I've no idea how this all plays out and I don't think anyone else has more than a guess. We'll see who the good guessers are.
Krugman's Monday post was interesting but more interesting were some of the commentariat, more later.
From Mother Jones:
A few days ago Tyler Cowen pointed me to an op-ed by Robert Gordon suggesting that future economic growth will be fairly sluggish. Gordon points out, correctly, that the strong growth of the 20th century was based on two key inventions, electrification and the internal combustion engine, and the thousands of innovations that followed on from those. The computer revolution of the late 20th century just hasn't produced as much innovation, and thus hasn't powered as much growth.
Fair enough, as far as it goes. But what about the future? Here's the nutshell version of Gordon's op-ed:
The first response from skeptics always involves health care....[But] pharmaceutical research appears to be entering a phase of diminishing returns....The fracking revolution and soaring oil and gas production have also excited optimists. But this isn't a source of future economic growth....Another claim by the growth optimists is that 3-D printing and micro-robots will revolutionize manufacturing....Can economic growth be saved by Google's driverless car? This is bizarre ground for optimism, but it is promoted not just by Google's Eric Schmidt but by the Massachusetts Institute of Technology's Erik Brynjolfsson.This is very strange. Gordon may be right about all these things, but he rather conspicuously left out the most important future innovation of all: artificial intelligence. You simply can't write about the future of innovation without talking about that. At the very least, you need to acknowledge it, and then explain why you think it will never happen, or why it won't produce a lot of future growth even if it does. But you can't just ignore it and then say there are no grounds for being optimistic about future growth. It would be like writing about the future of sports in 1960 and not bothering to address the possibility that television might have an impact on things....MORE