The one-sentence summary
We have used up most of the breakthroughs that fuelled growth, so stagnation and less choice is the new normal.
- The snappy sub title of this medium-length e book is How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Recover.
- The overall line of argument is that most of the things that generated economic growth have now been used up (the low-hanging fruit), certainly from a US perspective. We need to get used to this to have a more realistic view of how economies can work and what they can afford.
- The LHF that America ‘ate’ was all the free land, the quantity of technological breakthroughs, and improved education that fuelled growth. This lasted about 300 years but has now mostly gone.
- Most developed countries have seen their economic growth slowing since the 70s because technological development has slowed.
- It was easier for the average person to produce an important innovation in the nineteenth century than in the twentieth. This means a lower and declining rate of return on technology.
- A lot of our recent innovations are ‘private goods’ rather than ‘public goods’ – they have made a few individuals very wealthy but do not translate to gains for the average citizen.
WHAT’S GOOD ABOUT IT
- The theory is interesting: when you combine three macroeconomic events -growing income inequality, stagnant median income, and the financial crisis – you can see why our ‘new economy’ is not so productive as before.
- Productivity figures that rise can be misleading. For example, the biggest gain in the last few years has been discovering who isn’t producing very much and firing them.
- Although the internet is highly innovative, it doesn’t generate nearly as many jobs or as much income as traditional businesses. Google has 20,000 employees and eBay 16,400, but Facebook has only 1700 and Twitter 300. The internet is great because it gives us ‘cheap fun’ but it’s not generating the scale of revenue necessary to replace what we’ve lost.
- His recommendation is to raise the social status of scientists, so that we fuel more ideas that generate growth.
- Other than that, ‘we are living in the new normal.’
WHAT YOU HAVE TO WATCH
- This is an ebook so you need a Kindle or ipad to get it, and need to be comfortable with that reading format. On the plus side, this enables the author to keep it shorter than an average book – more of an extended essay – so he doesn’t go on longer than he needs to in order to make the point.