Comment on Edmund Phelps

Three main points
The Enlightenment and ensuing Modernism behind our prosperity
What creates ”the good life”
Not through consumption
But from our role as producers, innovators and entrepreneurs, creates economic dynamism
The ultimate source of increased prosperity is INNOVATION

Questionable claims
Much stronger challenges to Modernist thought in ”the golden era”
Rate of innovation equally high 1980–2007
ICT-revolution
Values have not become more traditionalist (but postmodern?)
US far more innovative than other countries (although declining); IMD? WEF?
Has median income really stagnated since the 1970s?
Inflation is overestimated
New goods often nonrival, large wedge between marginal cost and value for consumer

Questionable claims cont’d
Many health care services far greater value than cost
Hip operation
Previously untreatable psychiatric disorders
The value of the work of a great teacher?
Given positive externalities of human capital
Some 2/3 of production consists of services not amenable to accurate measurement
Increasingly difficult to assess evolution of real income
…and the latter is often used as a proxy for rate of innovation