Welcome to the new normal – has this all been a blip?

I have just finished reading a truly fascinating and eye opening article discussing the theory of the economist Robert Gordon, an economist who is described as a declinist and an accidental social theorist. A link to the full article is at the bottom of this page. But to summarise, here is what it has to say:

For all of measurable human history up until 1750, nothing much happened to peoples living standards; the well-being of average people did not perceptibly improve.

The first industrial revolution, beginning in the North of England massively changed this, followed hotly on its heels by the second industrial revolution in the US.

The consequence of this is that from 1750 instead of permanent stagnation we saw rapid growth so that by the 1960’s the average Briton would double their parents’ standard of living.

However, by the 1970s this began to taper off. Growth slowed. Gordon makes an anecdotal reference to this: compare your kitchen now to one of thirty or forty years ago, how different is it really apart from superficial changes and gadgets?

The fundamental point is that, what if the last 250 years or so of growth have been a blip? That our current downturn isn’t really a downturn, it’s a return to the pre 1750 normal. We can see plenty of examples of this. There is the kitchen, but also the fact that the generation of Britons now in their twenties is the first to not be significantly better educated than their parents.

Importantly too, the last 250 years of growth have instilled in people a sense of entitlement, that their lives will improve. What if they won’t, what if the last 250 years truly was a blip. In a very doomsday scenario, the question is posed, if we get to zero point zero growth, the only way to gain is to take from somebody else.

However, there is a counter argument, and like the theory of Gordon, it’s interesting. Underpinning it is innovation and technology. It is argued that we are only now, just, getting to grips with what technology can mean for society and the economy. In much the same way it took 30 years for productivity to increase in factories after the introduction of electricity. In short, technology = innovation = growth.

It’s a truly fascinating debate. For brands the implications are real, whichever side of the debate you proffer; How do you innovate to drive growth?

You can read the full article here http://nymag.com/news/features/economic-growth-2013-7/


About Author

Leave A Reply