- Major
- Total workers (fertility + immigration) x
- Total man hours x
- Productivity / effort
- Minor
- Ingenuity and creativity
Really, the main factors that drive the above boil down to just a few items:
Total workers is are broken down into two groups:
- Immigration rates
- Fertility rates
Since immigration tends to attract intelligent people from less-free countries, that is probably the number one factor today, but of course, immigration has been slowing for decades. To prove this, just notice how many Chinese people immigrate to the US vs how many Americans immigrate to China (effectively zero). So, we are still doing decent on this front. This seems to be a reason why people are okay with legal, but not illegal immigration.
In fact, without the immigration, the low domestic fertility rates would have sunk this country’s GDP growth decades ago.
And with baby boomers on the rise, with no new workers, and unless something changes quickly, the final outcome is clear: Our GDP must go down.
People surely put in less effort today (ask any staffing company), and the average work week around the world appear to have been declining for centuries.
The other items like creativity and ingenuity are difficult to measure, but some of that again is from immigrant process.
So in the end, there is no amount of financial magic that the Fed or anyone else can pull off as long as two things happen: Working age population slows. Real effort (or output per capita) decreases. This is a job that is more useful for religion. E.g. How for example Marx criticized the way Protestants were so successful, but that’s probably because their religion taught it; a point that Max Weber may have made.
If you teach people values and they believe in the values, there is nothing more powerful than creating real, lasting, internalized change.