Post-Scarcity Prophet

Economist Paul Romer on growth, technological change, and an unlimited human future.

Ronald Bailey from the December 2001 issue

(Page 6 of 6)

In today's purchasing power, that extra $25,000 per person is equal to income per capita in 1984. So if we can make the choices that increase the rate of growth or real income per person to 2.3 percent per year, in 50 years we can get extra income per person equal to what in 1984 it had taken us all of human history to achieve.

One policy innovation, for example, that would boost the growth rate would be to subsidize universities to train more undergraduate and graduate students in science and engineering. Also, you could give graduate students portable fellowships that they could use to pay for training in any field of natural science and engineering at any institution the students choose. Graduate students would no longer be hostage to the sometimes parochial research interests of university professors. Portable fellowships would encourage lab directors and professors to develop programs that meet the research and career interests of the students.

reason: What's next in New Growth Theory? Any conceptual breakthroughs on the horizon?

Romer: Because the economics of ideas are so different from the economics of markets, we're going to have to develop a richer understanding of non-market institutions, science-like institutions. This is going to be a new endeavor for economics.

reason: Do you think that there is a big role for economic historians in helping uncover this richer theory?

Romer: History is an absolutely essential body of evidence, because you can't make inferences about long-run trends using year-to-year or quarter-to-quarter data.

reason: There is a growing movement against technological progress around the world. Why is there this negative reaction to technological progress and what can we do about it?

Romer: You're a big believer in turmoil and creative destruction when you're early in life, because you can knock down the old and create your new thing. Once you achieve a certain level, you tend to get very conservative and try to slow the gales down, because they might blow you over. So I think we have to seriously commit ourselves to maintaining space for new entrants and for young people. That's one way to keep the process going. Another is to do what scholars have always done: to proselytize, to dissect incoherent arguments.

I think we'll be able to maintain this dynamic of progress that was unleashed a couple centuries ago. There will be small setbacks and a lot of noise and complaining, but the opportunities and the benefits are just too great to pull back.

reason: Could anything stop economic growth and technological progress?

Romer: Even if one society loses its nerve, there'll be new entrants who can take up the torch and push ahead. Mancur Olson talks about Caldwell's Law, the idea that no nation has remained truly innovative for very long. Look at Italy, and then Holland, and then the U.K., and then the United States. The pessimistic interpretation is that nobody can keep the process going. The optimistic interpretation is, Yes, you can, but somebody else comes along and the progress moves from one place to the next.

We've seen individual societies where conservative or reactionary elements suppress the changes. What has protected us in the past is that there were other nations that could try new paths. You didn't have the same political dynamic everywhere at once.

If in the far future we reach a situation where there really is truly global political control -- if multinational institutions grow more powerful over economic affairs so that there is imposed uniformity across all nations -- then there'd be a loss of diversity. And if the reactionary elements got in control of those institutions, there'd be no room for the new entrant, the upstart, to adopt new ideas. But that's a pretty distant and unlikely prospect.

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O Nobel da Economia « O Insurgente links to this page. Here’s an excerpt:

…Economia, Teoria — Miguel @ 09:50 Greg Makiw apresenta a relação dos favoritos para ganhar o Nobel da Economia segunda a agên cia de apostas Landbrokes. Os 3 primeiros classificdos são Eugene Fama, Paul Romer e Ernst Fehr. Deixe um comentário No Comments Yet » Ainda sem comentários. Feed RSS para comentários a este post. TrackBack URI Publicar um comentário Clique aqui para cancelar a resposta. nome…