Who Is Kim Jong-un?

Andrew J. Nathan 

The pudgy cheeks and flaring hairdo of North Korea’s young ruler Kim Jong-un, his bromance with tattooed and pierced former basketball star Dennis Rodman, his boy-on-a-lark grin at missile firings, combine incongruously with the regime’s pledge to drown its enemies in a “sea of fire.” They elicit a mix of revulsion and ridicule in the West. Many predict that the Democratic People’s Republic of Korea cannot survive much longer, given its pervasive poverty, genocidal prison camp system identified by a UN commission of inquiry as committing crimes against humanity,1 self-imposed economic isolation, confrontations with all of its neighbors, and its leader’s youth and inexperience. The Obama administration has adopted a position of “strategic patience,” waiting for intensifying international sanctions to force North Korea either to give up its nuclear weapons or to implode and be taken over by the pro-Western government of South Korea.

But North Korea’s other closest neighbors, the Chinese, have never expected the DPRK to surrender or collapse, and so far they have been correct. Instead of giving up its nuclear bomb and missile programs, Pyongyang is by now thought to have between ten and twenty nuclear devices and over one thousand short-, medium-, and long-range missiles, and to be developing a compact warhead that will be able to hit the US mainland.

At home, the regime recently survived the toughest test that totalitarian systems face, a leadership succession. The country was ruled by Kim Il-sung from 1948, when the postwar Soviet occupation of North Korea ended, until his death in 1994; by his son, Kim Jong-il, from 1994 until he died in 2011; and since 2011 by the founder’s grandson, Kim Jong-un. Jong-un was his father’s youngest son and a surprise successor; he emerged as heir apparent only two years before his father’s death, in contrast to his father, who had been heir apparent for twenty years. Kim Jong-il is believed to have run the country’s terrorism, counterfeiting, smuggling, and proliferation operations for most of that time.

In another contrast, the second Kim had staged a protracted public mourning for his father and made a show of modesty by postponing his formal takeover of top posts for three years, whereas Jong-un, only twenty-seven years old, anointed himself as first secretary of the ruling Korean Workers’ Party (KWP) immediately upon his father’s death and before long assumed the posts of chair of the Central Military Commission, chair of the National Defense Commission, and supreme commander of the Korean People’s Army, among others. This May, he summoned the Seventh Congress of the Korean Workers’ Party, its first in thirty-six years, so he could accept the position of party chairman and place his personal stamp on the country’s policy of “parallel advance” (byungjin) in building both the economy and nuclear weapons.

The third Kim’s authority rests on a uniquely North Korean form of legitimation that his grandfather established for the regime. The predecessor of the KWP was a classically Leninist organization called the Korean Communist Party, created in the 1920s under Soviet and (later) Chinese tutelage. But after Kim Il-sung took over the northern half of Korea in 1948, he purged his pro-Soviet and pro-Chinese rivals and constructed a distinctive cult of personality. In this cult, “Kim Il Sung was not presented as an heir to, a disciple of, or the recipient of the guidance of any foreign leader, philosopher, or thinker,” according to the North Korea expert Andrei Lankov in The Real North Korea. “He was the founding father…in his own right, the Creator of the Immortal Juche Idea and the Greatest Man in the Five Thousand Years of Korean History.”

The cult’s imagery drew themes from Christianity (which had long been propagated by missionaries on the Korean peninsula, including, according to some sources, Kim Il-sung’s maternal grandfather), Buddhism, and the emperor myth of Korea’s former colonizer, Japan. As B.R. Myers shows in The Cleanest Race, his analysis of North Korean propaganda, Kim Il-sung was portrayed as an androgynous figure—plump, soft, and clean—endowed with moral purity and uncanny composure, dispensing practical guidance and motherly love to a needy “child race.”

The North Korean regime, therefore, is neither “Stalinist” nor “Confucianist,” as it is often described. It adheres to an ideology called Kimilsungism, centered on the notion of juche (“self-reliance”). This ideology was once described by Kim Jong-il as “an original idea that cannot be explained within the framework of Marxism-Leninism…an idea newly discovered in the history of human thought.” Centered around the idea that “man, not nature, holds the position of Master in the material world,” juche is what the Korea scholar Bruce Cumings calls “the opaque core of North Korean national solipsism.”2

To provide for the regime’s future, Kim Il-sung made the myth that gave him personal legitimation also the basis of a new dynasty. He probably feared, as Lankov speculates, being rushed off the stage by his designated successor in the way that, for example, Lin Biao had recently been accused of doing to Mao in China. The only person unlikely to be tempted to overthrow him was his son, whose own survival would depend on the robustness of his father’s myth. The younger Kim’s birth year was altered from 1941 to 1942 to rhyme with his father’s birth year of 1912. His official birthplace was moved from its actual location in Siberia, where the Korean Communists were hiding out during the war, to a mythical secret revolutionary military camp on the snow-capped sacred Mount Paektu inside Japanese-occupied Korea. And the story of his youth was retroactively packed with demonstrations of resoluteness and virtue.

As the end of his own life approached, Kim Jong-il in turn needed to find a successor among his three male offspring. (He also had four daughters, who today occupy posts of varying responsibility in the regime.) Observers had originally expected the succession to fall upon the eldest, Kim Jong-nam (born in 1971).3 Jong-nam, however, was the offspring of Jong-il’s first long-term consort (it is not clear whether Jong-il ever formally married any of his companions), whom the patriarch Kim Il-sung disliked. Moreover, in 2001, Jong-nam was caught by Japanese immigration officials entering the country on a forged Dominican passport, accompanied by a wife, child, and nanny. The forged passport was nothing unusual for North Korean elites, but apparently Jong-nam’s reason for using it—to bring his family to visit Tokyo Disneyland—confirmed in his father’s eyes that he lacked the necessary toughness to wield power. Jong-nam was sent into exile, and reportedly spends much of his time in the Chinese gambling city of Macau. He has given several press interviews expressing his disapproval of “hereditary succession.” Chinese guards, I have been told, protect him from potential North Korean assassins. It is not clear who supports him.

Kim Jong-il’s second son, Kim Jong-chul, was also found inadequate, according to a gossipy book by the family’s Japanese former sushi chef, because he was too “effeminate.” That left Jong-un, born in 1984,4 although his official birthday has been adjusted to 1982 to continue the mystical parallelism with his grandfather’s and father’s birth years. Jong-un was not academically talented, and during his secondary education at a private school in Switzerland he is said to have been obsessed with basketball and other sports. But he was short-tempered and domineering, characteristics suitable for inheriting a dictatorship. In 2009, word appeared that a “new genius of leadership had emerged from within the ancient lands of Korea.” Jong-un’s appearance was groomed to resemble his grandfather’s—including his bouffant haircut. Observers speculate that he was encouraged to gain weight for this purpose; according to intelligence reports he may now be suffering from health problems related to obesity.

The most serious threat to Jong-un’s authority was his uncle. The husband of Kim Jong-il’s only sister, Jang Song-taek had accumulated broad influence, serving among other things as vice-chairman of the National Defense Commission, the controller of Pyongyang’s foreign exchange resources, and the regime’s chief contact with China.5 Many viewed him as a regent, and he held a potential threat over Jong-un’s head in the form of a close relationship with the exiled older half-brother Jong-nam, who could potentially have replaced the younger sibling at the head of the party and state.

On December 8, 2013, two years after Jong-un came to power, the young ruler arranged for Jang to be seized by uniformed guards in front of hundreds of high-ranking officials who had been summoned to an enlarged meeting of the ruling party’s Political Bureau. Jang was accused of “anti-party, counter-revolutionary factional acts,” of conducting numerous extramarital affairs, and of other crimes. He was denounced as “an ugly human scum worse than a dog” and executed by firing squad (not, as was rumored at the time, by antiaircraft guns or ravenous dogs). Many of his followers were killed or sent to labor camps, some reports say along with their spouses, children, and grandchildren. Jang’s wife may or may not have approved of her adulterous husband’s execution; she is said to be suffering from dementia and has appeared silently in public a handful of times since the purge.

This family drama especially shocked North Korea’s only formal allies, the Chinese. They interpreted such flagrant mistreatment of their prime Pyongyang interlocutor, whom they regarded as a rational reformer, as an insult. And the purge underscored a moral difference between the two dictatorships: for all the viciousness of their politics, Chinese politicians do not execute their relatives.

The young ruler also needed to firm up his authority among the regime’s technocratic elites. B.R. Myers makes a point that applies to Kim Jong-un as well as to his predecessors:

Since this is not a Marxist-Leninist state committed to the improvement of material living standards, but rather a nationalist one in which the leader’s main function is to embody Korean virtues—which are not seen to include intellectual brilliance anyway—the relative inferiority of [the leader’s] genius troubles propagandists less than an outsider might assume.

Still, a principal function of rulers in the Kim dynastic line is to visit production units throughout the country and dispense “on-the-spot guidance.”6 How could Kim Jong-un—only a year before his father’s death appointed a four-star general and vice-chair of the Central Military Committee without any prior military experience—command the respect of the country’s one-million-strong professional armed forces, the fourth-largest in the world, or its missile scientists, trained in the USSR and China, who had managed under conditions of economic stagnation to build nuclear bombs and missiles that (more or less) work, or of the country’s senior economic planners and diplomats?

To assert his control over them, Kim Jong-un purged dozens of high-ranking military officers as well as some senior party and security officials. (The Associated Press reported South Korean sources as saying that Kim executed some seventy high officials in his first four years in office.) At the same time, he promoted officials from his grandfather’s and father’s generations whom he regarded as loyal.

Kim moved to consolidate support among the general public by retaining but mildly softening the regime’s society-wide system of layered deprivation. This has been examined in a pair of invaluable reports by Robert Collins, who describes how the songbun, or class status, system of North Korea “subdivides the population of the country into 51 categories or ranks of trustworthiness and loyalty to the Kim family and North Korean state.” These categories are grouped in turn into three broad castes: the core, the wavering, and the hostile classes, representing about 25 percent, 55 percent, and 20 percent of the population, respectively.

Class status is hereditary, and it determines where one can live, the quality of one’s housing, one’s educational opportunities and work assignments, and access to food and consumer goods. The armed forces and security services are recruited from the core classes and seek to protect the system on which their and their families’ privileges depend. Any sign of political disloyalty moves an individual into the hostile class and often into a labor camp for an open-ended term that usually ends in death. Moreover, as Lankov reports, “not only the culprit but also the entire family disappears.”

The order of privilege is not only social but physical. Living in nearly first-world conditions in downtown Pyongyang are several hundred thousand top members of society. Further out but still in the city are lower-ranking cadres and experts whose conditions of life are inferior but tolerable. The mass of the population lives away from the capital. Personnel in the middle layers of privilege are afraid to question the system for fear of being demoted to layers suffering greater privation. This system generates an anxious conformity throughout society comparable to that generated by the Gulag in the Soviet Union and race exclusion in Nazi Germany.

The harshness of life for the majority has been mitigated to some extent by modest economic and cultural reforms, some of which began under Kim Jong-il. The regime tolerates small-scale private markets, which improve access to food; farmers may keep part of their harvests; enterprises can distribute some of their income to workers and staff; and a limited number of traders can go back and forth across the Chinese border. The famine of the late 1990s is fading in memory. The GDP growth rate has run about 1 percent per year since Kim took office, compared to negative rates during many of his father’s years. The new leader has cultivated a stodgy kind of youth culture, represented by exhibition basketball games with the Harlem Globetrotters, a girl band playing Western pop songs and surrounded by dancers costumed as Disney cartoon characters, a glitzy new water park, and the unusual (in North Korea) public appearances at his side of his beautiful young wife, a former singer.

The economy, however, still depends largely on four sources: exports to China of fishery products and minerals, often produced by prison camp inmates; the dispatch of teams of indentured laborers to Siberia, Africa, and the Middle East; the proceeds of illicit counterfeiting and smuggling; and relief aid blackmailed from South Korea and the West by the threat of starvation. In the 2000s Beijing tried to persuade Kim Jong-il to adopt Chinese-style reforms. But the elder Kim was probably right to judge that reforms on that scale would be politically suicidal. Even China almost collapsed in 1989, after the first ten years of Deng Xiaoping’s reforms.

North Korea is more like East Germany than it is like China: there is another Korean regime of similar size next door that offers a more successful economic model. Even the mild opening that the Kims have allowed has produced a hunger for information, fed by legal and illegal travelers to China and by radio broadcasts and other media disseminated by the “defector” community (as it is called) in South Korea, which could lead at some point to mass resistance. To prevent this, the regime controls information by locking radio receivers to approved frequencies and engineering cell phones and computers that can access only government-controlled sites. The population remains compliant, but is unlikely to feel the adulation for Kim Jong-un that earlier generations did for his grandfather. As in East Germany, North Korean citizens would flee in unstoppable numbers if the border were open and they fully understood what was going on next door.

The young ruler has dealt equally boldly with his challenges abroad. All the surrounding powers wish him ill; he has checkmated them. South Korea lives under the threat of thousands of artillery pieces pointed at Seoul and suffers intermittent North Korean military provocations. But in view of the prospect of mass immigration, it fears the collapse of the Pyongyang regime even more than its survival, and has propped it up with extensive food aid. Tokyo’s North Korea diplomacy focuses on trying to discover the fate of an unknown number of its citizens who were abducted in the late 1970s and the 1980s from Japanese beaches and streets by North Korean agents apparently seeking language instructors and potential spies.7

China opposes the North Korean nuclear weapons program because it drives South Korean, Japanese, and US weapons policies in a direction it dislikes (such as the recent South Korean agreement to deploy an American radar and missile defense system called THAAD) and raises the potential—although the Chinese deem it remote—of nuclear war next door and a flood of refugees. But Beijing does not regard the North Korean problem as a crisis the way Washington does, because the situation provides some benefits for China. Pyongyang’s disruptive behavior places stress on the relationships between Washington and its principal Asian allies in Tokyo and Seoul, since the three partners have different priorities in dealing with the North Korean threat.

China has been able to position itself as a major diplomatic broker in the region, driving South Korea closer to it and forcing Washington to express its gratitude for whatever efforts Beijing makes to help solve the North Korean problem. Although the Chinese have never liked the Kim dynasty, they have to deal with the North Korea that exists. This June, the Chinese president Xi Jinping granted an audience to a personal envoy sent by Kim Jong-un, even though the envoy’s brief was to deliver the defiant message that Pyongyang would never give up its nuclear weapons program.

Beijing sees the solution to the Korean nuclear problem as lying chiefly in Washington. As the Chinese see it, North Korean nuclear policy is an inevitable response to decades of threats from the US to North Korea’s survival, precisely as Pyongyang says it is. Chinese strategists believe Pyongyang would have bargained away the nuclear program if Washington had given credible guarantees not to seek the regime’s overthrow. But although Washington has said many things along this line, the formulations were never sufficiently firm and public to be credible. Two major deals to dismantle the nuclear weapons program—in 1994 and 2005—collapsed amid mutual accusations of duplicity between Pyongyang and Washington. Now, in China’s view, it is too late to denuclearize North Korea. What Kim Jong-un wants is international recognition as a nuclear power. Eventually the US will have to give it to him.

The ability of the weakest power in Northeast Asia to defy all the others is nothing new. As Charles Armstrong shows in Tyranny of the Weak, Pyongyang benefited from the rivalry between China and the Soviet Union throughout the cold war by virtue of “masterful manipulation.” Relations between the Kim dynasty and its Communist patrons were even worse than the outside world suspected, yet Pyongyang kept both countries busy bidding for its support. A similar dynamic applies today, as the regime confronts the rest of the world with its ability to wreak harm both by surviving and by collapsing.

Kim Jong-un has surprised the skeptics. In five years he has turned a most unpromising situation into a certain kind of success. He has refuted those at home and abroad who doubted his vigilance and ruthlessness, fostered a mild economic recovery, and advanced his country’s position as a nuclear power. UN sanctions have been calibrated at China’s behest so as not to threaten the regime’s survival. If Kim’s economy were to falter, China and South Korea would have to bail him out. The only risk of collapse would be if young Kim’s health declined. Even then, the strong, disciplined army, with its privileges at stake, would maintain order. China would be the beneficiary, which is one reason that Beijing sees no need for the discussions about contingency plans that many Western strategists call for. This is, however, a poor kind of victory, with the young ruler and his countrymen trapped in a self-sustaining nightmare that shows no prospect of ending.

They built towering new cities in China. Now they're trying it in downtown L.A.

David Pierson Los Angeles Times

Winston Yan stood atop the largest real estate project of its kind in downtown Los Angeles, a monstrous patchwork of glass and concrete next to the 110 Freeway, and marveled at the bustle of workers, construction vehicles and cranes 38 stories below.

The scope of development in this mixed-use project, called Metropolis, is unprecedented for L.A. but quite familiar to Yan. As an architect and executive for Chinese real estate giant Greenland, he’s witnessed firsthand China’s dramatic urbanization in recent decades.

“It reminds me of what’s happening in Beijing and Shanghai,” said Yan, chief technical officer for Greenland’s U.S. subsidiary. “Now it’s happening here.”

Los Angeles real estate has long attracted foreign investment, be it from Japan, Canada and South Korea. But no one is building from the ground up the way the Chinese are today.

Chinese developers such as Greenland, Oceanwide and Shenzhen Hazens are pouring billions into the neighborhood, adding thousands of new residential units in soaring skyscrapers that will fundamentally change the city’s skyline. Since 2014, Chinese developers have been involved in at least seven of 18 land deals downtown in excess of $19 million, according to real estate firm Transwestern. 

“When all these megaprojects are finished, they’re going to have to reshoot the postcard picture of downtown L.A.,” said Mark Tarczynski, executive vice president for Colliers International’s L.A. office.

By investing in Los Angeles, the builders are staking downtown’s revival closer to the Chinese economy. A sizable share of home buyers for the new downtown developments are expected to come from China, where many in the middle and upper class are looking to the perceived safety of foreign real estate to diversify their wealth. That trend has been exacerbated by the uncertainty of China’s slowing economy.

The building boom is something of a showcase for Chinese real estate companies, which are willing to pay a premium to establish themselves as global brands. The foray overseas has also demonstrated the many differences between building in both countries — an experience both sides will need to learn from if the U.S. is to remain a prime destination for Chinese capital.

“The speed is so dramatically different in China,” said Sonnet Hui, executive project director for Shenzhen Hazens, which is building a $700-million mixed-use project across from Staples Center. “There’s a lot of planning and study here,  whereas in China it’s just ‘Let’s go, let’s go.’”

Before the Chinese landed, things were going nowhere at a 6-acre site on the corner of W. 8th Street and the Harbor Freeway. Plans to develop the parcel, which had been a parking lot, were scuttled by one economic downturn after another.

Then in 2014, Shanghai’s Greenland paid $150 million for the plot and announced plans to build a “city within a city” with about 70,000 square feet of retail space, an 18-story boutique hotel and 1,500 residential units in three condo towers, some with ocean views. They priced properties at between $500,000 for the lowest end and $6.9 million for the premier penthouses. 

When completed in 2018, the $1-billion project will require a total of 300,000 tons of concrete and 650,000 square feet of glass, much of it in Greendland’s namesake color.

“They need a certain amount of scale to make it worth their while,” said Laurie Lustig-Bower, executive vice president at CBRE and broker for the Metropolis land deal. “Of course, what we consider large is not relatively large to them coming from China.”

When the chairman of Greenland came to visit Metropolis, it was the first time he didn’t require a car to traverse one of his building sites, an executive told Tony Natsis, a partner at Allen Matkins and chairman of the law firm's real estate practice.

“Their ability to build on this scale is completely child’s play to them.” Natsis said.

Around the same time Greenland bought its site, another Chinese real estate giant called Oceanwide Holdings paid $174.8 million for a 4.6-acre site across from Staples Center. The Beijing-based builder is in the early stages of another $1-billion mixed-use project, this one with nearly 170,000 square feet of retail space, a luxury hotel and two sleek condo towers that together will offer more than 500 residences.

In a design flourish popular in China, a massive LED screen will wrap the west facing side of Oceanwide Plaza overlooking Figueroa Street. The project is set to open by the end of 2018.

We buy it at the right time and we build right away.

— Thomas Feng, Oceanwide Plaza’s chief executive and president

Across the street are plans for an almost equally extravagant mixed-use development on the current Luxe City Center Hotel site. Shenzhen Hazens is proposing razing the hotel for a pair of gleaming condo towers and a W Hotel steps away from the arena.

“Our chairman [Yan Fuer] is a big basketball fan and went to a game at Staples Center and saw the property and said ‘I want that property,’” said Hui, the project’s director.

Shenzhen Hazens paid $104 million for the 2.5-acre site. The $925.11 paid per square foot is the highest of any major land purchase in the area since 2014, according to Transwestern.

The next three highest prices per square foot in the last two years also belong to Chinese buyers. The Greenland, Oceanwide and Shenzhen Hazens developments represent three of the four most-expensive land deals downtown,  and they highlight the Chinese appetite for splashy and ambitious projects.

 “The Chinese can come in with a lot of money and execute deals quickly,” said Michael Soto, an analyst for Transwestern. 

Other smaller Chinese projects in the works include Shanghai Construction Group’s proposed 35-story apartment tower on 4th Street and Broadway, Fulton Street Ventures’ 28-story condo building at 1133 S. Hope Street and City Century’s 37- and 22-story condo towers at 1201 S. Grand Avenue.

Meanwhile, Lifan Group, a motorcycle manufacturer from the Western Chinese metropolis of Chongqing, paid more than $19 million for a former union hall at the intersection of West 7th and Witmer streets. Naturally, it’s for another apartment high-rise.

Chinese developers can afford to outbid the competition in markets like L.A. because they are willing to wait longer than most to reap returns and can rely on both local and Chinese-based home buyers to scoop-up their condos. It’s also advantageous to move capital overseas to hedge against inflation and a weakening Chinese renminbi. 

“They look at risk a lot differently because of these factors that relate to what’s going on in China and what’s going on with their currency,” said Tarczynski of Colliers International.

After a boom period that saw property values skyrocket, China’s real estate market has quieted down. Deep-pocketed investors, having exhausted Beijing and Shanghai, looked to foreign markets like Vancouver, Canada; Sydney, Australia; and the San Gabriel Valley to park their cash (some in the belief China’s economic miracle was due for a reckoning).

Chinese developers followed in kind by building overseas, figuring their brand appeal would extend beyond its borders. Greenland, for example, has developments in Australia, Canada, Malaysia, South Korea, Germany and Spain in addition to U.S. projects in L.A., San Francisco and New York.

That dependence on Chinese buyers could just as easily become a source of risk. Some downtown L.A. residents have expressed concern that Chinese investors will leave their properties empty — a phenomenon common in China and antithetical to the dense urban neighborhood many local boosters have long championed.

Some Chinese developers in L.A. are expecting Chinese buyers to constitute up to 40% of their clients.  As a result, they could be beholden to the whims of Chinese regulators who are currently making it harder to get cash out of China — a move prompted by a steep decline in the country’s foreign exchange reserves. That’s led to the first dip in Chinese home-buying activity in the U.S. this year since 2011, according to the National Assn. of Realtors.

Chinese firms in L.A. may have to rely on domestic buyers more than they had planned. If so, they’ll have to hope the surge in construction downtown won’t result in a glut of condos and apartments.

There are currently 6,260 residences under construction Downtown by all developers, not just Chinese, according to Transwestern. When completed, that will boost the number of existing homes in the neighborhood by 15% to more than 40,000. Thousands more units are planned.

That risk has already steered some major Chinese developers such as Gemdale to forgo downtown and build in Hollywood instead. 

“What we have experienced in China is that when there is too much supply coming to the same place, then there will be a stop in investment,” said Jason Zhu, chief executive of Gemdale’s U.S. subsidiary.

Zhu said Gemdale had the luxury of studying the U.S. real estate market for years before making a move. 

But for most builders, it’s been a steep learning curve. That’s especially true when it comes to the city’s permitting process for building -- something L.A. officials recently streamlined but is considered too time consuming by the Chinese.

“Chinese developers are not into buying land, letting it sit there for years and waiting for better times,” said Thomas Feng, Oceanwide Plaza’s chief executive and president. “We buy it at the right time and we build right away.”

Part of that disconnect is over safety and planning, which is more stringent in the U.S. But it also underscores the different role real estate plays in the world’s second-largest economy. In China, there’s no real property tax, so local governments rely on land sales for more than a quarter of their revenue. That gives them every incentive to expedite real estate development. (It’s one of the reasons why a 57-story skyscraper can be built in 19 days in China). 

That’s not how things are moving in L.A. for Shenzhen Hazens, which still hasn’t broken ground two years after purchasing its land across from Staples Center. The company is still grappling with getting its project entitled.

Raymond Chan, a Los Angeles deputy mayor for economic development who headed the city’s Department of Building and Safety when many of the downtown Chinese projects were first announced, said the city “threw the book” at Shenzhen Hazens at first. Since then, regulators have been more accommodating, seeking ways for the builder to meet all the city’s requirements. The company hopes to have the entitlement completed by early next year.

“It’s been an education,” said Hui of Shenzhen Hazens. “That’s why we have so many attorneys and consultants. Every decision we make is so that we follow U.S. law to a T. … I think the city recognizes that.”  

Joseph Stiglitz

on Brexit, Europe’s long cycle of crisis, and why German economics is different

(Johnny Simon / Quartz)

WRITTEN BY Matt Phillips

United States of Europe

Globalization seems to have a lot more discontents lately.

From Britain’s vote to extricate itself from the European Union to Donald Trump’s anti-trade and immigration rhetoric, the conventional wisdom about economic advantages conferred by free-flowing goods and capital—and to a certain extent, people—that dominated economic policymaking in the 1990s now faces increasingly stiff opposition in the world’s advanced economies.

Columbia University economics professor Joseph Stiglitz says this shouldn’t be a surprise. The recipient of the 2001 Nobel Prize for economics has long been a critic of the neoliberal conventional wisdom—he calls it “market fundamentalism”—that long dominated at global financial policy-making institutions such as the International Monetary Fund. His best-selling 2002 book, Globalization and its Discontents, chastised the IMF among others for bailout programs conditioned on cutting government debts and deficits. Such austerity programs tended to sink recipient nations into deep recessions, as relatively straightforward Keynesian economics would have predicted.

The book set off an unusually raw debate in the typically rarified world of economic policy-making. Ken Rogoff, the IMF’s chief economist at the time, called Stiglitz’s ideas “at best highly controversial, at worst snake oil.”

In his new book, The Euro: How a Common Currency Threatens the Future of Europe, Stiglitz, the former head of the Clinton administration’s White House Council of Economic Advisors, analyzes another transnational economic policy push for austerity that seems to have gone throughly wrong.

From its conception, Stiglitz argues, the euro zone was a project carrying a staggering amount of ideological luggage that effectively blinded its creators to deep flaws in the system. For instance, by adopting a single currency, countries that underwent economic shocks could no longer take advantage of a weaker currency to boost exports and domestic demand.

And in addition to such structural problems, the response of eurozone officials to the debt crisis that erupted in Greece in 2010 has effectively doomed large parts of the monetary bloc to perennial depression. The mechanism is a punishing system of drip-by-drip bailouts, accompanied by demands for steep cuts on spending and disruptive “structural reforms” that only worsen the economic malaise and make it more difficult for a country return to economic expansion. Economic downturns worsen the fiscal position of the country, necessitating more bailouts and deeper spending cuts, and pushing the economy deeper into depression. Rinse and repeat, seemingly ad infinitum.

We visited Stiglitz’s offices at Columbia University recently to talk about his book. In the discussion that followed, he expounded on the depressing state of Europe’s economy, how ideology masquerades as economics, and why Germany has different economics from everyone else in the world. Here’s an edited excerpt of our conversation.

W. W. Norton (W. W. Norton)

Quartz: How would you describe the moment we’re in now, having been present for the discussions during the neoliberal moment? From my perspective, it seems like it’s kind of coming apart.

Very much so. And with big societal consequences. So, if [in the 1990s, policy makers] had turned to more academic economists, and said, “What will be the effects of free trade? Will it make everybody better off?” they would have been told there are going to be big, distributive consequences.

I’m enough of a political junkie to know if you have large numbers of people much worse off, you’re going to have consequences.

Going back to the founding of the euro zone, it was premised on two ideas. One is that it would bring greater prosperity, and the success of the euro zone would reinforce European solidarity. And then that would lead to the next stages of European political integration.

But it has been an economic failure. And as one would have anticipated, economic failure has contributed to undermining political solidarity. In fact, it’s led to the kind of divisiveness that makes it even more difficult for them to address the new problems they’re confronting like the migration crisis.

So what was the ideology behind the euro? How would you describe it? And what went wrong?

You can analyze the ideology at many different levels. Part of it was an aspect of the globalization ideology. Success required the next step in economic integration, which they interpreted to be a single currency. So the prioritization of a single currency was not based on economic science. It was blind faith.

Was there any backing for it? Where did they come up with this idea?

I think it was the moment of the time. It was just after the defeat of communism, the fall of the Berlin Wall. It was a moment to be seized.

The world could now move closer together. And there were a whole set of initiatives that came together. The WTO was founded in 1995, for example.

So it was a moment of global triumphalism and a wrong interpretation of what the fall of the Berlin Wall meant. It wasn’t the victory of capitalism, it was the defeat of a flawed system.

But there’s a second point that I’d emphasize. Even after you prioritized the notion of this common currency form of economic integration—you can have many other forms—even after you prioritized that, you have to say, “What are the rules the game?”

And that moment happened to be a neoliberal moment, an interesting period of social democratic governments in place in many countries—but social democratic governments that were actually right of center.

So for instance, Gerhard Schröder in Germany.

Tony Blair, Schröeder, and Clinton. From the current perspective many of the [Clinton administration economic policies] you know, financial market liberalization, NAFTA, are all viewed as an agenda of the center right—even though they were governing from the left, as it were.

And so as they developed the rules of the game, they were very much influenced by what I would call neoliberalism and what I call market fundamentalism.

A strong belief in reduced regulation and free movement of capital, labor, and trade.

And that all of that would lead to a burst of economic activity. Don’t worry about inequality. A rising tide lifts all boats. And everybody will be better off. It was almost a continuation of Reagan/Thatcherism, but with a more human face.

One thing that I emphasize in this book was the idea that all monetary policy had to worry about was inflation, that low inflation was necessary and almost sufficient for growth and stability. And so you see that embedded in what you might call the constitution of the euro zone. The ECB’s mandate was just inflation.

So the only thing you had to worry about was keep inflation at roughly 2% and everything else will take care of itself?

When they thought about how are we going to make this disparate group of countries share a currency, they said, “We’ll limit deficits to 3% of GDP, debts to 6% of GDP.”

There was no economic theory behind this. But this was the conservative, neoliberal agenda to constrain the hand of government. And the idea was that governments were the source of instability. If we constrain government, all will be well.

You’ve had really big jobs, you’re around influential people. People whose opinions matter. How do ideas like this that are not backed by theory or practice, how do they get stuck in people’s heads?

That’s a good question. And one that I’ve puzzled a lot about. The first thing that really struck me when I went from academia to the White House was that there was almost no one with a scientific background. They were lawyers. And very, very few of the lawyers had majored in any science.

There is something about the mindset of a scientist that is different—an awareness of uncertainty, modeling, proof. I began my career as a physicist. And in the White House my buddies were the people from the White House office of science and technology policy. But a lot of the people were lawyers. They like winning an argument, but science-based, evidence-based reasoning was just sort of not in their framework.

Has that changed much?

No. Basically, it’s the nature of who gets drawn into political life. I would say if anything, matters are worse because of the distortions to our society brought about by the financial sector.

The financial sector has so distorted salaries that physicists are getting drawn into the financial sector. All that has led to an undersupply of people committed to the public sector. That filters up into the whole system of who is in government today.

Wolfgang Schäuble and people like him, what do they want Greece to do? They’ve lost 25% of their GDP. They’ve moved back to a primary surplus. It just seems almost punitive at this point.

I think that’s in part true. It’s partly punitive. It’s partly “we’ve made a mistake admitting Greece [to the euro zone], let’s get rid of it.”

Germany’s diagnosis is they need more austerity—where in fact, Spain and Ireland had budget surpluses before the crisis, and a low debt-to-GDP ratio. So, totally wrong diagnosis, not good science. And rather than doing analytic work and saying, “Where was the failure?” they go back to their prejudices, their wrong models, and double down.

Are these demands being made for domestic political consumption, back home, say in Germany?

It’s a mixture. What is very clearly true, and I do emphasize in the book, is that German economics is different from economics everywhere else in the world. They still believe in austerity even though the IMF, which is not a left-wing organization, has said austerity doesn’t work. They used to be pro-austerity. And now they say no, it doesn’t work. So they’ve learned. And remarkably, Germany still pushes ahead.

It’s this peculiar brand of economics which has deep popular support, mostly in Germany.

Let’s turn to Brexit. In the context of the intransigence you see from European leadership with regard to the euro zone crisis, how does it fit in?

It fits in several ways. First, obviously, they’re very interdependent. If the Brexit leads to a weaker UK economically, it’s going to lead to a weaker EU and vice versa.

But the way the euro zone handled Greece and Spain was not a manner which would lead one to say, “I want to be a part of that club.” Do I want to be tethered to an economic club where Germany seems to be dominant and so insensitive to democracy and democratic processes in other countries?

That also fed into a perception that the Conservatives have fostered in the UK, of European bureaucrats being very rigid. I think an example of that kind of rigidity that we saw after was European Commission president Jean-Claude Juncker’s response to the question of what kind of negotiated agreement [would occur.]

His response was in part, “We’re going to be very, very, very tough with the UK, because we want to make sure that no one else leaves.” But [member states] should believe that the EU and the euro zone are bringing such benefits that no one would want to leave! If the only way you can get people to stay in is to say, “If you leave things will be so miserable. We caught you in a cage and we’re not going to let you out,” that’s not a way you sell.

Especially a project that was supposed to be about democracy.

About democracy, about prosperity, and about solidity. It says, “We have no solidarity. We don’t pay attention to democracy. And we know our system is not working and the only way we can keep you in is by threatening you.”

To me, that response was symbolic of why the EU is not working.

The Courts Begin to Call Out Lawmakers

 Linda Greenhouse The New York Times

In 1962, in the midst of the civil rights movement, African-American residents of Jackson, Miss., went to court to challenge the racial segregation of the city’s five municipal swimming pools, four of which were set aside for whites and one for blacks. When the plaintiffs won, the Jackson City Council responded by closing all the pools. It first claimed a “minor water difficulty” and later explained that integrated pools would present a safety problem and would be too expensive to operate. No pools, evidently, were preferable to integrated pools.

The black residents renewed their lawsuit, eventually reaching the Supreme Court. They argued there that the city’s real motivation — resistance to racial integration — violated the constitutional guarantee of equal protection. They lost.

The Supreme Court’s 1971 decision, Palmer v. Thompson, stands as the epitome of judges’ reluctance to call out lawmakers for acting with a bad motive, or any particular motive at all, especially if the action can be described as neutral on its face or if it comes with an explanation of surface plausibility. “It is extremely difficult for a court to ascertain the motivation, or collection of different motivations, that lie behind a legislative enactment,” Justice Hugo L. Black wrote for the court, observing that closing the public pools “to black and white alike” didn’t on its face look like a denial of equal protection. “It is difficult or impossible for any court to determine the ‘sole’ or ‘dominant’ motivation behind the choices of a group of legislators,” he added.

The facts may not be as bald, or the judicial response quite so cringe-inducing, but judges and justices across the ideological spectrum express versions of Justice Black’s sentiment so often that reluctance to label the obvious almost seems hard-wired into the judicial soul. (Justice Benjamin N. Cardozo wrote in 1935 that “There is a wise and ancient doctrine that a court will not inquire into the motives of a legislative body or assume them to be wrongful.”) As the constitutional scholar Paul Brest once explained: “To declare a law unconstitutional on its merits is to hold that the decision maker made an error. But a finding of illicit motivation often is tantamount to an accusation that the decision maker has violated his constitutional oath of office. Especially where the decision maker claims to have pursued only legitimate objectives, a judicial determination of illicit motivation carries an element of insult; it is an attack on the decision maker’s honesty.”

Against that background, it’s worth stopping to observe a notable development this summer. In the face of spurious explanations for public policies that would foreseeably inflict real damage on identifiable groups of people, judges and justices are abandoning the traditional diffidence of the judicial role and expressing a new willingness to call out legislatures for what they are really doing, not just what they say they are doing.

These are not obscure cases, but rather decisions on two of the hottest current subjects, abortion and voting rights. I’m in no way suggesting that the Supreme Court’s June 27 decision in the Texas abortion case or the appeals court decisions last month invalidating voter ID laws in Texas and North Carolina have been overlooked. Far from it. But understandably, the focus has been on the bottom lines and consequences of the decisions, rather than on how the courts are approaching their task.

Calling legislatures out is serious business, and there is nothing casual about these opinions. Each is highly attentive to facts — not only to isolated facts, but facts in suggestive patterns, facts in context. In the Supreme Court’s abortion decision, Whole Woman’s Health v. Hellerstedt, the question was whether a new Texas law setting elaborate physical requirements for abortion clinics and requiring the clinics’ doctors to have admitting privileges at nearby hospitals imposed an “undue burden” on access to abortion. In his majority opinion finding the regulations unconstitutional, Justice Stephen G. Breyer observed the ways Texas singled out abortion for restrictions not imposed on more dangerous medical procedures. “Nationwide, childbirth is 14 times more likely than abortion to result in death,” he noted in one of several examples, “but Texas law allows a midwife to oversee childbirth in the patient’s own home.”

In other words, abortion regulations that in isolation may seem inoffensive or even desirable assume a different cast when placed alongside the state’s more relaxed treatment of outpatient medical procedures (Justice Breyer discussed colonoscopy and liposuction) that carry higher risk.

The opinion asked: Was there a problem for which the Texas law actually promised a solution? The answer Justice Breyer gave was no. Abortion as regulated in Texas had been extremely safe before the new law was passed, with five deaths resulting from the hundreds of thousands of abortions performed over the previous 11 years. While Texas had a legitimate interest in protecting women’s health, Justice Breyer said, “there was no significant health-related problem that the new law helped to cure.” In fact, he continued, by predictably closing clinics that couldn’t meet the requirements, it was a “common-sense inference” that the effects of the law “would be harmful to, not supportive of, women’s health” by making women travel long distances “to get abortions in crammed-to-capacity superfacilities,” the only clinics able to comply with the regulations.

In the North Carolina voter ID case, decided by a three-judge panel of the United States Court of Appeals for the Fourth Circuit, Judge Diana Gribbon Motz likewise asked whether there was a problem for the new law to solve. North Carolina, like other states, claimed it needed the law to prevent fraud at the polls. But “the state has failed to identify even a single individual who has ever been charged with committing in-person voter fraud in North Carolina,” Judge Motz said.

By contrast, she continued, “the General Assembly did have evidence of alleged cases of mail-in absentee voter fraud.” But despite knowing that citizens who lacked the required identification were disproportionately black, while those who voted by absentee ballot were disproportionately white, the legislators rejected amendments that would have extended identification requirements to absentee voting. “We do not ask whether the state has an interest in preventing voter fraud — it does — or whether a photo ID requirement constitutes one way to serve that interest — it may,” Judge Motz wrote. Rather, she said, the question was whether the Legislature would have enacted the law “if it had no disproportionate impact on African-American voters.” She concluded: “The record evidence establishes that it would not have.”

Throughout her opinion, North Carolina State Conference of the N.A.A.C.P. v. McCrory, Judge Motz documented how the Legislature, armed with data it had requested showing the racial breakdown of voters who used various practices, specifically singled out for limitations or elimination those practices most used by African-American voters. These included early voting and same-day registration. Judge Motz then observed somewhat delicately that “the party that newly dominated the legislature” was also “the party that rarely enjoyed African-American support” — facts that provided the answer to what she called “the puzzle of the General Assembly’s motivation.” The answer to the puzzle: The Republican politicians’ motive was to entrench their party in office in the face of surging voter registration and participation by North Carolina’s black citizens.

“Using race as a proxy for party may be an effective way to win an election,” Judge Motz wrote. “But intentionally targeting a particular race’s access to the franchise because its members vote for a particular party, in a predictable manner, constitutes discriminatory purpose.”

Judge Motz’s language was more pointed and conclusory than Justice Breyer’s. Justice Breyer stopped short of declaring that the Texas Legislature’s stated motivation was phony and that its real motive was to restrict access to abortion to whatever degree the courts would let it get away with. But the message was clear, and the two decisions’ overlap in analysis is striking. Absence of a documented problem? Check. Singling out a particular practice for onerous requirements? Check. The legislators’ knowledge of the likely impact? Check. An official justification that the evidence, examined in close detail, can’t support? Check.

Of the decisions in the Texas abortion case and voter ID cases in Texas and North Carolina, the Texas voter decision is the most conventionally cautious. But coming from one of the country’s most conservative appeals courts, the Fifth Circuit, it is the most surprising. (It was a Fifth Circuit decision that the Supreme Court overturned in the abortion case.) The 9 to 6 opinion, issued by the full appeals court, was both the product of obvious compromise among the nine judges in the majority (four appointed by Republican presidents and five by Democrats) and of a pressing deadline. In an unusual order on April 29, the Supreme Court had given the Fifth Circuit until July 20 to decide the case, after which, the justices suggested, they themselves might intervene. (Two years ago, the Fifth Circuit had issued a stay of the District Court’s decision that invalidated the voter ID law, and the Supreme Court had refused to lift that stay, thus keeping the law in place.) The decision, Veasey v. Abbott, was issued on deadline, on July 20.

While the District Court decision had found that the law had a racially discriminatory purpose as well as a discriminatory effect, the July 20 opinion by Judge Catharina Haynes rested on effect alone, sending the “purpose” part of the lower court’s decision back for reconsideration. On the surface, then, the Fifth Circuit appeared to be conforming itself to the classic pattern of deference to the Legislature. But as I read the opinion, it was conformance in form only, not in substance. (It also didn’t make a practical difference, since the “effect” finding was sufficient to invalidate the law, and Texas has agreed for the 2016 election to greatly relax its ID requirements.) Judge Haynes drew a road map that Judge Nelva Gonzales Ramos of Federal District Court can easily follow in reinstating her discriminatory-purpose finding.

“There is evidence that could support a finding that the Legislature’s justification of ballot integrity was pretextual in relation to the specific, stringent provisions” of the law, Judge Haynes wrote. Noting that there had been only two convictions for in-person voter fraud out of the last 20 million ballots cast in Texas, Judge Haynes observed, “We cannot say that the district court had to simply accept that legislators were really so concerned with this almost nonexistent problem.”

In a remarkable passage, she added: “As we were recently reminded in Foster v. Chatman, people hide discriminatory intent behind seemingly legitimate reasons.” Foster v. Chatman was the decision the Supreme Court issued in May overturning a murder conviction on the ground that the prosecution’s real — although of course unstated — reason for eliminating two black jurors was racial discrimination. Chief Justice John G. Roberts Jr. wrote the majority opinion.

Under Section 5 of the Voting Rights Act, the section that became a dead letter as a result of the Supreme Court’s 2013 decision in Shelby County v. Holder, Texas had been barred from putting its voter ID law into effect. Just hours after the justices issued the Shelby County decision, Texas put the law into effect, a history that Judge Haynes recounted in her opinion. She noted that the legislators who voted for the law had assumed it would have to pass the pre-clearance test of Section 5 and thus had been understandably discreet in their statements years earlier as the law moved toward passage. “The absence of direct evidence such as a ‘let’s discriminate’ email cannot be and is not dispositive,” Judge Haynes wrote. Check.

This story is by no means over. Gov. Patrick L. McCrory, Republican of North Carolina, is appealing the ruling concerning his state to the Supreme Court. The Texas litigation will continue. The full impact of Justice Breyer’s opinion in the abortion case will be measured by how lower courts, and eventually the Supreme Court itself, treat a new generation of abortion restrictions now in the judicial pipeline.

But something has happened this summer that matters. Legislators, perhaps assuming they had friends in high judicial places, had taken bold, even flagrant steps to suppress the black vote and restrict women’s access to abortion. Judges responded, and even though their actions in some cases spoke more loudly than their words, these decisions mark a departure and make a difference. Maybe they will even begin to erase the memory of the long ago summer when the swimming pools closed to black and white alike.

THE GREAT PRODUCTIVITY PUZZLE

 By John Cassidy  The New Yorker

Whatever is driving the slowdown in productivity growth in the U.S. appears to be affecting many other advanced countries, like Japan, Germany, France, and the United Kingdom. What is it?

I was going to start this column with some new productivity figures from the Bureau of Labor Statistics, but I realized that at least half of the readers would quit right there. Productivity is one of those subjects that fascinates economists and bores, or mystifies, almost everyone else.

Instead, let’s start with a little story. Imagine that it’s 1890 and you and a friend have bought a donkey and cart and started a moving company that transports heavy objects, such as sofas and beds. If you work hard, you can manage two deliveries a day, for each of which you charge a price that, if adjusted for inflation, would amount to fifty-five dollars today. Let’s say overhead, such as advertising and food for the donkey, comes to ten dollars a day. That means you and your partner each earn fifty dollars a day.

Now imagine that time shoots forward fifteen years and a bank lends you money to buy one of the newfangled motorized trucks that are coming onto the market. They can pull much heavier loads than a donkey can: up to four thousand pounds. Once you’ve learned how to drive your new vehicle, you can carry a lot more stuff, and charge much higher prices—say, a hundred and ten dollars a load. Since the truck moves a lot faster than a donkey does, you can also double your number of daily deliveries to four. Assuming you can find enough customers, the amount of revenue your business produces will shoot up to four hundred and forty dollars a day. Even if your costs jump to forty dollars a day (factoring in gas and interest payments on the truck), you and your partner will each earn two hundred dollars. Thanks to technological progress, your earnings will have quadrupled.

Of course, this parable leaves out a lot, including the fact that competition tends to drive down prices over time. But it still conveys an essential fact about the modern economy, which Karl Marx and other nineteenth-century critics of capitalism originally denied: over the long haul, technological progress raises productivity, which, in turn, generates higher wages and living standards. Until recently, in fact, economy-wide productivity growth and wage growth have tended to have a one-to-one relationship. When productivity rose rapidly, as it did in the period from 1945 to 1973, wages also rose rapidly. When productivity growth slowed sharply, as it did between 1973 and 1995, wage growth also stagnated.

In the United States over the past twenty years, however, the tight relationship between productivity growth and wage growth has broken down. Wages have slipped behind productivity. Economists debate why this has happened, and how long the situation might last. (Some point to the rising cost of non-wage benefits, such as health insurance; others to the fact that profits have risen relative to wages.) But none deny that, over the long term, a healthy rate of productivity growth is a prerequisite for a further rise in living standards. Or that an anemic rate of productivity growth is a recipe for stagnation and class conflict.

Which brings me, finally, to the figures released this week by the Bureau of Labor Statistics. The new data showed that productivity in the non-farm business sector of the U.S. economy—i.e., most of it—has declined for the third quarter in a row. That’s the longest falling streak since 1979, and, unfortunately, it isn’t merely a statistical blip. Since 2007, the rate of productivity growth has been disappointing. Since 2010, it has been extremely disappointing.

Some numbers tell the story. Between 1947 and 1973, output per hour (the standard measure of labor productivity) rose at an annual rate of about three per cent. Then, between 1974 and 1995, for reasons that have never been fully explained, the rate of growth fell by half, to 1.5 per cent. Not coincidentally, this was the period when wage growth started to stagnate. Then things improved. For a decade or so, perhaps owing to the development of the Internet, the rate of productivity growth returned to about three per cent, and wages started to rise again. Optimists predicted a bright future—one that didn’t materialize.

Since 2007, the annual rate of productivity growth has averaged about 1.3 per cent. Since 2010, it has been even lower, about 0.5 per cent. According to the new figures, in the twelve months that ended in June, the growth rate of output per hour was negative 0.5 per cent. In the three months that ended in June, the annualized growth rate was negative 0.4 per cent.

Now, those last two numbers shouldn’t be taken too seriously. Quarterly productivity figures are very volatile, and the most recent ones reflect a decline in G.D.P. growth that appears to have ended. More worrying is the fact that slow productivity growth has now persisted for almost a decade, and that this development hasn’t been restricted to the United States. Something similar has happened in countries like Japan, Germany, France, and the United Kingdom. Whatever is driving the slowdown in productivity growth appears to be affecting the advanced world as a whole. What is it? Three possible answers have been put forward, and I’ll go through them in order of how alarmist they are.

The most benign explanation is that it’s all, or mostly, a statistical mirage. According to this school of thought, the basic problem is that the government’s figures are too antiquated to keep up with today’s hyper-connected economy, in which new goods and services are introduced at a breakneck pace. “Today’s pessimists about the economy’s rate of growth are wrong because the official statistics understate the growth of real GDP, of productivity, and of real household incomes,” Martin Feldstein, the Harvard economist, wrote in the Wall Street Journal last year.

On its face, this is a persuasive explanation. To someone of my generation, which came of age when the personal computer was a novelty, things like Siri, FaceTime, and G.P.S.-generated directions seem like technological marvels. Surely they must have saved us time and made us more productive. If the official productivity figures don’t reflect this, mustn’t there be something wrong with them?

Perhaps not. Earlier this year, three experts on productivity statistics—David M. Byrne, of the Federal Reserve Board; John G. Fernald, of the Federal Reserve Bank of San Francisco; and Marshall B. Reinsdorf, of the International Monetary Fund—published a study that debunked the mismeasurement explanation. The team of economists made three key points. First, they said, mismeasurement has always been an issue in the information-technology sector, and it was just as big an issue in the period from 1995 to 2005, when productivity was growing rapidly. Second, the productivity slowdown hasn’t been confined to sectors in which output is tough to measure: it has been broadly based. And, finally, many of the benefits that we’ve reaped from things like smartphones and Google searches have been confined to non-market activities, such as communication with friends and other leisure activities, rather than boosting our productivity at work. While that amounts to an increase in consumer welfare, it doesn’t generate higher wages.

A second possible explanation, and one that may withstand further scrutiny, is that the productivity slowdown has been a temporary, although extended, product of the Great Recession. Many productivity-enhancing new technologies are capital goods—think back to the moving truck. But since the recession ended, many businesses have been crimping on capital investments, preferring to hoard cash or spend it on stock buybacks.

It’s not just that senior executives now care only about their company’s stock prices, although that may have played a role. The bigger issue is that many corporations aren’t seeing enough demand for their products to justify large new investments. And even when they do see an uptick in demand they hire new workers who have to make do with existing equipment. So employment growth looks healthy, but the economy remains stuck in a low-growth, low-investment, low-productivity trap.

If this is what’s happening, there isn’t anything wrong with new technology, or the economy’s capacity to grow: the issue is how to exploit its potential. If higher demand could be sustained, perhaps through a fiscal or monetary stimulus, firms would step up investment, and the economy would return to a more virtuous circle, in which higher rates of productivity growth and G.D.P. growth reinforced each other. This is basically what happened between 1945 and 1973.

But there’s a final explanation, the darkest of all. It has been put forward, most recently, in a monumental new book, “The Rise and Fall of American Growth,” by Robert Gordon, an economist at Northwestern. Gordon’s theory, parts of which I recall him explaining to me over a lunch, in Chicago, some fifteen years ago, is that technological advancement just ain’t what it used to be.

To Gordon’s mind, things like the Internet and the smartphone, while they are undoubtedly marvellous products of human ingenuity, don’t match up to previous technological innovations, such as indoor plumbing, the internal-combustion engine, electrification, and commercial jetliners. In speeches, Gordon sometimes holds up pictures of a flushing toilet and an iPhone and asks audience members which one they would rather give up. “Look at what an ideal kitchen looked like in 1955,” he told the Wall Street Journal a few years ago. “It’s not that different than today. It’s nothing like moving from clotheslines to clothes dryers.”

If Gordon is right, sagging productivity figures simply reflect the fact that scientific progress doesn’t have as much impact on the economy as it once did. Rather than waiting for productivity growth and wages to rebound of their own accord, Gordon supports policies designed to expand the size and quality of the labor force, such as raising the retirement age, letting more immigrants into the country, and expanding access to higher education. His argument also implies that we will have to get used to lower productivity growth.

Which of the three explanations is the most convincing? It seems to me that there is something to all of them.

Despite the work of Byrne, Fernald, and Reinsdorf, measurement issues are a concern. It’s not just a matter of capturing and classifying the outputs of digital industries. As advanced economies develop, many of their fastest-growing parts tend to be service industries, such as health care, in which output can be hard to track. Government statisticians are well aware of this problem, but so far they haven’t come up with a fully satisfactory solution.

Persistently depressed demand is also a serious problem. In addition to undermining firms’ incentives to invest in technology, it degrades the skills of workers who can’t find a job that matches their qualifications. Fifty years ago, Keynesian economists like Nicholas Kaldor and P. J. Verdoorn examined the close links between rising demand and rising productivity. It might benefit some of today’s economists to rediscover this research.

Finally, Gordon’s argument, although controversial, cannot be dismissed. After all, the slowdown in productivity growth is nothing new. It began more than forty years ago, and, setting aside the decade from 1995 to 2005, it’s been in place ever since. How long does an economic phenomenon have to last before it is regarded as permanent rather than temporary? In recent years, the productivity slowdown has become more acute, and the belief that it will persist has led corporations and investors to downsize their expectations for future G.D.P. growth. This pessimism about growth helps explain, among other things, the fact that long-term interest rates are now negative in many advanced countries.

The key question is where we go from here. Ultimately, perhaps, ongoing advances in artificial intelligence, robotics, Big Data, and other new technologies will push productivity onto a much higher growth path, generating a new leap in living standards and demonstrating that the pessimists were mistaken. For now, though, we appear to be living in Gordon’s fallen world.