Fully Grown : Why a Stagnant Economy Is a Sign of Success

Most economists would agree that a thriving economy is synonymous with GDP growth. The more we produce and consume, the higher our living standard and the more resources available to the public. This means that our current era, in which growth has slowed substantially from its postwar highs, has raised alarm bells. But should it? Is growth actually the best way to measure economic success—and does our slowdown indicate economic problems? The counterintuitive answer Dietrich Vollrath offers is: No. Looking at the same facts as other economists, he offers a radically different interpretation. Rather than a sign of economic failure, he argues, our current slowdown is, in fact, a sign of our widespread economic success. Our powerful economy has already supplied so much of the necessary stuff of modern life, brought us so much comfort, security, and luxury, that we have turned to new forms of production and consumption that increase our well-being but do not contribute to growth in GDP. In __Fully Grown__, Vollrath offers a powerful case to support that argument. He explores a number of important trends in the US economy: including a decrease in the number of workers relative to the population, a shift from a goods-driven economy to a services-driven one, and a decline in geographic mobility. In each case, he shows how their economic effects could be read as a sign of success, even though they each act as a brake of GDP growth. He also reveals what growth measurement can and cannot tell us—which factors are rightly correlated with economic success, which tell us nothing about significant changes in the economy, and which fall into a conspicuously gray area. Sure to be controversial, __Fully Grown__ will reset the terms of economic debate and help us think anew about what a successful economy looks like. Vollrath challenges our long-held assumption that growth is the best indicator of an economy’s health. Most economists would agree that a thriving economy is synonymous with GDP growth. The more we produce and consume, the higher our living standard and the more resources available to the public. This means that our current era, in which growth has slowed substantially from its postwar highs, has raised alarm bells. But should it? Is growth actually the best way to measure economic success—and does our slowdown indicate economic problems? The counterintuitive answer Dietrich Vollrath offers is: No. Looking at the same facts as other economists, he offers a radically different interpretation. Rather than a sign of economic failure, he argues, our current slowdown is, in fact, a sign of our widespread economic success. Our powerful economy has already supplied so much of the necessary stuff of modern life, brought us so much comfort, security, and luxury, that we have turned to new forms of production and consumption that increase our well-being but do not contribute to growth in GDP. In Fully Grown, Vollrath offers a powerful case to support that argument. He explores a number of important trends in the US economy: including a decrease in the number of workers relative to the population, a shift from a goods-driven economy to a services-driven one, and a decline in geographic mobility. In each case, he shows how their economic effects could be read as a sign of success, even though they each act as a brake of GDP growth. He also reveals what growth measurement can and cannot tell us—which factors are rightly correlated with economic success, which tell us nothing about significant changes in the economy, and which fall into a conspicuously gray area. Sure to be controversial, Fully Grown will reset the terms of economic debate and help us think anew about what a successful economy looks like. Most economists would agree that a thriving economy is synonymous with GDP growth. The more we produce and consume, the higher our living standard and the more resources available to the public. This means that our current situation, in which the rate of growth has slowed substantially from its postwar highs, has rung alarm bells. But should it? Is growth actually the best way to measure economic success -- and does our slowdown indicate problems? The counterintuitive answer Dietrich Vollrath offers is no. Looking at the same facts as other economists, he offers a radically different interpretation. Rather than a sign of a failure, he argues, the long-term slowdown is, in fact, a sign of our widespread economic success. Our powerful economy has already supplied so much of the necessary stuff of modern life, brought us so much comfort, security, and luxury, that we have turned to new forms of production and consumption that increase our well-being but do not contribute to growth in GDP. In Fully Grown, Vollrath offers a powerful case to support that argument. He explores a number of trends in the US economy, including a decrease in the number of workers relative to the population, a shift from a goods-driven economy to a services-driven one, and a decline in geographic mobility. In each case, he shows how the economic effects can be read as a sign of success, even though each acts as a brake on GDP growth. He also reveals what growth measurement can and cannot tell us -- which factors are rightly correlated with economic success, which tell us nothing about significant changes in the economy, and which fall into a conspicuously gray area. -- dust jacket -- Informació de l'editor Vollrath challenges our long-held assumption that growth—as measured by the GDP—is the best indicator of an economy's health: "A must-read." — Financial Times Most economists would agree that a thriving economy is synonymous with GDP growth. The more we produce and consume, the higher our living standard and the more resources available to the public. Looking at the same facts as other economists, Dietrich Vollrath offers a radically different interpretation. Rather than a sign of economic failure, he argues, our current slowdown is, in fact, a sign of our widespread economic success. Our powerful economy has already supplied so much of the necessary stuff of modern life that we have turned to new forms of production and consumption that increase our well-being but do not contribute to growth in GDP. In Fully Grown , Vollrath offers a powerful case to support that argument. He explores a number of important trends in the US economy: including a decrease in the number of workers relative to the population, a shift from a goods-driven economy to a services-driven one, and a decline in geographic mobility. In each case, he shows how their economic effects could be read as a sign of success, even though they each act as a brake of GDP growth. He also reveals what growth measurement can and cannot tell us—which factors are rightly correlated with economic success, which tell us nothing about significant changes in the economy, and which fall into a conspicuously gray area. Sure to be controversial, Fully Grown will reset the terms of economic debate and help us think anew about what a successful economy looks like. "It is widely assumed by economists that growth- an increase in GDP, or the value of our output and expenditure- is essential to thriving, developed economies. The more we produce and consume, the better our living standards, public resources, and employment options. While few would deny that growth is an important measure of economic success, many see it as just one window to a healthy economy. As co-author of a leading undergrad textbook, Dietrich Vollrath is well versed in the factors that contribute to growth and in the reasons it is so exalted. And yet he questions whether a slowdown in growth, like the one currently experienced in the US and elsewhere, is truly and holistically a failure of the economy. Our living standards aren't falling and firms are not failing. Could it be that growth and the factors that contribute to it are not as indicative or influential as we once thought them to be? Indeed, Vollrath argues that the slowdown is a manifestation of our economic success. In Optimal Stagnation, Vollrath focuses largely on the US economy and investigates a number of important trends: a fall in the number of workers relative to the population, the shift from a goods-driven economy to a services-driven one, the slowing in turnover of workers and the slower rate of entry and exit by firms, as well as the decline in geographic mobility. He maps what growth measurement does and doesn't tell us-which factors are rightly correlated with economic success, which ones tell us nothing about significant changes in the economy, and which ones fall into a conspicuously grey area"-- Provided by publisher Preface 1 Victims of Our Own Success 2 What Is the Growth Slowdown? 3 The Inputs to Economic Growth 4 What Accounts for the Growth Slowdown? 5 The Effect of an Aging Population 6 The Difference between Productivity and Technology 7 The Reallocation from Goods to Services 8 Baumol’s Cost Disease 9 Market Power and Productivity 10 Market Power and the Decline in Investment 11 The Necessity of Market Power 12 Reallocations across Firms and Jobs 13 The Drop in Geographic Mobility 14 Did the Government Cause the Slowdown? 15 Did Inequality Cause the Slowdown? 16 Did China Cause the Slowdown? 17 The Future of Growth