This Saturday, Oct. the 5 th, I got a chance to listen to Prof. Robert J.

Gordons talk entitled: Is Innovation Trend Sufficient for Economic Growth? Has the Era of Economic Growth Ended?. The talk was organized by the Turkish Industry and Business Association (TUSIAD) and was held at Kadir Has University on the coast of the beautiful Golden Horn of Istanbul. Prof. Gordons talk was followed by the discussion of Kemal Dervis, the former Vice President of the World Bank and the former Administrator of the UNDP. Having been deeply concerned about the recently unimpressive economic performance and equally uninspiring social and political events in Turkey, listening to the long-term projections about the largest economy in the world, and the like, was certainly refreshing. The contents of the talk, however, was quite pessimistic; Prof. Gordon gave a rather bleak picture of the next 50 years, based specifically on the bottlenecks the US has been encountering in the spheres of education and equality. Though it is not my intension to summarize his talk in all its aspects, I will mention about the six factors that he lists to justify pessimism regarding the growth prospects of the US economy. These factors are, briefly, the slowdown in the rates of increase in the i) level of education; ii) quality of education; iii) population growth; iv) female labor force participation; v) technological progress; and increase in vi) income inequality. Taking into account all these indicators, he points out that the average growth rate of the US economy can be projected to be down to less than 0.5 percent per annum in per capita terms till the 2070s, as compared to the 2 percent average in the previous decades. He adds his contention that this implies that the US economy will be surpassed by the European Economies in the first half of the 21st century. What makes one wonder, notwithstanding the importance of this observation for business projections and repercussions for the world trade, is how well-suited this emphasis is for the welfare of the society. Is the growth performance of US should continue to be an end in itself? or, should the policy makers now turn their attention and good deal of their policy reform efforts, to the unsustainability of income distribution that shows close to 55 percent of the income generated in the economy going to the mere one percent of the whole population. Can once call this advancement if on the way to growth and efficiency so much poverty and inequality is generated in an economy that more and more resources may be still required for this status-quo not to manifest into social discontent or even unrest? Prof. Gordon mentions that most of the gains from the economic growth during the past decade have also been appropriated by the top 1 percent. If so, I am not sure how one may justify for an advanced economy like US to be still concerned mainly about growth but not about reforming its redistributive mechanisms instead. Development policies does not only concern less developed economies. As the Nobel Prize winner economist Douglass North states, development is growth plus effective institutional change. Development is not only about producing more, but about just distribution of wealth, trust and the happiness of the society. As Europe struggles with its own problems of unemployment and slow growth, it still scores better in at least its education, health and distributional aspects. In view of the powerful financial sector interests in the advanced economies that resist

the overdue reforms in that sector, which is almost certain to bear the potential to lead to crises of the sort that surfaced in 2007 or to the persistence of recession, reforming fiscal institutions and establishing better redistributive mechanisms may be the alternative path, albeit the difficulties involved. The economic dynamism that may stem from improved income distribution and educational quality may generate new incentives for innovations to the surprise of the pessimists. This could also lead to the emergence of and empowerment of alternative interests as in the process of creative destruction much needed in an advanced economy such as the US.