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.
In Britain, real, inflation-corrected income per head per day is now 30 times higher than it was then. Contrary to recent alarms, even in the rich countries, real income for the poor continues to grow. Thirty years ago, hip-joint replacement was experimental. Now it’s routine. Tyres and motors were unreliable. Now they almost never wear out. Once nothing could be done about clinical depression. Now something can. Further, in terms of real comforts—a roof, heating, ample clothing, decent food, adequate education, effective medicine, long life—the income is more and more equally spread. Pace Piketty.