Eli Dourado - Frontiers for Productivity

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_3** (2:33)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
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**Patrick O'Shaughnessy** (2:58)
This is a conversation about the most exciting technology trends in the world. My guest today is Eli Dourado, an economist and senior research fellow at the Center for Growth and Opportunity at Utah State University. We discussed the strange economic stagnation of the past few decades and the innovative technologies that could reverse this trend.
Eli's wealth of knowledge on biotech innovation, alternative energy, and the space opportunity are sure to leave you craving more. I hope you enjoy this great conversation with Eli Dourado.
So Eli, I think the right framing for our discussion, given the wide variety of your background and your work, is what we'll call the great stagnation. I'd love you to describe this problem, maybe introduce concepts like GDP or total factor productivity, ways of measuring what we'll call a stagnation, and then most of our conversation will be, how do we get out of it, assuming that we are indeed in it? But I think that's a great opening frame. Why are you interested in this problem and what does it mean?

**Eli Dourado** (3:53)
A good way to start is to just think about economic output and what are the inputs that go into it. So economists think in general about output as a function of capital and labor and everything else that we can't measure. Everything else that we can't measure is actually the interesting part. If we apply more labor, if it means that we're working harder, we're all working longer hours and we get more output, that's like not a big yay, that's like a little yay, maybe we got more output, but like we're all working harder.
And that is a cost. But if you can get more output for the same amount of labor and the same amount of capital going in, that's really good. That sort of residual term is called total factor productivity and it sort of represents the quality of ideas and institutions and the recipes that society has for combining labor and capital into output. Total factor productivity to me is like the key metric of like how civilization is doing.