Two conflicting stories of our economic future as we head into 2017: Don Pittis

Perhaps it's a persistent egocentricillusion to think of our current era asa turning point in history, but two books out this past year both say it's so.

Robert Gordon's dense volume got a lot of attention for its cynical realism. The key lesson of his book, The Rise and Fall of American Growth, was not the rise, but the fall.

American-led growth was a miracle, Gordonsays. But the miracle is over.

The view of two Oxford scholars, Ian Goldin and Canadian Chris Kutarna, is far more uplifting. Called Age of Discovery,their book makes a direct comparison between our current eraand the vibrancy of the Renaissance.

It insiststhat rather than being at the end of the good times as we head into 2017, we are on the verge of a kind of dynamism none of us has witnessed in our lifetime a potential hair-raising ride.

The case for gloom

Gordon constructsa strong case using conventional economic principles and exacting data measurement.

Its socialist realism dust jacket makes a glamorous addition to any bookshelf, but the tome'slugubrious style and microscopic examination of economic history meansit may bemore suited to academic readers.

Fortunately, Gordon is an excellent lecturer.His Ted Talk, which predates the book and summarizes many of its key points, is well worth viewing.

His essential argument isthe wonderful innovations that became widely used in the 1900s, often first inthe U.S.,created a burst of economic growth thatsimply cannot be repeated.

Electricity, telephones, motorized transport andcomputerstransformed people's lives and made them richer in ways that have never been seen before and won't be seen again. Futureinnovation will be slower and less rewarding.

Gordon says somewhere near the middle of the last century, radicalinnovation and its attendant spectacular economic growth began to slow. His estimates show it will return to a trend line close to zero.

And that's important, he says, because such low growth rates won't be enough to counteract current headwindsthat include inequality, poor education levels and an aging workforce.

Even after this book-length examination that includes aprescription for making things better, he comes to agloomy conclusion.

"There is no claim here that even were all the proposed policy initiatives implemented, medianreal disposable income per person would be boosted by more than a few tenths of a per cent."

The Renaissance case

Except for agreeing that the world faces a radical transformation, the case made by Goldin and Kutarna could hardly be more different.

Their firm rejection of Gordon's gloom is partly based on contrasting economic parameters.

For one, they say traditional economists' careful measurements are failing to capture what has been traditionally called "spillover" benefits. Theseare ignored in conventionalcalculationsof profit and loss because their dollar figure cannot becounted.

Similar to the foundingobservationof feminist economics, Goldin and Kutarnaobserve that in the internet age, spillover can't be consideredamere ancillarybenefit simplybecause GDP ameasure of economic benefit that may now be out of date fails to capture it.

For instance,as we spend more time entertaining or serving each other on the web, an innovation the authorslikenin impact to the printing press of the Renaissance,both our work and our gains are no longer part of the conventionally measured economy, even though both the work andgains are real andgrowing.

They offer the concrete example of Encyclopedia Britannica. The sale of a million copies would add a billion dollars to GDP, whereas a million Wikipedia users add zero.

"If the user base swells from a million people to a billion, it's still zero," writeGoldinandKutarna, despite research they sayshows Wikipediaoffers those who use it $500 a year in time saved.

Thatleads toanother difference in perspective.

Rather than limiting their view of economic growth to the United States, these authors see the boom spreading as more of the globe's poor get a share of the innovations once limited to citizens of the world's richest regions.

More brains better trained

They assertthat as with the effect of the printing press, an explosion ofwealth and education is not just a result of economic growth but an engine of future growth.

As the number ofmore and better trained brains increases by billions, seemingly impossible tasks from curing Alzheimer's to inventingmore useful economic paradigms suddenly become feasible.

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Of course the Renaissance wasn't a stroll through great works of art to the tune of recorder, lute and drum.

As well as being a time of genius, it was a time of violence and uncertainty, a time when brilliant new ideas created brand newproblems, whereradical change led to more than one populist backlash. To the adventurous, perhaps that only adds to the challenge.

Read together,The Rise and Fall of American Growthfeels like thelast gasps of a dying paradigm andAge of Discovery rings like a rallying cry for an aspirational future.

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