Economic growth occurs whenever people take resources and rearrange them in
ways that are more valuable. A useful metaphor for production in an economy comes
from the kitchen. To create valuable final products, we mix inexpensive ingredients
together according to a recipe. The cooking one can do is limited by the supply of
ingredients, and most cooking in the economy produces undesirable side effects. If
economic growth could be achieved only by doing more and more of the same kind
of cooking, we would eventually run out of raw materials and suffer from
unacceptable levels of pollution and nuisance. Human history teaches us, however,
that economic growth springs from better recipes, not just from more cooking. New
recipes generally produce fewer unpleasant side effects and generate more economic
value per unit of raw material.
. . .
Every generation has perceived the limits to growth that finite resources and
undesirable side effects would pose if no new recipes or ideas were discovered. And
every generation has underestimated the potential for finding new recipes and ideas.
We consistently fail to grasp how many ideas remain to be discovered. The difficulty
is the same one we have with compounding: possibilities do not merely add up; they
multiply.
- Paul M. Romer, “Economic Growth”, The Concise Encyclopedia of Economics, 2007
People usually can’t feel loss of opportunities unless they are already able to imagine the details of the opportunity. To be rational, one should have a habit of making well-calibrated estimates of how much opportunity would be felt by the sort of person who would have investigated the details.)
Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material.
. . .
Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding: possibilities do not merely add up; they multiply.
- Paul M. Romer, “Economic Growth”, The Concise Encyclopedia of Economics, 2007
(Related to a theme in We Change Our Minds Less Often Than We Think, which is about failure to grasp the other arguments one could have considered, and to a theme in arguments about the consequences of intelligence (Expected Creative Surprises, Belief in Intelligence, Efficient Cross-Domain Optimization, Recursive Self-Improvement, Dreams of Friendliness, That Alien Message, or The AI-Box Experiment), which are about failure to grasp the strategies that something more intelligent than oneself could find.
People usually can’t feel loss of opportunities unless they are already able to imagine the details of the opportunity. To be rational, one should have a habit of making well-calibrated estimates of how much opportunity would be felt by the sort of person who would have investigated the details.)