Do we ever make ANY difference at all?
This fascinating analysis from Tino Sanandaji (via Marginal Revolution) reveals an unexpected (to me) fact about the Japanese "lost decade(s)". Japan's growth from 1990 to 2007, adjusting for changes in demographic composition of the population, was exactly the same as the US and Europe's! So for all the attention on the US technology boom, European integration, Japan's property bust and vast stimulus programmes - none of it mattered. Growth per working-age individual seems to proceed at a steady 1.6% per annum regardless of the different policy regimes, tax rates, interest rates etc etc etc. This sheds interesting light on the claim of Adam Posen (Bank of England monetary policy committee member) that Britain faces a Japan-style decade. So does the surprising fact that the UK was the leader among all rich countries in total factor productivity growth from 1990 to 2007! So is all of economic growth explained by some common underlying factor, unrelated t...