Debate deepens among stagnationists and technologists

Subject

Secular stagnation.

Significance

The latest research by Harvard economist Lawrence Summers shows that the slowdown in economic growth across the advanced economies over the past 30 years will lead to long-term secular stagnation in the absence of offsetting policies. However, technologists suggest that technological advances will raise productivity growth, transforming GDP growth prospects.

Impacts

• Technology enthusiasts suggest that higher growth is around the corner after new technologies overcome their initial disruptions and costs.
• Stagnationists say that the present slowdown is not just a short-term blip but has been underway for a generation; they expect it to deepen.
• Many economists back public investment in infrastructure, education and research, especially as the cost of debt lies below the growth rate.
• Taxing the rich and redistributing to the poor would help to stimulate consumption but encounters stiff political opposition.