In this insightful discussion, Brad DeLong, a professor of economics at UC Berkley, explores the economic history of the 20th century, the significant transformations from 1870-1920, and the impact of technological advancements on society.
He also discusses the concept of a leisure society predicted by Keynes and why people still work extensively despite technological progress.
Human Inventiveness and Collective Intelligence
Human inventiveness and collective intelligence are key to finding solutions to resource management and productivity challenges.
Problems of environmental catastrophe and pollution are seen as issues of externalities and the management of common resources, rather than physical resources becoming scarce.
German Universities’ Contribution to Progress
German universities flourished in the 19th century, playing a crucial role in society’s transition from the Agrarian age.
Their success contributed significantly to the intellectual and technical progress of the era, setting a benchmark for academic excellence.
Role of Material Want
Modern economic growth is not a triumph of humanity over material want, but rather of material want over humanity and technology.
Material wants continue to drive economic growth and technological advancement, suggesting that Keynes may have underestimated the power of material want over humanity and technology.
The Middle-Income Trap
The middle-income trap, where it becomes more beneficial for individuals to join a government regimentation machine than to engage in entrepreneurial activities, is a persistent issue.
This trap is particularly prevalent in countries like China and India, and its strength and persistence are a cause for concern.
Divergence in Economic Development
The divergence in economic development since 1870 can be attributed to factors such as internal and external colonialism and the influence of Lenin.
The failure to converge after the end of colonialism is due to the destruction of state institutions and the challenges of building a state.
Economic Growth in the Late 19th Century
The period between 1870 and 1920 marked a significant shift in economic growth, laying the foundation for the modern world.
The 2% per year income and productivity growth that we have grown accustomed to since the Second Industrial Revolution is completely unprecedented and was not seen in previous eras.
The Royal Society’s Role in Knowledge Advancement
The Royal Society played a pivotal role in shifting society’s focus from power maintenance to truth and knowledge seeking.
This shift, which emphasized determining truth through experimentation, was largely responsible for the intellectual and technical progress that followed.
Significance of a Well-Functioning Market System
A well-functioning market system is crucial for achieving social goals.
It is essential to align market prices with social values and distribute property rights in a way that aligns with societal goals.
However, managing externalities and potential pitfalls of a market system where only property rights matter remains a challenge.
Persistence of Economic Traps
The persistence of middle-income and other economic traps, particularly in the context of recent global convergence, is concerning.
The rise of leaders like Xi Jinping in China and Narendra Modi in India may contribute to the persistence of these traps.
Modern economic growth is not a triumph of humanity over material want, but of material want over humanity and technology. – Brad DeLong
There is no better way for harnessing the 8 billion brain Anthology intelligence of humanity to achieving the social goals we all want other than to organize a well-functioning market system. – Brad DeLong
Need for Public Investment
A substantial boost of public investment is needed in Britain, along with a long-term plan to finance it.
A conservative government that promises future wealth taxes to keep the deficit under control could be a viable way forward.
Influence of Investor Confidence
Investor confidence significantly influences economic outcomes.
A conservative government that can make credible promises about future wealth taxes could help to boost investor confidence and support economic growth.
Technological Progress and its Impact
Technological progress has profoundly transformed society, improving living standards and doubling humanity’s technological capacity every 70 years.
However, this progress has not led to the leisure society predicted by Keynes, suggesting that material want continues to drive economic growth and technological advancement.
