The Way It Worked and Why It Won't: Structural Change and the Slowdown of U.S. Economic Growth

The Way It Worked and Why It Won't: Structural Change and the Slowdown of U.S. Economic Growth

The Way It Worked and Why It Won't: Structural Change and the Slowdown of U.S. Economic Growth

The Way It Worked and Why It Won't: Structural Change and the Slowdown of U.S. Economic Growth

Synopsis

While the decline of U.S. economic growth has been widely recognized and debated by professional economists, no one has until now offered a comprehensive description and explanation until now. Professor Bjork does so, and he explains the growth slowdown as a natural consequence of economic maturity.

Excerpt

We live life facing forward but understand it looking backward. --Sϕren Kierkegaard

The decline in the growth rate of the U.S. economy over the past quarter- century is widely recognized by economists. However, the causes of the decline are the subject of extensive speculation by economists and others. Some of the speculation by economists is based on misinformation about the historical record, and misconceptions about the process of economic growth. Some of the misconceptions about economic growth communicated to the public by journalists and politicians are based on misunderstanding of the nature of measurement in economics. These misconceptions lead to assertions that America could reverse the decline in the rate of economic growth and return to higher and increasing rates of growth if we only followed the right policies.

The claims are appealing. Many people yearn for a return to a mythical past when things were better. That theme lies behind part of the title for this book, which is a play on the title of one of my favorite films--"The Way We Were." in the film stars Barbra Streisand and Robert Redford indulge in nostalgic flashbacks to the romance of their college days; but the film ends with their realization that the romance of their adolescence is no longer relevant to their mature years. Similarly contrasting adolescence and maturity, this book explains how measured growth in per capita incomes increased more rapidly in the past than it does in the present--and why it won't increase even that fast in the future.

This book presents and explains the evidence on three related economic phenomena: (1) the acceleration and deceleration over the past century in the observed rate of growth of Gross Domestic Product (GDP) per worker hour resulting from structural changes in the composition of output; (2) the decline . . .

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