The “secular stagnation hypothesis” has now been around long enough that it has a nickname – SecStag. The basic idea is that the world may have entered a period of low economic growth that is going to persist for a long time, and governments need to start responding to it. This long ebook has chapters from a number of famous economists, including Larry Summers, Barry Eichengreen, Robert Gordon, Paul Krugman, and Edward Glaeser.

It’s hard for the non-economist to summarize, but I’ll try. Some of the ideas are:

• The real interest rate is essentially the price of borrowing money. When people want to save (loan it out) more than other people want to borrow (invest it in new capital, infrastructure, inventions, business activity), it suggests that the rate of innovation, or profitable new investment possibilities, might have slowed down.
• One way the rate of new profitable investments would slow down is if the rate of technological progress has slowed down compared to what it was over the past 50 years or so. Some are suggesting that.
• Another possibility is that the type of technological progress that is occurring is harder to turn into profits than in the past, meaning it is not showing up in the traditional tracking numbers.
• Another way is if governments are investing too little in infrastructure, and companies are investing too little in research and development because they are uncertain whether it will pay off.
• Another way is if people are saving more for a rainy day, because there are more people nearing retirement as a fraction of the population than there used to be, and/or people and firms are saving because they are uncertain about the future, for example because they fear losing their jobs or having to may large health care bills.
• Another possibility is that innovation is occurring, but only benefiting a few rich people and corporations at the top of the income scale, so that the average person is not benefiting.
• A final possibility is that workers’ skills became obsolete because they were idle for too long after the recession hit. The idea that education is inadequate is also similar to this.

I think the explanation for the recent low GDP growth could be some combination of all of these, although I have a lot of trouble buying the lack of innovation hypothesis. Corporate profits and stock markets seem to be up, suggesting to me that profitable innovation is occurring but benefiting only a chosen few.

The automation vs. employment debate isn’t mentioned very much here, and climate change is mentioned only once in the 179 page book.