Friday, November 21, 2014
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Crise de l'innovation ou crise financière ?

CAMBRIDGE – La période de faible croissance de cette année va sans doute se prolonger en 2013, aussi s'interroge-t-on de plus en plus sur ce que réservent les prochaines décennies. La crise financière mondiale a-t-elle été un simple accroc - certes ravageur, mais momentané dans la croissance des pays avancés - ou bien a-t-elle mis en lumière un problème plus profond ?

Quelques observateurs dont Peter Thiel, l'investisseur dans le secteur des nouvelles technologies, et Garry Kasparov, le militant politique et ancien champion du monde d'échec, ont donné récemment une interprétation très radicale du ralentissement économique. Dans un livre qui va sortir prochainement, ils écrivent que l'effondrement de la croissance dans les pays avancés n'a pas pour seule cause la crise financière, mais qu'elle est avant tout la conséquence d'une longue stagnation en matière de technologie et d'innovation. Ils en concluent que si les pays avancés ne modifient pas profondément leur politique en matière d'innovation, ils ne parviendront pas à une augmentation durable de leur productivité.

L'économiste Robert Gordon pousse cette idée encore plus loin. Selon lui, la phase de progrès technologique rapide qui a suivi la Révolution industrielle serait une exception de 250 ans au cours de la longue stagnation qui caractérise l'Histoire humaine. Il laisse entendre que l'innovation technologique actuelle ne représente pas grand chose, comparée à l'introduction de l'électricité, de l'eau courante, du moteur à combustion interne et d'autres innovations qui datent de plus de 100 ans.

J'ai récemment évoqué la thèse de la stagnation technologique avec Thiel et Kasparov à l'université d'Oxford, ainsi qu'avec Mark Shuttleworth, pionnier du logiciel libre. Kasparov m'a demandé non sans ironie ce qu'un produit comme l'iPhone 5 ajoute à nos capacités et il a souligné que la plus grande partie de la science qui sous-tend l'informatique moderne date des années 1970. Thiel a défendu l'idée que les mesures de relâchement monétaire et de stimulation budgétaire hyper-aggressive destinées à combattre la récession ne visent pas la bonne maladie et sont de ce fait potentiellement très dangereuses.

Ce sont des idées intéressantes, pourtant il est presque indiscutable que le ralentissement de l'économie mondiale résulte d'une crise financière systémique sévère et non d'une crise de longue durée en matière d'innovation.

Je ne néglige pas ceux qui croient que les sources de la science se tarissent et jugent sans grand intérêt les derniers gadgets et les dernières idées à la mode qui servent de locomotive au commerce mondiale. Mais la grande majorité de mes collègues scientifiques des grandes universités s'investissent avec passion dans des projets en matière de nanotechnologie, de neurosciences ou d'énergie, entre autres domaines innovateurs. Ils pensent qu'ils changent le monde à un rythme rapide. Franchement, quand je considère la stagnation en tant qu'économiste, je suis préoccupé de constater que les monopoles peuvent étouffer des idées et que la récente prolongation de la validité des brevets exacerbe ce problème.

La récession récente tient avant tout au boom mondial du crédit qui a conduit ensuite à sa restriction drastique - c'est une évidence. La profonde ressemblance de la période actuelle avec les lendemains des dizaines de grandes crises financières systémiques du passé n'est pas due au hasard et elle n'est pas seulement qualitative. Les marques de la crise sont évidentes, qu'il s'agisse du chômage ou des prix de l'immobilier, en  passant par le creusement de la dette.

Il est tout à fait possible que le boom du crédit lui-même tienne à l'excès d'optimisme qui a entouré le potentiel de croissance lié à la mondialisation et aux nouvelles technologies. Ainsi que Carmen Reinhart et moi-même le soulignons dans notre livre This Time is Different, ces phases d'optimisme accompagnent souvent les booms du crédit et ce n'est pas la première fois que la mondialisation et l'innovation technologique jouent un rôle central.

Attribuer à la crise financière l'interminable période de ralentissement économique que nous traversons ne signifie pas qu'il n'existe pas d'autres effets à long terme, dont certains s'enracinent dans la crise elle-même. Le resserrement du crédit frappe de plein fouet les start-ups et les petites entreprises. Beaucoup des meilleures idées et des meilleures innovations venant de ces dernières, plutôt que des grandes entreprises établies de longue date, la contraction prolongée du crédit aura des conséquences sur la croissance à long terme. Parallèlement le savoir-faire inutilisé des chômeurs s'érode. Il en est de même pour beaucoup de jeunes diplômés qui ont de plus en plus de mal à trouver un emploi qui corresponde à leurs qualifications, ce qui affecte leur productivité ainsi que leurs revenus.

Leur caisse étant quasiment vide, les Etats remettent à plus tard des projets d'infrastructures pourtant urgents, ce qui va entraver leur croissance à moyen terme. Même en faisant abstraction de l'évolution de la technologie, d'autres tendances à long terme (telles que le vieillissement de la population dans la plupart des pays avancés) affectent les perspectives de croissance. Même s'il n'y avait pas la crise, il faudrait procéder à des réajustements douloureux en matière de retraite et d'assurance-maladie.

Considérés tous ensemble, ces facteurs permettent de penser que la croissance continuera à évoluer un point de pourcentage en dessous de la normale pendant encore une décennie - si ce n'est plus. Si l'hypothèse Kasparov-Thiel-Gordon est exacte, la perspective est encore plus sombre, et la nécessité de réformes encore plus urgente, car la plupart des plans pour sortir de la crise et parvenir à une reprise économique durable reposent sur l'idée que le progrès technologique va susciter une hausse de la productivité.

Il faut donc répondre à une question : la principale cause du récent ralentissement est-elle une crise de l'innovation ou une crise financière ? Peut-être un peu des deux, mais le traumatisme économique des dernières années est avant tout la conséquence de la crise financière, même si pour y remédier il faut s'occuper simultanément des autres obstacles à une croissance durable.

Traduit de l’anglais par Patrice Horovitz

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    1. CommentedStephane Levasseur

      Mr. Rogoff,

      I agree with your idea but I suggest a simpler way of explaining it:

      In developped countries, 70% of the economy are services provided to humans by humans. Today's technological innovations are thrilling but are of less economic significance because they won't lead to a major increase in economic output. Science and technology can mainly improve the primary and secondary sectors of the economy. Its impact on the third sector (services) is limited.

      Growth in a service economy is achieved by improvement of human capital: education, research in social sciences, economics, psychology, etc. The economy will grow if we have better teachers, managers, policy makers, economists...

      What do you think of my view?

      Stephane Levasseur

    2. CommentedNathan Coppedge

      I would like to avoid the extensive use of mere words to symbolize what may be highly invisible and transparent factors, which may ambiguously represent both problems and solutions. We must realize that the word 'problem' is just a word, as useful as it seems. If increasingly global needs are provided for, this is a solid sign for GDP, in real terms if not in statistical terms.

      On the subject of Moore's Law-type thinking, I suspect that in the real economy what we know as technologies are only a small part of industry. Manufactured goods are a resource whether they are purchased or given away for free. Perhaps industry (real industry, which does not exist for most of us) should use its cheap production advantage to boost the middle class. Then a means can be found to interpret material resources as viable incomes. I suspect this has been done in the past. At any rate, it is likely that there has been too much emphasis on small-scale production, which dishonestly projects that all industries have high production costs. I suspect this is not the case. When considering invisibility, and the existence of cheap production for a select group, then (even in this developed case) it seems that Rogoff is right, that debt is the real factor that remains. Even with an exponential technology production, there is a reliance on pre-existing industries, which essentially define what is real and false, scalable to per-capita income, not GDP.

    3. CommentedBenjamin Hawkins

      Mr.Rogoff briefly touched on the issue of Intellectual Property Rights, which is surely a policy domain that requires closer scruitiny -- for a number of reasons. Perhaps most importantly in the context of this discussion, however, is the imposition of stringent TRIPS and TRIPS-plus IRP conditions on developing countries such as China and India through the WTO and free trade agreements. Such short-sighted policies ensures that the creativity and innovative capacities of over 2.5 billion people in these two countires alone is not being fully utilised.

    4. CommentedCher Calusa

      I agree with the economists quoted in this article in the respect that we have been treating the wrong disease. It's interesting that they believe that there is lack of innovation in the secular technology. Actually, there has been tremendous growth in the military technology sector . So by the reasoning cited in this article, we can draw a conclusion by artificially dividing the military economy and the general economy? This makes no sense whatsoever. These two parts of the world economy are not sequestered into some isolated scenario. There is no stagnation in innovation. We are simply not aware of every advancement in science and technology that is proceeding without the knowledge of the general public.. Our "disease" is that we imagine separations and situations that don't exist in reality and we formulate a theory or opinion and consider it valid, regardless of tested success. These fabrications come about due to our skewed perception of reality. An honest examination of the natural universe within which we live yields the same results repeatedly from the microscopic to the macroscopic levels. It's a fact that all life, and thus activities by living beings, coexist in a huge reflexive system. When considering every stable and unstable variable in living systems, progression and regression follow natural laws of cause and effect that tend to create balance. The closer we come to mimicking the natural balance among all living systems, the better quality of life and growth we'll have on every level. What we see repeatedly in healthy living systems is a level of cooperation that tends towards the integrity, sustenance and growth of each part of that system. Instead of imagining that we've created some new method of growth and balance that exists in a vacuum and then calling it "The Economy", we should begin understanding that mutual cooperation and development between and among all people and groups participating on this planet will yield predictable and consistent results. The natural economy has no deficits and is never stagnant. We create all deficits through our ignorance of the reciprocal system of which we are a part.

    5. CommentedHenrik Ørsted

      The financial crises almost certainly does not have a single cause, but it certainly has nothing to do with a lack of innovation. Innovation cannot do away with the axioms of physics. They are here to stay, even though in the 1950ies there were science fiction artists who predicted that we would by now drive hovering cars without wheels. The problem of the financial crisis is in my opinion a total different one: namely the problem of Big Data and the incapacity of the players in the financial industry to be good at mathematics. Financial times series, Markov models are models brought up for convenience not having to crunch the real numbers. Every statistics package has integrated these models and even they are heavily used in physics, which in my opinion should be a rigid scientific discipline, they might not be valid. We have to stop to map our imagination onto mathematical models, they might lead to severe errors of judgement and impair our future substantially. We should rather place our hopes in a better mathematical education, transparence and accept that humanity is constrained my its physical boundaries.

    6. CommentedKen Fedio

      Rogoff isn't saying what he really thinks. He knows that this economic epoch is ending; not with a bang, but with a whimper. As for technological innovation: it only contributes to economic growth if it raises productivity AND living standards. The benefits of techadvan are so unevenly distributed that they are an impediment to general socio-economic advancement . Ask one billion Chinese ; or 100 million Africans; or 50 million Americans.

    7. CommentedAndrew Purdy

      No one who has commented on this article seems to "get it". The big innovations of the 19th and 20th century - electricity, powered machines, oil, petrochemicals, engines, flight, etc... were all about the ability to generate and utilize energy. Energy is required to have real economic growth. Money is nothing but a claim on useable energy. Current innovations in electronics, nanotech, etc.. are mostly about the manipulation of information and to some extent using energy more efficiently, but do not add much to the supply of energy or enable physical transformations to take place on a larger scale. Continuation of exponential growth requires ever greater sources, utilization, and transformations of energy, and the science to do this does not exist right now. As the fossil fuel era winds down to a close, one should expect more and more stagnation, and that stagnation will continue until either the energy of the sun or the full mc^2 of matter can be economically extracted and utilized. We could be in for centuries of stagnation unless Science comes up with some really radical breakthroughs.

    8. CommentedSuhan Gurer

      I think the main point here is not innovation but invention. We have been innovating a lot, but inventions or crucial ones at that are less in numbers.

      However, trying to create a make up for the current crisis based on lack of crucial scientific advances is in reality downplaying the blind optimism of the finance world which led us to the crisis in the first place.

      Throughtout the history, it has been debated that science has come up to its boundaries tons of times. Every time something came up and changed the world. No need to run around shouting we are at a dead end.

    9. CommentedCarol Maczinsky

      Innovation drives through challenges. The trick is for an economy to set itself challenges, such as to lower the consumation of energy and switch to renewables. Also disaster relief and protection are interesting endevours. It is interesting to see the example of Japan, an economy constantly challenged by natural disasters and natural constraints.

    10. CommentedCiril Bosch

      Mr Rogoff,
      I am surprised at such a piece, supported by such poor arguments.

      Do you really believe the question is "what does an iphone 5 add to our capabilities?" If so, I would suggest to have a look at pictures of Mogadiscio, and tell me what is surprising about them (hint: it has to do with cell phones...not necessarily iphone 5).

      I suggest you check the at&t campaign "you will" from the 90's (http://alturl.com/h78f9). It is hard to argue the technological stagnation idea after seeing how much more productive our tools are compared with just 10 years ago.



    11. CommentedJohn Brian Shannon

      Hi Kenneth,

      Fascinating piece.

      Economics, like democracy -- is always a 'work in progress'.

      There are no perfect economies and there are no perfect democracies.

      Each generation makes its mark to further protect union and enhance the economic realization of that union.

      Landing men on the Moon directly correlates with the invention of the printing press -- no printing press, no huge, available and constantly-upgraded knowledge base for thousands of scientists over the centuries since then, for our generations to draw from. (Someone from NASA said this)

      This proves that all the technology since the printing press is derivative of that original invention.

      Similar could be said about the invention of the wheel, the invention and the capture for use, of electricity.

      All the inventions these days are merely derivatives of earlier inventions.

      Although the global knowledge base doubles every few years nowadays, it is all knowledge being added to the existing knowledge base. It is not new, it is additional knowledge.

      With regard to economic policy, the same applies. It is certainly in our best interests to improve on economic thought, building on what we already know to be true as demonstrated by the many empirical examples we have seen.

      We have gone from learning the basics (the abacus) to multiplication tables, graphs, algorithms, Algorithmic information theory, Computational complexity theory, Complexity economics and Predictive Behavior Modeling.

      Now that we have arrived in the 21st-century and our economic thinking has advanced, we find ourselves grasping for a better understanding of what we see going on around us, economically-speaking.

      All of the foregoing are useful and can explain what has happened, but does not predict well what will happen.

      What is missing is human psychology. Economics is a form of human expression, how people feel is how they spend, how they react to different stimuli affects the economy, in large ways.

      When human psychology becomes fully integrated into the economics classroom, we will have fulfilled our hopes to predict every future economic indicator to an exact degree.

      Then, adjusting policy, rates, regulations and economic theory to match those patterns will become light-years more accurate and efficient.

      In short, the entire economy revolves around human psychology, which continues to happen right in front of us.

      Bull market, bear market, recession, housing bubble, recession, financial crises, etc... are all directly a result of human expression.

      "So, is the main cause of the recent slowdown an innovation crisis or a financial crisis?"

      No. It is a lack of full and deep understanding by economists and policymakers of the human psychology expressed in the trillions of individual economic actions every day -- combined with a lack of ability by economists and policymakers to enhance the positive aspects of human action/reaction and preempt and marginalize the negative expressions of human economic action, in order to better perfect our economic union and the economic status of the people in that union.

      As always, very best regards, JBS
      http://jbsnews.com






    12. CommentedStéphane Genilloud

      Why does it have to be about productivity growth? Innovation can trigger a boost in demand as well. The post-war period was marked by fabulous inventions that everybody wanted to own, but with little effect on productivity: cars, fridges, tv-sets (they admittedly were invented long before, but technology suddenly made them affordable).
      Demand for individual goods may be saturated. Smartphones and the like are not going to make a long-term difference.
      If there is something demand for does not look saturated, it is public goods: education, transportation infrastructure, health care, etc. And that's what the governments save on. No wonder the economy is not taking off.

    13. CommentedShavonda Brandon

      The current state of the economy is clearly a result of crises. Although the idea of long term innovation droughts sound interesting, I would never credit changes in innovation for stagnation that is felt so severe and intrinsic. I feel that the crash brought us back to the realization the resources that we have are finite.
      I feel that the fundamental principles of economics are the culprits of this extended downturn: how we react and deal with scarcity and the uncertainty that coincidences with it. Sure, the goods have become more complex, but the same idea still applies. In the case of the most recent financial crises, the credit bubble was merely a result of people wanting more than what was presumably available. As prices of collateralized debt contracts spread farther and farther away from their true value, defaults ensued. Mortgages holders realized that they had taken on debt they could not handle, and the illusion of the indestructible financial market was gone.
      Our current economy seems as if it is suffering from an internal panic that is reminiscent of the fact that we can not demand everything we want with out consequences-- sometimes you have to watch the bubble burst.
      In all honesty, I feel that in order stimulate growth once again, we have to veil the reality of scarcity. Allowing credit market to increase again, and ignite a desire for new investment and innovation, in those who feel that economy is not in the proper state to initiate such a feat, but with awareness to the need for regulation and proper supervisor. Because it has become clear that facing the harsh reality over use of some resources, will promote only stagnating economy rather than a growing one.

    14. CommentedZsolt Hermann

      Unfortunately both options, innovation crisis or financial crisis still presume that humans are stand alone creatures, completely independent of the system they exist in, who can do whatever they want and any limit of growth and development is solely dependent on human ingenuity and activity.
      This attitude completely ignores that humans as any other living creatures are part of the vast, surrounding natural system, and that our biological body, and psyche is fully dependent on the same natural laws and principles as any other life-form.
      The only difference between humans and other animals is the ego, this self-centered conscious mind, that separated humanity from the rest of the system. Human evolution equals the evolution of the human ego.
      As a result today we fully believe we are outside of the system and we can do whatever we want.
      The global economical and financial crisis, the growing number of social and international conflicts, the loss of future direction all stems from this fact that we left the natural system and now drove ourselves into a dead end.
      If we want to continue evolution and develop in a positive way we have to return within the laws and principles of the natural system, first of all thriving for balance and homeostasis, and we have to change the intention, direction of exploration and innovation. Today we explore, study and innovate in order to stuff ourselves, to exploit and self serve regardless of the system, ignoring any long term prospects whether our conduct is sustainable of not.
      In the future any exploration, study or innovation has to happen with keeping the general laws of balance and homeostasis in mind, only act within the boundaries of natural necessity and available resources.
      By becoming partners with the system we would be able to get to know it much deeper than we do today, and our life quality, and our future prospects would be infinitely higher, entering a qualitatively much better existence.
      Humanity's superiority over other animals is the conscious capability of exploring, getting to know this natural system and adhering, adapting to it by free choice.
      The choice of going against the system is not a wise one, it caused the deepening crisis and can lead to much worse, even existential problems.

    15. CommentedJose araujo

      First, we are very far from our production-possibility curve and further away from the technology limits, so the nexus between the current situation and Innovation is nonexistente.

      Yet we are used to SUPPLY sidders arguments to try to maintain alive a theory that should be extinct long ago, a theory that persists on the full employment DOGMA, when everybody can see that e are very far from full employment.

      This isn't a supply problem, we are living in a DEMAND crises. People don't have money to buy stuff, let alone technological stuff.

      Without demand, there is little incentive for innovation, firms over-exploit their assets and technology cycles are broken.

        CommentedPaul A. Myers

        Excellent points. I would go further and state that increases in public infrastructure spending improve demand in the short term while improving overall productivity in the intermediate term and beyond.

        Let's postulate that public investment is the base for long-term secular improvements in productivity and rising standards of living. If so, then the whole "government is the problem" hypothesis is wrong.

        What the fiscal cliff debate shows is that our problem is the concentrated political power of the top .1 percent of the wealth distribution since they want to go AWOL on funding public investment.

        The selfishness of the .1 percent indicates they misunderstand the fundamental driver of economic progress for approximately the past two centuries.

    16. CommentedThomas Haynie

      Predicting scientific futures is a little like trading for a living. You can’t see the future with certainty. What we KNOW is that in the past men have claimed that Science has given us it’s all only to be dead wrong. Technological progress in general is increasing.

      I would lend weight to the Kasparov-Thiel argument in as much as the recent bubble essentially stretched beyond just housing as so many do. We may have seen now .. as was seen in the late 20’s a market boom fueled by simultaneous industry sources.

      I think the author is dead right about coming dramatic changes of Nano Technology, biotechnology, healthcare and energy.

    17. CommentedMarc Laventurier

      Mr. Thiel's notable contribution to innovation, PayPal, could have been written in COBOL without loss in translation, though it's philosophical motivation was at least in part to provide an escape route for capital from the sort of 'financial repression' visited on populations by regimes bent on devaluing their currencies. This project seems not to have been realized, and Thiel's ministrations now seem dedicated to the growth of the libertarian lumpenproletariat's social graph, that and making money.

      Mr. Kasparov's idealism seems deeper, and mated to the kind of mind that could well defend the greasy castle keep of the chess world, though innovation of a specialized sort left him playing black and feeling blue in 1997.

      Mr. Shuttleworth's innovation extended the highly technical and ethical contributions of Stallman and Torvalds to domesticate and distribute a free version of a powerful operating system, arguably the key kind of software running the world today. That is what growth and innovation really look like - for free - just add electrons.

      Prof. Rogoff could contribute to innovation by entertaining the idea that the recourse to limitless nominal economic growth may be more an artifact of capitalism than a unnecessary feature of human progress. His astute academic colleagues will be happy to explain it to him.

    18. CommentedFrank O'Callaghan

      Not all the past innovations were commercial propositions. Writing did not immediately generate a profit. Not much does immediately.

      The great problem for innovation today is that the criterion of immediate profit is the crucial one for investment in research. Would a cheap, non patentable, easily produced cure for cancer be a commercial proposition? Would a contagious viral agent that cured diabetes be an attractive business proposition? Clearly not! What about a nitrogen fixing, disease resistant, fast growing, easily propagated, nutritious plant that could grow in currently unusable environments?

      We need to fund innovation for the global benefits it has rather than the profits alone.

    19. CommentedJan Smith

      Slowdown in technology is not the only cause of secular stagnation or decline. Three other possibilities:

      1. Proliferation of lobbies, hence of monopolies and rents.
      2. Concentration of wealth, hence excess saving and volatile asset prices.
      3. Exploding population, hence exploding costs of plunder and pollution.

      Perhaps if we exclude these causes from our model, they'll vanish from the world?

    20. CommentedSergei Vorobiev

      I would prefer to attend a chess match between Rogoff and Kasparov rather than a celebrity economics debate between them. A sound suggestion for the next round of the Oxford University celebrity debates - pit Rogof against Mr. Burns or Mother Teresa. Well, they cannot do the latter than maybe they should pick Mike Tyson instead.

    21. CommentedProcyon Mukherjee

      I think there is a serious point that we are missing on innovation as path-breaking innovation seemed to have stymied. It is not necessary that for continuity of innovation, the pipeline of projects should deliver as path-breaking outputs as the steam engine. It is equally important that the benefit of innovation is passed on to a majority of people in a manner that makes economic sense for all stake holders. Innovation could be meaningless if it is locked in gains for a minuscule minority, thus we have a strong connection with the economics of innovation.

      Evidence is strong on both sides of the argument, that crisis emboldens businesses to innovate while the drive for profit maximization could be a strong deterrent if the market is swooned into believing the short-term thrust of ‘profit at all costs’.

      Procyon Mukherjee

    22. CommentedMatt Stillerman

      I completely disagree that today's innovations are of less significance than those mentioned. Consider:

      Each of the innovaitons mentioned has taken many years (or, in the case of running water, over 2000 years) to have its impact. So, we should be looking 50 to 2000 years down the road to see the impact of our current crop.

      Our electronics are truly remarkable. They are the most complex artifacts ever created by any civilization, by many orders of magnitude. Indeed our electronic "gadgets" by some measures are more complex than we are! Humans have some 30,000 genes. Perhaps there are three times as many regulatory sites in the human genome (a guess). But garden-variety microprocessors routinely have five orders of magnitude more transistors than that. And this explosion of complexity (i.e. Moore's Law) shows no sign of slowing down.

      For another example, consider current efforts to build quantum computers based on quantum entanglement. Purposefully entangled qbits represents a completely new state of matter that, as far as we know, has never existed before.

      Recent advances in biology and medicine have resulted in an unprecedented understanding of these subjects. Within just the last ten years we have gone from the comparatively primitive gene-protein equivalence view to a much broader understanding of biology that includes, for example epigenetics. Of course that starting point was, itself, a huge scientific triumph.

      Where will these scientific advances lead? We need to wait at least 50 years, and perhaps much longer to know the answer. For example, number theory, which currently secures a significant fraction of the world's wealth, was, until 35 years ago, an "impractical" branch of pure mathematics -- under development for roughly the last 4000 years!

      I have no doubt whatsoever that some subset of today's innovations will withstand this test of time, and will prove to be very significant to our civilization.

        CommentedStephane Levasseur

        Mr. Stillerman,
        In developped countries, 70% of the economy are services provided to humans by humans. Today's technological innovations are thrilling but are of less ECONOMIC significance because they won't lead to a major increase in economic output.
        Science and technology can improve the primary and secondary sectors of the economy. Its impact on the third sector (services) are limited. Increase in economic output is achieved by improvement of human capital: education, humanities research, etc.
        What do you think of my idea?

        Stephane Levasseur

        CommentedAndrew Purdy

        Real economic growth is not sustained by complexity. It is sustained by the ability to generate, transform, and utilize ever greater amounts of energy. Today's electronic devices have already passed the point of diminishing returns here. It does not matter how complex it is if it can't power engines, make things fly faster up to (and maybe beyond) the speed of light, move more earth, build buildings cheaper and faster, build colonies in space, or expand toward Galactic Empire. The only way exponential growth can continue indefinitely is to expand into the galaxy and beyond. If we remain confined to the earth with present day energy sources, economic stagnation is an absolute physical requirement.

    23. CommentedJules Pierre

      I am inclined to think that there is an absolute correlation between scientific/technical knowledge and GDP. In that case, as the pace of knowledge growth is to be measured in decades, and that knowledge can only pile up, year-scale GDP or growth downturns would be due to chaos in the economic system.

      This doesn't mean, though, that the long-term pace of innovation isn't slowing down.

      Another explanation for the current situation would be that the high growth rates of the second half of the XXth century have built a "growth debt" that must now be reimbursed and hinders current growth. Much of the economy 50 years ago wasn't durable. Now progress is needed even to maintain production levels, and increasing them requires even more of it. Global inequalities is another type of debt, one that used not to matter much but that became apparent with modern communication means and must now be serviced.

    24. Commentedarnim holzer

      I agree with Professor Rogoff but would also add that one needs to take a very long look at development cycles and periods of "darkness", for which the recent credit bust recession hardly qualifies, in order to diagnose the types of implications Thiel and Kasparov are submitting. Additionally, while many scientific discoveries are adapted and recycled for commercial use in the tradeable goods sector, the service side is less systematic and quantifiable. The service sector and the power it manifests in an economy can be overwhelming and high value added in its impact for global advancement. Unfortunately, service sector innovation is not something that can be formulaically developed but thrives in the free market of incentives and ideas. While the recent economic recession and its impacts have served to slightly diminish the focus on the next "new new thing" in services (as cost containment and efficiency have been of greater import), I believe service innovation will once again drive the US economy. One needs only think about when companies like FedEx, Starbucks, and Apple arose and how much of their genius was in service, not technology.

    25. CommentedJohn Nick

      In a competitive economy innovation can be a major factor in maximizing the profit. But the main goal is always maximizing the profit. Can innovation and profit be contradictory at some point ? Of course they can. This is the case of self-sacrifice profit. Meaning that short term positive balance is incentive enough to sacrifice the future. And if true competition is not active anymore (too big to fail positions on market) incentive for innovation is once more reduced.
      Such phenomena are already present. It's the case of banking and financial sector.
      We live an era of profit maximization and less market competition.

        Commentedradek tanski

        What incentive is there to invest for a founder when fast followers just take over the idea?

        Too many fast followers. No protection of founders.

        Until China is in a position where innovation would generate more then it gets from western business mimicry at a lower cost, no real point for the west to innovate.

        The little guys reckon why bother if 3 months down the road the opportunity is feeding asians.

    26. Commentedjim bridgeman

      I'm just extrapolating on an idea of Richard Roll's, but how about this? Financial values (including those deriving from real estate values) are validated by future incomes, and in a highly leveraged way by the growth rates of future incomes. A widespread realization that future income growth rates could not be expected to be large enough to validate financial values at the time is a plausible explanation for the financial crisis. Roll hypothetically attributed the realization that income growth rates weren't going to be as anticipated in financial values to emerging political circumstances (leftward drifts.) But maybe it was some sort of emerging realization of the innovation deficit?

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