Where growth comes from
Economic growth keeps growing. Human conditions keep keeting better (at least in some countries). Things are not settling down into a steady state. What accounts for this?
The increasing returns that come with new goods. Differentiation. An increasing variety of goods. Technological change. These things aren't external to the functional economic system — they are the components of the system that, with positive feedback, drive economic growth.
Diversity is something that Jane Jacobs focused on in The Economy of Cities in 1969. She tells the story of Birmingham and Manchester. In Birmingham in the 1850s there were many small businesses doing pieces of different things — no real specialization that you could see. Manchester, on the other hand, had huge businesses in textiles and was viewed as the city of the future. But Birmingham stayed alive, and Manchester dimmed. Diversity seems to be the key to growth.
To drive the development of new ideas (which lead to new products and services, which lead to growth), we'd need to invest substantially in infrastructure. More funding for education. More openness in academic publications. More government investment in broadband infrastructure and treatment of it as a utility - a basic good needed to support the transmission and production of new ideas. This seems like a good time for enlightened government support of technological development.
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