*Fully Grown: Why a Stagnant Economy is a Sign of Success*

That is the new book by Dietrich Vollrath, strongly recommended, it is a primer on the current state of knowledge about economic growth.  Tightly argued, and a remarkable amount is covered in 216 pp. of regular text.  Here is one excerpt:

Although there were plenty of changes in the individual markups firms charge, many of them actually fell over the last twenty years.  What explained the overall rise in markups from 1.18 to 1.67 was that spending shifted away from firms with low markups and toward firms with high markups.  Which high markup firms did we shift our spending to?  Well, a lot of service firms, including those involved in communications, technology, health care, and education.  In short, the rise in economic profits and markups we see at the aggregate level is part of the overall shift toward services we discussed a few chapters ago.

Here is where things get a little weirder.  Baqaee and Farhi show that the shift toward high-markup firms was good for productivity growth.  Whatever the source of a high markup, it indicates a product that is very valuable relative to its marginal cost.  If we take the inputs required to produce a low-markup product and use them to instead produce a high-markup product, then we have raised the value of what we produce.  As this increase in value came from reallocating our existing inputs toward a different use, rather than from accumulating new physical or human capital, the shift in spending toward high-markup firms shows up as an increase in productivity growth.

More books should be like this, it actually tries to teach the reader something!  And succeeds.  Definitely recommended.  Due out in January, you can pre-order here.