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Digital Subscriptions > Prospect Magazine > March 2016 > The sky will not fall

The sky will not fall

Real average income per person in the world is rising faster than ever before

For reasons I don’t understand, people simply love to be told that the sky is falling. Yet it seldom does. For example, a gaggle of conservative and liberal economists, such as Lawrence Summers, Erik Brynjolfsson, Andrew McAfee, Edmund Phelps, Jeffrey Sachs, Laurence Kotlikoffand Tyler Cowen, have argued recently that Europe and the United States are facing a slowdown of new ideas and a skill shortage. Technological unemployment, uncompetitveness and slow economic growth, it is said, will be the result. The idea is expanded on by my old friend Robert Gordon in the pages of his new book, The Rise and Fall of American Growth.

Maybe. In the past couple of centuries numerous other learned economists have predicted similar slowdowns. The Keynesian economists in the late 1930s and the 1940s were confident in their prediction, along Gordon’s lines, of world “stagnationism.” The prediction was instantly falsified by the continuing Great Enrichment, which since 1800 has raised real incomes in countries like Britain and Italy and Japan by 3,000 per cent. Three-thousand per cent. In the first three-quarters of the 19th century the classical economists, Karl Marx included, expected landlords, or in Marx’s case capitalists, to engorge the national product. On Malthusian grounds, they expected workers to stay at the same subsistence wage level—£2 a day in 2016 prices—typical of human life since the caves. It didn’t happen that way.

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About Prospect Magazine

In Prospect’s March issue: Peter Pomerantsev describes the situation in Eastern Europe as the governments of Hungary and Poland turn right. Simon Tilford, from the Centre for European Reform, questions the substance of David Cameron’s EU deal and Philip Collins argues that Jeremy Corbyn is not fit for purpose. Also in this issue: Peter Kellner shows us that we are feeling more optimistic than during the last stages of the last Labour government and Jessica Abrahams explores the sexism of Valentine’s Day. Plus Justice Malala on South Africa and the Prospect Duel asks: "Should all immigrants learn English?"
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