Nest is cool, but central air changed the world.
Electric vehicles are cool, but cars changed the world.
Streaming is cool, but TVs changed the world.
This theme is one of the core ideas in Robert Gordon’s The Rise and Fall of American Growth. He wrote:
The economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could only happen once.
What about the internet, you might ask. Gordon wasn’t particularly impressed, saying:
The main benefits of digitalization for productivity growth have already occurred during the temporary productivity growth revival of 1996-2004.
It’s been more than 5 years since this book came out, and Gordon is changing his tune.
The Wall Street Journal reports:
In 2015 he had predicted productivity growth of only 1.5% a year over the next 25 years. Recent developments have made him more optimistic, and he expects annual productivity growth of about 1.8% this decade.
We can trace the recent developments directly back to what we’ve dealt with over the last year. The Coronavirus was a shock to the system, and we immediately responded.
Business investment rose 17% in computer equipment, 6% in software, and 1% in research and development, even as GDP fell 2.4% in the fourth quarter from the same period a year earlier. Investment in automation and technology accelerated to 7% year-over-year growth in the third quarter of 2020 from 5% growth in the same period a year earlier
Josh and I will talk about the potential for the roaring 20s and much more on tonight’s What Are Your Thoughts? We’re live at 5:30. Hope to see you there:
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