Friday, December 28, 2012

Krugman on growth and industrial revolutions (plus Rifkin)

Krugman's recent blog post, Is Growth Over?, is of interest. He questions the assumptions of some, like the CBO, that growth will continue as it has in the past. He cites Robert Gordon's claim that growth will in fact continue to decline. Gordon shows that growth was spurred by the various industrial revolutions. The first based on steam power, and the second on fossil fuels, evidenced considerable growth. He argues though that the third, based on info tech, has not produced such a growth cycle.

Krugman though disagrees with his analysis on the third revolution and thinks smart machines might indeed lead to another cycle of growth. What Krugman did not address, nor did Gordon, is that Rifkin has also discussed these 3 revolutions, and that the energy source for the 3rd is renewable. However like Krugman the tech to organize and distribute it is indeed smart grids that are in development and making advances quite quickly.

I must admit though that I am torn, since unsustainable growth itself is part of the problem. And this notion that tech will come in and save the day so that we can just keep consuming without limit in a never-ending fest of egoic excess. This latter seems out of balance with a more social contract to distribute wealth equitably, and by so doing discovering that our natural resources, including renewable, are not inexhaustible. It requires a fundamental shift in the me-first thinking typical of  points made in the recent election, which attitude leads in fact to vast income inequality. And this last point Krugman indeed addressed, since even if tech saves the day to whom will the spoils go?

I might also add that if Rifkin is correct, providing most, if not all, of our energy generation in the home and office will indeed shift income equality in favor of the rest of us, since the source and generation of energy is a prime factor in income inequality. This shift to not only distributed energy but a more distributed worldview and lifestyle counters the me-first focus that is part of the problem. It sounds utopian and unattainable, but let's keep in mind the progress already made with not only the tech in the EU but also its shift to more socially just socio-economic systems unlike the US. There is hope still.

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