I'm not, like, an econ guy, but I found the Hatzius note from Saturday ("Productivity Paradox 2.0") sort of frustrating. I would naively put the thesis as: GDP figures do not capture consumer surplus, which is systematically rising in the modern world. So like:
Is that true? It seems plausible to me but what do I know.
Is it interesting, software-related, etc.? Like my (super dim) understanding of classical economics is that producers get competed down to marginal cost, so over time you'd expect consumer surplus to systematically increase in ways not measured by prices (and so by GDP). What work is done by Hatzius saying "How much better is Grand Theft Auto V than Grand Theft Auto IV?"
Why should any of this be cyclical? What does it tell us about the questions Hatzius cares about, e.g. measuring economic strength and deciding on an appropriately accomodative monetary policy? Is the conclusion seriously "never mind GDP for a while/forever"? Seems weird.
Like I said, this is way out of my expertise. This seems like a much-discussed question, though much of the discussion I've seen of it seems naive; is there good writing on it?
Update May 27: Of course here is Tyler Cowen, and Matt Klein.
Update June 4: Here is Matt Yglesias but he sort of skirts the real question. Obviously GDP measures monetized market output and not other important things. But if there was some reason to think that the other important things were becoming more important to economic life, and that there was some cyclical or step-function or otherwise interesting trajectory to that, then that would be interesting. If it's just "there are some other important things, idk, whatever," then, idk, whatever.