67 Johan Ugander, Brian Karrer, Lars Backstrom, and Cameron Marlow, “The Anatomy of the Facebook Social Graph,” Cornell University, 2011, https://arxiv.org/abs/1111.4503v1.
68 Yosh Halberstam and Brian Knight “Homophily, Group Size, and the Diffusion of Political Information in Social Networks: Evidence from Twitter,” Journal of Public Economics, 143 (November 2016), 73–88, https://doi.org/10.1016/j.jpubeco.2016.08.011.
69 David Brock, The Republican Noise Machine (New York: Crown, 2004).
70 David Yanagizawa-Drott, “Propaganda and Conflict: Evidence from the Rwandan Genocide,” Quarterly Journal of Economics 129, no. 4 (2014), https://doi.org/10.1093/qje/qju020.
71 Matthew Gentzkow and Jesse Shapiro, “Ideological Segregation Online and Offline,” Quarterly Journal of Economics 126, no. 4 (2011), http://doi.org/10.1093/qje/qjr044.
72 Levi Boxell, Matthew Gentzkow, and Jesse Shapiro, “Greater Internet Use Is Not Associated with Faster Growth in Political Polarization among US Demographic Groups,” Proceedings of the National Academy of Sciences of the United States of America, 2017, https://doi.org/10.1073/pnas.1706588114.
73 Gregory J. Martin and Ali Yurukoglu, “Bias in Cable News: Persuasion and Polarization,” American Economic Review 107, no. 9 (2017), http://doi.org/10.1257/aer.20160812.
74 Ibid.
75 Matthew Gentzkow, Jesse M. Shapiro, and Matt Taddy, “Measuring Polarization in High-Dimensional Data: Method and Application to Congressional Speech,” working paper, 2016.
76 Julia Cagé, Nicolas Hervé, and Marie-Luce Viaud, “The Production of Information in an Online World: Is Copy Right?,” Net Institute working paper, 2017, http://dx.doi.org/10.2139/ssrn.2672050.
77 “2015 Census,” American Society of News Editors, https://www.asne.org/diversity-survey-2015.
78 “Sociocultural Dimensions of Immigrant Integration,” in The Integration of Immigrants into American Society, eds. Mary C. Waters and Marissa Gerstein Pineau (Washington, DC: National Academies of Sciences Engineering Medicine, 2015).
79 Hunt Allcott and Matthew Gentzkow, “Social Media and Fake News in the 2016 Election,” Journal of Economic Perspectives 31, no. 2 (2017), http://doi.org/10.1257/jep.31.2.211.
80 Donghee Jo, “Better the Devil You Know: An Online Field Experiment on News Consumption,”Northeastern University working paper, accessed June 20, 2019, https://www.dongheejo.com/.
81 Gordon Allport, The Nature of Prejudice (Cambridge, MA: Addison-Wesley, 1954).
82 Elizabeth Levy Paluck, Seth Green, and Donald P. Green, “The Contact Hypothesis Re-evaluated,” Behavioral Public Policy (2017): 1–30.
83 Johanne Boisjoly, Greg J. Duncan, Michael Kremer, Dan M. Levy, and Jacque Eccles, “Empathy or Antipathy? The Impact of Diversity,” American Economic Review 96, no. 5 (2006): 1890–1905.
84 Gautam Rao, “Familiarity Does Not Breed Contempt: Generosity, Discrimination, and Diversity in Delhi Schools,” American Economic Review 109, no. 3 (2019): 774–809.
85 Matthew Lowe, “Types of Contact: A Field Experiment on Collaborative and Adversarial Caste Integration,” OSF, last updated on May 29, 2019, osf.io/u2d9x.
86 Thomas C. Schelling, “Dynamic Models of Segregation,” Journal of Mathematical Sociology 1 (1971): 143–186.
87 David Card, Alexandre Mas, and Jesse Rothstein, “Tipping and the Dynamics of Segregation,” Quarterly Journal of Economics 123, no. 1 (2008): 177–218.
88 The French system of public housing is not a lottery, but in principle it should work to spread people around: a commission meets at the departement level (similar to a county) to allocate vacant units to applicant families across the entire departement, based on family size and other priority criteria, but not race. But subsidized housing in nice neighborhoods is so lucrative that the incentive to cheat is very powerful. In the mid-1990s, allocation of housing units in Paris was exposed as a key mechanism of clientelism, put in place and maintained by Jacques Chirac (the mayor of Paris, and later the president of France). Yann Algan, Camille Hémet, and David D. Laitin, “The Social Effects of Ethnic Diversity at the Local Level : A Natural Experiment with Exogenous Residential Allocation,” Journal of Political Economy 124, no. 3 (2016): 696–733.
89 Joshua D. Angrist and Kevin Lang, “Does School Integration Generate Peer Effects? Evidence from Boston’s Metco Program,”American Economic Review 94, no. 5 (2004): 1613–34.
90 Abhijit Banerjee, Donald Green, Jennifer Green, and Rohini Pande, “Can Voters Be Primed to Choose Better Legislators? Experimental Evidence from Rural India,” Poverty Action Lab working paper, 2010, accessed June 19, 2019, https://www.povertyactionlab.org/sites/default/files/publications/105_419_Can%20Voters%20be%20Primed_Abhijit_Oct2009.pdf.
CHAPTER 5. THE END OF GROWTH?
1 Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016).
2 C. I. Jones, “The Facts of Economic Growth,” in Handbook of Macroeconomics, vol. 2, eds. John B. Taylor and Harald Uhlig (Amsterdam: North Holland, 2016), 3–69.
3 Angus Maddison, “Historical Statistics of the World Economy: 1-2008 AD,” Groningen Growth and Development Centre: Maddison Project Database (2010).
4 Angus Maddison, “Measuring and Interpreting World Economic Performance 1500–2001,” Review of Income and Wealth 51, no. 1 (2005): 1–35, https://doi.org/10.1111/j.1475-4991.2005.00143.x.
5 Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016), 258.
6 J. Bradford DeLong, Claudia Goldin, and Lawrence F. Katz, “Sustaining U.S. Economic Growth,” in Henry J. Aaron, James M. Lindsay, Pietro S. Nivola, Agenda for the Nation (Washington, DC: Brookings Institution, 2003), 17–60.
7 Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016), 575, figure 17.2. Annualized TFP growth in the US was 0.46 percent per year between 1880 and 1920 and 1.89 percent per year between 1920 and 1970.
8 Nicholas Crafts, “Fifty Years of Economic Growth in Western Europe: No Longer Catching Up but Falling Behind?,” World Economics 5, no. 2 (2004): 131–45.
9 Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016).
10 Annualized TFP growth in the US was 1.89 percent per year between 1920 and 1970 and 0.57 between 1970 and 1995; Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016), 575, figure 17.2.
11 Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016), 575, figure 17.2. Annual TFP growth was 0.40 from 2014 to 2014, even lower than the 0.70 annual TFP growth during the 1973–1994 period and the annual 0.46 TFP growth during the 1890–1920 period.
12 “Total Factor Productivity,” Federal Reserve Bank of San Francisco, accessed June 19, 2019, https://www.frbsf.org/economic-research/indicators-data/total-factor-productivity-tfp/.
13 Robert Gordon and Joel Mokyr, “Boom vs. Doom: Debating the Future of the US Economy,” debate, Chicago Council of Global Affairs, October 31, 2016.
14 Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016), 594–603.
15 Robert Gordon and Joel Mokyr, “Boom vs. Doom: Debating the Future of the US Economy,” debate, Chicago Council of Global Affairs, October 31, 2016.
16 Alvin H. Hansen, “Economic Progress and Declining Population Growth,” American Economic Review 29, no. 1 (1939): 1–15.
17 Angus Maddison, Growth and Interaction in the World Economy: The Roots of Modernity (Washington, DC: AEI Press, 2005).
18 Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2013), 73, table 2.1. The data Piketty uses for long-term growth originally comes from Angus Maddison, and can be found on the Maddison project data base at https://www.rug.nl/ggdc/historical development/maddison/releases/maddison-project-database-2018.
19 For the interested reader who d
ecides to peruse this literature, it will be useful to know that economists call well-being “welfare” (by which they are not referring to welfare programs). So this is what they would call a welfare calculation.
20 Chad Syverson, “Challenges to Mismeasurement Explanations for the US Productivity Slowdown,” Journal of Economic Perspectives 31, no. 2 (2017): 165–86, https://doi.org/10.1257/jep.31.2.165.
21 Ibid.
22 Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow, “The Welfare Effects of Social Media,” NBER Working Paper 25514 (2019).
23 Robert M. Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics 70, no. 1 (1956): 65–94, https://doi.org/10.2307/1884513.
24 “Estimating the U.S. Labor Share,” Bureau of Labor Statistics, 2017, accessed April 15, 2019, https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-labor-share.htm.
25 The Berkeley economist Brad DeLong is famous for making this point in J. Bradford De Long, “Productivity Growth, Convergence, and Welfare: Comment,” American Economic Review 78, no. 5 (1988): 1138–54. He recently updated his graph using World Bank data at /www.bradford-delong.com/2015/08/in-which-i-once-again-bet-on-a-substantial-growth-slowdown-in-china.html.
26 Archimedes: “Give me a lever and a place to stand and I will move the earth.” The Library of History of Diodorus Siculus, Fragments of Book XXVI, as translated by F. R. Walton, in Loeb Classical Library, vol. 11 (Cambridge: Harvard University Press 1957).
27 Robert E. Lucas Jr., “On the Mechanics of Economic Development,” Journal of Monetary Economics 22, no. 1 (1988): 3–42.
28 Robert E. Lucas Jr., “Why Doesn’t Capital Flow from Rich to Poor Countries?,” American Economic Review 80, no. 2 (1990): 92–96.
29 Francesco Caselli, “Accounting for Cross-Country Income Differences,” in Handbook of Economic Growth, vol. 1, part A, eds. Philippe Aghion and Steven N. Durlauf (Amsterdam: North Holland, 2005), 679–741.
30 Anne Robert Jacques Turgot, “Sur le Memoire de M. de Saint-Péravy,” in Oeuvres de Turgot et documents le concernant, avec biographie et notes, ed. G. Schelle (Paris : F. Alcan, 1913).
31 Karl Marx, Das Kapital (Hamburg: Verlag von Otto Meisner, 1867). Fortunately for capitalism, there was a misstep in Marx’s logic. As Solow pointed out, when the return on capital goes down, the speed of accumulation also goes down. Therefore, unless capitalists start saving more precisely when it is less rewarding to do so, accumulation will eventually slow down and the rate of profit will stop falling.
32 Julia Carrie, “Amazon Posts Record 2.5bn Profit Fueled by Ad and Cloud Business,” Guardian, July 26, 2018. Part of the profits come from Amazon selling cloud storage. But cloud storage is itself a by-product of the excess capacity on the cloud they knew they had to build to remain the dominant market maker. So Amazon cloud business is part and parcel of their gigantic size.
33 Paul M. Romer, “Increasing Returns and Long-Run Growth,” Journal of Political Economy 94, no. 5 (1986): 1002–37, https://doi.org/10.1086/261420.
34 Danielle Paquette, “Scott Walker Just Approved $3 billion Deal for a New Foxconn Factory in Wisconsin,” Washington Post, September 18, 2017; Natalie Kitroeff, “Foxconn Affirms Wisconsin Factory Plan, Citing Trump Chat,” New York Times, February 1, 2019.
35 Enrico Moretti, “Are Cities the New Growth Escalator?” in The Urban Imperative: Towards Competitive Cities, ed. Abha Joshi-Ghani and Edward Glaeser (New Delhi: Oxford University Press, 2015), 116–48.
36 Laura Stevens and Shayndi Raice, “How Amazon Picked HQ2 and Jilted 236 Cities,” Wall Street Journal, November 14, 2018.
37 Amazon HQ2 RFP,” September 2017, https://images-na.ssl-images-amazon.com/images/G/01/Anything/test/images/usa/RFP_3._V516043504_.pdf accessed June 14, 2019.
38 Adam B. Jaffe, Manuel Trajtenberg, and Rebecca Henderson, “Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations,” Quarterly Journal of Economics 108, no. 3 (1993): 577–98, https://doi.org/10.2307/2118401.
39 Enrico Moretti. The New Geography of Jobs. (Boston: Mariner Books, 2012).
40 Michael Greenstone, Richard Hornbeck, and Enrico Moretti, “Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings,” Journal of Political Economy 118, no. 3 (June 2010): 536–98, https://doi.org/10.1086/653714.
41 Of course, the question being asked in New York was not about the size of the gains (everybody agreed there would be some) but why Amazon was allowed to keep so much of it for themselves. After all, Alexandria offered much less, and Boston nothing at all (but then Boston did not win).
42 Jane Jacobs, “Why TVA Failed,” New York Review of Books, May 10, 1984.
43 43.Patrick Kline and Enrico Moretti, “Local Economic Development, Agglomeration Economies, and the Big Push: 100 Years of Evidence from the Tennessee Valley Authority,” Quarterly Journal of Economics 129, no. 1 (2014): 275–331, https://doi.org/10.1093/qje/qjt034.
44 Ten percent growth over the past decade will raise growth over the next decade by 20 percent of 10 percent, which is 2 percent. This will create additional growth of 20 percent of 2 percent, or 0.4 percent, over the following decade and so on. It is evident the additional rounds of growth are small to start with and get smaller pretty fast.
45 Patrick Kline and Enrico Moretti, “Local Economic Development, Agglomeration Economies and the Big Push: 100 Years of Evidence from the Tennessee Valley Authority,” Quarterly Journal of Economics 129, no. 1 (2014): 275–331, https://doi.org/10.1093/qje/qjt034.
46 Enrico Moretti, “Are Cities the New Growth Escalator?,” in The Urban Imperative: Towards Competitive Cities, ed. Edward Glaeser and Abha Joshi-Ghani (New Delhi: Oxford University Press, 2015), 116–48.
47 Peter Ellis and Mark Roberts, Leveraging Urbanization in South Asia: Managing Spatial Transformation for Prosperity and Livability, South Asia Development Matters (Washington, DC: World Bank, 2016), https://doi.org/10.1596/978-1-4648-0662-9. License: Creative Commons Attribution CC BY 3.0 IGO.
48 Paul M. Romer, “Endogenous Technological Change,” Journal of Political Economy 98, no. 5, part 2 (1990): S71–S102, https://doi.org/10.1086/261725.
49 Philippe Aghion and Peter Howitt, “A Model of Growth Through Creative Destruction,” Econometrica 60, no. 2 (1992): 323–51.
50 The Wikipedia entry for Schumpeter reads thus: “Schumpeter claimed that he had set himself three goals in life: to be the greatest economist in the world, to be the best horseman in all of Austria and the greatest lover in all of Vienna. He said he had reached two of his goals, but he never said which two, although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations.” See https://en.wikipedia.org/wiki/Joseph_Schumpeter.
51 Philippe Aghion and Peter Howitt, “A Model of Growth Through Creative Destruction,” Econometrica 60, no. 2 (1992): 323–51.
52 ‘Real GDP Growth,” US Budget and Economy, http://usbudget.blog spot.fr/2009/02/real-gdp-growth.html.
53 David Leonardt, “Do Tax Cuts Lead to Economic Growth?,” New York Times, September 15, 2012, https://nyti.ms/2mBjewo.
54 Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, “Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities,” American Economic Journal: Economic Policy 6, no. 1 (2014): 230–71, https://doi.org/10.1257/pol.6.1.230.
55 William Gale, “The Kansas Tax Cut Experiment,” Brookings Institution, 2017, https://www.brookings.edu/blog/unpacked/2017/07/11/the-kansas-tax-cut-experiment/.
56 Owen Zidar, “Tax Cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment,” Journal of Political Economy 127, no. 3 (2019): 1437–72, https://doi.org/10.1086/701424.
57 Emmanuel Saez, Joel Slemrod, and Seth H. Giertz, “The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review,” Journal of Economic Literature 50, no. 1 (2012): 3–50, https://doi.org/10.1257/jel.50.1.3.
>
58 “Tax Reform,” IGM Forum, 2017, http://www.igmchicago.org/surveys/tax-reform-2.
59 “Analysis of Growth and Revenue Estimates Based on the US Senate Committee on Finance Tax Reform Plan,” Department of the Treasury, 2017, https://www.treasury.gov/press-center/press-releases/Documents/Treasury GrowthMemo12-11-17.pdf.
60 The signatories were Robert J. Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, and John B. Taylor. See “How Tax Reform Will Lift the Economy,” Wall Street Journal: Opinion, 2017, https://www.wsj.com/articles/how-tax-reform-will-lift-the-economy-1511729894?mg=prod/accounts-wsj.
61 Jason Furman and Lawrence Summers, “Dear colleagues: You Responded, but We Have More Questions About Your Tax-Cut Analysis,” Washington Post, 2017, https://www.washingtonpost.com/news/wonk/wp/2017/11/30/dear-colleagues-you-responded-but-we-have-more-questions-about-your-tax-cut-analysis/?utm_term=.bbd78b5f1ef9.
62 “Economic Report of the President together with the Annual Report of the Council of Economic Advisers,” 2016, https://obamawhitehouse.archives.gov/sites/default/files/docs/ERP_2016_Book_Complete%20JA.pdf.
63 Thomas Philippon The Great Reversal: How America Gave up on Free Markets (Cambridge: Harvard University Press, 2019).
64 David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen, “The Fall of the Labor Share and the Rise of Superstar Firms,” NBER Working Paper 23396, 2017.
65 For powerful arguments that the rise in concentration has been bad for consumers, see Thomas Philippon The Great Reversal: How America Gave Up on Free Markets (Cambridge: Harvard University Press, 2019); Jan De Loecker, Jan Eeckhout, and Gabriel Unger, “The Rise of Market Power and the Macroeconomic Implications,” working paper, 2018.
66 Esteban Rossi-Hansberg, Pierre-Daniel Sarte, and Nicholas Trachter, “Diverging Trends in National and Local Concentration,”NBER Working Paper 25066, 2018.
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