by paul f renda
In 2012, Dr. Robert Gordon’s published a paper, called “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds”.
Dr. Gordon focuses on the period of time it takes for real per-capital GDP growth to double. The shortest period of time was from 1929 to 1957. He projects 2007 to 2100 for the next doubling. Per-capital growth is decreasing in speed.
From Dr. Gordon’s paper:
“Since Solow’s seminal work in the 1950s, economic growth has been regarded as a continuous process that will persist forever. But there was virtually no economic growth before 1750, suggesting that the rapid progress made over the past 250 years could well be a unique episode in human history rather than a guarantee of endless future advance at the same rate.”
In short, Dr. Gordon’s paper implies that a large middle class is a historical oddity and is now coming to an end.
Gordon also acknowledges the six headwinds, which are: education, inequality, globalization, energy, deficits and demographic divide.
So what is the big deal about economists writing a paper? Years ago, I discovered another paper written by a mathematical physicist, who had a similar conclusion. This paper, written by Dr. Jonathan Huebner, is called “A Possible Declining Trend for Worldwide Innovation”. This paper was published in 2005, and Dr. Huebner hedges his bets by stating that there is a possible declining trend in worldwide innovation. Dr. Gordon was unaware of Dr. Huebner’s publication. Physicists, in general, do not talk to economists and vice versa. I am bringing both of these papers together in this article. Hopefully, other academics will read these two papers. When two individuals with PhDs from different disciplines obtain the same data or similar data and come to the same conclusions, you can almost be certain that what they observe is a real effect. The observation of these authors is that innovation is slowing down, as innovation in the world slows down, and the middle class is on the decline, especially in the United States. What is particularly telling about Dr. Huebner’s paper is the last figure in his paper. It shows that the rate of invention slowing down.
I put data points together from Dr. Huebners and Gordon’s work along with the GDP growth of the United States. I came up with a .87 correlation, coefficient to the uninitiated in mathematics, which is like winning the lottery twice in a row.
The only fault I found about their work is that they did not take China into consideration.
The concept of a large middle class in the United States only came about after the 2nd Industrial Revolution, Henry Ford’s five-dollar wage job s, and the rise of unions. Today, overall, wages are on the decline. As for the unions, they are going the way of the dinosaur. I have a plan to stabilize the union enrollments, but I do not want to deal with that topic in this article.
This is not a Democrat or Republican issue; however, I think the economic policies of President Obama may have greatly accelerated the collapse of the middle class in this country. There have been a number of outliners that nobody has really tried to explain. When you have a deep recession, you have a large bounce back in the economy; we have had a very subpar bounce back. At one time, the labor participation of African Americans was greater than the labor participation of white males. Today, the labor participation of African Americans is decreasing. The African American middle class is on life support. Another interesting outliner is the record number of white males who are turning in their passports and renouncing U.S. citizenship. If the U.S. is the land of opportunity for white males, how can you explain this? We are paying a very heavy price for having a news media that is politically correct.
Next post article education and inequality
(Note: if you want to meet the author of this article he performs with others at the Bodega monthly poetry and short story reading, on the first Sunday of every month. 24 ST Nicholas Ave., Brooklyn New York)