Ideas Aren’t Getting Harder to Find-Asterisk

Fifty years ago, productivity growth in advanced economies began to slow down. Productivity growth - the component of GDP growth that is not due to increases in labor and capital - is the primary driver of rising incomes. When it slows, so does economic growth as a whole. This makes it an urgent trend to understand. Unfortunately, the most popular explanation for why it’s happening might be wrong. The most widely endorsed reason productivity growth has faltered is that we are running out of good ideas. As this narrative has it, the many scientific and technology advances responsible for driving economic growth in the past were low-hanging fruit. Now the tree is more barren. Novel advances, we should expect, are harder to come by, and historical growth may thus be difficult to sustain. In the extreme, this may lead to the end of progress altogether. This story began in 2020, with the publication of “Are Ideas Getting Harder to Find?,” by economists Nicholas Bloom and colleagues. Bloom et al. looked across many sectors, from agriculture to medicine to computing. In each field, productivity measures have grown at the same rate as before. This sounds like good news, except that the number of researchers in each of these fields has exploded. In other words, each researcher produces much less than they used to - something you might expect if ideas really are getting harder to find. The progress studies movement and the metascience community have risen, in part, in response to this challenge. Both seek ways to rethink how we do research: by making our research institutions more efficient or by increasing science funding. But there's a growing body of evidence that suggests ideas are not, in fact, getting harder to find. Instead, the problem appears to be that markets have become less effective at translating breakthrough technologies into productivity gains. Researchers appear to be continuing to generate valuable innovations at historical rates. It’s just that these innovations face greater barriers to commercialization, and innovative firms thus fail to gain market share. All this suggests that the constraint on growth isn’t in our universities or labs or R&D departments, but in our markets. Why ideas matter Historically, the task of growth theory has been to rationalize this graph: Through two world wars, the Great Depression, the global financial crisis, and the Cold War, US real GDP per capita has grown steadily at 2% per year. This consistency is remarkable, so much so that it has motivated economists to search for a near-immutable source of economic growth: something fundamental that drives growth across long sweeps of time. Sure, growth can be affected in the short run by policies and events of the day - tariffs, wars, demographic transitions, educational booms - but it would be an incredible coincidence if the combined impact of every economic policy and external event in history happened to net out as a constant growth rate! So what could this immutable mechanism be? It took economists decades to...

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