Nicolas Lemann starts his book, Transaction Man, with a reminder:

There are moments in history when everything seems calm, when there isn’t obvious, bitter contention about big questions. It takes some effort now to remember that the dawn of the new millennium was like that, at least to the minds of fortunate people in the United States.

There were disagreements about the relative importance of the different factors that contributed to a century of remarkable progress in the United States, but everyone agreed that progress would continue.

No one then would have predicted that by 2020, life expectancy in the US would be falling.

When I agreed to write a review for Foreign Affairs of Lemann’s book and a complementary book by Binyamin Appelbaum – The Economists' Hour – I knew that both would ask “what went wrong?” I expected both authors to criticize economists for failing to anticipate the possibility that the US might stop making progress. I anticipated that both would charge that even after the fact, economists have failed to diagnose the cause of the slide from progress to regress.

What I did not anticipate was the claim that economists were the cause.

Answers to questions about by my proposal for a tax on targeted digital ads. (New FAQs added 9 am EDT on May 7.)

Today the FT published an Op-Ed featuring my recommendations for the new President of the World Bank. It’s reposted here with their permission. The original can be found here (paywall).

“As the World Bank’s board considers nominations for the institution’s next president (Donald Trump is expected to nominate David Malpass, the US Treasury department’s top official on international affairs), there are two critical ways he or she can make the bank more effective.

Many people ask why I received the Nobel Prize* in Economics. Here’s the best answer I’ve come up with so far:

The human condition emerges from a never-ending contest between the dismal Malthusian economics of objects and the unrealized possibilities of the economics of ideas. For centuries, economists took sides and followed Thomas Malthus. A paper I published finally turned it into a fair fight. Economists no longer have to assume that Malthus wins before exploring the question posed in the title I chose for my Nobel lecture: “On the possibility of progress.”

When I was working on growth in the 1990s, I wrote an article on economic growth for an encyclopedia of economics. (The links in this post take you to a version of this article that I updated in 2016.) My goal was to provide an accessible introduction to our understanding of growth without shying away from its deep conceptual foundations.

• We can share discoveries with others.
• There are incomprehensibly many discoveries yet to be found.

The economic jargon for this first point is the “nonrivalry of knowledge;” the jargon from math and computer science for the second point is “combinatorial explosion.”

I’ve been pleasantly surprised about how well this article seems to have served its dual purpose. Non-economists have said that it helped them understand why unlimited growth is possible in a world with finite resources. Professional colleagues have been intrigued by the discussion of combinatorial explosion and its interaction with nonrivalry. Specialists and non-specialists have both latched onto the concept it points to of a meta-idea: an idea about how better to discover ideas.

The updated version also makes a point that is not well understood that is captured in the picture to the right: If we treated Shenzhen as a city-state analogous to Singapore or Hong Kong, Shenzhen has the fastest rate of GDP growth ever observed. Over the 30 years from 1980 to 2010, output in Shenzen increased 1000 fold, which implies an average compound rate of growth that exceeds 20% per year.