Over at the Skeptical Optimist Steve Conover is at it again, doing some interesting analysis. After reading a number of very gloomy articles about the debt burden/economy our grandchildren could inherit, he noted:
All scenarios were bad news, and were, of course, our fault for not being “fiscally responsible” today. Some were written by people with economic perspectives I highly respect; others by analysts with skills I highly respect; others by journalists or politicians with economic knowledge that commands little to none of my respect. But the common thread was the terrible scenario that “could” come about.
He then did his own analysis, a sensitivity analysis, and guess what he found:
The key word is “could.” The use of that word in all those articles implied that maybe, just maybe, there might be some other scenarios, not so gloomy, that also “could” come about. So I decided to spend a few evenings testing the possibilities.
Sure enough: It turns out that in many plausible scenarios, the future’s so bright I gotta wear shades.
It’s immediately obvious that productivity growth (input #4), the key driver behind GDP growth, is of overwhelming importance.