You make a valid assertion, of course, Derb: Sometimes economic growth makes more use of labor and sometimes it makes more use of capital. And Jacoby’s suggestion that throughout American history growth “required” a growing pool of labor is simply mistaken, as witness that immigration was largely choked off in 1924—and that the economy nevertheless boomed until 1929. (When the economy at last crashed, it did so for reasons that center on the banking system, not the labor supply). But may I very respectfully suggest that one ought to be very, very careful about setting up Japan as an example?

Japan has just undergone nearly 15 years–15 years–of economic stagnation. That article in The Economist expresses the hope that after turning in an acceptable rate of growth last year (and it was only acceptable: compare Japan’s 2.6 percent rate of growth in 2003 with an average rate of growth of more than three percent in the United States during both the Reagan and Clinton years) Japan might finally be turning the corner. And then again, it might not.

The point? If a pool of labor is fixed, or even, as it ages, shrinking, like the pool of labor in Japan over these past 15 years—and like our own pool of labor, absent the last couple of decades of immigration—then an economy must grow by making use only of capital. No doubt it can be done. But the Japanese have spent almost a decade-and-a-half proving that it can be a difficult trick.