My thoughts: The conclusion that societies should save very large portions of their economic output is extreme, and I think we should be suspicious of it. The model assumes that economic output only depends on capital; more recent models have illuminated the important role of technological progress in driving economic growth. The paper “Optimum Growth When Technology is Changing” (Mirrlees, 1967) proposes a theory of optimal economic growth and savings rates using a model that incorporates technology and human capital; I can’t access it, but I would be curious as to what it says. I suspect that the optimal savings rate would be much lower, because investing in innovation and human capital seems like a far more efficient way to promote economic growth than the brute-force approach of pouring large sums of money into capital accumulation.
My thoughts: The conclusion that societies should save very large portions of their economic output is extreme, and I think we should be suspicious of it. The model assumes that economic output only depends on capital; more recent models have illuminated the important role of technological progress in driving economic growth. The paper “Optimum Growth When Technology is Changing” (Mirrlees, 1967) proposes a theory of optimal economic growth and savings rates using a model that incorporates technology and human capital; I can’t access it, but I would be curious as to what it says. I suspect that the optimal savings rate would be much lower, because investing in innovation and human capital seems like a far more efficient way to promote economic growth than the brute-force approach of pouring large sums of money into capital accumulation.