Thread by @lindsey_brink

I’ve been doing a series of Substack posts on the causes of the long-term decline in dynamism. I thought I’d put the highlights in a long, continuing thread. I plan to do several more posts on this general theme, and as I roll them out I’ll add to this thread as well. 1/

Of possible interest to @RobAtkinsonITIF, @albrgr, @s8mb, @mishachellam, @patrickc, @tylercowen, @delong, @elidourado, @Scholars_Stage, @LettieriDC, @JimPethokoukis, @AlecStapp, @ATabarrok, @DKThomp, @atrembath, @swinshi, @danwwang, @calebwatney. 2/

I’ll start with my first essay in this series, “The Age of Stasis.” Here I discuss capitalism’s natural aging process: the richer we get, the harder continued growth becomes due to exhaustion of low-hanging fruit. 3/ brinklindsey.substack.com/p/the-age-of-s…

The transition from poverty to mass affluence involves a number of one-off changes that take decades to unfold. While those changes are happening, they provide a tailwind to economic growth. But eventually they run out of gas… 4/

The most direct way to raise GDP per capita is to get a higher percentage of the population making GDP for a living. That happened over the course of the 20th century with the steady influx of women into the paid workforce. 5/

Beyond increasing the relative quantity of workers, you can increase the quality of labor by upskilling the workforce and thereby getting more output per hour of labor. That happened during the 20th century with the rapid rise in secondary and then college education. 6/

These tailwinds are now more or less exhausted. Female labor force participation peaked in 2000; increasing education attainment slowed down dramatically after 1980. Consequently, innovation and productivity growth would have to fill the slack to keep growth from slowing down. 7/

Alas, innovation and productivity growth are getting harder over time as well. Once again, exhaustion of low-hanging fruit plays a role. 8/

Specifically, the most productive sectors tend to shrink over time as productivity outraces demand, so output and employment become concentrated in the least productive sectors. 9/

This means that productivity growth can fall even if the pace of innovation remains the same. The economist Dietrich Vollrath estimates that the shift from manufacturing the services accounts for most of the productivity slowdown. 10/

But I believe innovation is slowing down. For one thing, look at the collapse of productivity growth outside IT. Non-IT-producing and -consuming industries have basically contributed nothing to productivity growth since 1973. 11/

And why is innovation slowing down? One likely reason is exhaustion of low-hanging fruit. In “Are Ideas Getting Harder to Find?” Bloom et al. answer their question in the affirmative. 12/

An important piece of evidence that they cite: productivity growth is flat or declining despite the huge increase in scientists and engineers. Innovative activity is experiencing diminishing returns. 13/

On to the second essay in the series. Here I look at the role of loss aversion (or related phenomena) in undermining dynamism: the tendency of people to want to hang on to what they’ve got even if it means passing up on big gains. 14/ brinklindsey.substack.com/p/loss-aversio…

The existence and importance of loss aversion are now being contested, but the controversy is beside the point I’m making. What matters to me is that having stuff makes people more conservative; the controversy is about exactly why. 15/

The negative influence of loss aversion on dynamism can be seen in the rise of NIMBYism. 16/

It can also be seen in the decline in geographic mobility (screenshot from Molloy and Smith, “U.S. Internal Migration: Recent Patterns and Outstanding Puzzles”). 17/

Policy barriers caused by loss aversion (i.e., NIMBYism) are part of the problem; so are interstate policy differences in occupational licensing and government benefit eligibility that make moving out of state a potential loss event. 18/

In addition, deeper roots in the previously fast-growing and highly mobile Sunbelt have made people more averse to moving. This is the argument of economists Patrick Coate and Kyle Mangum in “Fast Locations and Slowing Mobility.” 19/

Loss aversion also shows up in our increasing focus on health and physical safety. As the economist Charles Jones explains, physical risk aversion can lead to much slower rates of growth. 20/

Finally, we see the effects of loss aversion on dynamism in the proliferation of narrow interest groups that lobby for the preservation of their relative position. 21/

This is the famous argument of Mancur Olson in The Rise and Decline of Nations: the longer piece and prosperity persist, the more groups with a stake in the status quo will arise and figure out how to organize themselves. 22/ amazon.com/Rise-Decline-N…

The third essay in this series is “The Anti-Promethean Backlash,” which looks at the broad cultural turn since the 60s against those forms of technological progress that expand and amplify human mastery over the physical world. 23/ brinklindsey.substack.com/p/the-anti-pro…

Although this backlash made itself felt primarily through the environmental movement, it’s important not to confuse the backlash with environmentalism per se. 24/

The problem is that environmentalism developed in the wake of a series of 20th century horrors made possible by technology. 25/

One can imagine an environmental movement that from the outset saw technology, not as the root of the problem, but as the only possible solution to environmental degradation. Alas, not on our timeline. 26/

Here’s the legacy of the anti-Promethean backlash: an energy crisis that never ended. 27/

That chart is from J. Storrs Hall’s Where Is My Flying Car?, a truly weird and brilliant book that changed my mind about the possibilities of technological progress. 28/

The idea that the productivity slowdown was to a significant degree a self-inflicted injury remains well outside the conventional wisdom. And it’s because we have no good tools to measure what never happened. 28/