Economic Possibilities for Our Children..Larry Summers edition

Keynes wrote a paper on the same topic.

Now we have Larry Summers who explores the subject in 2013 Martin Feldstein Lecture.

I learned about how to approach economic research from watching Marty. There is a central element that has been a part of his approach to economics, and it has always been a part of mine, both as an economist and a policymaker. It is the approach of many in our profession, but not all. This is the belief that we cannot aspire to know the world with complete precision; that no single parameter will measure with precision how our economy is going to respond to a policy or a shock. Rather, what we can aspire to establish is a combination of logic, modeling, suggestive anecdote and experience, and empirical measurements from multiple different perspectives that lead to an overall view on economic phenomena. That kind of overall view on economic phenomena moves the world forward much more than a precise estimate of a single parameter.

It is very much in that spirit that I want to reflect with you this afternoon on economic possibilities for our children. Keynes wrote a famous essay entitled “Economic Possibilities for Our Grandchildren.” I am not Keynes, so I cannot look nearly as far forward as he did. But I am seeking to speak in the same spirit. At a moment of substantial cyclical distress, at a moment of financial preoccupation, I would like to look to the broader technological forces that are operating and that will shape the structure of our economy and how people live over the long term.

I think of my horizon as being more like a generation than the century that Keynes spoke of. At one level, by the way, Keynes did pretty well. He predicted that incomes in the industrialized world would rise eightfold between 1930 and 2030 and they’ve risen a little more than sixfold so far, so he’s looking pretty good on that prediction. But Keynes also got some things wrong. He predicted that as incomes rose eightfold, the workweek would fall to 15 or 20 hours. The reason he got that wrong is something that I hadn’t previously reflected on.

He speaks on how info tech has changed things:

In conclusion, I invite you to consider how the prodigious change associated with information technology that may be qualitatively different from past technological change may have defining implications for our economy going forward. If I have caused you to reflect on the fact that very substantial relative price changes are likely to be associated with dramatic changes in the structure of employment, the nature of economic activity, and the relative importance of the widget-producing firm in our economy, and to consider the implications this will have for the future of the subject with which I began my career in economics under Marty’s tutelage, public economics, then I will have served my purpose this afternoon.

Nice bit..


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