What is the growth holdup?
Is US economic growth over? Faltering innovation confronts the six headwinds, CEPR Insight # 63, Robert J Gordon, Northwestern University and CEPR, http://www.cepr.org/pubs/PolicyInsig...yInsight63.pdf
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The prospects for future long-run US economic growth were already dismal in 2007 but were little noticed in the continuing euphoria over the invention of the internet and the related 1. developments in information technology and communications (ICT). This Policy Paper pulls back from the past five years of financial crisis to pose a question with implications that will persist for decades even if the current international economic disorder is eventually resolved.
Robert J. Gordon, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Robert_J._Gordon
In an economy not so far, far away, By Izabella Kaminska, December 27, 2012 8:00 pm, Financial Times, www.ft.com
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Imagine a time when all undesirable work is done by automated systems or robots. What would it mean? Would there be a financial crisis? What would happen to labour and capital?
These are some of the deeper questions economists are asking when not preoccupied by short-term worries about the fiscal cliff, a Chinese slowdown or the eurozone.
Innovation Crisis or Financial Crisis? Kenneth Rogoff, Project Syndicate, http://www.project-syndicate.org/com...kenneth-rogoff
Is Growth Over? Paul Krugman, NYT Blog, http://krugman.blogs.nytimes.com/201...s-growth-over/
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Gordon argues, rightly in my view, that we’ve really had three industrial revolutions so far, each based on a different cluster of technologies:
The analysis in my paper links periods of slow and rapid growth to the timing of the three industrial revolutions:
IR #1 (steam, railroads) from 1750 to 1830;
IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and
IR #3 (computers, the web, mobile phones) from 1960 to present.
Gordon then argues that IR#2 was by far the most dramatic, which again seems right. Think of the America shown in Lincoln, which is a society shaped by industrial revolution 1 but not yet transformed by IR #2. It was a society in which you could travel much further and faster than ever before — but when you got to your destination, it was still a horse-drawn society in which most people still lived on farms and cities were cruder and dirtier than we can easily imagine. By the 1920s, however, urban America was already recognizably a modern society.
What Gordon then does is suggest that IR #3 has already mostly run its course, that all our mobile devices and all that are new and fun but not that fundamental. It’s good to have someone questioning the tech euphoria; but I’ve been looking into technology issues a lot lately, and I’m pretty sure he’s wrong, that the IT revolution has only begun to have its impact.
A decisive year for ‘deglobalisation’, Howard Davies, December 23, 2012, Financial Times, www.ft.com
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The quarter-century leading up to the financial crisis saw a remarkable leap in globalisation. In particular, cross-border financial flows grew rapidly. Western investors piled into China and the other Brics. The new phenomenon of south-north flows emerged, as sovereign wealth funds from Asia and the Middle East acquired developed economy assets on a massive scale. But the fastest growth was in cross-border bank lending, much of it intermediated in London. Citibank’s ambition was to be seen on street corners from Manhattan to Manama; HSBC proudly told us, every time we got off a plane, that it was “the world’s local bank”.
Since the crisis that last trend has gone into reverse: cross-border lending has fallen sharply and the ambitions of major American and European banks have been scaled back. HSBC has withdrawn from a number of countries; Citibank and Barclay’s have other preoccupations. The continental European banks are struggling to strengthen their capital bases, and emerging market assets have been realised to bolster the parents’ balance sheets.
So are we entering a new age of financial deglobalisation? If so, should we care?
Globalization, From Wikipedia, the free encyclopedia,http://en.wikipedia.org/wiki/Globalization
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In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people and the dissemination of knowledge.[7]
Trend is heading macro...
Lost illusions on Europe, Editorial, January 9, 2013 7:13 pm, Financial Times, www.ft.com
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Britain needs to adopt a hard-headed approach founded on the national interest – and hold a referendum
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The UK’s troubled relationship is a matter of culture, geography and history. Britain is a post-imperial power with an affinity to other English-speaking countries, especially the US. Mutual incomprehension between the UK and Europe comes down to a basic difference in outlook: while the UK sees membership of the club in economic terms, France and Germany, the co-founders, see the European Union as a political project forged from the ashes of the second world war.
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This newspaper has always argued in favour of Britain’s membership of the EU, and we continue to believe it is central to the national interest. Our reasons go beyond a purely economic calculation of cost and benefit. They have to do with Britain’s place in the world. Membership gives the UK influence over the biggest global market. It helps to keep the US relationship special. It amplifies the UK’s sway in a world where economic power is shifting eastwards.
The benefits stretch across national frontiers. Thanks to the single market, the British can live, work, travel and study freely across Europe. Enlargement of the EU southwards and eastwards has consolidated democracy in Spain, Portugal and Greece and created a zone of peace and prosperity in former communist central and eastern Europe. Nonetheless, today’s EU is vastly different from the one the UK joined in 1973, or indeed the one Britons voted to stay in when they were last given a chance to express their views in a referendum in 1975.