Economist’s Debate
Sep 3rd, 2014 by Scott Hebert
There is good reason to believe the U.S. economy is headed for a period of stagnation. Robert Gordon rightfully points out that the U.S. workforce is shrinking as the number of workers entering their retirement years is outpacing the influx of new workers. As medical advances slowly push the average life expectancy up, this new generation of workers can expect to be carrying the burden of an inflated non-working population for longer than any previous generation. Only through innovation can a smaller workforce expect to support these growing demands. That economic growth is spurred by innovation is not in question here.
Mr. Gordon argues that there are no more game-changing innovations to be had. That all of the “low hanging fruit” has been picked. Unfortunately, only in hindsight will we be able to tell if he was right. Rarely is it possible to foresee what the next great innovation is going to be. The Romans built roads for horse-drawn carts, not so that Henry Ford could put his Model T on them over 2,000 years later. Like those Roman roads, the Internet is the modern foundation on which future innovations will be built.
Perhaps the problem that Mr. Gordon is really pointing to is that the problems we need innovation to solve are more complicated than previous problems. After all, to a modern observer, the benefits of electricity in every household seem obvious. It may be the case that the accidental discovery of a life-saving drug like penicillin is not going to happen again. In May of 2013, David Shaywitz argued that the relative dearth of medical cures is related to a lag in medical science (Shaywitz, 2013). Perhaps modern innovations in computer clustering and cloud computing, built on the foundation of the Internet, will be just the framework medical science needs to make the next big innovation.
References
Shaywitz, D. (2013). What’s Holding Back Cures? Our Collective Ignorance (And No, Not A Pharma Conspiracy). Forbes. Retrieved September 2, 2014.