First, Krugman writes an entire column that isn't guilty of ranting under the influence of naval gazing. More importantly, though, the book he reviewed, Robert Gordon's The Rise and Fall of American Growth raises enough ideas that can be debated without having to have read the book first.
Robert J. Gordon, a distinguished macroeconomist and economic historian at Northwestern, has been arguing for a long time against the techno-optimism that saturates our culture, with its constant assertion that we’re in the midst of revolutionary change. Starting at the height of the dot-com frenzy, he has repeatedly called for perspective: Developments in information and communication technology, he has insisted, just don’t measure up to past achievements. Specifically, he has argued that the I.T. revolution is less important than any one of the five Great Inventions that powered economic growth from 1870 to 1970: electricity, urban sanitation, chemicals and pharmaceuticals, the internal combustion engine and modern communication.
It is hard to argue with this. For someone living in 1880, 1950 would be completely unimaginable. The gulf from 1950 to 2020 (absent something completely unforeseeable) is tiny by comparison.
The Great Inventions — electricity, flush toilets, cars, airplanes, and the like — transformed life in ways that subsequent inventions haven't and can't. Their spread was the cause of the nearly a century's worth of rapid economic growth; that all the Great Inventions have been invented and fully adopted means that the growth we have become used to is already a thing of the past.
I think that conclusion is very difficult to argue against. Even if you add IT to the list of Great Inventions (Gordon apparently does not), computers haven't transformed our lives in the way the Great Inventions have — and won't so long as artificial intelligence, which still makes a cricket look brilliant, perpetually remains five years in the future.
As for the Great Inventions themselves, they have all followed identical horizontal-S performance curves. Slow at first, then a phase of rapid improvement, followed by near stagnation. Indoor plumbing has already improved our lives as much as it ever will. Airplanes will never go faster than they do now. Space flight will always be extraordinarily difficult and limited.
Does that mean everything has been invented? Of course not. Graphene, for just one likely example, is "about 100 times stronger than strongest steel with hypothetical thickness of 3.35Å which is equal to the thickness of graphene sheet. It conducts heat and electricity efficiently and is nearly transparent. Researchers have identified the bipolar transistor effect, ballistic transport of charges and large quantum oscillations in the material."
Just the first property alone could make featherweight airplanes, trains, cars, and rockets.
All of which would still be subject to the same barriers they do now: the speed of sound, wind resistance, and reaction mass. They would do what exactly what they do now, but more cheaply. The payload fraction of a space launch would go up, but it wouldn't get anywhere significantly more quickly.
In short, we may be reaching an economic and existential "end of history".
Krugman, true to form, bangs the inequality drum, without noticing his own review has taken away the sticks:
So what does this say about the future? Gordon suggests that the future is all too likely to be marked by stagnant living standards for most Americans, because the effects of slowing technological progress will be reinforced by a set of “headwinds”: rising inequality, a plateau in education levels, an aging population and more.
It’s a shocking prediction for a society whose self-image, arguably its very identity, is bound up with the expectation of constant progress. And you have to wonder about the social and political consequences of another generation of stagnation or decline in working-class incomes.
Even though there are no more Great Inventions* — and this should be glaringly obvious to even the most casual observer of reality — stagnant incomes do not mean stagnant living standards. All the minor inventions surrounding the Great Inventions have flattened consumption. Everyone has smart phones, garbage disposals, flush toilets, air conditioning, ad nearly infinitum. The rich undoubtedly have fancier of all those things, but there is scarcely anything the rich have that the rest of us do not.
Cars are a perfect example, perhaps one I have overused. The average new car today could not have been bought for any amount of money 20 years ago. The average four year old car today is so much better than even the best new car of 40 years ago as to make meaningful price comparisons impossible. Yet the time it takes an average worker to earn the money required to buy an average new car today is identical to what it was in the mid-1970s: 23 weeks.**
Stagnant income means stagnant living standards? Wanna trade your Focus for a Pinto? The question answers itself. And cars are by far from the only example.
The point here isn't that growing inequality*** doesn't exist, but rather that it leaves one wondering how important it is. Yes, perhaps, probably, even, there are no game changing innovations left. To me, the more interesting question is what it might be like for civilization itself to have reached the right side of that horizontal-S curve. If that is indeed the case, then humanity is looking at an indefinite future that has the same aspect as the indefinite past before the industrial age: incremental, scarcely noticeable change.
Hard to conceive of, given what we have lived through in my lifetime.
* Genetic engineering notwithstanding
** No, I am not going to track down the source for that one. You will just have to trust me.
*** Clearly inequality is growing, but progressives, for whom this is the latest new religion omit, or confuse, a great many things: free agency, composition vs. characteristic, and correlation of class with divorce, among other things. No matter, the concept fluffs their looting fetish, so we are stuck with it.