The Big Question: Can Innovation Save the US Economy?

(light piano music)

Hal Weitzman: In the 100 years or so that led up to the Great Recession, Americans got used to annual growth rates of more than 2 percent and similar increases in their disposable incomes, but many economists are forecasting much slower growth to come. Labor-force participation has dropped dramatically in the past seven years, and productivity has been falling for decades.

So do most Americans just have to adapt to sluggish growth and stagnant incomes? Can innovation save the US economy or could the government come to the rescue with policies to jump-start growth?

Welcome to The Big Question, the monthly video series from Capital Ideas at Chicago Booth. I’m Hal Weitzman, and with me to discuss the issue is an expert panel.

Robert Gordon is the Stanley G. Harris Professor in the Social Sciences and professor of economics at Northwestern University. He’s an advisor to the US Bureau of Economic Analysis and was a member of the Boskin Commission, which concluded in 1997 that the US Consumer Price Index significantly overstated the rate of inflation. He’s the author of a collection of essays entitled Productivity Growth, Inflation, and Unemployment.

Steven Davis is the William H. Abbott Professor of International Business and Economics and deputy dean for faculty at Chicago Booth. He’s an economic advisor to the Congressional Budget Office as well as a visiting scholar at the Federal Reserve Bank of Chicago.

Joel Mokyr is the Robert H. Strotz Professor of Arts and Sciences and professor of economic history at Northwestern University and a professorial fellow at the University of Tel Aviv. An expert on US and European economic history, he was editor-in-chief of the Oxford Encyclopedia of Economic History. His forthcoming book is A Culture of Growth: Origins of the Modern Economy.

And Chad Syverson is the J. Baum Harris Professor of Economics at Chicago Booth and an editor of the RAND Journal of Economics. His background as a mechanical engineer led him to one of his current research interests, the study of productivity.

Panel, welcome to The Big Question.

Professor Gordon, let me start with you. Your argument is essentially that the US faces these incredible headwinds, so economic growth is going to be much, much slower in the coming decades than it has been in the past. So tell us about, briefly about some of those headwinds and why that’s the case.

Robert Gordon: First of all, when we talk about economic growth, we’re talking about growth in the American standard of living, which means growth in output per person. Now that can be divided up into growth and output per hour and growth in hours per person. Most of our—

Hal Weitzman: Hours worked per person.

Robert Gordon: Hours worked per person. And most of our difficulties come in the latter. The first we call productivity—output per hour. The second is hours per person. Those rose mightily in the ’60s, ’70s, and ’80s as women entered the labor force. So we had more wage earners per person in the population. That hasnow turned around, partly because of the retirement of the baby boom generation, and so we have fewer workers per person. And that alone, that hours per person factor, takes a full percentage point off of our growth compared to what it was back in the ’80s and ’90s

Hal Weitzman: OK, but you’re actually forecasting that growth could fall as low as 0.2 percent—

Robert Gordon: No, most of it has already happened. Growth in per capita income in the last decade, since 2004, is only 0.6, after having gone at 2.1 percent over the hundred-plus years from 1890 to 2007. So what we’re talking about has already happened. We’re not being dire about the future. We’re just reportage, you know, as in the newspaper report.

Hal Weitzman: OK, and these headwinds inevitable? Is there anything we can do about them?

Robert Gordon: Well, let’s just enumerate what they are. First of all, we have slowing population growth. We have slowing growth in the labor force as baby boomers are retired and for some reason young people are not working to the same degree as they used to. We have an educational system, which has problems from bottom to top. We have inequality, so that the top 1 percent get far greater share of the small growth we have than everybody else in the bottom 99 percent. And gradually we’re building up a lot of debt that we’re going to somehow have to pay off.

So those are the four headwinds: demography, inequality, education, and debt.

Hal WEitzman: OK, but is there anything we do about them?

Robert Gordon: We can do a lot about some of them, and nothing about others. For instance, eventually we have to pay off the deb, and that involves rearranging the way we spend money on transfer payments and changing our tax system. If our population growth is slowing, there’s a very simple way to increase it, and that is to totally change our system of immigration laws. There are many countries that welcome immigrants. We don’t. We try to turn them away. We can turn the dial on our own population growth because so many people still want to come to the United States.

Hal Weitzman: OK, some of that slowing growth is gonna be inevitable, other parts we can do something about, seems to be—

Robert Gordon: That’s right. We can do a lot about education as well, particularly in the realm of preschool education. We can change our system of financing higher education so we don’t wind up with $1.5 trillion in debt. Canada doesn’t have students with trillions of dollars of debt. Neither does Australia. Neither does Britain. Why should we?

Hal Weitzman: OK. Well, let’s come back to some of the solutions later, but Chad Syverson, I want to get your kind of reaction to this argument about dramatically slowing US growth in the decades to come—or has already happened and will continue.

Chad Syverson: Well, I agree with parts of it. I take issues with some other parts of it.

One thing I’ll note is Bob talked about the slow growth since 2004. Part of that is cyclical. So we have seen drops in hours worked per person. A little bit of that has been retirement of the baby boom generation, but a lot of has just been people dropping out of the labor force because for many reasons the opportunities haven’t been good enough for them to work. And so I think some of that will be reversed.

I think the growth that we saw in hours per person in the decades prior to that, part of that was not going to be sustained. You know, once women came into the labor force, that can only continue so long. That had probably reached its peak or somewhere near its peak about the time it started. So that wasn’t going to continue paying dividends forever either. The population growth more broadly is something that’s going to be very slow to react and hard to turn around, although Bob makes a good point that part of this is about immigration policy, and that is something that can be affected very quickly if we want it to.

Hal Weitzman: Joel Mokyr, you’re one of the optimists about the US economy.

Joel Mokr: Well, I think when we talk about headwinds, we should also talk about tailwinds, and my expertise is in the economic history of technology, and the difference between me and my esteemed colleague Bob Gordon is that we both agree that the period between say 1870 and roughly speaking 2000 has been a period of miraculous technological change, in which the American economy—not just the American economy, but all industrialized economies and many nonindustrialized economies—were lifted by this fantastic tailwind of technological change driven by better signs, driven by better understanding of natural regularities, and the lot. The difference is that, my attitude is that we ain’t seen nothing yet. The best is still to come.

And I say that with some uncertainty because of course you can’t really predict technological change, you know. Karl Popper once said: if you can predict innovation, you’ve made the innovation. I can’t exactly say where it’s going to go. But my sense is that, and, you know, I’ve studied what drives technological change in the past and eventually of course that drives productivity, although I don’t think productivity properly measures everything that technology does in our lives, and I’ll talk about that a little bit later on.

But there are a number of factors that I think make me extremely optimistic about where technological change is growing, and the first is that—and this is a fairly sort of mundane thing, you know. Science is driven by technology just as much as technology is driven by science. Because technology provides science with tools. And when we think about the effect of new technology like computers. For instance, if we think about what it does to productivity, to retailing, to manufacturing, we forget that in fact this technology feeds back into our scientific understanding of nature that eventually will allow technology to change through a sort of indirect feedback loop that is gigantic.

So if you look at what we can do today in terms of the tools that scientists have, not just digital tools but all kinds of tool. You know, microscopes. You know, fantastic nanoscopes. We can do things that were unimaginable 20 years ago, let alone in the time of Galileo.

But there’s more to it than that. I think what we have today in the world is a system in which incentives to innovate and to enter science are stronger and better than ever. I mean, there is a competition between major trading blocs in the world, and everybody wants to outdo one another, and as long as that competition is going on, we will provide incentives for innovators, for scientists. We do this in all kinds of clever ways. We give people tenure at places like MIT and Caltech. We give Nobel prizes. We give Presidential Awards of Freedom. We reward scientists for being good and coming up with with new ideas.

And what’s more, I think society has been, particularly in the 21st century, they’ve been extremely good in setting an agenda for where knowledge is going to go. And so my sense is that what we are looking at today—and I can talk about some of the frontiers that have opened up just in the last 20 years: genetic modification of organisms, the new material science based on in silico improvement, and on and on and on.

One final note: that does not mean that I am sure that these things will happen, OK? There is one thing which technology has never resolved is human stupidity and pigheadedness, and what we see around us in the world is this resistance against certain new technologies, particularly the stuff, I think, completely a misdirected resistance to things like genetic modification, which I think is a fabulous frontier in which we can turn agricultural productivity on its head and do things that are utterly unimaginable.

Hal Weitzman: OK, so in short, you’re an optimist. And if anyone actually developed a technology to get rid of stupidity, that would be a huge innovation being very—

(panelists laughing)

Joel Mokyr: That would be the biggest innovation in human history!

Hal Weitzman: Steve Davis, let me bring you in because you’ve said on a The Big Question before that Americans will have to get used to, or may have to get used to lower economic growth in the decades to come. So I mean how . . . is that still your view?

Steven J. Davis: Well, as Bob pointed out, we’ve already had slow productivity growth, slow economic growth in the last 15 years or so, relative to the previous decades. So that’s the reportage he talked about.

But let me pick up on the tailwinds and headwinds that we’ve heard about. There are many. But I do want to emphasize that there are things we can do as a policy matter, an institutional matter to affect the wind speed and direction. We’ve heard a little bit of that already, and let me just elaborate on that.

First, picking up on something that Joel said: it’s hard to predict the pace of technological innovation, but there are things we can do that affect the conditions under which technological advance is more or less likely. One, which we are not doing now and is really a self-destructive policy in the United States, in my view, is our stance toward immigration of highly skilled, highly ambitious people.

We’ve already heard the United States remains a magnet to many of the most ambitious and talented people in the world. We make it very hard, sometimes impossible, for those people to come in the United States and push the frontier here, rather than not at all or to do it somewhere else. So that is probably the simplest, most direct policy lever we have available to us that could sharply increase the likelihood not only that we see big technological advance, but that we see it centered in the United States. So that’s kind of one wind speed, wind direction thing that is very much in our control.

Going back to something Bob said on the education front. I’m thinking here of schooling in particular, primary, secondary, preschool. There’s both good news and bad news. The good news is the United States has a mediocre school system compared to much of the world. We are well inside the frontier. That’s true both with respect to how well or how poorly we do with educating the average kid, the kid at the bottom, but also with respect to—and this gets more to the innovation point, the conditions for innovation— at the top end. We have a lot of room for improvement there.

This is not easy to do because of political obstacles. It won’t generate the immediate returns that change in our immigration policy would, but over the long term, it’s vitally important that we do that if we want to reverse some of the tailwinds and turn them into headwinds.

Hal Weitzmn: OK, I mean, the US hasn’t had a good recent history of opening its doors to immigrants or in reforming its education systems. If those things don’t happen, what are the consequences, Steve Davis?

Steven J. Davis: Well, I think we can expect that those two things will continue to be contributors to the kind of sluggish growth we’ve seen in the last 15 years.

Hal Weitzman: OK, Joel Mokyr?

Joel Mokyr:I just want to add to what Steve said. I think he’s absolutely right about education and immigration. I would add to that federal funding for research, particularly what we call basic research. You know, and I understand there now is a culture in Washington trying to cut, but the one area where we really should not be cutting anything expanding are things like the National Science Foundation, National Institutes of Health, on and on and on. That money has been traditionally extremely well spent. Much of the innovation of the post–World War Two period has been driven, for better or for worse, by federal funding, either direct federal projects through DARPA or indirect federal funding of people in universities and research institutions. That is the one area we are cutting off our oxygen supply by not spending that money.

And I think, just to add one point. The other area where I think the news is not yet altogether bad, but I’m worried, is in precisely these sort of top-rated institutions. Because the average quality of education is extremely important, but much of the innovation is generated by the top 2 or 3 percent of people in these top-rated institutions, and I think resources going to these institutions, attracting the best and the brightest—not just from the United States, but from all over the world. Many of these people will end up staying here, and that transfer of human capital is one of the greatest windfalls to the American economy we can secure. But we need to be smart about it.

Hal Weitzman: OK, Bob Gordon, I want to bring you in because innovation is something you’ve written a lot about. You’re skeptical of the view that we’re going to see big paradigm-shifting innovation, or we’ve seen it coming from technology in recent years or that we will see it. So tell us a bit more.

Robert Gordon: Well, let me distinguish between a part of the economy where we’ve seen a lot of innovation and it will continue. And that is in manufacturing and in certain parts of what we call wholesaling, in the form of robots gradually taking over from people. Now this is nothing new. The first industrial robot was introduced by General Motors in 1961, more than 50 years ago. So this is not a quantum leap into some unknown future. This is a continuation. Robots are becoming cheaper, smaller, more effective, and will continue to produce above-average productivity growth in manufacturing.

When we talk about wholesaling, immediately what springs to mind is an Amazon warehouse where there are lots of little robots running around fetching the books and the CDs and bringing them to a human—which is still necessary to pack them because the robots haven’t figured out yet exactly how to arrange random objects in boxes.

But going beyond that, I like to walk around every day and I look at people and I say, is their job going to be eliminated in the next 10 years, 20 years, 30 years, and I find it very hard to locate anyone whose job is going to be replaced. Here we are, 50 years after the introduction of the robot, and in our grocery stores, the goods are still put on the shelf by human beings. That wholesale sector I mentioned, only a very small slice of that is Amazon warehouses. The great majority of it are trucks coming out and delivering bread and beer and Coca-Cola to stores, where the truck driver isn’t just driving the truck, he’s pushing this stuff through the store, arranging it on the shelves, and then going back and getting in the truck.

Hal Weitzman: But aren’t we all going to be receiving our groceries by drone in a few years’ time?

Robert Goron: I think drones are going to be forbidden by the Federal Aviation Administration. They’ve already cracked the whip on that. But the same thing goes if you are gonna say, oh we’ll all get our groceries by magic delivery. Somebody still has to deliver them. This gets to the whole dream of driverless trucks and driverless cars. Most of what truck drivers do, if you think of UPS and you think of all those deliveries coming to the entire retail sector, involves a combination of tasks that robots simply are not yet up to.

Hal Weitzman: Interesting, so you do not . . . there’s quite a lot of research that talks about automation. So you do not think automation is going to, you know, we’re not on on the cusp of a new wave?

Robert Gordon: I’m looking at an economy where 8 percent of the employment is in manufacturing, and maybe another 2 or 3 percent is in the warehouse part of wholesaling.

You look at what’s happened in offices. We had a complete revolution, from 1970 to the year 2000. We went from paper-driven typewriters with no contact with the outside world to, by the year 2000, we had everybody connected to the web. By 2005, everybody had a flat screen. And what people are doing in offices today is just exactly the same as what they were doing 10 years ago.

Hal Weitzman: So does that mean you do not expect to . . . You expect to see productivity sort of flatline, or—?

Robert Gordon: No, we’ll continue to have innovations that I’m sure my colleagues here will tell us about, and there’ll be a slow incremental improvement in productivity, just as there has been over the last 10 years. Nobody’s saying productivity growth is going to be zero. All I’m doing is saying that we’ve got a precedent of the last 40 or 50 years of relatively slow productivity growth, and we’re gonna see that continue. We’re not gonna see some great miracle of inventions.

Hal Weitzman: Yes, sorry, I was gonna ask Chad Syverson, because you study a lot of manufacturing and productivity, what’s your view on automation and how it might affect productivity?

Chad Syverson: My view of it is predicting the future of it is very difficult, you know, to say. You can look around today and have a comfortable feeling about how things are gonna evolve around the next 10 or 20 years. I just don’t feel comfortable doing that. I don’t think history has shown that people are . . . It’s fun to do it, but is there any indication that we’re good at it? Not so much. So I’m weary of trying to predict how things are gonna change.

But what I can say is historically we know with the last diffusion of general-purpose technologies—the electric motor and the internal combustion engine around the end of the 19th century, early 20th century—it’s clear in the data that the productivity gains that those yielded came in waves. They did not all come in one big bunch and then go away never to be seen again.

Some came over the course of a decade, and then productivity growth slowed again for another 10 to 15 years, and then it picked up yet again after that.

I’m not sure anyone at the time could have predicted either the first slowdown or the second pickup, but we do know that this stuff does not have to just only come once. You know technologies that are already having effects or have had effects, like the IT technologies we’ve seen over the last 20 years, it could be that there’s a second wave of that coming, where there’s precedent for that.

Hal Weitzman: Joel Mokyr, briefly.

Joel Mokyr: I just want to make one comment on what Bob said, and that is I think the view of technological change as some machines coming in and replacing people is an overly narrow view of what technology does. It really transforms not only how many workers are needed for a job, but also exactly what these workers do and the environment in which they live.

So let me give you one example about something which I’ve thought about a great deal, and that is the impact of modern technology on the actual employee-employer relationship. So what we’ve seen in the last 15 years is the rise of something called telecommuting. Now, it hasn’t quite taken off as fast as I thought it would, but I think it’s growing and it will continue to grow.

That doesn’t mean, you know, there are fewer workers needed, but what it will mean is that workers may not have to spend an hour in rush-hour traffic driving to work, sitting in a little cubicle for eight hours, and then spend another hour driving home. Instead, the worker may come in twice a week for a few hours and do much of the work from her or his living room.

Now, is that a gain in productivity? It doesn’t because, of course, we don’t actually count commuting as part of work. Is it an improvement in economic welfare? Of course it is. Who wants to spend an hour in traffic doing it twice a day, and then sitting eight hours in a cubicle? And so in that sense, I think the impact of technology is way larger than we can ever measure by our sort of standard productivity indicators because that’s not what they’re designed to do.

Hal Weitzman: You’re talking about quality-of-life issues there?

Joel Mokyr: Absolutely! Quality of life. But something much bigger than that, something which we call consumer [inaudible]. That is to say, the overall welfare improvement due to technology, not necessarily as measured by the market.

My favorite example and I must give you . . . I mention it a lot. My favorite example, and I use it in classrooms a lot, is the invention of anesthesia in the 1840s and early 1850s. Now, the impact of that on productivity, GDP, national income is epsilon zero. Right? It’s nothing. But in terms of what it did for human welfare . . . Ask anybody today, how much would you have to be paid to have your appendix taken out without anesthesia, and you get an infinite amount. I mean, it’s unthinkable! And yet that is something that has improved human welfare without ever affecting productivity.

I think of telecommuting and a hundred of other things like that in exactly the same way.

Steven J. Davis: Yeah, let me pick up on that because I wanted to make a similar point. First, to just endorse one thing that Joel said. Time-use studies—and some of the most important ones have been done by our colleagues here, Erik Hurst and Mark Aguilar, who’s now at Princeton—bear out the fact that when you look at time spent in work-like activities, not just in the marketplace but at home, those have declined by several hours a week for men and for women. Men because they’re working less in the marketplace. Women predominantly because they’re working less at home.

That kind of is an illustration of the point that Joel was making. He also made the point about the value of surgery with anesthesia versus otherwise. But there are other ways in which technological innovation does not show up or does not show up very well in the measured productivity statistics. And for example, extensions of life or improvements in the quality of life. They may affect productivity while working, but of course they also increase the value and the amount of leisure time over the course of a lifetime tremendously. That’s another big thing.

Another area in which I think the standard statistics don’t capture the enormous increase in surplus that Joel mentioned is the value of entertainment services. So if you go to a poor country, you’ll see somebody spend a good chunk of their income on a color TV. And if they’re willing to spend 5 or 10 percent of their annual income on that color TV, you have to say to yourself: How much surplus is the middle-income person in the United States with their 150 cable TV channels getting from that color TV? It’s enormous. In principle, you could try to capture that in our standard productivity statistics; in practice, it’s extremely difficult to do.

Hal Weitzman: OK. Bob Gordon?

Robert Gordon: I’m always hearing people talk about the future with great optimism, coming up with examples from the past that have already happened. But the anesthesia from 1850 sets a new limit of digging back into the past to find something that was a tremendous benefit.

What I’m interested in is what are going to be these great benefits in the future, in the next 10 or 20 years, compared to the last 10 or 20 years? We all agree that wonderful things happened, and Joel in particular singled out the period between 1870 and 1970, 1990.

Talk about telecommuting. All the tools we needed for telecommuting were already in place 20 years ago. Maybe we needed to make the transition from dial-up to broadband, but that happened about 15 years ago. So why are we still waiting here for everybody to telecommute? It’s because there is socialization that occurs when people go to the office. People are afraid of being left out of the loop, left out of the power structure.

There are fundamental reasons why this isn’t happening, and Joel admitted he thought it would have taken off more before now than it has. A lot of these dreams about the future are just that: dreams. I’m interested in specifics.

Hal Weitzman: But what about this timeline argument that Chad Severson mentioned? So, you know, that the period you talk about, 1870 to 1970, there were waves when growth was slow. There were periods when growth, particularly after 1939, when growth was much quicker. So how can you say when you’re in the middle of the process how the process is going to play out?

Robert Gordon: With all due respect to Chad, there was one big wave. We had the great inventions, the two great inventions: electricity and the internal combustion engine. They both happened within 10 weeks of each other in 1879. It took a good two to three decades to figure out how to use them.

Paul David, a famous economic historian, has made this point with an analogy between the electric motor and the computer. Both of those took about three decades to come to fruition, and then the productivity growth took off.

The same thing is true of the internal combustion engine. There we had horse-drawn carriages, and then we had this powerful engine. It took them about two decades to figure out how to get the power from the engine to the wheels without tearing apart the vehicle. But once that happened, it took another three decades for the number of motor vehicles in the economy to take off to a high enough level to make a dent in productivity.

And if we look at the productivity statistics, there’s one big wave: productivity growth, total factor productivity, took off in 1920, and the growth rate between 1920 and 1970, for half a century, was three times as high as it’s been since then.

So our great years of productivity growth are in the past. What I’m interested in is what are the specifics that will cause us to grow faster in the future than we have in the last 10 or 20 years?

Hal Weitzman: Well, but the answer seems to be: we don’t know. But the stage is set for—

Robert Gordon: But that’s where we’re all on an equal ground here.

Hal Weitzman: Yes.

Robert Gordon: We’re ignorant as pessimists. We’re ignorant as optimists. So I think a really good thing to do is right now, today, let’s go out and walk around the Chicago metropolitan area and find the jobs that are going to be replaced by the robots

Hal Weitzman: OK. Chad Syverson?

Chad Syverson: Well, I’ll just dispute the disputation of my earlier numbers. If you look at labor productivity growth, you see exactly the same pattern repeated with the IT revolution. There’s a 25-year lag or so between invention of the technology and the first measurable productivity growth from it. That occurs about over a period of about a decade, and then there’s a slowdown again. That happened with the electric motor and internal combustion engine period as well.

Now, if you want to extend the window and put another 20 years after that and call that one big wave, OK. That’s fine, but let’s give ourselves 20 more years after today before we declare the end of the IT revolution.

Hal Weitzman: OK.

Joel Mokyr: Basically Bob shot himself in his own . . . Alright, if he admits that there is a 20-, 30-year lag for the electric engine, and for . . . And I would add to that the steam engine, it was more than 20 years. It was more like a century. So why isn’t he willing to give us 20 or 25 years for telecommuting to take place.

I actually think we are going to look at the growth of that very quickly. We may not see the disappearance of the office. I think he’s absolutely right. There are other reasons why people would want to go to the office. But the important thing is they don’t have to go every day. They don’t have to show up all at the same time.

Robert Gordon: Just like professors.

Joel Mokyr: Just like professors. They will . . . everybody will have a job like Bob and I have. We show up whenever we feel like it. But no,

Hal Weitzman: I’m not sure if that’s good or bad.

(panelists talking over eachother)

Joel Mokyr: Maybe not. Maybe not.

But look, I mean the impact that that will have on, for instance, mothers trying to raise children when the child is sick, and she basically says, look, I’m going to work from home today because my child has a fever. That kind of flexibility didn’t exist in the factory system. It’s a huge boon to human welfare and to the way work is organized. And it’s made possible by the fact that you can be at work without physically being there.

Hal Weitzman: OK. Steve Davis, briefly?

Steven J. Davis: It’s fun to talk about these prognostications about whether or not we’re gonna have another technological boom followed by a productivity boom. But it’s also, I think we all agree, fundamentally hard.

There are other things we talked about earlier in this conversation that we know do have measurable effects on productivity growth: like improvements in our schooling system, like bringing in more highly talented immigrants. Those are things that are under our control.

We do know that if we make progress in reforming those institutions and those policies, there will be productivity gains following them. They may not be the dramatic type of advances we’ve been talking about here, but again, it’s important to understand that in terms of schooling, the United States is not at the world frontier. We are well inside the world frontier. We’re more like some advanced middle-income economy looking to the United States for technological leadership in some ways and saying, if we can just get to the frontier, we’ll grow a lot. Well, that’s true in some US in some domains as well, and schooling is a principle one.

Hal Weitzman: Bob Gordon, I’m going to give you a very brief final word.

Robert Gordon: We haven’t talked at all about the most fundamental headwind, and that is inequality. We have enormously vaster growth in the top 1 percent than we have in the rest of the population. Whether it’s half a percent slower, a full percent slower, the growth rate of well-being in the bottom 99 percent is well below the economy-wide average.

Everything we talked about today is about the average for the whole economy, and we haven’t given nearly enough thought to what in the world we can do to narrow the gap between the people at the very top who have political control that is partly responsible for their high incomes versus the other 99 percent, many of whom are in a powerless situation to raise their wages the way that they’re raised.

Hal Weitzman: OK, well my sense is that we’ve just scratched the surface of all these issues, so we should reconvene and do this again.

My hope is that at least you have found the conversation somewhat innovative and somewhat productive.

My thanks to our panel, Robert Gordon, Steven Davis, Joe Mokyr, and Chad Syverson.

For more research, analysis, and commentary, visit us online at chicagobooth.edu/capideas, and join us again next time for another The Big Question.

Goodbye.

(light piano music)