “My fellow Americans, our Great Age of Growth was wonderful.  And it’s over; welcome to the new Season of Sustainability.”  I do not see that as a big vote-getter. They will do what politicians always do — they will promise a bigger and brighter economic future. Because if there’s one thing politicians are really good at, it’s making promises that they have absolutely no ability to keep. 

 

RYSSDAL: Stephen Dubner.  Freakonomics.com is the web site.  We will talk to you again in a couple of weeks.

This is a transcript of the Freakonomics Radio podcast “Why America’s Economic Growth May Be (Shh!) Over.

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