It’s been said that about half of all people have an IQ less than 100. Some psychologists have pointed out that those with IQs less than 90 have a difficult time finding good work in advanced knowledge-driven economies, and manual labor has been either exported to other countries or replaced with robots, leaving part of the labor pool underutilized.
So the shape of the idea that would generate 9%+ GDP growth is a set of technologies and/or political configurations that bring people of all IQs enthusiastically into the labor force. Not just employment opportunity, but situations that would be gleefully embraced, and productive, regardless of IQ. Work that is useful and fulfilling and worth doing for all involved.
This is not the actual idea, of course, only a statement of what might be its shape. If I actually had that idea, I would be talking to venture capitalists at this moment rather than typing this comment.
This would be good only for a temporary gain of three to six years of high growth. After that, we would be at full employment, and although the indirect gains would likely flow for a long time, national growth would likely fall below the 9% figure.
What’s more important, though, is that such an outcome (bringing gleeful and productive employment to many) would make a lot of people happier, regardless of GDP growth.
This is an outstanding article, and it deserves a lot more analysis and debate. Here are some of my initial thoughts.
First is that the phenomenon could be nearly entirely to rent-seeking. You said the key words: “all of the important things”. Education is critical, health care is critical. K-12 is critical as preparation for college, and getting a high reputation college is critical for status and earnings throughout life. The medical system is obviously directly critical to health. The offerors of these services have an effective monopoly (as a collective) on their services, so they can increase prices and not see a decline in quantity of goods. That the money is not going to teachers or doctors indicates that within these collectives, the actors with the greatest power are not actually those individuals, but other elements. This is not a surprise; each individual doctor or teacher does not have a monopoly, as they can be replaced with another doctor or teacher. The power resides in the bottlenecks of these institutions.
Within education, the bottlenecks are the NEA, the elite schools, accreditation organizations, and Government. Each of these players have a monopoly within their respective fields of action. So if you look to see where the money is going, it’s to these actors, or others like them that I’m not aware of as I type this paragraph.
Within medicine, the monopolies include patented drugs, major hospital chains, local hospitals, large health insurance companies, and Government. In some places, the local health insurance provider has a stranglehold over the health insurance market. Even if they are non-profit, they still control the market and collect rent.
Where does the money go? I can guess that it leaks out through people networks, some going to increased administrator salaries, and also more administrators, more consultants (who happen to know the head admin), other miscellaneous and specialized services that would have been completely unheard of 60 years ago (like unconscious bias training), and preferences for services companies. Some of this likely meets the definition of corruption, but it is usually well-hidden, transitory, or within the supposed discretion of the principle players.
Another factor that I didn’t see fully covered was actual rent. Urban real estate is significantly more expensive over the time periods you indicated, and I believe has appreciated faster than the general inflation rate. Urban colleges, medical facilities, and highly educated elites pay these increased real estate prices and pass on those costs to their customers. So each area of unusual cost growth also faces monopolists in the real estate business, and those monopolists seek to capture rent from the users of health and education services.
It’s not clear to me that we have a choice on postponement. If company A refrains, then company B has an edge. If as a nation we constrain companies A and B, then country X will not, and gain an edge. And if country X and we sign a treaty, then country Y will have an edge. And if all countries refrain, then a criminal or terrorist group outside of all civilized nations will have an edge.
The longer that the postponement occurs, the easier it will become for an entity that is outside of the agreements to create AGI on its own. The bonus value (power) gained by breaking the treaty grows greater as others refrain, reaching its maximum when everyone except the rulebreaker refrain.
All participants are in a dollar auction.
A lot of the answer to this question is in Charles Murray’s Coming Apart (2010). In it he makes extensive use of Government statistics from surveys and economic analysis to trace the fortunes of working class and upper income community types from 1960 to 2010. There are four key founding virtues: industriousness, honesty, religiosity, and marriage. America had these in abundance from its founding up through 1960. After 1960 upper classes retained most of them, but the working classes experienced major declines. These were societal in extent; no blame assigned, it is simply what happened. The two classes have diverged strongly, and while the upper income class will be fine, without these virtues, working class communities that have come apart probably cannot be put together again.
Though he does pick the “virtues” that he chooses to study, the book is jammed with graphs and explanations of the data sources. To dismiss it you’d need to dismiss the validity of data that is from disparate sources that pre-date the book.
One big challenge is that the double income, university-educated, urban elites in WDC, SF, LA, and NYC have little knowledge of the experiences of those in “flyover country.” This leads to political polarization that is fed from different lived experiences, but I think the point of the book is that even if you removed politics completely from your view of this divergence, the four virtues are what are needed to get things back together. Government can’t do that on its own. These are values that people pick for themselves. Government policies have actually nudged people towards discarding these values, but there is no political will for the types of programs (or absence thereof) that would undo that nudging.