Economist Robert Solow is one of the two economists who came up with a model of exogenous growth—that is, economic growth that can be attributed to non-economic factors—that became known as the Solow-Swan Model.
The Solow-Swan Model says a lot of things, but it says them concisely and using an easy-to-parse (for mathematicians and economists, anyway) formula, which has led to it becoming well-incorporated into other, descendent models of how growth happens within economies.
Fundamental to this model is the idea that long-term economic growth is only really achievable through technological progress.
Lacking such progress, economies tend to return to a default, stable state, and that equilibrium is maintained (with only minor ebbs and flows) by the activity of the people who make up that economy: their working and saving and all the other economic things they do tends to balance out and converge on a central, default state over time.
Solow is also known for an eponymous paradox that was named after him, Solow's Paradox, which is sometimes called the Productivity Paradox.
This paradox stems from an observation he made back in 1987, when he said that the then-burgeoning computer age could be seen absolutely everywhere you look, except in productivity statistics.
This seeming paradox cleared up a bit in the 1990s when that still-nascent space ballooned a bunch of industries, like tech and retail, to astounding (and ultimately unsustainable) proportions, seemingly overnight.
But it's returned a few times since, and until the lead-up to the Dotcom Bubble it seemed like worker productivity—the amount of value being produced per worker in the United States—was actually going down by some measures, even as whizbang new personal computers were landing on everyone's desk.
Later research determined that this productivity depletion had been going on since the 1970s, when earlier computers were being deployed by the likes of IBM to offices around the country and the fruits of digitization were beginning to be seen everywhere you’d look. And researchers couldn't figure out why these impressive new tools, which increased the leverage and capability of the workers who used them, didn't show up in their productivity numbers.
An analysis from late-2022, which took a look at a purported productivity lag that's happening in Europe, today, proposed that the reason these technologies didn’t show up in the numbers early on is that isolated levels of productivity are visible when you run more focused numbers, but when you look at the aggregate of the whole economy, they disappear.
This disappearance is thought to be the consequence of benefits in some sectors being wiped out by downswings in less productive sectors, which in some cases become less productive because of that parallel, new-tech deployment.
Said another way:
If one industry surges beyond what all the others can muster, those other industries might slow down, unable to compete in terms of resource acquisition, hirings, and so on. That in turn can lead to layoffs in the slower industries, which may then result in folks from one industry trying to move to another, more productive (and thus growth-oriented, opportunity-rich) industry.
The tech-boom of the late-90s is a perfect example of this, as the world of computers and the internet really took off at this moment, and folks from neighboring industries, from education to the financial world to manufacturing, were trying to figure out how they could get in on all that opportunity and all those resources.
Consequently, productivity growth in booming industries is cancelled out by slow-downs elsewhere, because those latter industries are depleted and the folks who are changing jobs are less-effective at what they're doing now—either because they're in-between work, or because they're retraining and not yet at the skill level they could boast in their previous jobs.
This concept isn't written in stone, and both the Solow-Swan Model and the Solow Paradox are still being analyzed and debated.
Things are almost always more complex than what we can illustrate using a clear, practical formula, and there are exceptions to even the most interesting and appealing methods of describing and explaining the world.
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