Is human progress slowing down?
One economist says there's no guarantee that growth and innovation will continue indefinitely.
Krugman was referring to a thesis by Northwestern University economist Robert J. Gordon arguing that the progress made in the past 250 years is so dramatic and unique that it may never be duplicated. In a paper published in August, Gordon notes that economic advancements occur in fits and starts. He mentions three distinct industrial revolutions: steam and railroads from 1750 to 1830; electricity, running water and petroleum from 1830 to 1870; and the Web and mobile phone revolution of 1960 to the present. The last of these revolutions arguably is the least dramatic in terms of technological change.
"There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely," according to a paper Gordon published earlier this year.
In other words, nothing lasts forever.
Krugman, a Nobel laureate, said Gordon's thesis was interesting even though he doesn't agree with it. He notes that high-speed computing and voice-recognition software have much improved in recent years, and could spur rapid productivity growth and overall economic growth.
"It’s all too easy to make the case that most Americans will be left behind, because smart machines will end up devaluing the contribution of workers, including highly skilled workers whose skills suddenly become redundant," he wrote. "The point is that there’s good reason to believe that the conventional wisdom embodied in long-run budget projections -- projections that shape almost every aspect of current policy discussion -- is all wrong."
Voice-recognition software and similar technologies are vastly better than they used to be and will continue to improve. Moreover, just because the pace of human innovation has slowed recently doesn't necessarily mean that it might speed up again.
As Nate Silver noted in "The Signal and the Noise," economists are terrible about forecasting the future. While Gordon and Krugman may be correct in their historical analysis, as every investor knows, past performance is no guarantee of future returns. This is especially true when considering grand theories that attempt to predict future decades of human activity through statistical calculations in a spread sheet.
--Follow Jonathan Berr on Twitter @jdberr
More from Money Now
- Are gas prices about to take off?
- The market's winners and losers of 2012
- Should stranded adventurers pay for own rescue?
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Economists find that as women grow more self-reliant, marriages become more about wanting commitment than needing it.
- Obamaphone program: Dialing for fraud?
- Lone Signal lets you tweet aliens for a fee
- Russell Brand swings at 'Morning Joe' -- and scores
- 7-Eleven targeted in human smuggling raid
- Why 'Dumb Ways to Die' became a viral hit
- Red Robin ad doesn't go down well with vegetarians
- Pity the millionaire: Mansions in short supply
- Bloomberg's new crusade: Food scraps
- China eyes stockings that shoo away perverts
[BRIEFING.COM] The major averages ended higher across the board as the S&P 500 advanced 0.8%.
Equities climbed steadily since the opening bell as investors prepared for tomorrow's policy decision from the Federal Reserve. Although chatter in recent weeks has included speculation the Fed would look to taper its asset purchases, today's broad gains suggest investors expect mostly reassuring words from Chairman Bernanke at tomorrow's press conference.
All ten sectors ended with ... More
More Market News
Here's a list of ways to profit from the potential move from defensive to cyclical stocks.