Ahem.
Essentially, he\’s taking the growth rate in the longest boom ever as the trend growth rate. Everything else flows from that.
And, sadly, the growth rate during the longest boom ever is not in fact the trend growth rate. For long booms, as Keynes himself continually pointed out, will lead to bubbles, bubbles which burst, and thus some of that growth being recorded is in fact ephemeral, not in fact real.
So comparing where the economy could be by using as your trend growth rate the growth rate in that longest boom ever is, umm, well, no, it\’s wrong.
As is Ritchie\’s latest venture into macroeconomics.