Posts Tagged ‘stagnation’
“The clustering of technological innovation in time and space helps explain both the uneven growth among nations and the rise and decline of hegemonic powers”*…
As scholars like Robert Gordon and Tyler Cowan have begun to call out a slowing of progress and growth in the U.S., others are beginning to wonder if “innovation clusters” like Silicon Valley are still advantageous. For example, Brian J. Asquith…
In 2011, the economist Tyler Cowen published The Great Stagnation, a short treatise with a provocative hypothesis. Cowen challenged his audience to look beyond the gleam of the internet and personal computing, arguing that these innovations masked a more troubling reality. Cowen contended that, since the 1970s, there has been a marked stagnation in critical economic indicators: median family income, total factor productivity growth, and average annual GDP growth have all plateaued…
In the years since the publication of the Great Stagnation hypothesis, others have stepped forward to offer support for this theory. Robert Gordon’s 2017 The Rise and Fall of American Growth chronicles in engrossing detail the beginnings of the Second Industrial Revolution in the United States, starting around 1870, the acceleration of growth spanning the 1920–70 period, and then a general slowdown and stagnation since about 1970. Gordon’s key finding is that, while the growth rate of average total factor productivity from 1920 to 1970 was 1.9 percent, it was just 0.6 percent from 1970 to 2014, where 1970 represents a secular trend break for reasons still not entirely understood. Cowen’s and Gordon’s insights have since been further corroborated by numerous research papers. Research productivity across a variety of measures (researchers per paper, R&D spending needed to maintain existing growth rates, etc.) has been on the decline across the developed world. Languishing productivity growth extends beyond research-intensive industries. In sectors such as construction, the value added per worker was 40 percent lower in 2020 than it was in 1970. The trend is mirrored in firm productivity growth, where a small number of superstar firms see exceptionally strong growth and the rest of the distribution increasingly lags behind.
A 2020 article by Nicholas Bloom and three coauthors in the American Economic Review cut right to the chase by asking, “Are Ideas Getting Harder to Find?,” and answered its own question in the affirmative.6 Depending on the data source, the authors find that while the number of researchers has grown sharply, output per researcher has declined sharply, leading aggregate research productivity to decline by 5 percent per year.
This stagnation should elicit greater surprise and concern because it persists despite advanced economies adhering to the established economics prescription intended to boost growth and innovation rates: (1) promote mass higher education, (2) identify particularly bright young people via standardized testing and direct them to research‑intensive universities, and (3) pipe basic research grants through the university system to foster locally-driven research and development networks that supercharge productivity…
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… the tech cluster phenomenon stands out because there is a fundamental discrepancy between how the clusters function in practice versus their theoretical contributions to greater growth rates. The emergence of tech clusters has been celebrated by many leading economists because of a range of findings that innovative people become more productive (by various metrics) when they work in the same location as other talented people in the same field. In this telling, the essence of innovation can be boiled down to three things: co-location, co-location, co-location. No other urban form seems to facilitate innovation like a cluster of interconnected researchers and firms.
This line of reasoning yields a straightforward syllogism: technology clusters enhance individual innovation and productivity. The local nature of innovation notwithstanding, technologies developed within these clusters can be adopted and enjoyed globally. Thus, while not everyone can live in a tech cluster, individuals worldwide benefit from new advances and innovations generated there, and some of the outsized economic gains the clusters produce can then be redistributed to people outside of the clusters to smooth over any lingering inequalities. Therefore, any policy that weakens these tech clusters leads to a diminished rate of innovation and leaves humanity as a whole poorer.
Yet the fact that the emergence of the tech clusters has also coincided with Cowen’s Great Stagnation raises certain questions. Are there shortcomings in the empirical evidence on the effects of the tech clusters? Does technology really diffuse across the rest of the economy as many economists assume? Do the tech clusters inherently prioritize welfare-enhancing technologies? Is there some role for federal or state action to improve the situation? Clusters are not unique to the postwar period: Detroit famously achieved a large agglomeration economy based on automobiles in the early twentieth century, and several authors have drawn parallels between the ascents of Detroit and Silicon Valley. What makes today’s tech clusters distinct from past ones? The fact that the tech clusters have not yielded the same society-enhancing benefits that they once promised should invite further scrutiny…
How could this be? What can we do about it? Eminently worth reading in full: “Superstars or Black Holes: Are Tech Clusters Causing Stagnation?” (possible soft paywall), from @basquith827.
See also: Brad DeLong, on comments from Eric Schmidt: “That an externality market failure is partly counterbalanced and offset by a behavioral-irrationality-herd-mania cognitive failure is a fact about the world. But it does not mean that we should not be thinking and working very hard to build a better system—or that those who profit mightily from herd mania on the part of others should feel good about themselves.”
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As we contemplate co-location, we might recall that it was on this date in 1956 that a denizen of one of America’s leading tech/innovation hubs, Jay Forrester at MIT [see here and here], was awarded a patent for his coincident current magnetic core memory (Patent No. 2,736,880). Forrester’s invention, a “multicoordinate digital information storage device,” became the standard memory device for digital computers until supplanted by solid state (semiconductor) RAM in the mid-1970s.
“To overcome a desperate situation, make a complete turn in one sudden burst”*…
Rupert Wingfield-Hayes, the BBC’s Tokyo correspondent, on the riddle of Japan…
This is the world’s third-largest economy. It’s a peaceful, prosperous country with the longest life expectancy in the world, the lowest murder rate, little political conflict, a powerful passport, and the sublime Shinkansen, the world’s best high-speed rail network.
America and Europe once feared the Japanese economic juggernaut much the same way they fear China’s growing economic might today. But the Japan the world expected never arrived. In the late 1980s, Japanese people were richer than Americans. Now they earn less than Britons.
For decades Japan has been struggling with a sluggish economy, held back by a deep resistance to change and a stubborn attachment to the past. Now, its population is both ageing and shrinking.
Japan is stuck…
His diagnosis and his prognosis: “Japan was the future but it’s stuck in the past,” @wingcommander1 in @BBCWorld.
* Japanese proverb
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As we ponder progress, we might recall that it was on this date in 2011 that three reactors at the Fukushima Daiichi Nuclear Power Plant exploded and released radioactivity into the atmosphere a day after the 2011 Tōhoku earthquake and tsunami.
The radiation releases forced the evacuation of 83,000 residents from towns around the plant. The meltdown caused concerns about contamination of food and water supplies, including the 2011 rice harvest, and also the health effects of radiation on workers at the plant. Scientists estimate that the accident released 18 quadrillion becquerels of caesium-137 into the Pacific Ocean, contaminating 150 square miles of the ocean floor.
“There is nothing new to be discovered in physics now. All that remains is more and more precise measurement.”*…
Some observations are best considered “interesting, if true”; some, a la Karl Popper, “true, until false”… Consider this very recent paper in Nature…
Theories of scientific and technological change view discovery and invention as endogenous processes, wherein previous accumulated knowledge enables future progress by allowing researchers to, in Newton’s words, ‘stand on the shoulders of giants.’ Recent decades have witnessed exponential growth in the volume of new scientific and technological knowledge, thereby creating conditions that should be ripe for major advances. Yet contrary to this view, studies suggest that progress is slowing in several major fields. Here, we analyse these claims at scale across six decades, using data on 45 million papers and 3.9 million patents from six large-scale datasets, together with a new quantitative metric—the CD index—that characterizes how papers and patents change networks of citations in science and technology. We find that papers and patents are increasingly less likely to break with the past in ways that push science and technology in new directions. This pattern holds universally across fields and is robust across multiple different citation- and text-based metrics. Subsequently, we link this decline in disruptiveness to a narrowing in the use of previous knowledge, allowing us to reconcile the patterns we observe with the ‘shoulders of giants’ view. We find that the observed declines are unlikely to be driven by changes in the quality of published science, citation practices or field-specific factors. Overall, our results suggest that slowing rates of disruption may reflect a fundamental shift in the nature of science and technology.
The full paper: “Papers and patents are becoming less disruptive over time” @Nature
One notes that the quote above– from Lord Kelvin, at the turn of the twentieth century– immediately preceded a couple of decades in which physics was radically redefined and advanced by Planck, Einstein, Bohr, et al. (In fairness to Kelvin, consider this suggestion that his point was more subtle.) As we look forward, we might ponder the ways in which the reorganization of disciplines, the rise of research in other cultures (less constrained by the mores of “conventional” research), the use of AI, and/or some as yet unknown dynamic could challenge the phenomenon– “a narrowing in the use of previous knowledge”– to which the authors attribute diminishing disruption.
[Source of the image above]
* Lord Kelvin, in an address to the the Royal Institution in April of 1900
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As we ponder progress, we might send advanced birthday greetings to Wilhelm Wien; he was born on this date in 1864. A physicist, his work helped move past Kelvin’s log-jam. In 1893, he used theories about heat and electromagnetism to deduce Wien’s displacement law, which calculates the emission of a blackbody (a surface that absorbs all radiant energy falling on it) at any temperature from the emission at any one reference temperature. His colleague Max Planck colaborated with Wien, then extended the thinking in what we now know as Planck’s law, which led to the development of quantum theory.
Wien received the 1911 Nobel Prize for his work on heat radiation.
Just before Kelvin’s speech (in 1898) Wien identified a positive particle equal in mass to the hydrogen atom– what we now know as a proton. Wien, in the techniques he used, laid the foundation of mass spectrometry.
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