Where Growth Comes From

Karl Smith explains why unusually strong economic growth is possible - if unlikely:

10% growth is crazy high for the United States because we usually don’t have a massive reservoir of untapped labor which could be easily mobilized.

10% growth is not crazy high for the Chinese economy because effectively they do have a massive untapped reservoir of labor. Workers migrating from extremely unproductive rural farm work to highly productive industrialized work along the coast is the source of China’s growth.

However, unlike normal circumstances the US does have a reservoir now. The massive unemployment we have is the potential feedstock for super-normal growth. In a basic sense economic growth either comes from more workers or higher worker productivity.