Abundance vs. scarcity
Lionel Robbins defined economics as "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." When he wrote this in 1935, per capita income was about an eighth of what it is today.
Robbins' statement is still true, but maybe in the opposite sense. The scarcity constraint today is less about, say, how much coal did we extract this year and how many houses will it heat, but rather how much coal can we extract without overheating the planet. Where the earlier question was "how do we incentivize sufficient extraction to heat everyone's home?" today it is "given that we have the technology and capacity to heat everyone's home in multiple ways, how will we do it in a way that leaves the planet livable in 2100?"
Calling pollution an externality made sense in 1935, but the word seems to marginalize the phenomenon in a way that doesn't make as much sense today. When scarcity was a constraint for basic material needs, economists could figure that the resulting smog has a social cost that the producer doesn't include in his calculations. That cost had useful implications for weighing the costs and benefits of various policies. Today, with an unprecedentedly productive economy facing a Pascal-ish wager on a global scale, cost-benefit analysis seems almost beside the point.
Maintenance vs. development
Consumption of fixed capital to GDP has been increasing steadily, as has (maybe more significantly for the point I'm making here) consumption of fixed capital to average annual increase in GDP.
Decaying infrastructure -- whether in the form of leaking aqueducts or 240,000 water main breaks per year -- is usually taken as a sign of decline. Deferred costs of maintenance of infrastructure amount to over $1 trillion by the end of 2019 - $873 billion at the state level and $183 billion at the federal level. Building is easier than maintaining.
Production vs. finance
The financialization of our economy was a significant part of the narrative of how and why the financial crisis happened. The financial sector has continued to grow.
Looking forward, when viewed together with current circumstances such as the expansion of the Fed's balance sheet, stock markets hitting records despite an unprecedentedly bad economic quarter due to an ongoing global pandemic, and increasing credit creation by nonbanks, it is a component that probably needs to be better understood and incorporated in public finance economics. What are the implications of the increased size of the financial sector not just on the sector itself (e.g., asset prices increase as more lending goes toward financial rather than productive assets) but on the broader economy?
To summarize
The increase in national wealth since 1935 enables us to set a higher floor on the standard of living without unduly minimizing the size of the private sector. To the extent that economics does not move on from researching the means of expanding the provision of basic needs to more but not all people to researching the means of most effectively structuring an economy that takes the provision of basic needs to all people as a given, it might be slowing progress.
The challenge for economics is more about sustainability and resilience rather efficiency. Today our issue isn't producing and distributing enough food and energy, it's producing it sustainably and getting it to homes in a way that accounts for the low probability exogenous (e.g., Carrington event) and endogenous (e.g., financial crisis) shocks that we tend to focus on only once they happen.
In The Wealth of Nations Adam Smith links slower population growth with a lower share of national income going to labor. "It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest ... The most decisive mark of the prosperity of any country is the increase of the number of its inhabitants." (p. 172-3) Labor's share of income has decreased steadily for 40 years, and for more reasons than just the ones Smith mentioned. Assuming that productivity and population growth will not start to grow at the pace they did from 1800-1970, we need to figure out how to thrive without growing. Part of this probably entails tying policy suggestions to different, more relevant metrics of economic success.
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