November 2012

Do periods of economic downturn create more pessimists, or do they just get more attention during tough times?  Economists and politicians love to alarm us into believing economic growth is now on a slippery slope to permanently low levels.  Everything has already been invented, baby boomers are on the decline, and productivity will never experience the kind of improvements that were seen in the 1950s.  Robert J. Gordon, Professor of Social Science at Northwestern University wrote a paper for the National Bureau of Economic Research (NBER) in August 2012 in advance of his book release Beyond the Rainbow: The American Standard of Living Since the Civil War.  He points out that the computer and Internet revolution has resulted in a much smaller economic impact than that of the combustion engine.  He then argues that future innovations will have a diminishing effect on economic growth because of six headwinds¹.