Jul

25

The Rise and Fall of American Growth by Robert Gordon is a great book that is worthy of space in your library, but at 650 pages this is not summer reading.

It focuses on two periods: 1870 to 1940 (rapid to 1940, slower thereafter) and 1940 to 2015

Insights:

1. The great inventions are only made once.

2. GDP increase did not measure the value of the improvement in living.

3. Baumol's disease–a Mozart quartet always requires four players. On the other hand, records, tapes, CDs, DVDs, and ipods cure (or nearly cure) the disease. I wonder how this cure applies to education and to illness detection and correction.

4. Perhaps the greatest invention was the written language. The movable type printing press enabled widespread literacy. Geniuses developed and communicated to the world. The Internet is more important than the movable type printing press. Dr. Marshall Greenblatt, "The Internet will increase the number of geniuses available to the world by a factor of ten." (1995) Einstein was born in 1879. The world population at that time was 1.2 billion. Today it is 6 times larger. Therefore, the frequency of an Einstein level intellectual capability is 60 times what it was in 1879.

The Internet was introduced only 25 years ago and it is still spreading. A genius born today in Western China probably has access to the Internet and can exercise and improve his or her innate genius. Chrome book $149.

One impact of the Internet is that education of children will be taken out of the hands of the government. The changes will be both incremental and total. An incremental example - much music education it already done outside the public school system. Some of the changes are total. At this time, 3% of the population is home schooled. Private schools account for 10% of the population. Enterprises and governments will hire certified employees (CPA, PE, Cisco and Microsoft). Other certifications will be obtained outside the public school system. There are numerous examples of the Internet increasing communism – the good kind such as Wikipedia and Linux. These are examples of equality of access not the equality of outcome, which is the target of socialism.

6. Policy prescriptions

Reverse the socialism policies in the Federal and state governments. Focus the Federal Government on the few items that are required:

-Defense of the country and its critical interests

-Enforcement of responsible contracts (exempli gratia selling yourself into slavery is an irresponsible contract and is not enforceable.)

-Enforcement of a reasonable legal code

-Minimum necessary regulations at the federal level

-Simplify the tax system I don't expect much progress on the policy recommendations above.

Nonetheless, I think that the Internet is such a powerful invention, that the growth rate over the 2015 to 2050 period will be about 2.5% - range 2.0 to 3.0 – even with low productivity growth and low world population growth. Costs of education, illness detection and illness correction will collapse resulting in significant improvement in the standard of living even with low economic growth.

anonymous writes: 

The usual publishing quibble. Gutenberg's extraordinary invention did NOT lead to an explosion of literacy but to an explosion of book collecting among the already literate - the teachers, monks, and other clerics. For the first 50 years all the books printed were copies of Latin manuscripts and new works written in the same language. Literacy only grew after broadsheets became widely circulated and that had to wait for the invention of cheap paper and less expensive inks.


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