Recently an economics professor from Northwestern named Robert Gordon published a working paper on line called “Is U.S. Economic Growth Over?” His central thesis is that the effects of the Industrial Revolution have played out across most of the world’s economies, and the high growth rates present during various periods of the industrial revolution will largely be a thing of the past.
Part of the reason is that modern countries are about as modern as they will get. We might get new gadgets, but there aren’t any truly transformative technologies on the horizon. Phones might get fancier with more functions, but we are at a point where most people in the developed world, and certainly in the US, have the ability to quickly and easily communicate with other people. One example cited in the article is that a contemporary kitchen has most of the same appliances as a kitchen of 50 years ago – modern stove and oven, refrigerator, dishwasher – but the kitchen of 1960 was dramatically different from the kitchen of 1910, where food was cooked over a real fire and where ice boxes held real ice. Modern kitchens might have new gadgets, cool wine decanters, food processors, etc., but these have only a minor impact on making cooking easier and more efficient.
The countries with higher rates of economic growth are those countries where people are moving from a pre-industrial existence to a modern existence. Think China, where peasants are moving from the country-side, where they lived in huts and cooked over fires, to the city where they live in apartments with modern appliances.
A New York Magazine article analyzing the article can be found here: The Blip.
The Full article can be found here: Is U.S. Economic Growth Over.
I should note that I have not read the full article, but have read the New York Magazine piece.
The article notes that many other economists view Gordon as unduly pessimistic. They note that new technologies still have the power to transform economies. The bad news is that there is probably some truth to Gordon’s theory. It does explain why economic growth has slowed in modern economies.