Can governments engineer miracles? Unlikely.

Economists, business tycoons and politicians are almost unanimous in their view that slow growth of the global economy is unacceptable and that growth must be stimulated by whatever means possible. From 1947 to 2000 the US economy grew by an average of 2.2% but since 2001 it has been growing by an average of 0.9%. In the last decade 81% of people in the US have experienced flat or declining income. The figures are 97% in Italy, 70% in Britain and 63% in France. As a result people are working fewer hours, which means less income, and there is less productivity per unit of work. One economist RJ Gordon argued that internet is not going to be as productive for the economy as electricity, air transport and indoor plumbing were. Central banks have been pouring money into markets hoping that cheap credit will encourage people to spend more and increase demand, which will increase inflation. But that is not happening. A recent paper from the IMF supports a continuation of the same policies, including negative interest rates. These policies are reducing the value of pension funds, which will reduce spending power of growing numbers retired people, and are creating huge asset price bubbles. The trouble is that while central banks are increasing liquidity governments are reluctant to spend for fear of increasing government debt. Greece's problems with national debt, which is 214% of GDP, seems to have paralysed other governments. The IMF used to recommend austerity as a remedy for recession. No longer. IMF economists, includung Olivier Blanchard, have agreed that one dollar of stimulus spending by governments produces more than one dollar in output. Such is the desperation that Japan's Prime Minister, Shinzo Abe was advised to use 'helicopter money' to stimulate growth. All this easy money is helping the rich to accumulate more assets by borrowing cheap. Over $1 trillion will be invested in real estate this year, pushing up prices and creating more poverty by pushing people into wasting money on rents. But maybe economic miracles do not exist, writes Tyler Cowen. Denmark grew by 1.9% from 1890 to 1916 and has been growing around that rate for the last 100 years. Denmark has a per capita income of $52,000 per year and is the happiest country in the world. The East Asian economies of Japan, South Korea and China grew at over 10% by borrowing technology which was already invented and they started from a very low base. For advanced economies such growth rates are not possible. Or it maybe that productivity growth of today's technologies cannot be measured because much of it is given away for free. The media in India is very excited about how 'disruptive innovations' will power our economy to double digit growth. Perhaps we need to step back and take a deep breath. Disruptions disrupt. Can we deal with it?