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The average inflate uh inflation-adjusted buying power in the United States is about 40% higher than the average uh EU country.
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But the median, the middle person, is the same.
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There's that much difference created by inequalities.
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The unemployment rate of American four-year BA graduates is about the highest it's ever been.
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So you put it all together, and you gotta conclude that the great period is behind us, and that what we're going through now, however miraculous it may appear, is just not changing in as big a way as what we went through in the early part of the 20th century.
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Well, for today's episode, we're off to Chicago, Illinois.
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We're gonna speak to Professor Robert Gordon, who for four decades has had enormous experience in really delving into the global and US economy.
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And it is quite interesting.
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Uh tell us who is Professor Bob Gordon?
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Robert Bob Gordon, as he's known, uh very well-known professor in the Northwestern University, as you said, uh, Chicago, Illinois.
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And uh I came across Bob Gordon about 2014-15, he did a very famous TED Talk, Ivan, okay, where he talked about how US productivity growth had peaked.
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And uh peaked around peaked just after 2000, okay, and has started to decline ever since then.
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So as you know, the US was in this really high peak growth period uh because of the baby boomers.
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There was lots of tailwinds behind the US economy.
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But we get into very interesting structural uh headwinds, as he calls them, uh, in the episode.
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So it's it's really interesting.
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I've watched it, and uh demographics is something that is very interesting because he talks about you need 2.1 to maintain a steady population of kids per female adult, and that America's below that.
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And so in the first instance, uh the population declines, and there's a dependency ratio of more pensioners than workers, but ultimately the total population will decline.
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It's very I mean, he has uh four headwinds.
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Demographics is is one of them, one of the most important ones.
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And it's a global issue, uh Ivan.
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It's an issue even in Ireland, as we see.
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We have a greying population in this country, the the pensioner support ratio is shrinking, so there's going to be less people working to support the state pension.
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So it's demographics is becoming more and more important.
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Are we getting to that?
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Interestingly, in the series of interviews, this guy seems to have had a big personal influence on you.
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Tell us about that.
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Yeah, so I I've taught an MBA class in Dublin for maybe eight, seven or eight years, Ivan, and all my students know who Professor Robert Gordon is because it's You plagiarized all his best stuff, is that it?
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Yes, actually.
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Yeah, yeah.
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Don't tell anyone though, okay?
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So he's got a very famous TED talk where it's only 13 minutes long.
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I'll put it in the link, but it's very interesting in terms of the four structural headwinds that we mentioned earlier.
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Um, but he really talks about how uh the inventions of the past hundred years will never be replaced, you know, like electricity, underwater uh sewer, sanitation, the eradication of airborne, waterborne diseases.
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You know, we got the iPhone, but you can compare that to the combustion engine, for example.
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So it's fascinating.
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He also majorly features as a macroeconomist in the relationship between debt and inflation.
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Yeah, so debt is another headwind.
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Okay, he talks about the unsustainability of debt and the law of diminishing returns.
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So, again, I mean, uh the no there's no surprise that we're looking at a big problem in the US in terms of debt, but he frames it in terms of looking at productivity in in relation to too much debt, you're not going to grow.
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Well, take a look at uh this interview now between Dr.
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Bob Gordon from Chicago, Northwestern University, and Alan, and we'll have a little chat again afterwards.
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Okay, so joining me now, I'm delighted to say, is Professor of Social Sciences and Economics at Northwestern University, Professor Robert C.
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Gordon.
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Um, Professor Gordon will be well known to many listening and viewing on um the podcasts and in YouTube.
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He is the author of numerous books, most famously, probably The Rise and Fall of American Growth, published in 2016, uh US Standard of Living Since the Civil War.
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In 2016, he was also voted one of the 50 most influential economists.
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And it's in it's important to say, I suppose, many of my own students have seen Professor Gordon's TED Talk, which he gave and discussed his famous thesis about US productivity.
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Professor Gordon, how are you?
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Uh great to be here.
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Looking forward to your uh questions and our discussion.
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Okay, so I'm gonna start off with uh the whole notion of growth and productivity.
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And I know that GDP gets meshed in into that discussion, but there are gonna be some um people listening to this that maybe don't have a background in finance and economics.
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So can we how do we how do we decipher between growth and productivity?
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Growth growth refers to the growth of the economy's total output.
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Uh that is the total of all the goods and services that are produced uh in an economy in a given time period, like a quarter of a year or a full year.
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So for the United States, that's$30 trillion in a year.
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Uh for China, it's about$20 trillion.
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For the European Union, it's about the same.
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Um and then productivity is the amount of output, which we just described, divided by the number of hours of work.
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Uh so the more output you get out of a given hour of work, the higher your uh productivity.
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And over the years, uh through automation, uh machinery, uh inventions, electronics, the world has learned how to make more output out of a given hour of work.
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And so productivity uh has gone up.
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And uh for instance, in the uh in the United States, productivity is roughly seven times higher than it was a hundred years ago.
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Um and historically, productivity grows at sometimes one percent a year, sometimes two percent a year.
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And just to keep that in mind, um for if something double something grows at 1% a year, it doubles in 70 years.
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If something grows at 2% a year, it doubles in uh 35 years.
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And so we've had almost 100 years uh for uh since the late 1920s.
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And so it's not surprising that with 2% growth, we would have gone up by a factor of seven or eight over that 100-year time.
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So uh things can change a lot.
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From the Roman Empire through the middle of the 18th century, there was no economic growth at all.
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Um it's very hard to figure it out, but the uh the best guess is that productivity grew only at about 0.1% uh over that 2,000-year period, hardly at all.
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Uh and then uh things took off in the middle of the 18th century, starting in Britain with the steam engine, the mechanization of uh textiles and fabrics and weaving, uh, and then on through the railroad and the great inventions of the late 19th century, of which the two most important were electricity and the internal combustion engine.
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And then we had the electronic revolution of the late 20th century, uh, which has brought us to where we are now.
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It's it's very interesting that you say we had centuries of zero growth, and all of a sudden, just in the last 200 years, we've had this huge ex exponential growth through the various uh industrial revolutions.
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How much uh importance do you place on the Enlightenment era in relation to uh the driving force behind uh the first industrial revolution in in in in the UK?
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I mean, what was the catalyst that uh s uh lit the spark, I suppose, for the start of this exponential period of growth?
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Uh it was a combination of um elements that began to appear in in Britain in the uh seventeenth century, uh the uh growing respect for science, uh the um governance of uh uh Britain that gave free reign to scientific inquiry.
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And uh as several of my economic history colleagues have emphasized, uh the actual carrying out of the invention of the steam engine and the uh textile machinery required skilled engineers.
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And there just happened to be enough skilled engineers in Britain to figure out how to get the steam contained inside a vessel and make that steam engine uh possible.
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Uh it's not entirely clear, although one of my colleagues, Joel Moch here, is the world's greatest expert on this topic, um, it's not entirely clear why that particular combination of talents emerged first in in Britain.
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But of course, once it took off, it was copied everywhere.
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And the British, as we know, lost their lead as the uh highest productivity uh economy uh as early as around 1870, 1880.
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And you you you have uh spoken in previous interviews about the tree technological revolutions.
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Uh can you speak to those briefly, please, just to frame it out?
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Yeah.
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Well, the first industrial revolution we were just talking about, uh primarily uh the invention of the steam engine, which made possible the railroad and steamships, uh, which of course revolutionized travel, uh, going from the wind to the powered motor on the seas made it possible to bring uh vast numbers of immigrants from Europe to uh the United States in the late 19th century.
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The second industrial revolution was the most important uh because it's it's pretty clear now as we enter the post-computer age that the invention of electricity was really critical to everything.
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It was critical for machinery, it made possible home appliances, it made possible uh electric light, uh, air conditioning, uh, everything we live with today.
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We all know what a disaster it is when our power goes out.
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Uh so electricity, numero uno for the second industrial revolution, uh invented uh with the electric light invented in the uh autumn of 1879 by Thomas Edison in New Jersey.
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And at the same time, uh Carl Benz in Germany invented the first workable internal combustion engine uh in 1879 as well.
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Uh then adding to that were uh chemicals pioneered in Germany, uh entertainment and communications like uh the phonograph, the telephone, the telegraph, uh the uh movies, and then in the early 19th century radio, uh early 20th century radio.
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Um and then perhaps the most important of all, in terms of the everyday standard of living, in addition to electricity and light, was the invention of uh what we call urban sanitation infrastructure, running water, sewers under the ground, um elimination of the outhouse, uh, indoor bathrooms, which became ubiquitous in urban America by the 1920s, but took longer in uh rural America, as did electricity.
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The second industrial revolution made it possible for the United States to have 50 years of 3% productivity growth.
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I remember I said sort of 2% was normal, um, but we had 50 years of 3% productivity growth between uh 1920 and 1970, and then things slowed down.
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The third Industrial Revolution uh was very strung out.
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It started with the mainframe computers after World War II, and then the invention of the personal computer, which really was the uh turning point in uh the early 1980s.
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Then by uh 1995, with the introduction of the web browser, and with it e-commerce, search engines, flat screens, broadband, and everything that we associate with uh the modern electronics.
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Um that was pretty much over by 2005.
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By 2005, we were operating uh pretty much uh the way you and I are today.
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Uh but then uh came in 2007 came the smartphone, which is of course uh another revolution, not so much for productivity, but for everyday life and uh the ability of everyone, virtually everyone in the world now to carry a powerful pocket computer in their pocket that would have been only a dream uh as recently as, say, uh 1990.
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Uh we don't count that personal phone by itself as a as a separate industrial revolution, but it has been leading into what people have been calling for many years now the fourth industrial revolution of artificial intelligence.
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And we probably should talk about that separately as a separate topic.
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Yeah, I know it's it's very interesting to get the context of the evolution and technical advan uh uh advance, particularly over the last century.
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I think you refer to that period from the 1920s as as the as the miracle century in relation to the level of exponential uh technological growth.
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In relation to uh back in 2016 when you published the rise and fall of American growth, you already had a huge body of research done, uh peer-reviewed uh research.
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What were you looking at back then, and I presume in the previous decade, to give you pause for concern that perhaps peak growth, peak technological or peak peak productivity was it was in in the US?
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What what were what what were you seeing?
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Uh as of 2016, or the book was was that part of the book was written in 2014, uh, we had already had almost a decade of slowing growth from the third industrial revolution.
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The the timing was that we had that 3% growth for 50 years up to 1970, then we had 25 slow years of about 1.5%, then it speeded up again to 3% after the uh just about the same time as the web browser was introduced in 1995.
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So we had a great decade from 1995 to 2005, but then it went away again.
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And so my insight was to say, oh, look, the previous Industrial Revolution, we had great growth for 50 years.
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The computer only gave us great growth for 10 years.
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That's a five to one difference.
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So that was enough to uh lead to the idea that the previous inventions just were more important, that they had more effect in spinning out this 50 years of growth.
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And so where are we now?
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Growth for the last 20 years, since 2005, in the United States.
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And I think it's a little too complicated for us to go and start comparing Europe with the United States.
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That's a different issue.
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But the United States is sort of at the technological frontier, and so we um we can focus on on that.
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And the average growth rate in the last 20 years for the U.S.
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is at is back down to around 1.5 percent, just about the same as it was from 1970 to 1995.
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So looking broadly, over the last century, we had a revolution that gave us 3% growth for 50 years, then we had 25 slow years, then we had 10 good years, and now we've had another another 20 slow years.
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So you put it all together and you gotta conclude that the great period is behind us and that what we're going through now, h however miraculous it may appear, is just not changing in as big a way as what we went through uh in the early part of the 20th century.
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In your fantastic TED talk, you mentioned the four headwinds, uh demographics, headwinds to growth, I should say, uh demographics, debt, education inequality, and technology.
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Uh, I'm not sure if I have those correct.
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Maybe you'll correct me if I'm wrong.
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Aaron Powell The first one about demographics, of course, is is well known.
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We have declining fertility, and that leads to an aging population.
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So um, as long as we have a fixed retirement age of, say, 65, then the share of the population that is retired and drawing on past saving is endlessly growing, and the share of the population that's working and providing the savings and providing the income is shrinking.
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So, of course, you have this greater and greater debt burden and growing insolvency of retirement plans, rising taxes on the working people to support the welfare and pensions of the older people.
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Uh and so that is a uh a source of declining well-being because it's a a sort of vicious circle just due to the consequences of lower fertility.
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So, how how is the government going to pay for that?
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Are they gonna go into debt?
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Uh going into debt means that uh there's more and more bonds for the existing uh savers to purchase.
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The government has to keep raising interest rates to induce people to buy the bonds.
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That's really the second headwind.
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Demographics and the growing number of old people is the first headwind, and then the uh growing pressure on the government.
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And you know, we we have uh now in the United States a ratio of debt to GDP or of 100 percent uh compared to about 40 percent uh 30 or 40 years ago.
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Uh and so that's gonna give us continuing pressure for higher interest rates.
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It's contributing to the housing crisis, that it's so expensive now for young people to buy houses, that this is changing the the whole nature of society with rising ages of marriage, rising ages of homeownership, uh declining uh fractions of people who are out on their own at age 30, and a growing fraction of people who are back living with their parents.
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So that's a sort of social malaise that combines the demographics and the and the debt debt, which leads to higher interest rates.
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Then we have uh inequality, whatever the growth in the economy per hour is, a larger share of it has been going to the top one or two percent, a smaller share to the bottom 90%.
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And that means that however well the economy is doing, the average person is not doing as well as the overall economy, because so much going to the to the people at the top.
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There are now, according to the latest number I read, there are now 2,500 billionaires in the world, of whom, uh of which a third are in the United States.
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So the United States has 4% of the world's population and a third of the billionaires, and a third of the millionaires.
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Uh so that's a sign, again, that inequality in the U.S.
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is just much higher than it is in most places.
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Another startling uh statistic that uh will interest your uh listeners in Europe is that the average income per person adjusted for inflation, this is real buying power, the average inflate uh inflation adjusted buying power in the United States is about 40 percent higher than the average uh EU country, but the median, the middle person is the same.
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There's that much difference created by inequality.
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So so much of America's uh GDP per person is going to people at the top that the middle person in the United States is no better off than the middle person uh in Europe.
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And in many ways, the uh the American is worse off because we have a lot of problems in the United States.
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You know, you hear about Europe falling behind, but wait till I tell you about some of the issues in the United States.
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You could consider these headwinds as well.
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But compared to the United to uh Europe, uh the U.S.
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has a much harsher climate.
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We have colder winters, we have hotter summers, we have more energy used for heating and air conditioning to keep a given uh room temperature.
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Uh we have many more people in prison uh for whatever reasons, both because there's more crime and because there may be uh harsher sentences.
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Uh and so uh when you look at what Americans are spending money on, uh we're spending a lot of money on prisons, we're spending a lot of money on energy to keep our cold climate warm in the winter and hot climate uh cool in the summer.
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Uh and those are things we have to spend that uh come out of our income that don't make us any uh better off compared to a European.
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So that's a lot of stuff about uh headwinds it's interesting the way the four headwinds kind of interact with each other and and particularly the one the one I forgot to mention, the fourth one, we had demographics, we had debt, the growing debt of the uh governments everywhere, we had inequality.
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I didn't mention the last one, which was education.
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Starting in the early 20th century, only about 10% of the population finished high school.
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This is again about the United States.
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By 1970, 80% had completed.
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So we had this that was one of the reasons we had so much productivity growth in the in the 20th century is that we we went from a population that almost nobody finished high school to a population where almost everybody had finished high school.
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And gradually the sheer finishing college has gone up from maybe 5% at in 1900 to about 35, 40% today.
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But that's plateaued.
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That stopped growing and now we hear about more and more of the four-year college graduates not being able to get college qualified jobs.
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The people who are winding up as taxi drivers, as baristas at Starbucks, even though they have college degrees and this has become even more acute in the last two years.
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I was just reading a a big article yesterday about the the golden career of being a PhD in economics is no longer a guarantee of getting an academic job in the university where you'll get a 10-year professorship.
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More and more of the new PhDs coming out of economics departments are finding it hard to get any job at all.
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And the unemployment rate of American four-year BA graduates is about the highest it's ever been.
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So that overlaps a little bit with artificial intelligence, but it's been going on for longer than just the last two years.
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You know, we can date the large language models back to November 2022.
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So we're now three and a half years into the era of the large language model chat GPT kind of kind of AI.
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But this malaise of college graduates not finding college level jobs goes back, I mean I was writing about that 10 years ago so it's just getting worse.
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And that means that the contribution of growing education to productivity which has been estimated as in the 20th century as much as a third, a quarter, even half a percent per year has gone away if if we zoom out of the United States for a moment and just look globally, are we in a perfect storm then in terms of productivity global growth?
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Because we've got demographic like the US isn't so bad in demographics versus Asian countries obviously and the likes of Germany in Europe.
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But then we've got debt sovereign debt uh you know and I I interviewed Dr.
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Lacey Hunt recently and he's talking about the law of diminishing returns and when you when you abuse one of the factors of production and cent governments have absolutely abused uh the debt debt funding so if if we've got problems with demographics problems with debt um problems with human capital because the old system of education doesn't work how does this play out then if you were to update your thesis on productivity?
00:26:10.640 --> 00:26:13.920
As you suggested let's broaden this out to the rest of the world.
00:26:14.160 --> 00:26:38.000
The US, the EU and Japan, and the more advanced countries in Asia, we have about a billion people but we have about eight billion people in the world so only one eighth of the people in the world are going through what we're describing of um aging population demographics and so on.
00:26:39.119 --> 00:26:48.000
We have India and China which together are another almost 3 billion people then we have the rest of the world which is another 4 billion people.
00:26:48.720 --> 00:27:08.079
So all those people in China, India, Asia and Africa, Latin America are still way behind the curve in adopting the technology and the kind of services that we take for granted in the developed 1 billion of the world.
00:27:08.240 --> 00:27:13.680
And they're still growing I mean India is growing at 6 or 7% a year.
00:27:14.079 --> 00:27:24.240
China still miraculously maintains a growth rate of 4 or 5% a year even though you'd think that they would be reaching a mature level.
00:27:24.960 --> 00:27:47.680
China of course is now much feared as catching up with the United States at least in the United States we fear that according to the latest evaluations Chinese scientists are now ahead in something like 50 out of 60 different areas of inquiry whereas 20 years ago the United States was ahead in 50 or 55 out of the 60s.
00:27:47.839 --> 00:27:50.319
So China is catching up.
00:27:50.480 --> 00:27:58.720
So there's a lot of growth going on and there's a lot of just basic second industrial revolution kind of stuff.
00:27:58.799 --> 00:28:05.279
I mean a lot of Africa still does not have reliable electricity so they're a century behind.
00:28:05.519 --> 00:28:53.920
So when we talk about the impediments to growth in the 1 billion of the rich countries uh that does not mean that there aren't lots of opportunities uh for growth in the rest of the world and of course we know it would take us forever in in this conversation to talk about the particular problems of why Africa has been left behind, why some countries in Asia seem to be better at manufacturing than others and have had export-led booms like uh South Korea, Singapore, why India has gradually been adding to its service prowess in IT services, gradually starting to um manufacture more, Bangladesh being the home of the world's textile industry now.
00:28:54.319 --> 00:28:58.079
So every store every country or every region has a a different story.
00:28:58.240 --> 00:29:04.880
But many of these headwinds that we're talking about have not arrived yet in much of the world.
00:29:06.160 --> 00:29:12.240
In terms of talking about growth, it's very difficult to have that conversation without talking about energy.
00:29:12.480 --> 00:29:33.119
I mean you could argue that the abundance of energy the ability to extract energy over the last century has absolutely contributed massively to to the um to the economic growth what what about the outlook for energy in relation to growth?
00:29:34.319 --> 00:29:49.200
Are we there's discussions that peak shale oil in the US what's the real truth around uh fossil fuels in the Middle East and we hear lots of focus on nuclear energy now on the back of the Ukraine-Russian war.
00:29:50.559 --> 00:30:15.039
Just any any thoughts on how energy is factored into your calculations regarding growth I take a a pretty different attitude toward uh global warming energy environment uh than the typical European who is uh seems to be dead set on the arbitrary year of 2050 to have zero emissions.
00:30:15.279 --> 00:30:19.200
I think we're we're steadily realizing that's not possible.
00:30:19.680 --> 00:30:26.559
We know that it's impossible to uh run the world's aviation industry without uh jet engines.
00:30:26.799 --> 00:30:31.920
There's no technology in sight uh to have the air transport industry converted.
00:30:32.160 --> 00:31:41.839
We know that there is a massive restructuring of the entire world's uh buildings of trillions and hundreds of trillions of dollars of investment and buildings that are built for fossil fuel heating and air conditioning instead of uh electric uh electricity based heat pumps uh we know that we don't have the electric generating capacity for the world's vehicles to all be electric, for the heating uh and industry to all be electric, um nonpolluting um my attitude toward this is that technology is steadily reducing the cost of solar energy and if instead of putting massive amounts into subsidizing solar and wind and penalizing the production of natural gas I mean granted coal is out uh except in China uh oil is a bad uh but natural gas has half the polluting uh emissions that coal and and oil does so it's sort of a transition.
00:31:42.480 --> 00:31:52.799
Um eventually there's enough land in the world to have the whole thing papered over with solar panels and eventually we'll get our electricity from that and it'll be very low cost.
00:31:53.039 --> 00:32:03.279
Just as the price of computing has steadily gone down for the last 50 years I expect the price of solar panels and solar energy will uh continue to go down.
00:32:03.519 --> 00:32:05.519
But that means we just need to be patient.
00:32:05.759 --> 00:32:35.519
Instead of the arbitrary 2050 date maybe it's more realistic to have 2060, 2070, why should we uh put all these barriers to growth that are in Europe uh through prohibition on this, shutting down nuclear that, as in Germany, uh when uh if we take a little bit more relaxed attitude and just let technology uh take care of it, uh it'll take longer.
00:32:35.680 --> 00:32:56.160
Uh but you know another another issue that involves that division of the world population between the 1 billion in the rich countries and the uh seven billion in the poor countries, those 7 billion people are not going to give up on the chance to become developed just to avoid global warming.
00:32:56.400 --> 00:33:03.359
They're going to want to have their buildings with heat or air conditioning just like we do.
00:33:03.680 --> 00:33:05.039
And there's seven billion of them.
00:33:05.200 --> 00:33:15.599
I mean a lot of them are in China and India but there are a lot of people in the rest of the world who are still waiting to catch up to our industrial revolutions that have that have already happened.
00:33:15.920 --> 00:33:38.480
So my conclusion is that uh it's futile and economically destructive to have arbitrary uh impediments to growth that are based on a given year chosen out of the sky like 2050 for zero admissions.
00:33:38.799 --> 00:33:42.480
And you know we could have arguments about that back and forth.
00:33:42.960 --> 00:33:50.000
But there's not you know we're gonna have global warming for a long time because of that other 7 billion people catching up.
00:33:50.240 --> 00:33:57.839
And no matter how great our efforts in the developed countries um I mean it gets to be ridiculous.
00:33:58.000 --> 00:34:52.880
Here in my hometown of Evanston Illinois they have banned gas leaf blowers and forced the landscape people to have electric leaf blowers which are half as good all because they you know there's no pollution that's going to affect global warming out of a few leaf blowers in a suburb in America in the context of the world uh and a lot of this stuff is just uh destructive of Northwestern University next week we turn it to AI Professor Gordon has actually bet Stanford's Eric Blinjofferson that AI will not deliver the productivity boom many are predicting so who's right next week in part two we discuss AI productivity the future of work and whether this really is the technological revolution we've been promised.
00:34:53.119 --> 00:35:02.800
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00:35:46.079 --> 00:35:46.880
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00:00:00.160 --> 00:00:11.919
The average inflate uh inflation-adjusted buying power in the United States is about 40% higher than the average uh EU country.
00:00:12.240 --> 00:00:17.359
But the median, the middle person, is the same.
00:00:17.679 --> 00:00:20.320
There's that much difference created by inequalities.
00:00:20.480 --> 00:00:27.600
The unemployment rate of American four-year BA graduates is about the highest it's ever been.
00:00:27.760 --> 00:00:46.960
So you put it all together, and you gotta conclude that the great period is behind us, and that what we're going through now, however miraculous it may appear, is just not changing in as big a way as what we went through in the early part of the 20th century.
00:00:47.280 --> 00:00:51.119
Well, for today's episode, we're off to Chicago, Illinois.
00:00:51.280 --> 00:01:04.480
We're gonna speak to Professor Robert Gordon, who for four decades has had enormous experience in really delving into the global and US economy.
00:01:04.799 --> 00:01:06.959
And it is quite interesting.
00:01:07.040 --> 00:01:09.599
Uh tell us who is Professor Bob Gordon?
00:01:09.920 --> 00:01:17.439
Robert Bob Gordon, as he's known, uh very well-known professor in the Northwestern University, as you said, uh, Chicago, Illinois.
00:01:17.680 --> 00:01:29.599
And uh I came across Bob Gordon about 2014-15, he did a very famous TED Talk, Ivan, okay, where he talked about how US productivity growth had peaked.
00:01:29.840 --> 00:01:37.840
And uh peaked around peaked just after 2000, okay, and has started to decline ever since then.
00:01:38.000 --> 00:01:44.560
So as you know, the US was in this really high peak growth period uh because of the baby boomers.
00:01:44.719 --> 00:01:47.439
There was lots of tailwinds behind the US economy.
00:01:47.599 --> 00:01:54.079
But we get into very interesting structural uh headwinds, as he calls them, uh, in the episode.
00:01:54.159 --> 00:01:55.280
So it's it's really interesting.
00:01:55.519 --> 00:02:11.680
I've watched it, and uh demographics is something that is very interesting because he talks about you need 2.1 to maintain a steady population of kids per female adult, and that America's below that.
00:02:11.840 --> 00:02:22.639
And so in the first instance, uh the population declines, and there's a dependency ratio of more pensioners than workers, but ultimately the total population will decline.
00:02:22.879 --> 00:02:25.039
It's very I mean, he has uh four headwinds.
00:02:25.120 --> 00:02:27.840
Demographics is is one of them, one of the most important ones.
00:02:27.919 --> 00:02:29.840
And it's a global issue, uh Ivan.
00:02:30.240 --> 00:02:31.919
It's an issue even in Ireland, as we see.
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We have a greying population in this country, the the pensioner support ratio is shrinking, so there's going to be less people working to support the state pension.
00:02:41.360 --> 00:02:44.000
So it's demographics is becoming more and more important.
00:02:44.159 --> 00:02:44.960
Are we getting to that?
00:02:45.280 --> 00:02:51.199
Interestingly, in the series of interviews, this guy seems to have had a big personal influence on you.
00:02:51.280 --> 00:02:51.840
Tell us about that.
00:02:52.080 --> 00:03:03.520
Yeah, so I I've taught an MBA class in Dublin for maybe eight, seven or eight years, Ivan, and all my students know who Professor Robert Gordon is because it's You plagiarized all his best stuff, is that it?
00:03:03.599 --> 00:03:04.000
Yes, actually.
00:03:04.159 --> 00:03:04.479
Yeah, yeah.
00:03:04.560 --> 00:03:06.080
Don't tell anyone though, okay?
00:03:06.240 --> 00:03:10.400
So he's got a very famous TED talk where it's only 13 minutes long.
00:03:10.479 --> 00:03:15.919
I'll put it in the link, but it's very interesting in terms of the four structural headwinds that we mentioned earlier.
00:03:16.080 --> 00:03:30.639
Um, but he really talks about how uh the inventions of the past hundred years will never be replaced, you know, like electricity, underwater uh sewer, sanitation, the eradication of airborne, waterborne diseases.
00:03:30.800 --> 00:03:35.280
You know, we got the iPhone, but you can compare that to the combustion engine, for example.
00:03:35.439 --> 00:03:36.560
So it's fascinating.
00:03:36.879 --> 00:03:42.560
He also majorly features as a macroeconomist in the relationship between debt and inflation.
00:03:42.800 --> 00:03:44.479
Yeah, so debt is another headwind.
00:03:44.560 --> 00:03:49.360
Okay, he talks about the unsustainability of debt and the law of diminishing returns.
00:03:49.520 --> 00:04:02.080
So, again, I mean, uh the no there's no surprise that we're looking at a big problem in the US in terms of debt, but he frames it in terms of looking at productivity in in relation to too much debt, you're not going to grow.
00:04:02.400 --> 00:04:06.879
Well, take a look at uh this interview now between Dr.
00:04:07.039 --> 00:04:13.919
Bob Gordon from Chicago, Northwestern University, and Alan, and we'll have a little chat again afterwards.
00:04:14.319 --> 00:04:22.639
Okay, so joining me now, I'm delighted to say, is Professor of Social Sciences and Economics at Northwestern University, Professor Robert C.
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Gordon.
00:04:23.759 --> 00:04:31.279
Um, Professor Gordon will be well known to many listening and viewing on um the podcasts and in YouTube.
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He is the author of numerous books, most famously, probably The Rise and Fall of American Growth, published in 2016, uh US Standard of Living Since the Civil War.
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In 2016, he was also voted one of the 50 most influential economists.
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And it's in it's important to say, I suppose, many of my own students have seen Professor Gordon's TED Talk, which he gave and discussed his famous thesis about US productivity.
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Professor Gordon, how are you?
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Uh great to be here.
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Looking forward to your uh questions and our discussion.
00:05:04.800 --> 00:05:11.839
Okay, so I'm gonna start off with uh the whole notion of growth and productivity.
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And I know that GDP gets meshed in into that discussion, but there are gonna be some um people listening to this that maybe don't have a background in finance and economics.
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So can we how do we how do we decipher between growth and productivity?
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Growth growth refers to the growth of the economy's total output.
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Uh that is the total of all the goods and services that are produced uh in an economy in a given time period, like a quarter of a year or a full year.
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So for the United States, that's$30 trillion in a year.
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Uh for China, it's about$20 trillion.
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For the European Union, it's about the same.
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Um and then productivity is the amount of output, which we just described, divided by the number of hours of work.
00:06:03.519 --> 00:06:10.160
Uh so the more output you get out of a given hour of work, the higher your uh productivity.
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And over the years, uh through automation, uh machinery, uh inventions, electronics, the world has learned how to make more output out of a given hour of work.
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And so productivity uh has gone up.
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And uh for instance, in the uh in the United States, productivity is roughly seven times higher than it was a hundred years ago.
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Um and historically, productivity grows at sometimes one percent a year, sometimes two percent a year.
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And just to keep that in mind, um for if something double something grows at 1% a year, it doubles in 70 years.
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If something grows at 2% a year, it doubles in uh 35 years.
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And so we've had almost 100 years uh for uh since the late 1920s.
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And so it's not surprising that with 2% growth, we would have gone up by a factor of seven or eight over that 100-year time.
00:07:15.439 --> 00:07:17.360
So uh things can change a lot.
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From the Roman Empire through the middle of the 18th century, there was no economic growth at all.
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Um it's very hard to figure it out, but the uh the best guess is that productivity grew only at about 0.1% uh over that 2,000-year period, hardly at all.
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Uh and then uh things took off in the middle of the 18th century, starting in Britain with the steam engine, the mechanization of uh textiles and fabrics and weaving, uh, and then on through the railroad and the great inventions of the late 19th century, of which the two most important were electricity and the internal combustion engine.
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And then we had the electronic revolution of the late 20th century, uh, which has brought us to where we are now.
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It's it's very interesting that you say we had centuries of zero growth, and all of a sudden, just in the last 200 years, we've had this huge ex exponential growth through the various uh industrial revolutions.
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How much uh importance do you place on the Enlightenment era in relation to uh the driving force behind uh the first industrial revolution in in in in the UK?
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I mean, what was the catalyst that uh s uh lit the spark, I suppose, for the start of this exponential period of growth?
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Uh it was a combination of um elements that began to appear in in Britain in the uh seventeenth century, uh the uh growing respect for science, uh the um governance of uh uh Britain that gave free reign to scientific inquiry.
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And uh as several of my economic history colleagues have emphasized, uh the actual carrying out of the invention of the steam engine and the uh textile machinery required skilled engineers.
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And there just happened to be enough skilled engineers in Britain to figure out how to get the steam contained inside a vessel and make that steam engine uh possible.
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Uh it's not entirely clear, although one of my colleagues, Joel Moch here, is the world's greatest expert on this topic, um, it's not entirely clear why that particular combination of talents emerged first in in Britain.
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But of course, once it took off, it was copied everywhere.
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And the British, as we know, lost their lead as the uh highest productivity uh economy uh as early as around 1870, 1880.
00:10:02.159 --> 00:10:08.480
And you you you have uh spoken in previous interviews about the tree technological revolutions.
00:10:08.559 --> 00:10:12.399
Uh can you speak to those briefly, please, just to frame it out?
00:10:12.960 --> 00:10:13.120
Yeah.
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Well, the first industrial revolution we were just talking about, uh primarily uh the invention of the steam engine, which made possible the railroad and steamships, uh, which of course revolutionized travel, uh, going from the wind to the powered motor on the seas made it possible to bring uh vast numbers of immigrants from Europe to uh the United States in the late 19th century.
00:10:39.120 --> 00:10:50.480
The second industrial revolution was the most important uh because it's it's pretty clear now as we enter the post-computer age that the invention of electricity was really critical to everything.
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It was critical for machinery, it made possible home appliances, it made possible uh electric light, uh, air conditioning, uh, everything we live with today.
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We all know what a disaster it is when our power goes out.
00:11:03.120 --> 00:11:17.200
Uh so electricity, numero uno for the second industrial revolution, uh invented uh with the electric light invented in the uh autumn of 1879 by Thomas Edison in New Jersey.
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And at the same time, uh Carl Benz in Germany invented the first workable internal combustion engine uh in 1879 as well.
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Uh then adding to that were uh chemicals pioneered in Germany, uh entertainment and communications like uh the phonograph, the telephone, the telegraph, uh the uh movies, and then in the early 19th century radio, uh early 20th century radio.
00:11:47.440 --> 00:12:15.919
Um and then perhaps the most important of all, in terms of the everyday standard of living, in addition to electricity and light, was the invention of uh what we call urban sanitation infrastructure, running water, sewers under the ground, um elimination of the outhouse, uh, indoor bathrooms, which became ubiquitous in urban America by the 1920s, but took longer in uh rural America, as did electricity.
00:12:16.320 --> 00:12:24.639
The second industrial revolution made it possible for the United States to have 50 years of 3% productivity growth.
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I remember I said sort of 2% was normal, um, but we had 50 years of 3% productivity growth between uh 1920 and 1970, and then things slowed down.
00:12:35.120 --> 00:12:38.559
The third Industrial Revolution uh was very strung out.
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It started with the mainframe computers after World War II, and then the invention of the personal computer, which really was the uh turning point in uh the early 1980s.
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Then by uh 1995, with the introduction of the web browser, and with it e-commerce, search engines, flat screens, broadband, and everything that we associate with uh the modern electronics.
00:13:04.399 --> 00:13:07.360
Um that was pretty much over by 2005.
00:13:07.519 --> 00:13:13.279
By 2005, we were operating uh pretty much uh the way you and I are today.
00:13:13.440 --> 00:13:41.279
Uh but then uh came in 2007 came the smartphone, which is of course uh another revolution, not so much for productivity, but for everyday life and uh the ability of everyone, virtually everyone in the world now to carry a powerful pocket computer in their pocket that would have been only a dream uh as recently as, say, uh 1990.
00:13:41.519 --> 00:13:58.159
Uh we don't count that personal phone by itself as a as a separate industrial revolution, but it has been leading into what people have been calling for many years now the fourth industrial revolution of artificial intelligence.
00:13:58.320 --> 00:14:02.639
And we probably should talk about that separately as a separate topic.
00:14:03.200 --> 00:14:12.399
Yeah, I know it's it's very interesting to get the context of the evolution and technical advan uh uh advance, particularly over the last century.
00:14:12.639 --> 00:14:22.720
I think you refer to that period from the 1920s as as the as the miracle century in relation to the level of exponential uh technological growth.
00:14:22.960 --> 00:14:34.000
In relation to uh back in 2016 when you published the rise and fall of American growth, you already had a huge body of research done, uh peer-reviewed uh research.
00:14:34.159 --> 00:14:47.360
What were you looking at back then, and I presume in the previous decade, to give you pause for concern that perhaps peak growth, peak technological or peak peak productivity was it was in in the US?
00:14:47.519 --> 00:14:50.159
What what were what what were you seeing?
00:14:50.799 --> 00:15:06.720
Uh as of 2016, or the book was was that part of the book was written in 2014, uh, we had already had almost a decade of slowing growth from the third industrial revolution.
00:15:06.960 --> 00:15:25.039
The the timing was that we had that 3% growth for 50 years up to 1970, then we had 25 slow years of about 1.5%, then it speeded up again to 3% after the uh just about the same time as the web browser was introduced in 1995.
00:15:25.200 --> 00:15:30.240
So we had a great decade from 1995 to 2005, but then it went away again.
00:15:30.399 --> 00:15:38.000
And so my insight was to say, oh, look, the previous Industrial Revolution, we had great growth for 50 years.
00:15:38.159 --> 00:15:41.039
The computer only gave us great growth for 10 years.
00:15:41.200 --> 00:15:43.600
That's a five to one difference.
00:15:43.840 --> 00:15:56.799
So that was enough to uh lead to the idea that the previous inventions just were more important, that they had more effect in spinning out this 50 years of growth.
00:15:57.039 --> 00:15:58.320
And so where are we now?
00:15:58.559 --> 00:16:02.879
Growth for the last 20 years, since 2005, in the United States.
00:16:03.039 --> 00:16:08.639
And I think it's a little too complicated for us to go and start comparing Europe with the United States.
00:16:08.799 --> 00:16:10.000
That's a different issue.
00:16:10.159 --> 00:16:19.120
But the United States is sort of at the technological frontier, and so we um we can focus on on that.
00:16:19.519 --> 00:16:23.519
And the average growth rate in the last 20 years for the U.S.
00:16:23.840 --> 00:16:30.720
is at is back down to around 1.5 percent, just about the same as it was from 1970 to 1995.
00:16:31.120 --> 00:16:46.960
So looking broadly, over the last century, we had a revolution that gave us 3% growth for 50 years, then we had 25 slow years, then we had 10 good years, and now we've had another another 20 slow years.
00:16:47.039 --> 00:17:07.279
So you put it all together and you gotta conclude that the great period is behind us and that what we're going through now, h however miraculous it may appear, is just not changing in as big a way as what we went through uh in the early part of the 20th century.
00:17:08.319 --> 00:17:19.200
In your fantastic TED talk, you mentioned the four headwinds, uh demographics, headwinds to growth, I should say, uh demographics, debt, education inequality, and technology.
00:17:19.359 --> 00:17:20.880
Uh, I'm not sure if I have those correct.
00:17:21.039 --> 00:17:22.559
Maybe you'll correct me if I'm wrong.
00:17:22.720 --> 00:17:26.480
Aaron Powell The first one about demographics, of course, is is well known.
00:17:26.640 --> 00:17:30.559
We have declining fertility, and that leads to an aging population.
00:17:30.799 --> 00:17:49.279
So um, as long as we have a fixed retirement age of, say, 65, then the share of the population that is retired and drawing on past saving is endlessly growing, and the share of the population that's working and providing the savings and providing the income is shrinking.
00:17:49.440 --> 00:18:05.440
So, of course, you have this greater and greater debt burden and growing insolvency of retirement plans, rising taxes on the working people to support the welfare and pensions of the older people.
00:18:05.839 --> 00:18:20.240
Uh and so that is a uh a source of declining well-being because it's a a sort of vicious circle just due to the consequences of lower fertility.
00:18:20.480 --> 00:18:22.559
So, how how is the government going to pay for that?
00:18:22.720 --> 00:18:24.240
Are they gonna go into debt?
00:18:24.480 --> 00:18:33.200
Uh going into debt means that uh there's more and more bonds for the existing uh savers to purchase.
00:18:33.440 --> 00:18:36.960
The government has to keep raising interest rates to induce people to buy the bonds.
00:18:37.039 --> 00:18:38.799
That's really the second headwind.
00:18:38.960 --> 00:18:46.480
Demographics and the growing number of old people is the first headwind, and then the uh growing pressure on the government.
00:18:46.640 --> 00:19:00.160
And you know, we we have uh now in the United States a ratio of debt to GDP or of 100 percent uh compared to about 40 percent uh 30 or 40 years ago.
00:19:00.319 --> 00:19:06.240
Uh and so that's gonna give us continuing pressure for higher interest rates.
00:19:06.400 --> 00:19:33.279
It's contributing to the housing crisis, that it's so expensive now for young people to buy houses, that this is changing the the whole nature of society with rising ages of marriage, rising ages of homeownership, uh declining uh fractions of people who are out on their own at age 30, and a growing fraction of people who are back living with their parents.
00:19:33.599 --> 00:19:41.839
So that's a sort of social malaise that combines the demographics and the and the debt debt, which leads to higher interest rates.
00:19:42.319 --> 00:19:56.799
Then we have uh inequality, whatever the growth in the economy per hour is, a larger share of it has been going to the top one or two percent, a smaller share to the bottom 90%.
00:19:57.759 --> 00:20:08.400
And that means that however well the economy is doing, the average person is not doing as well as the overall economy, because so much going to the to the people at the top.
00:20:08.960 --> 00:20:18.799
There are now, according to the latest number I read, there are now 2,500 billionaires in the world, of whom, uh of which a third are in the United States.
00:20:18.960 --> 00:20:25.200
So the United States has 4% of the world's population and a third of the billionaires, and a third of the millionaires.
00:20:25.519 --> 00:20:29.200
Uh so that's a sign, again, that inequality in the U.S.
00:20:29.359 --> 00:20:33.279
is just much higher than it is in most places.
00:20:33.599 --> 00:21:07.039
Another startling uh statistic that uh will interest your uh listeners in Europe is that the average income per person adjusted for inflation, this is real buying power, the average inflate uh inflation adjusted buying power in the United States is about 40 percent higher than the average uh EU country, but the median, the middle person is the same.
00:21:07.680 --> 00:21:10.160
There's that much difference created by inequality.
00:21:10.319 --> 00:21:22.480
So so much of America's uh GDP per person is going to people at the top that the middle person in the United States is no better off than the middle person uh in Europe.
00:21:22.799 --> 00:21:30.079
And in many ways, the uh the American is worse off because we have a lot of problems in the United States.
00:21:30.240 --> 00:21:37.519
You know, you hear about Europe falling behind, but wait till I tell you about some of the issues in the United States.
00:21:37.599 --> 00:21:40.400
You could consider these headwinds as well.
00:21:40.559 --> 00:21:43.920
But compared to the United to uh Europe, uh the U.S.
00:21:44.079 --> 00:21:45.519
has a much harsher climate.
00:21:45.680 --> 00:21:54.079
We have colder winters, we have hotter summers, we have more energy used for heating and air conditioning to keep a given uh room temperature.
00:21:54.319 --> 00:22:05.039
Uh we have many more people in prison uh for whatever reasons, both because there's more crime and because there may be uh harsher sentences.
00:22:05.200 --> 00:22:19.359
Uh and so uh when you look at what Americans are spending money on, uh we're spending a lot of money on prisons, we're spending a lot of money on energy to keep our cold climate warm in the winter and hot climate uh cool in the summer.
00:22:19.519 --> 00:22:28.640
Uh and those are things we have to spend that uh come out of our income that don't make us any uh better off compared to a European.
00:22:28.880 --> 00:22:46.640
So that's a lot of stuff about uh headwinds it's interesting the way the four headwinds kind of interact with each other and and particularly the one the one I forgot to mention, the fourth one, we had demographics, we had debt, the growing debt of the uh governments everywhere, we had inequality.
00:22:46.720 --> 00:22:49.119
I didn't mention the last one, which was education.
00:22:50.240 --> 00:22:57.440
Starting in the early 20th century, only about 10% of the population finished high school.
00:22:57.599 --> 00:22:59.440
This is again about the United States.
00:22:59.759 --> 00:23:04.400
By 1970, 80% had completed.
00:23:04.559 --> 00:23:17.359
So we had this that was one of the reasons we had so much productivity growth in the in the 20th century is that we we went from a population that almost nobody finished high school to a population where almost everybody had finished high school.
00:23:17.519 --> 00:23:28.880
And gradually the sheer finishing college has gone up from maybe 5% at in 1900 to about 35, 40% today.
00:23:29.039 --> 00:23:30.160
But that's plateaued.
00:23:30.240 --> 00:23:43.759
That stopped growing and now we hear about more and more of the four-year college graduates not being able to get college qualified jobs.
00:23:44.000 --> 00:23:54.880
The people who are winding up as taxi drivers, as baristas at Starbucks, even though they have college degrees and this has become even more acute in the last two years.
00:23:55.119 --> 00:24:12.480
I was just reading a a big article yesterday about the the golden career of being a PhD in economics is no longer a guarantee of getting an academic job in the university where you'll get a 10-year professorship.
00:24:12.880 --> 00:24:18.799
More and more of the new PhDs coming out of economics departments are finding it hard to get any job at all.
00:24:19.039 --> 00:24:30.720
And the unemployment rate of American four-year BA graduates is about the highest it's ever been.
00:24:31.680 --> 00:24:38.640
So that overlaps a little bit with artificial intelligence, but it's been going on for longer than just the last two years.
00:24:38.799 --> 00:24:43.920
You know, we can date the large language models back to November 2022.
00:24:44.079 --> 00:24:52.240
So we're now three and a half years into the era of the large language model chat GPT kind of kind of AI.
00:24:52.480 --> 00:25:02.720
But this malaise of college graduates not finding college level jobs goes back, I mean I was writing about that 10 years ago so it's just getting worse.
00:25:02.960 --> 00:25:28.160
And that means that the contribution of growing education to productivity which has been estimated as in the 20th century as much as a third, a quarter, even half a percent per year has gone away if if we zoom out of the United States for a moment and just look globally, are we in a perfect storm then in terms of productivity global growth?
00:25:28.240 --> 00:25:35.839
Because we've got demographic like the US isn't so bad in demographics versus Asian countries obviously and the likes of Germany in Europe.
00:25:36.000 --> 00:25:40.160
But then we've got debt sovereign debt uh you know and I I interviewed Dr.
00:25:40.240 --> 00:26:10.000
Lacey Hunt recently and he's talking about the law of diminishing returns and when you when you abuse one of the factors of production and cent governments have absolutely abused uh the debt debt funding so if if we've got problems with demographics problems with debt um problems with human capital because the old system of education doesn't work how does this play out then if you were to update your thesis on productivity?
00:26:10.640 --> 00:26:13.920
As you suggested let's broaden this out to the rest of the world.
00:26:14.160 --> 00:26:38.000
The US, the EU and Japan, and the more advanced countries in Asia, we have about a billion people but we have about eight billion people in the world so only one eighth of the people in the world are going through what we're describing of um aging population demographics and so on.
00:26:39.119 --> 00:26:48.000
We have India and China which together are another almost 3 billion people then we have the rest of the world which is another 4 billion people.
00:26:48.720 --> 00:27:08.079
So all those people in China, India, Asia and Africa, Latin America are still way behind the curve in adopting the technology and the kind of services that we take for granted in the developed 1 billion of the world.
00:27:08.240 --> 00:27:13.680
And they're still growing I mean India is growing at 6 or 7% a year.
00:27:14.079 --> 00:27:24.240
China still miraculously maintains a growth rate of 4 or 5% a year even though you'd think that they would be reaching a mature level.
00:27:24.960 --> 00:27:47.680
China of course is now much feared as catching up with the United States at least in the United States we fear that according to the latest evaluations Chinese scientists are now ahead in something like 50 out of 60 different areas of inquiry whereas 20 years ago the United States was ahead in 50 or 55 out of the 60s.
00:27:47.839 --> 00:27:50.319
So China is catching up.
00:27:50.480 --> 00:27:58.720
So there's a lot of growth going on and there's a lot of just basic second industrial revolution kind of stuff.
00:27:58.799 --> 00:28:05.279
I mean a lot of Africa still does not have reliable electricity so they're a century behind.
00:28:05.519 --> 00:28:53.920
So when we talk about the impediments to growth in the 1 billion of the rich countries uh that does not mean that there aren't lots of opportunities uh for growth in the rest of the world and of course we know it would take us forever in in this conversation to talk about the particular problems of why Africa has been left behind, why some countries in Asia seem to be better at manufacturing than others and have had export-led booms like uh South Korea, Singapore, why India has gradually been adding to its service prowess in IT services, gradually starting to um manufacture more, Bangladesh being the home of the world's textile industry now.
00:28:54.319 --> 00:28:58.079
So every store every country or every region has a a different story.
00:28:58.240 --> 00:29:04.880
But many of these headwinds that we're talking about have not arrived yet in much of the world.
00:29:06.160 --> 00:29:12.240
In terms of talking about growth, it's very difficult to have that conversation without talking about energy.
00:29:12.480 --> 00:29:33.119
I mean you could argue that the abundance of energy the ability to extract energy over the last century has absolutely contributed massively to to the um to the economic growth what what about the outlook for energy in relation to growth?
00:29:34.319 --> 00:29:49.200
Are we there's discussions that peak shale oil in the US what's the real truth around uh fossil fuels in the Middle East and we hear lots of focus on nuclear energy now on the back of the Ukraine-Russian war.
00:29:50.559 --> 00:30:15.039
Just any any thoughts on how energy is factored into your calculations regarding growth I take a a pretty different attitude toward uh global warming energy environment uh than the typical European who is uh seems to be dead set on the arbitrary year of 2050 to have zero emissions.
00:30:15.279 --> 00:30:19.200
I think we're we're steadily realizing that's not possible.
00:30:19.680 --> 00:30:26.559
We know that it's impossible to uh run the world's aviation industry without uh jet engines.
00:30:26.799 --> 00:30:31.920
There's no technology in sight uh to have the air transport industry converted.
00:30:32.160 --> 00:31:41.839
We know that there is a massive restructuring of the entire world's uh buildings of trillions and hundreds of trillions of dollars of investment and buildings that are built for fossil fuel heating and air conditioning instead of uh electric uh electricity based heat pumps uh we know that we don't have the electric generating capacity for the world's vehicles to all be electric, for the heating uh and industry to all be electric, um nonpolluting um my attitude toward this is that technology is steadily reducing the cost of solar energy and if instead of putting massive amounts into subsidizing solar and wind and penalizing the production of natural gas I mean granted coal is out uh except in China uh oil is a bad uh but natural gas has half the polluting uh emissions that coal and and oil does so it's sort of a transition.
00:31:42.480 --> 00:31:52.799
Um eventually there's enough land in the world to have the whole thing papered over with solar panels and eventually we'll get our electricity from that and it'll be very low cost.
00:31:53.039 --> 00:32:03.279
Just as the price of computing has steadily gone down for the last 50 years I expect the price of solar panels and solar energy will uh continue to go down.
00:32:03.519 --> 00:32:05.519
But that means we just need to be patient.
00:32:05.759 --> 00:32:35.519
Instead of the arbitrary 2050 date maybe it's more realistic to have 2060, 2070, why should we uh put all these barriers to growth that are in Europe uh through prohibition on this, shutting down nuclear that, as in Germany, uh when uh if we take a little bit more relaxed attitude and just let technology uh take care of it, uh it'll take longer.
00:32:35.680 --> 00:32:56.160
Uh but you know another another issue that involves that division of the world population between the 1 billion in the rich countries and the uh seven billion in the poor countries, those 7 billion people are not going to give up on the chance to become developed just to avoid global warming.
00:32:56.400 --> 00:33:03.359
They're going to want to have their buildings with heat or air conditioning just like we do.
00:33:03.680 --> 00:33:05.039
And there's seven billion of them.
00:33:05.200 --> 00:33:15.599
I mean a lot of them are in China and India but there are a lot of people in the rest of the world who are still waiting to catch up to our industrial revolutions that have that have already happened.
00:33:15.920 --> 00:33:38.480
So my conclusion is that uh it's futile and economically destructive to have arbitrary uh impediments to growth that are based on a given year chosen out of the sky like 2050 for zero admissions.
00:33:38.799 --> 00:33:42.480
And you know we could have arguments about that back and forth.
00:33:42.960 --> 00:33:50.000
But there's not you know we're gonna have global warming for a long time because of that other 7 billion people catching up.
00:33:50.240 --> 00:33:57.839
And no matter how great our efforts in the developed countries um I mean it gets to be ridiculous.
00:33:58.000 --> 00:34:52.880
Here in my hometown of Evanston Illinois they have banned gas leaf blowers and forced the landscape people to have electric leaf blowers which are half as good all because they you know there's no pollution that's going to affect global warming out of a few leaf blowers in a suburb in America in the context of the world uh and a lot of this stuff is just uh destructive of Northwestern University next week we turn it to AI Professor Gordon has actually bet Stanford's Eric Blinjofferson that AI will not deliver the productivity boom many are predicting so who's right next week in part two we discuss AI productivity the future of work and whether this really is the technological revolution we've been promised.
00:34:53.119 --> 00:35:02.800
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00:35:03.039 --> 00:35:14.320
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