February 09, 2018
In an NYT column advocating that companies spend more money on training their workers, former Yale president Richard Levin implicitly endorsed the Republicans’ view that the economy will grow much more rapidly than projected by the Congressional Budget Office and most other forecasters. Levin bases his argument in part on an evaluation by McKinsey, a management consulting company, that up to half of all jobs could be automated over the next two decades.
If we do in fact see half of all current jobs eliminated, that would imply 3.5 percent annual productivity growth, a little better than the 3.0 percent rates we saw in the long Golden Age from 1947 to 1973 and again from 1995 to 2005. With even modest labor force growth, we would be looking at GDP growth of more than 4.0 percent. Even if the McKinsey numbers turn out to be overly optimistic on the rate of productivity growth, we should still be able to make the 3.0 percent GDP growth rate touted by the Republicans.
Of course this growth has nothing to do with the Republican tax cut, the McKinsey projections long predate Trump’s election. But they do indicate that the prospect of 3.0 percent growth is not absurd, many respectable types use this sort of assumption as the basis for their NYT columns.
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