Edmund Phelps was the 2006 Nobel laureate in Economics and is director of the Center on Capitalism and Society at Columbia University. He argues in the FT this morning that the:
slowdown [in European growth] resulted from narrowing innovation. Even in the postwar years, innovation in Europe was feeble by past standards. In the 1960s, it slackened again, leaving the continent largely dependent on America for new ideas that would generate further productivity growth. But in the 1970s American innovation, confined to Silicon Valley, waned in the aggregate. The pool of past American advances on which Europe could draw would narrow to a trickle and lead to the productivity slowdown on the continent in the late 1990s and which came later to Germany.
This is an idea I have put forward on this blog, often.
The simple fact is that the need for the goods and services that the market supplies has been, to a very large degree, satisfied by the current state of technology given the current state of wealth and income distribution in Europe and there is little or no chance of some new technology coming along and changing that any time soon, not least because no one is investing to make that happen.
No, it isn’t an idea that you’ve put forward often.
The productivity growth of the 50s and 60s was largely catch up growth from the 30s and 40s. The slow down of productivity growth in the 70s and 80s was largely an effect of the growing regulatory state. Productivity growth increased as that regulatory state was dismantled to a small extent in the late 80s and 90s.
Phleps most assuredly ain’t agreeing with you Ritchie, m’lad.