There has been a lot of discussion lately about the Great Stagnation: the apparent slowdown in productivity growth in rich countries since 1970. The phenomenon is indisputable, but mysterious, since it parallels the rise of computers and the internet, both of which should have saved a lot of resources in the production and distribution of goods and services. Maybe the robots will usher in a huge productivity increase, even if it has not quite happened yet.
Oddly, there has been a running debate over whether agricultural productivity has suffered a similar decline. Well, now Julian Alston (U.C. Davis), Matt Andersen (Wyoming) and Phil Pardey (Minnesota) have taken a closer look! Now, calculating multifactor productivity (MFP) in agriculture is not as simple as it sounds, especially across a century, but they have done it. Here are their results:
Eyeballing the log scale gives you their main result: continuing productivity growth, but a clear acceleration in the 1930s and a slowdown around 1980.
So what happened? They offer two hypotheses. First, stagnation in R&D spending:
As Julian Alston has pointed out, agriculture faces a Red Queen’s Race: the co-evolution of pests and diseases means that you have to keep running as fast as you can just to stay in the same place. Moreover, private spending does not necessarily compensate for public for the simple reason that the time horizons involved in developing agricultural technologies are very long. As a result, very high ultimate cost-benefit ratios (21 for state efforts and 18 for federal ones) translate into much more modest internal rates of return (19%). That is still a high return, no doubt, Panama Canal high ... but nothing like what you would expect from the size of the long-term payoffs.
The second (related) hypothesis is that the big acceleration in productivity was a one-off from a few mid-century inventions:
The implication, of course, being that GMOs don’t hold a candle to hybrid corn (which is quite reasonable) ... or maybe that we haven’t seen nothing yet. In fact, all we can really say is that the argument Robert Gordon has advanced in his seminal work may apply to agriculture as much as manufacturing and services.
What I really want to know, though, is what the hell was up with rural telephones?