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Is the U.S. Condemned by History to Slow Growth?

An academic paper makes the argument that the economy’s best days are behind it
Is the U.S. Condemned by History to Slow Growth?
Illustration by Adam James Turnbull/Colagene

On Oct. 8 the International Monetary Fund lowered its global growth forecast for 2013, from 3.9 percent to 3.6 percent. The fund also warned of an “alarmingly high” chance that growth would slip below 2 percent next year. The number crunchers at the IMF, like most economic forecasters, rely on the basic assumption that over time, growth will do what it always has done: It will trend upward, and the ups will be greater than the downs. A group of economists who take the long view of history—a very, very long view—are now challenging the conventional wisdom.

The standard theory of economic growth comes from two papers penned in the 1950s by Robert Solow that would eventually earn him the Nobel Prize. Before Solow, growth was seen as simply a function of population and capital accumulation: More money plus more people equals more growth. The Massachusetts Institute of Technology economist pointed out that technology had something to do with growth, too. Technological advances, such as the mechanization of looms or the computerization of spreadsheets, increase the economy’s productive potential.