Whenever The Economist does one of its briefings on an issue, it becomes the first thing to read to get a good understanding of the background. The magazine recently ran a summary on the alleged slowdown in economic growth. This is, today as always, one of the most important issues facing our society. Over the course of decades economic growth is the factor that determines living standards and, hence, the political and societal pressures that we face. This article is a good starting point on an issue that everyone should be aware of.
There’s this good quote on one of the fundamental roles of government in inspiring the basic research which leads to long-term gains in wealth and living standards. This role is all-too-often ignored by people who think they understand economics.
Another thing which may have changed permanently is the role of government. Technology pessimists rarely miss an opportunity to point to the Apollo programme, crowning glory of a time in which government did not simply facilitate new innovation but provided an ongoing demand for talent and invention. This it did most reliably through the military-industrial complex of which Apollo was a spectacular and peculiarly inspirational outgrowth. Mr Thiel is often critical of the venture-capital industry for its lack of interest in big, world-changing ideas. Yet this is mostly a response to market realities. Private investors rationally prefer modest business models with a reasonably short time to profit and cash out.
From the founders of the colonies to the Revolutionary generation on, Americans have understood that one of the roles of government was to fund long-term projects that can’t provide the immediate returns that the private sector demands. It’s a sad to see many people today forget this important point.