Results for “stagnation” 721 found
Aromafork (there is no great stagnation)
Christopher Snow reports:
What would you give to make all your veggies taste like chocolate? Would you give $60 to a Canadian molecular gastronomy company called Molecule-R? Because that’s how much it’s asking for the new “Aromafork.”
Molecular gastronomy is a subset of modern cuisine that borrows many of its innovations from the scientific community, but you don’t need to be a scientist to know the tongue is only responsible for a portion of overall taste. It’s your nose that fills in most of the subtleties of a given flavor, and that’s how the Aromafork works.
Each Aromafork—you get four of them—has a notch near the prongs to hold a small, circular diffusing paper. Onto the diffuser you’ll drop one of the 21 included aromas, like coffee, basil, peanut, ginger, smoke, and—yes—chocolate.
Of course the Aromafork isn’t intended solely to mask the flavor of yucky vegetables, but rather to extend the possibilities for creative food pairings. Molecule-R’s website suggests seared tuna with the aroma of truffle, or strawberries with a hint of mint, or eggs with a whiff of cilantro. The only limit is your creativity.
The company’s website is here, and for the pointer I thank Ray Llpez.
Caffeine-infused underwear fails (there is a great stagnation)
Bras, girdles and leggings infused with caffeine and sold as weight loss aids were more decaf than espresso, and the companies that sold them have agreed to refund money to customers and pull their ads, U.S. regulators said on Monday.
The Federal Trade Commission said Wacoal America and Norm Thompson Outfitters, which owns Sahalie and others, were accused of deceptive advertising that claimed their caffeine-impregnated clothing would cause the wearer to lose weight and have less cellulite.
There is more here, and for the pointer I thank Glenn Mercer.
Scott Sumner on demand-side secular stagnation
It seems to me that the Krugman/Summers view has three big problems:
1. The standard textbook model says demand shocks have cyclical effects, and that after wages and prices adjust the economy self-corrects back to the natural rate after a few years. Even if it takes 10 years, it would not explain the longer-term stagnation that they believe is occurring.
2. Krugman might respond to the first point by saying we should dump the new Keynesian model and go back to the old Keynesian unemployment equilibrium model. But even that won’t work, as the old Keynesian model used unemployment as the mechanism for the transmission of demand shocks to low output. If you showed Keynes the US unemployment data since 2009, with the unemployment rate dropping from 10% to 6.1%, he would have assumed that we had had fast growth. If you then told him RGDP growth had averaged just over 2%, he would have had no explanation. That’s a supply-side problem. And it’s even worse in Britain, where job growth has been stronger than in the US, and RGDP growth has been weaker. The eurozone also suffers from this problem.
The truth is that we have three problems:
1. A demand-side (unemployment) problem that was severe in 2009, and (in the US) has been gradually improving since.
2. Slow growth in the working-age population.
3. Supply-side problems ranging from increasing worker disability to slower productivity growth.
I agree completely, his post is here. And on labor turnover, don’t forget Alex’s earlier post here.
Does natural resource wealth imply technological stagnation?
Peter Thiel tells us:
Look at the Forbes list of the 92 people who are worth ten billion dollars or more in 2012. Where do they make money? 11 of them made it in technology, and all 11 were in computers. You’ve heard of all of them: It’s Bill Gates, it’s Larry Ellison, Jeff Bezos, Mark Zuckerberg, on and on. There are 25 people who made it in mining natural resources. You probably haven’t heard their names. And these are basically cases of technological failure, because commodities are inelastic goods, and farmers make a fortune when there’s a famine. People will pay way more for food if there’s not enough. 25 people in the last 40 years made their fortunes because of the lack of innovation; 11 people made them because of innovation.
I also liked this bit:
One of the smartest investors in the world is considered to be Warren Buffett. His single biggest investment is in the railroad industry, which I think is a bet against technological progress, both in transportation and energy. Most of what gets transported on railroads is coal, and Buffett is essentially betting that after the 21st century, we’ll look more like the 19th rather than the 20th century. We’ll go back to rail, and back to coal; we’re going to run out of oil, and clean-tech is going to fail.
This very useful post collates and presents all of Peter’s evidence for his view that modern technology has been stagnating. It is both “interesting throughout” and “self-recommending.” It is from this blog by Dan Wang.
I very much liked Peter’s new book, Zero to One: Notes on Start-Ups, or How to Build the Future.
Is China seeing a great stagnation?
China’s 1% average annual growth in total factor productivity between 1978 and 2012 – a period when average per capita annual incomes rose from $2,000 to $8,000 — compares with 4% annual gains for Japan during its comparable 1950-1970 high-growth period, 3% for Taiwan from 1966-1990 and 2% for South Korea from 1966-1990, he said, when purchasing power in the relative economies is taken into account.
“Our study shows that China’s spectacular growth in the reform period has been mainly investment-driven and quite inefficient,” Mr. Wu wrote.
A big problem, which often complicates efforts to assess the health of China’s economy, is the reliability of Chinese data. Using three measures of productivity, J.P. Morgan economist Haibin Zhu concludes in a research note that China’s total factor productivity grew 1.1% in 2013 from a 3.2% expansion in 2008. Mr. Wu draws on different methodology to argue that total factor productivity turned negative from 2007 to 2012.
“Correctly measuring China’s productivity has, not surprisingly, been obstructed by severe data problems that have resulted in widely contradictory productivity performance estimates,” Mr. Wu said.
I would classify this as highly speculative. TFP is hard enough to measure in the first place, but in a rapidly growing economy productivity boosts are especially likely to be embodied in (and measured as) rising capital expenditures. Still, it is an interesting perspective on what is the number one economic problem in the world today.
Stephen Williamson on secular stagnation
Well, Eggertsson and Mehrotra have fleshed out a theory that they think captures what Summers and Krugman are trying to get at. The Eggertsson and Mehrotra chapter in this volume is a summary of a formal academic paper that I discussed in this post. The gist of that blog post is that Eggertsson and Mehrotra – as with Eggertsson/Krugman, which is closely related – focus on the wrong problem. The key inefficiency in their model arises from a credit friction, but they are focusing their attention on the secondary zero-lower-bound inefficiency that the credit friction creates. Basically, the problem is insufficient government debt, and the solution is straightforward.
There is more here, interesting throughout, for those who find this interesting that is.
Addendum: Scott Sumner has some more practical comments.
There is no Korean great stagnation
…in South Korea, the Hanwha Eagles (former team of Hyun-Jin Ryu) have gone “next level” by providing robots to stomp and yell unifying chants for those who cannot attend the game in person.
There is more here, good short video, the robots take on the actual faces of absent fans, and for the pointer I thank Isaac.
There is no feline great stagnation
Facial recognition is helping improve everything from gaming to fighting crime – and now it could help in the battle against cat obesity.
A new gadget that uses ‘cutting-edge cat facial recognition technology’ promises to monitor our feline friends’ appetites and alert owners to any problems.
The Bistro system, created by Taiwanese company 42Ark, uses a camera at the front of a feeder to identify each of the cats.
There is more here, along with obligatory cat photo, with the cat’s face being scanned by facial recognition technology. For the pointer I thank Mark Thorson.
Sentences to ponder, secular stagnation and aggregate demand
…in reality the very period over which income inequality has increased the most, total savings rates have fallen precipitously…
That is from Ashok Rao, and on secular stagnation theories more generally there is more here.
African-American fact of the day (there is a great stagnation)
As sociologist Patrick Sharkey shows in his book Stuck in Place, 62 percent of black adults born between 1955 and 1970 lived in neighborhoods that were at least 20 percent poor, a fact that’s true of their children as well. An astounding 66 percent of blacks born between 1985 and 2000 live in neighborhoods as poor or poorer as those of their parents.
That is from Jamelle Bouie, there is more here, mostly about neighborhood effects.
Matt Rognlie on secular stagnation
In the comments of Askblog, Matt writes:
…the “secular stagnation” hypothesis is in dire need of some cogent back-of-the-envelope estimates, and I don’t think it holds up very well. A long-term fall in the average real interest rate from, say, 2% to -1%, would be absolutely extraordinary. It would imply massive increases in the valuation of long-lived, inelastically supplied assets like land, and massive increases in the quantity of long-lived, elastically supplied capital like structures.
Just to illustrate how extreme the implications can be, consider the following (sloppy) calculation. The BEA’s average depreciation rate for private structures is currently about 2.5%. A decline in the real interest rate from 2% to -1% implies a decline in user cost r+delta from 4.5% to 1.5%, of a factor of three. If the demand for structures is unit elastic (as economists, unjustifiably from an empirical standpoint, tend to assume with Cobb-Douglas functional forms), this would imply a threefold increase in the steady-state quantity. Since structures are already 175% of GDP, this would imply an additional increase of 350% of GDP, more than doubling the overall private capital stock and nearly doubling national net worth. The transition to this level would require such an extraordinary, prolonged investment boom that we would not face slack demand for many, many years.
(There are many things wrong with this calculation, but even an effect a fraction of this size serves my point, especially when you keep in mind that land values would be skyrocketing as well. The bottom line is that proponents of secular stagnation have not yet contended with some of the basic numbers.)
There is more here. That is via David Beckworth.
I am still waiting for a model of secular stagnation that rationalizes both a negative real interest rate and positive investment, which indeed we are observing in most countries circa 2014. That means, by the way, I don’t quite agree with Matt’s sentence “The transition to this level would require such an extraordinary, prolonged investment boom that we would not face slack demand for many, many years.” There are some “reasoning from a price change” issues floating around in the background here. Is it the productivity of just new capital that has fallen to bring the natural interest rate to negative one? Or the rate of return on old capital too, in which case the value of the extant capital stock is not given by the calculation in question? Tough stuff, but you know where the burden of proof lies. Can this all fit together with the fact that nominal gdp is now well above its pre-crash peak? And that we are seeing positive net investment? In any case I agree with Matt’s broader point that the implied magnitudes here don’t seem to fit the facts or even to come close.
Speaking of Piketty (or did I mean to write “speaking of Scott Sumner?”), Scott has a question:
…here’s what confuses me. Some of the reviews seem to imply that Piketty argues that real rate of return on capital represents the rate at which the wealth of the upper classes grow. Is that right? If so, what is the basis of that argument? I don’t think anyone seriously expects the grandchildren of a Bill Gates or a Warren Buffett to be 10 times as wealthy as they are.
The INTIMACY project (there is no great stagnation)
INTIMACY is a high-tech fashion project exploring the relation between intimacy and technology. Its high-tech garments entitled ‘Intimacy White’ and ‘Intimacy Black’ are made out of opaque smart e-foils that become increasingly transparent based on close and personal encounters with people.
Social interactions determine the garmentsʼ level of transparency, creating a sensual play of disclosure.
INTIMACY 2.0 features Studio Roosegaardeʼs new, wearable dresses composed of leather and smart e-foils which are daringly perfect to wear on the red carpet. In response to the heartbeat of each person, INTIMACY 2.0 becomes more or less transparent.
There is more information here, and for the pointer I thank Samir Varma.
Robert Gordon’s sequel paper on the great stagnation
You will find his NBER paper here, in which he responds to critics and outlines his core argument that U.S. growth is doomed to be slow and subpar for a long time to come. There is no point in summarizing this already-familiar debate, so let’s cut straight to the chase:
1. I agree with a great deal of this paper, to say the least, especially when it is compared to previous mainstream opinion on these topics. My favorite parts are his discussions of how multi-faceted were the waves of earlier progress starting in the 19th century, compared to some of the more recent and weaker tech revolutions. That said, in some key ways this piece falls short of meeting the standards of reasoned argumentation.
2. The single biggest question is how much the United States will be able to draw upon innovation from other countries, over the next say 40 years. Gordon doesn’t discuss this in a serious way. The rest of his paper simply lists a bunch of pessimistic factors (valid worries, I might add) and then declares he can’t think of anything else that might turn them around. Maybe that should shift your “p,” but one’s own failure to imagine shouldn’t imply a very firm conclusion about impossibilities.
3. There is a key passage on p.26: “My forecast of 1.3 percent annual total-economy productivity growth in the future does not require any foresight beyond suggesting that the past 40 years are a more relevant benchmark of feasible productivity growth than the 80 years of before 1972.” Fair enough, but how about looking at the last 120 years or last 120,000 years for that matter? The overall pattern is lots of pauses, followed by eventual new bursts of progress. That’s no proof of a future subsequent burst of progress, but so far history is not on the side of the long-term tech pessimists. It may be on the side of the short-term tech pessimists, at least for a while. Gordon, in 2003, wrote rather wisely: “But is it possible to be so sure which decades into the past are relevant for predictions…”
4. Gordon doesn’t know much about the literature on driverless vehicles and their potential, and yet he escalates his rhetoric to the point of giving the reader the impression that he approaches the entire question of tech progress with simple irritation: “This category of future progress is demoted to last place because it offers benefits that are so minor [compared to cars]…”
5. Advances in the biosciences are dismissed in two short paragraphs. For sure, I am myself somewhat in tune with the pessimistic perspective here. I think these advances were way over-promised and still may take longer than people think. Still, Gordon doesn’t offer any argument. His first sentence of that brief section says it all: “Future advances in medicine related to the genome have already proved to be disappointing.” This is a simple confusion of past and future tense.
7. Gordon still fails to credit the originators of the growth slowdown idea, as applied to contemporary times, namely Michael Mandel and Peter Thiel. The first sentence of his paper reads: “A controversy about the future of U.S. economic growth was ignited by my paper released in late summer 2012.” I would add, perhaps with a bit of peevishness, that a lot of the actual debate was kicked off by my own The Great Stagnation, published in January of 2011 and which was covered and commented on extensively. (And which by the way was dedicated to Mandel and Thiel, as well as citing them.) And if I did not credit Gordon more aggressively at that time, it is because I was all too well aware of his 2003 essay, “Exploding Productivity Growth,” the contents of which I do not need to relate any further but if you wish read at the link.
Gordon would do well to reflect a little more deeply on how and why he has changed his mind over the last ten years and what this implies for when a bit more agnosticism would be appropriate.
Addendum: I agree with Kevin Drum. Matt Yglesias comments too.
Brad Delong on stagnationist arguments
He has a very long and interesting post — over 9000 words — so do read the whole thing. Here is one excerpt:
…we have an argument that we were not as rich as we thought we were, an argument which indeed seems to me to be true, but that is not an argument that future growth will slow but rather that past growth was misperceived because of irrational exuberance. Only with “no new net job creation in the last decade…” is there even a datum that I see as about a “great stagnation”. But then Tyler branches off into failures of American governance, failures that seem to me to be no greater than the failures of American governance have always been. Yes, failing governance. Yes, overestimated wealth at the end of the 1990s and in the mid-2000s. Yes, a somewhat more sclerotic-appearing labor market as far as cyclical adjustment is concerned. Yes, a successful class war waged by the 1% on the rest of us–or, rather, if my household income in 2014 is what I think it will be, on the rest of you. Yes, a huge demand shortfall-driven business-cycle downturn.
Where in all of this is the promised “great stagnation”? I do not see it.
The latter part of his post, however, is more sympathetic to stagnationist arguments, so do read the whole thing.
I would offer a few points in response:
1. I am not the “pessimist” Brad thinks I am; I sometimes say I am a revenue pessimist, but a happiness optimist. In this regard Brad’s case for an ongoing growth in well-being is not opposed to all stagnationist ideas. But we are still short a few transformative technologies compared say to 1870-1960, and that matters for what kinds of changes we are going to get.
2. For all the usefulness of the AD-AS model for the short run, I don’t see AD and AS as so clearly separable over the medium term and certainly not over the long term. In this regard I think today’s Keynesians are often taking that model too literally. Had we done a better job of generating wealth, demand today and looking forward would be stronger.
3. I don’t see a belief in the efficacy of institutional changes as an alternative to stagnationist views. One can and probably should believe both a) big institutional changes could bring us significant growth benefits, and b) given some approximation of the current set of policies, we have been on a relatively unfruitful part of the technology yield curve. On top of that c) policies don’t always change so quickly and so “b)” remains an important consideration, and d) the “golden years” for growth themselves had some pretty terrible policies and institutions, not the least of which was an extreme legacy of racial, gender, and other kinds of (grossly inefficient) discrimination. Transformative technologies can overcome a lot of human stupidity, and it would be nice to have more of those.
Arnold Kling on “secular stagnation” theses
He makes some good additional points:
Here are some criticisms that come to mind.
1. If “the” full-employment real interest rate is negative, then why do we need quantitative easing? Why does not the excess of saving over investment not by itself drive long-term rates to zero?
2. Summers wants to claim that full employment has been achieved in recent years because of asset bubbles. However, in a world of negative real interest rates, there is no such thing as an asset bubble. Real assets have infinite value in such a world.
The full post is here.