95. Why America’s Economic Growth May Be (Shh!) Over

[0] From APM, American Public Media and WNYC, this is Freakonomics Radio on Marketplace.

[1] Here's the host of Marketplace, Kai Risdahl.

[2] Time now for a little bit of Freakonomics Radio, that moment in the broadcast every couple of weeks where we talk to Stephen Dubner, the co -author of the books and the blog of the same name.

[3] It is The Hidden Side O Everything.

[4] Dubner, welcome back, man. I missed you.

[5] I missed you, too, Kai.

[6] Thanks for having me. I love you, I'm guessing you're going to be in front of your TV tonight for the debate.

[7] I am.

[8] Yes, of course.

[9] I am.

[10] In point of fact, also live tweeting, and it's on Marketplace .org.

[11] So if you're lonely, you know, where you can go.

[12] Very good.

[13] You know, the focus of this first presidential debate, as you know, is domestic policy.

[14] So I'm assuming we're going to hear an awful lot about the economy.

[15] Yes.

[16] One would certainly hope, right?

[17] I mean, that's what we're waiting for for these two men who want to be the most powerful men in the world to help us fix the American economy, right?

[18] So, Kai, let me say two things about this.

[19] Okay.

[20] The first, which I have said on your program before, and I probably will again, is that the U .S. President.

[21] and has much less influence over the economy than we actually think.

[22] Yeah, but we have to pretend.

[23] Right, come on.

[24] We have to pretend.

[25] My second point is actually more heretical than that.

[26] My second point is this.

[27] There are people out in the world who will argue with you that the great age of American economic growth is just over.

[28] Okay.

[29] Here's Robert Gordon, an economist at Northwestern.

[30] Okay.

[31] We had a century of relatively rapid productivity growth between, say, 1870 and 1970.

[32] And then it slowed down.

[33] And a major puzzle for the economics profession was to figure out why did it slow down?

[34] Okay.

[35] So, A, did they figure it out?

[36] And B, what about computers and automation and technology and increased productivity?

[37] Hello?

[38] Excellent questions.

[39] I know.

[40] So, okay, here's the way Robert Gordon explains it.

[41] There have been three what he calls industrial revolutions over the past couple centuries.

[42] The first one was, you know, steam power and railroads.

[43] It was big time.

[44] That was a big one, but the second one that we're really most thankful for included things like electricity, the internal combustion engine and the fuels to run it, clean water.

[45] And his argument is that the computer revolution is just not as potent as the ones that came before it.

[46] Hello.

[47] Has this man never heard of the iPhone?

[48] I mean, come on.

[49] That changed my life.

[50] And there are people who will be amazed to hear me say that.

[51] I'm glad it changed your life.

[52] It's changing my life, too.

[53] But his argument is this, is that what a lot of technology does is make things that already exist.

[54] more portable and more flexible, our entertainment, our communication, and obviously we're all thankful for that.

[55] 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.

[56] Okay, 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?

[57] I mean, is America going to, you know?

[58] No, no. No, and nobody's saying that.

[59] What you are starting to hear is a description of, you know, America's golden age of growth may have been exactly that, a golden age, which by its nature cannot last forever, okay?

[60] Tyler Cowan, an economist that you've had on this program before, he's coined a name for the current U .S. economy.

[61] He calls it the Great Stagnation.

[62] Okay.

[63] Now, that said, Cowan is a big believer that new technology, artificial intelligence, for instance, will lead to further growth.

[64] he thinks that Robert Gordon's prediction, therefore, is probably a little bit too grim.

[65] I think our ability to forecast future growth has never been all that great.

[66] So about the future, I'm actually fairly optimistic.

[67] Which is great, but what if, Dubner, right?

[68] What if Gordon's right and what if you're right and that the greatest growth is behind us, then what?

[69] Well, look, it may be.

[70] And again, these are predictions, and you know how I feel about predictions.

[71] They're mostly worthless.

[72] But 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, right, which isn't necessarily the worst thing in the world.

[73] And, of course, that's what we're going to hear the president and Governor Romney talk about tonight, right?

[74] Not about growth at all, yeah.

[75] Are you kidding me?

[76] First of all, they both need to preserve this fiction that the president controls the economy.

[77] But beyond that, to get on TV, okay, picture this, and to say, you know, my fellow Americans, our great age of growth was wonderful and it's over.

[78] welcome to the new season of sustainability.

[79] I do not see that as a big vote -getter.

[80] They will do what politicians always do.

[81] They will promise a bigger and brighter economic future.

[82] Because if there's one thing, Kai, that politicians are really good at, it's making promises that they have absolutely no ability to keep.

[83] Stephen Dubner, Freakonomics .com, is the website.

[84] We will talk to you again in a couple of weeks, man. See you.

[85] See ya, Kai.

[86] Thanks.

[87] Coming up on the next Freakonomics radio, The Cobra Effect.

[88] When there's a really nasty pest you want to get rid of, what's the best way to make that happen?

[89] That's easy, right?

[90] Just offer a cash bounty.

[91] What could possibly go wrong with that?