BMany young adults in the West feel unease, due in part to climate change, but also to the slowdown in economic growth over the past two decades. Indeed, each generation improves its living conditions and well-being by increasing labor productivity, that is to say the quantity of goods and services that an economy produces per hour of work. To double the productivity of the previous generation born thirty years earlier, productivity must grow by 2.3% per year, on average.
For decades, France did even better, increasing its productivity by 2.5% per year between 1973 and 2003. But today, this is no longer the case. From 2003 to 2023, productivity growth was only 0.4% per year. At this rate, it would take one hundred and seventy-five years to double the productivity reached in 2003! If, from this date, France had recorded growth as rapid as during the previous three decades, its annual production would have been, in 2023, more than 50% higher than it actually was, i.e. the equivalent 23,000 euros more per year for each resident.
However, before the French engage in some national soul-searching, they can take solace in the fact that productivity growth after 2003 across Western Europe as a whole was almost as slow: 0.6 %, compared to 0.4% (Western Europe, or E17, includes the seventeen countries that were not part of the communist bloc before 1990).
Latency
The essential reason for this general slowdown in productivity growth is simple: new inventions have less economic effect than in the past. When you have ten inventions, one more increases the total by 10%. But, when you already have a hundred inventions, making one more only increases the total by 1%. And that’s the problem: we’ve already invented a lot.
Furthermore, some of the earlier inventions were of exceptional importance, particularly at the end of the 19th century.e century: electricity, the internal combustion engine, the telephone, the phonograph or photography, but also running water, indoor bathrooms and the victorious fight against infectious diseases.
There is a lag time before great inventions accelerate productivity growth. In the United States, it experienced its fastest pace between 1920 and 1970. In Western Europe, the devastations of the two world wars delayed this period of rapid growth until the years 1945-1975, the “thirty glorious years”, during which productivity growth in France and the E17 reached 5% per year.
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