Martin Wolf writes in the Financial Times that we may be reaching the limits of productivity enabled economic growth in the rich nations. He uses the data and arguments of Prof. Gordon which I posted a few days ago. He asks a simple question that is behind the analysis provided by Prof. Gordon. Would you rather give up running water or your cellphone? His answer is clear. The innovations, like running water, that were made during our second industrial revolution were more profound than the innovations that are driving growth today. The US, for example, is on the innovation frontier and productivity is slowing down. Other nations will catch up with the rich nations, and countries like the US will no longer benefit from rising productivity. The elite in the rich nations will be well off, but everyone else will less well off. Wolf tells us to get used to it.
The post that follows below on China shows where the growth will take place. Emerging economies will have greater access to productivity enhancing technology as they move towards the technology frontier established in rich countries. They will grow and become more prosperous. Multinational corporations may benefit from global growth but that will not trickle down to the middle classes where they are domiciled.