Don't jump to conclusions on big bad Trump

Keep your shirt on. The world as we know it may be ending, but if so it won't be for a while. And maybe things won't change as much as feared.

Yesterday the experts were confidently predicting Hillary Clinton would be president. Today they are predicting Donald Trump's presidency will be a disaster with equal confidence. How do they know?

I find it hard to imagine Trump's ascendancy won't end up being bad for our economy, for the rest of the world and the Americans themselves.

But that's a long way down the track and lots of unexpected things could happen between now and then. Maybe even a few good things.

The thing of which I'm most certain is that the election of a climate change-denying president will further delay a serious response to the challenge by America and, through its bad influence, the rest of us.

But, hey, we are probably too late already. So no (extra) harm done. And Donald, you and I will be dead long before it gets really bad.

Sorry, back to the present. Don't forget the guy doesn't even get the job until January. And even then he may not yet have assembled the full range of his thousands of appointees.

Not that there is likely to be any shortage of volunteers. They won't be America's finest, but there will be plenty of people keen to be the president's friend.

The delay will give Wall Street and the world's share markets plenty of time to change their mind about Trump - several times.

Remember, share markets took no time to decide Brexit was the end of the world and only a little more to decide it wasn't.

And every new presidency starts with a honeymoon, in which all the people who voted him in rejoice - a new start for America! - some of the people who didn't wish they had, and everyone is glad to be shot of the last lot and all their failings.

Nothing very bad will happen in the honeymoon.

If one of the first new policies to go forward is Trump's plan to end decades of neglect by renewing America's public infrastructure, that would be a good thing of itself, would boost the US economy and spread a little growth on to the rest of us.

At the other extreme, should Trump lose no time in starting a trade war with China, everyone would lose - the US, China and the rest, with Australia prominent among those last.

This is where we must trust that America's celebrated "separation of powers" comes to the rescue, allowing other, wiser heads to prevent Trump from being as foolhardy as he said he would be.

Of course, the one prediction every Aussie voter can make made with confidence is that Trump, being a politician, will fail to keep most of his promises. Good.

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Maybe the end of economic growth draws near

If you think the possible ascension of Donald Trump is our one big worry you haven't been paying attention. Some climate scientists are worried sick over the possibility that climate change may be passing the point of no return while we procrastinate over controlling it.

Meanwhile, the nation's – nay, the world's – economists worry that the wellsprings of economic growth are drying up in the developed countries. Think of it – an economy without growth!

On Monday the Productivity Commission issued a discussion paper exclaiming that there is "justified global anxiety" that improvements in productivity and the growth in national income they cause have "slowed or stopped".

In my job I'm not supposed to say it but, sorry, I'm a lot more worried about inaction on climate change than the feared end of economic growth – if for no other reason than that going backward must surely be worse than not going forward.

Why can't most economists see that? Because climate change is not their department. They're meant to be experts on how to make economies grow, and that's all they want to talk about.

Most economists I know never doubt that a growing economy is what keeps us happy and, should the economy stop growing, it would make us all inconsolable.

They can't prove that, of course, but they're as convinced of it as anyone else selling something.

I'm not so sure. I'm sure a lot of greedy business people would be unhappy if their profits and bonuses stopped growing, but I often wonder if the rest of us could adjust to a stationary economy a lot more easily than it suits economists and business people to believe.

And get this: there is a fair chance we may get to find out if I'm right.

The economy – the amount of economic activity, measured as annual production of goods and services – grows as the population and, more particularly, the amount of work being done, grows.

The economy also grows when we save some of our income from producing goods and services and invest it in additional productive equipment – machines, buildings, infrastructure – thus making our workers capable of producing more goods and services with each hour they spend.

But here's the bit many scientists and others don't get: the secret sauce of economic growth is our ability to produce more goods and services this year than we did last year even with the same quantity of labour and capital equipment.

This is the pure essence of economic growth: improved "productivity" – productiveness. How is it possible? Mainly by giving workers not just more machines, but better machines; machines that do better tricks. By technological advance.

And also, these days, by using further education and training to make our workers capable of doing fancier tricks – including working with more sophisticated machines – and organising work in better ways.

This essence of productivity – which economists call "multifactor" productivity – is what seems to be drying up. In Australia, according to the eponymous commission, it hasn't improved since 2004.

But it's much the same story in all the developed economies. Many economists are starting to accept Harvard professor Lawrence Summers' revival of the theory of "secular stagnation" – that we've entered a lasting period of little or no growth in national income (gross domestic product), especially income per person.

What's helping to persuade them is the argument of another American economist, professor Robert Gordon, perhaps the world's leading expert on productivity.

His contention – which no young person would believe – is that the slowdown in measured productivity improvement has occurred because there is now much less innovation than we became used to over the past century.

Despite the unending wonders of the digital age, and the digital disruption of industry after industry, they just don't compare with the life-changing and economy-transforming technological advances of the past: electricity, the internal combustion engine, even underground water and sewerage.

We spent all of last century fully exploring and exploiting the potential just of electricity – from light bulb to production line to dishwasher to the computer and all it has spawned.

But there's more to Summers' secular stagnation. He argues that population ageing is leading people in the West to save more, while digital innovation and weak population growth are reducing the need for much new physical investment by businesses and governments.

Higher saving and lower investment equal permanently lower interest rates and lower economic growth.

Well, possibly. A rival theory is that the digital revolution and the shift from more goods to more services is changing the economy in ways that the economists' conventional measuring system is incapable of picking up.

We're still getting better off, but in ways that aren't showing on the economists' dials. It's certainly true that much of the time-saving and convenience flowing from the internet is not measured by GDP.

That's been my big problem with economists' obsession with economic growth. It defines prosperity almost wholly in material terms. Any preference for greater leisure over greater production is assumed to be retrograde.

Weekends are there to be commercialised. Family ties are great, so long as they don't stop you being shifted to Perth.

But I'd like to see if, in a stagnant economy, we could throw the switch from quantity to quality. Not more, better.

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