Why long-term economic growth often disappoints

FROM THE point of view of the 1950s, America’s economic progress over the 70 years that followed has been a huge disappointment. Futurists foresaw a world of super-pills, space farms and cities encased in glass. Science and technology would engineer unending riches and everything consumers could ever want. Yet the achieved during the Space Age, it turned out, soon ebbed: between 2000 and 2019 America’s real income per head grew by 1.2% a year on average, down from 2% between 1980 and 1999 and 2.5% in the 1950s. And instead of flying cars, , a venture capitalist, once jibed, “we got 140 characters”.A new paper suggests such disappointment is not warranted—because it stems from an equally huge misunderstanding of how economic progress happens. Thomas Philippon, a professor of finance at New York University, argues the post-war experience was unusual. Looking at American data going back to 1890 and British data from 1600 to 1914 he finds that, when technological progress is properly understood, the world has been on broadly the same path for centuries. In the grand scheme of things, in other words, there has been no slowdown at all.