This week's Outside the Box does not make me feel good, but author Benjamin Wallace-Wells does explain Robert Gordon’s views better than anyone I have seen. (And of course the whole point of Outside the Box is to yank us out of our comfort zones from time to time.)
Dr. Robert Gordon is a professor of economics who has held a named chair at Northwestern University for decades; but as the author of this piece says, "[T]he scope of his bleakness has given him, over the past year, a newfound public profile." Gordon offers us two key predictions, both discomfiting. The first pertains to the near future, when, he says, our economy will grow at less than half its average rate over the last century because of a whole raft of structural headwinds.
His second prediction is even more unsettling. He thinks the forces that drove the second industrial revolution (beginning in 1870 and created largely in the US) were so powerful and so unique that they cannot be repeated.
(A corollary view of Gordon's, mentioned only indirectly in this article, is that computers and the internet and robotics and nanotech and biotech are no great shakes, compared to the electric grid and internal combustion engine, as forces for economic change. Which is where he and I part company.)
He thinks, in short, that we do not understood how lucky we have been, nor do we comprehend how desperately difficult our future is going to be. If nothing else, Gordon has provoked some serious reaction from leading figures who are not quite ready to throw in the towel. “Very impressive,” former Treasury Secretary (and leading Fed Chairman candidate) Larry Summers texted Gordon last August, the day after he published a working paper titled “Is U.S. Economic Growth Over?” Ben Bernanke delivered a commencement address this spring considering the paper’s implications. And of course the techno-optimists have been buzzing around Gordon like angry hornets. (An interesting TED-talk anecdote along these lines is related herein.)
Gordon makes me very uncomfortable, too, but he's got me thinking not only about how we find growth but also about how we do a better job of managing our affairs, nationally and globally. I think Gordon's totally bleak view misses more than half the story, but it's up to all of us who still believe in the future of this country and this planet (and its increasingly dominant if not altogether wise species) to reject naysaying attitudes and stand right up on our hind legs and envision and create that future.
And it is quite possible that we will find ourselves with two very different parallel futures for the world. In one, the haves may see their lives get dramatically better, while in the other those less fortunate may suffer an even greater economic and political disparity. That is not a formula for a workable future.
I’m in New York City this afternoon, working on too many projects. But I am going to take off in a few hours and make my way down to Bobby Van’s at the close of the markets to meet with the Friends of Fermentation and my great friend Art Cashin. I wanted to see him yesterday, but he had a doctor’s appointment. Then this morning I read in his daily letter:
Missing Mauldin – My good friend John Mauldin is on one of his New York "drive-bys" on his way to the annual fishing visit to Leen's Lodge in Maine with another friend, David Kotok, and an economic brain trust. Since he was in town, he thought he might drop in on the Friends of Fermentation nightly conclave, as our mutual friend Dennis Gartman had done so notably last week.
Unfortunately, I had a late day doctor's appointment that would most likely mean I might miss the FoF seminar myself. So, I gave John the wave-off until another time.
That's when the roof fell in. You would have thought I had canceled Christmas. On learning of the wave-off, the FoF offered me sackcloth and ashes. How could I dare cancel a rare opportunity to have John join the session? Even Bob Pisani was not happy.
Ironically, the doctor's office was empty and the test results were all good. (Obviously, none had to with my mental state or acuity.)
When I slinked into the FoF at mid-session, I was the proverbial skunk at the picnic. Since I had deprived them of access to John's wit and wisdom (leaving them with only me), I was told the bill was on me. I left with a much thinner wallet amid barely suppressed hissing. I'll never wave-off Mauldin again, even if there are riots in the streets. Next time, John!
Next time indeed. I can’t leave a friend out in the cold.
Have a great week! My son Trey joins me tomorrow, and then we fly on to Maine Thursday morning. This is one of those weeks that I look forward to all year. So many friends. I think this may be the 7 th or 8th year Trey has gone. He has grown up with these guys, and it is a special bonding time for both of us. And who knows, maybe this year I’ll finally catch more fish than he does! All bear markets have to end someday, don’t they?
You’re getting ready to slow down analyst,
John Mauldin, Editor
Outside the Box
By Benjamin Wallace-Wells
What if everything we've come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course?
Picture this, arranged along a time line.
For all of measurable human history up until the year 1750, nothing happened that mattered. This isn't to say history was stagnant,…