Growth

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Highlights

• 2024-09-29
  • “‘The end justifies the means,’ wrote the author Ursula K. Le Guin.”
  • “We have the power not only to make life good in the decades to come, in the words of the philosopher Derek Parfit, but to make it better in ways that we cannot now even imagine.”
• 2024-10-01
  • “‘irregular gratifications’ out of marriage – in short, not having casual sex.”
  • “Carved on the gravestone of Immanuel Kant is a quote from one of his great works: ‘Two things fill the mind with ever new and increasing admiration and awe, the more often and the more steadily we reflect on them: the starry heavens above and the moral law within me”
  • “Does it have any ‘Kant questions’ of its own?”
  • “there is at least one ‘Kant question’ in economics: the puzzle of modern economic growth.”
  • “For if you believe that the economic pie cannot keep growing indefinitely, then a larger slice for some must eventually mean a smaller one for others, and the issue of how to slice up the pie becomes far more fractious.”
  • “You finish his work feeling empty, none the wiser about what really matters”
  • “Harrod-Domar model.”
  • “growth depends almost entirely upon a country’s level of investment in physical capital.”
  • “Nor, it turned out, would it gain any credible empirical backing as the decades passed: experience would show that more physical capital alone was simply not sufficient for growth.21 (If it were that simple, we would have seen most poor countries invest their way into sustained prosperity – and we have not.)”
  • “‘production function’, a mathematical expression that captures how different inputs – workers, machines and land, for instance – are assumed to combine in a particular economy to produce the outputs.”
  • “Harrod and Domar chose a peculiar production function, one where you had to have more of every input to produce more output.”
  • “driving growth and for its knife-edge narrative. The Solow-Swan model’s most important departure was to abandon this form of production function. In their alternative story, more of any input would lead to more output, whether or not the other inputs remained fixed.”
  • “Solow-Swan also imagined that as more and more inputs were added they would have a smaller and smaller effect on increasing output.”
  • “In Harrod-Domar, more workers were entirely ineffective in increasing output without more machines; in Solow-Swan, those workers were less effective”
  • “that escape must have happened through sustained ‘technological progress”
  • “What technological progress did, Solow-Swan showed, was provide a defence against the onslaught of diminishing returns”
  • “But technological progress, if sustained, meant that those workers or machines would also become more productive as time went on”
  • “when capital was accumulated at the perfect rate, diminishing returns were offset by technological progress, and the economy was suspended in a state of perpetually rising prosperity.”
  • “that, in short, US growth did not come from using more resources, but from using those resources more productively.”
• 2024-10-02
  • “This simple but powerful idea, Romer explained, could be used and re-used indefinitely. There is no sense that only one child can benefit from it at a time, or that if the idea is used to save one life it is somehow degraded and less effective for the child that comes after.”
  • “the existing ideas can be used and reused again – and completely for free.”
  • “Malthus’ problem: studying only what he could see and touch, and consumed by the idea of scarcity, he lacked the intellectual tools to explain a way out of his self-imposed trap. Solow caught a glimpse of how to escape, pointing to a process of technological progress that might fight against those diminishing returns; but he was unable (and unwilling) to remove the veil of mystery obscuring that progress’s origins. Now, Romer was able to whip that veil away: he showed it was the discovery of ideas that mattered. Their peculiar non-rival properties, their ability to be re-used without limit and at no further cost, was what overcame the curse of diminishing returns that characterized the world of physical resources alone”
  • “Daron Acemoglu and James Robinson have become the flag bearers for this movement, generalizing these ideas into a popular distinction between ‘extractive’ institutions, which allow a few elites to extract resources from the many, and ‘inclusive’ institutions, which provide a level playing field for everyone in society.”
  • “Joel Mokyr’s A Culture of Growth”
  • “In the language of philosophers, it feels like all this scholarly activity might be ‘epiphenomenal’, clever bits of mental reasoning that don’t actually affect the real world”
  • “Joel Mokyr (whose A Culture of Growth was mentioned before). In his view, it was a profound change in culture during the eighteenth century that supplies the necessary connection. The argument is deeply compelling”
• 2024-10-03
  • “After John F. Kennedy won, signs sprung up across the US Department of Commerce asking, ‘What have you done for Growth today”
  • “Nordhaus made the same point more bluntly. ‘If you want to know why GDP matters,’ he said, ‘just put yourself back in the 1930 period, where we had no idea what was happening to our economy … There were people then who said things were fine and others who said things weren’t fine. But we had no comprehensive measures, so we looked at things like boxcar loadings.”
  • “during the Depression it remained above 10 per cent for a decade)”
• 2024-10-04
  • “This view – that strong growth pays for a generous state – is still widely held today”
  • “But above all, the pursuit of prosperity gave political leaders a sense of confidence. Formal expertise, hard data, quantitative analysis, measurable outcomes – this would replace all those fuzzy, fractious, hard-to-answer moral questions.”
  • “It is also because growth has a seductive political appeal: it appeared to be a social ‘solvent’, dissolving the difficult problems and hard tradeoffs that have ensnared politicians and philosophers in irresolution for centuries”
  • “It is the ‘explosion of top wages and salaries’, notes another economist, that explains much of the surge in the top 1 per cent’s share of national income. ‘Labour income remains the main driver of inequality over the last 40 years,’ concluded one important survey of inequality.19”
  • “Overall income inequality is substantial: the highest-earning 10 per cent receive 52 per cent of global income, and the lowest-earning 50 per cent get only 8.5 per cent of it. But wealth inequality is even worse: the richest 10 per cent own 76 per cent of the wealth, and the poorest 50 per cent just a measly 2 per cent.20”
  • “And finally, there were the technologies that helped those who owned capital: by crushing the labour share of income, by encouraging firms to use productive new machines rather than workers, and by rewarding the largest companies, they drove inequality up even further.23”
  • “(between 1950 and 2000, availability of computational power increased roughly by a factor of 10 billion)”
  • “And as technological progress continues its advance, that reach will only extend further over time. As the lawyer Jamie Susskind puts it in his books Future Politics and The Digital Republic, ‘the digital is political.’”
  • “Code determines questions of social justice: there are algorithms that decide which applicants get a job, which citizens get social housing, which borrowers receive a financial loan, which prisoners are released on parole, which patients receive health treatment. And code shapes our democracy: search engines sort and shape what information we receive, online media platforms sift and select which conversations we take part in, social networks determine who is amplified and who is muted”
  • “The pervasiveness of new technologies has made software engineers into social engineers, but there is no reason to think that the remarkable expertise they deploy when designing these powerful systems would give them any particular sensitivity for understanding their political consequences.”
  • “In short, Messi may have the absolute advantage in both activities, but has the comparative advantage at playing football.”
• 2024-10-06
  • “‘infinite growth is not possible on a finite planet’”
  • “the Club of Rome report was also interdisciplinary, this time drawing not on physics and thermodynamics but on computer science and supposed advances in so-called ‘system dynamics’”
  • “In fact, what really matters for growth are the intangible ideas for combining these resources in new and valuable ways.”
  • “any political theory must do two things simultaneously: it must satisfy an ‘ideal’ function, presenting a compelling ‘ideal of collective life’, but at the same time it must satisfy a ‘persuasive’ function, convincing ‘people one by one that they should want to live under it’.”
  • “Tyler Cowen, in his 2011 book The Great Stagnation, wrote that, ‘life is better and we have more stuff, but the pace of change has slowed down compared to what people saw two or three generations ago.’”
  • “There is a celebrated line in the work of Paul Krugman: ‘productivity isn’t everything, but in the long run it is almost everything.’8 I would put the same observation differently: ideas are not everything, but in the long run they are almost everything”
  • “how do we raise productivity?’ is therefore the same thing as asking ‘how do we generate more ideas?’”
  • “Too lax and, in the words of the American jurist Richard Posner, you ‘kill the goose that lays the golden eggs’; but too tight, and the golden eggs that are laid rot in disuse.”
  • “This is for three reasons: what I call ‘IP anachronism’, ‘IP imperialism’ and ‘IP weaponization’.”
• 2024-10-07
  • “This is because the private benefit to a company or an individual from coming up with a new idea, however vast it may be, will always be completely dwarfed by the social benefits that come when that idea ripples through society and is used and reused by others for free.”
  • “As critics note, universities may be good at ‘invention’, the act of making intellectual breakthroughs, but they are not famed for ‘innovation’, the task of putting new ideas to commercial and productive use. What’s more, many private companies can compete effectively with public universities at their own academic game –”
  • “And in the event, Moore turned out to be right, with computational power soaring by a factor of around ten billion between 1950 and 2000”
  • “Although the technological progress has indeed been sustained for decades, it has required ever more people to keep it up. Today, for instance, the number of researchers required to double the density of transistors on a chip is eighteen times as many as were needed back in the 1970s”
  • “‘Eroom’s Law’ (‘Moore’s Law’ spelled backwards): just as the number of transistors on a chip has been rising exponentially, the number of drugs discovered per billion dollars spent on R&D has been declining exponentially, roughly halving every nine years.”
  • “‘induced technological change’, the notion that new technologies are ‘induced’ or brought about by the particular incentives that people face. ‘A change in the relative prices of the factors of production is itself a spur to invention,’ wrote the economist John Hicks”
• 2024-10-08
  • “It is a sort of perverse reverse-Faustian bargain: rather than giving up something of moral worth to gain worldly knowledge, they want to abandon the knowledge of how to make the world a better place in order to gain a sense of spiritual worth from stamping out capitalism.”
• 2024-10-10
  • “Okun believed, like many others do, that a degree of inequality in society was necessary in order to provide people with an incentive to hustle and strive.”
  • “In short, economics was about engaging with the problem of scarcity. Human beings have infinite wants to satisfy but finite means to achieve them. They cannot have everything they desire, so they must hunt for the best way to be dissatisfied in any situation”
  • “And so, in response, they have come up with another interpretation of degrowth, where the aim is not to pursue negative growth, but to be ‘indifferent’ about growth while prioritizing other outcomes instead. (Most of the time, their focus is on protecting the environment.)4 The economist Kate Raworth, for instance, calls this a ‘growth-agnostic’ position; the economist Tim Jackson describes it as a ‘post-growth’ outlook.5 These milder takes have allowed figures otherwise hostile to the idea of strong degrowth to feel more comfortable with coming into the fold.”
  • “consider having less regard for growth. We can think of this as ‘weak degrowth’.”
  • “This is the famous problem of ‘intergenerational equity’. A key concept here is the ‘discount rate’, a highly contested number that captures precisely how much we ought to care about future costs and benefits relative to those in the present.”
  • “This three-part mantra – ‘Future people count. There could be a lot of them. We can make their lives go better’ – infuses the future with immense moral gravity, demanding that ever more of our current efforts be drawn into making sure that these potential people flourish.15 This helps explain why Silicon Valley finds long-termism so attractive: it pulls our attention towards existential issues like biological weapons, nuclear war, space settlement and – most significantly – technology and AI, reaffirming the world-historical importance of their work. But it is also why others find the idea repulsive: it pulls our attention away from tackling the existing misery and suffering of those who had the bad luck to be born in the present.”
  • “Whether or not the idea is right, it is very hard for it to be seen as reasonable. Given the existing suffering and misery in the world today, people are likely to feel that the philosophy is akin to being mugged for resources by the imaginary demands of a gang of trillions of future people who have not even been born.”
  • “They need a wider form of collective deliberation – one that we currently lack, in part due to the priority we have attached for so long to the unfettered pursuit of economic growth.”
• 2024-10-11
  • “What is now required is a wave of new institutions that would bring citizens together to debate important issues again and again, satisfying the demands for participation that are so poorly met by tired and clunky existing mechanisms. Today, a promising source of such innovations is a family of phenomena known as ‘mini-publics”
  • “When I read the ideas of long-termists, I feel frustrated – and not only for the reasons set out in the last chapter. The movement is so defensive and cautionary, so concerned with managing risks rather than chasing opportunities, with coddling the future instead of striking out boldly to build it.”
  • “For 300,000 years, humankind looked out on the future and what they saw must have seemed inescapably bleak: a relentless, unforgiving struggle for subsistence. Modern economic growth has changed that.”