13 January 2016 – Rebecca Rosen has an interesting essay at The Atlantic on economist John Maynard Keynes’ prediction in 1930 that with increased productivity, over the next 100 years the economy would become so productive that people would barely need to work at all.
For a while, it looked like Keynes was right: In 1930 the average workweek was 47 hours. By 1970 it had fallen to slightly less than 39. But then something changed. Instead of continuing to decline, the duration of the workweek stayed put; it’s hovered just below 40 hours for nearly five decades. According to Rosen there would be no mystery in this if Keynes had been wrong about the economy’s increasing productivity, which he thought would lead to a standard of living “between four and eight times as high as it is today.”
Keynes got that right: Technology has made the economy massively more productive. Now a new paper Benjamin Friedman says that “the U.S. economy is right on track to reach Keynes’s eight-fold multiple” by 2029—100 years after the last data Keynes would have had. But according to Friedman, the key reason that Keynes prediction failed to come true is that Keynes failed to allow for the changing distribution of wealth.