We’ve evaluated most of the arguments put forth by neo-Keynesians who claim the US economy – and probably Europe and Japan as well – is mired in so-called secular stagnation. The notion first arose in the mind of the American popularizer of Keynes, Alvin Hansen, who assured the world that the US had fallen into secular stagnation at the precise moment that the US economy was poised for spectacular growth.

We’ve observed that there are far simpler explanations for our recent slow economic growth, and we’ve examined and discarded three of the other four main arguments for secular stagnation: economic inequality, demographics, and central banker exhaustion. The final argument is that productivity growth has slowed markedly, mainly due to lagging technological advance, ensuring that economic growth will remain anemic essentially forever.

The secular stagnationists are certainly correct in noting that measures of productivity growth in the first ten or fifteen years of the 21st century – and especially since 2011(1) – have lagged the same measures in the late 1980s and 1990s. But there is no mystery about why this is the case. The substantive explanation is simply that productivity rates are always cyclical. Major technological advances aren’t instantly incorporated into the economy, and human beings and their educational institutions are even slower to adapt.

For example, the Turing machine, a hypothetical computer, was proposed by Alan Turing in 1936, but it wasn’t until the late 1980s that computers began to revolutionize the workplace. We had to progress from hypothetical machines to analog machines to more modern digital machines the size of small buildings to mainframes that fed dumb desktop terminals, to smart desktop computers, to portable computers to laptop computers to tablets to smartphones to smartwatches and so on.

Perhaps even more important, we had to develop the software that drove the machines. A simple transition from the incomprehensible MS-DOS to graphical operating systems like Windows in 1985 suddenly allowed virtually everyone to operate a computer. Productivity exploded, but so did the skill levels now required by industry.

Consider the humble example of the Greycourt receptionist position. In 1993, when we moved to new offices, we advertised for a receptionist. Our requirements were modest, as we were looking for only three talents. We wanted someone who (a) was presentable, (b) had not too bad of a Pittsburgh accent (“Can I help yinz?” was what we hoped to avoid), and (c) would show up for work every day and mostly on time. That was it. The position required no minimum education level.(2) It was truly an entry-level position, and a huge percentage of the young working population could qualify for it.

Today, in 2015, if you perused the job description for a Greycourt receptionist you could be forgiven for imagining that we were looking for a software engineer from Google. Technology has so infiltrated everything we do that no receptionist could possibly succeed in her job(3) without being widely and deeply skilled in virtually every known workplace technology. But we expect even more than that – technologies evolve and also change suddenly and disruptively, so it’s necessary for the receptionist to be smart enough and resourceful enough to evolve along with the changes in the workplace environment. We want a college graduate who knows how to think and adapt and solve problems. It’s still an entry-level position, but today only a small fraction of the working population can qualify for it. Oh – and we still want those initial three qualifications, too.

Despite the widespread availability of computers in the early 1980s, productivity growth was slow, as industry and people learned how to use the infernal machines. But as we became proficient, productivity soared. Note to secular stagnationists: productivity will always – always – be cyclical.

The neo-Keynesians also argue that productivity is low because technological advance has slowed markedly. It makes one wonder what sort of world they are living in. (Actually, we know – academia, where productivity has been static since the 12th century.) The reality is that technology is advancing so rapidly, and insinuating itself into everything we do so thoroughly, that we simply no longer know how to measure it. Social media, for example, has revolutionized everyone’s lives, but how do we measure it in terms of productivity?

There are thousands of examples, but mentioning just one will show the boundless dimensions of the problem.(4) Consider the smartphone. According to the Bureau of Labor Statistics, the smartphone is simply a piece of hardware. If the phone is cheaper than the last model, that’s productivity growth. It’s as though Steve Jobs’ iPhone was merely a modest improvement over the Princess phone your sister used to have in her bedroom back in 1960.(5) This is so wrongheaded you begin to wonder if the BLS might not be working from Moscow, circa 1972. The smartphone isn’t a piece of hardware, it’s an astonishing piece of software encased in plastic.

Yes, you can make a phone call with it, and you can make that call from virtually anywhere, not just within thirty feet of the hard-wired wall outlet your sister’s tangled cord allowed. But you can do so, so much more: email (how many emails do you send and receive, versus phone calls?); text message (I’m communicating now via text message with two of my kids, who are in Cluj, Romania – don’t ask); Internet research (which is how I found Joe Carson’s articles, see footnote 4); photos (my kids not in Cluj now but somewhere called Sibiu – I won’t ask); reserving and checking into your hotel room (Marriott app); evaluating tomorrow’s weather at Hershey Park, from whence I’m writing these words while my kids are still asleep (Dark Sky app); getting current on the madness in Greece (New York Times app); arranging your Uber ride; listening to Gene Clark’s astonishing version of “You Better Move On;” ordering lunch via GrubHub and arranging dinner via Open Table; refilling my prescription; ordering Simenon’s latest Maigret book, all 75 of which are being republished by Penguin; checking my bank balance and recent credit card transactions; checking out who’s checking me out (LinkedIn); backing up and syncing my files (Dropbox); keeping track of my ridiculous travel schedule (TripIt); checking the scores of the women’s World Cup soccer games (ESPN app), and so on and so on and so on. I haven’t even mentioned the dozens of smartphone applications most people use but I mainly don’t: YouTube, Twitter, Instagram, Snapchat, eBay, Spotify and so on.

If US productivity growth has been slow recently, it’s either because (a) we are just beginning to understand how to use the avalanche of technology raining down on us, but when we do productivity will explode, or (b) we’re already using those technologies but the BLS doesn’t get it. Whichever, it’s not because of slow technological progress and secular stagnation.

(1) Since 2011, measured US productivity growth has averaged about 0.7% per year, well below the levels observed in prior years and the lowest levels since the early 1980s.

(2) Despite these unassuming standards, several of our receptionists rose up the ladder to become senior professionals at the firm.

(3) So far as I can remember, they’ve all been young women.

(4) I’m indebted for these examples to Joe Carson, AllianceBernstein’s Economist and Director of Global Economic Research. See “The Productivity Paradox: Is Innovation Mispriced?” Economics: US Perspectives, 3/20/15, and “Productivity Paradox Part 2: Is Innovation Mispriced (and Missing)?” US Perspectives, 4/2/15.

(5) “It’s little…It’s lovely…It lights!”

Next up: Greece, Puerto Rico and the End of Political Innocence

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Please note that this post is intended to provide interested persons with an insight on the capital markets and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.