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It would be nice to test from such a dataset, again starting from (4.6), to see if free growth theory holds again. Who knows? Meanwhile, | think, the case is closed. All growth at very large scales is free until proved otherwise. Where Does Opinion Stand Now? What should we make of this evidence for free growth in national accounts and stock market data? Lawmakers would probably demand a recount or an investigation. Tax laws discourage consumption and dividends to encourage growth. Yet data show that lower consumption rate coincides as often with lower as higher capital growth rate for eight nations over four to fourteen decades. They will show the same for dividends when we come to that. Economists would be less surprised. Solow has prepared them for the news. In 1956 and 1957 he showed evidence that most growth is not explained by capital accumulation, or saving through consumption restraint. His Nobel prize acceptance speech in 1988 includes: ... In the beginning, I was quite surprised at the relatively minor part the model ascribed to capital formation. Even when this was confirmed by Denison and others, the result seemed contrary to common sense. The fact that the steady-state rate of growth is independent of the investment quota was easy to understand; it only required thinking through the theory. It was harder to feel comfortable with the conclusion that even in the shorter run increased investment would do very little for transitory growth. The transition to a higher equilibrium growth path seemed to offer very little leverage for policy aimed at promoting investment. The formal model omitted one mechanism whose absence would clearly bias the predictions against investment. That is what I called “embodiment,” the fact that much technological progress, maybe most of it, could find its way into actual production only with the use of new and different capital equipment. Therefore the effectiveness of innovation in increasing output would be paced by the rate of gross Chapter 4 Mill’s Idea 1/11/16 23 HOUSE_OVERSIGHT_011014