What if everything we’ve come to think of as American is predicated on freak coincidence?( R.Gordon)

[Jefferson23]

And what if that coincidence has run its course?


By Benjamin Wallace-Wells
Published Jul 21, 2013

Picture this, arranged along a time line.

For all of measurable human history up until the year 1750, nothing happened that mattered. This isn’t to say history was stagnant, or that life was only grim and blank, but the well-being of average people did not perceptibly improve. All of the wars, literature, love affairs, and religious schisms, the schemes for empire-making and ocean-crossing and simple profit and freedom, the entire human theater of ambition and deceit and redemption took place on a scale too small to register, too minor to much improve the lot of ordinary human beings. In England before the middle of the eighteenth century, where industrialization first began, the pace of progress was so slow that it took 350 years for a family to double its standard of living. In Sweden, during a similar 200-year period, there was essentially no improvement at all. By the middle of the eighteenth century, the state of technology and the luxury and quality of life afforded the average individual were little better than they had been two millennia earlier, in ancient Rome.

Then two things happened that did matter, and they were so grand that they dwarfed everything that had come before and encompassed most everything that has come since: the first industrial revolution, beginning in 1750 or so in the north of England, and the second industrial revolution, beginning around 1870 and created mostly in this country. That the second industrial revolution happened just as the first had begun to dissipate was an incredible stroke of good luck. It meant that during the whole modern era from 1750 onward—which contains, not coincidentally, the full life span of the United States—human well-being accelerated at a rate that could barely have been contemplated before. Instead of permanent stagnation, growth became so rapid and so seemingly automatic that by the fifties and sixties the average American would roughly double his or her parents’ standard of living. In the space of a single generation, for most everybody, life was getting twice as good.

At some point in the late sixties or early seventies, this great acceleration began to taper off. The shift was modest at first, and it was concealed in the hectic up-and-down of yearly data. But if you examine the growth data since the early seventies, and if you are mathematically astute enough to fit a curve to it, you can see a clear trend: The rate at which life is improving here, on the frontier of human well-being, has slowed.

If you are like most economists—until a couple of years ago, it was virtually all economists—you are not greatly troubled by this story, which is, with some variation, the consensus long-arc view of economic history. The machinery of innovation, after all, is now more organized and sophisticated than it has ever been, human intelligence is more efficiently marshaled by spreading education and expanding global connectedness, and the examples of the Internet, and perhaps artificial intelligence, suggest that progress continues to be rapid.

But if you are prone to a more radical sense of what is possible, you might begin to follow a different line of thought. If nothing like the first and second industrial revolutions had ever happened before, what is to say that anything similar will happen again? Then, perhaps, the global economic slump that we have endured since 2008 might not merely be the consequence of the burst housing bubble, or financial entanglement and overreach, or the coming generational trauma of the retiring baby boomers, but instead a glimpse at a far broader change, the slow expiration of a historically singular event. Perhaps our fitful post-crisis recovery is no aberration. This line of thinking would make you an acolyte of a 72-year-old economist at Northwestern named Robert Gordon, and you would probably share his view that it would be crazy to expect something on the scale of the second industrial revolution to ever take place again.

“Some things,” Gordon says, and he says it often enough that it has become both a battle cry and a mantra, “can happen only once.”

in full: http://nymag.com/news/features/economic-growth-2013-7/

[LongTomH]

1. I don't agree with the pessimism of this article....history is not a straight progression

It's not just 2 steps forward, one step back; sometimes, it's several steps back before you start moving forward again.

Technological progress has not stopped; there are other 'revolutions' to come. The next will probably be the molecular nanotechnology revolution predicted by Dr. K. Eric Drexler.

The issue is, making sure everyone shares in the gains to be made.

[Jefferson23]

2. I have no crystal ball. I do find this man Gordon to have a fascinating mind.

snip* the aging of the American population; the stagnation in educational achievement; the fiscal tightening to fix our public and private debt; the costs of health care and energy; the pressures of globalization and growing inequality.

Nothing controversial about those statements.


Thank you for your post and link.

[LongTomH]

3. Northern Europe has an aging population too....

.....they manage to maintain a high standard of living an a much more egalitarian society than the US.

As for the other trends, I don't see them as either inexorable or inevitable.

Edited to add: As for the issue of globalization: Thomas Friedman's "The World is Flat" dictum is getting some pushback.
http://www.democraticunderground.com/101670054

[Jefferson23]

4. I'm no fan of Friedman, not on any level.

Gordon makes himself pretty clear, imo...the rate of growth will be slow, not that it will not
occur.

snip* our economy will grow at less than half the rate it has averaged.
* believes we can no longer expect to double our standard of living in one generation; it will now take at least two.

I like Wells' commentary on Gordon:

In the book that Gordon is writing now, in which he details his theory, he breaks his narrative between the Old World and the New at 1940. That year is a convenient midpoint, because it more or less splits the difference between the beginning of the second industrial revolution and the present day. It also happens to be the year of Gordon’s birth. There is a certain degree of solipsism in Gordon, in the insistence that human existence has reached its peak during his lifetime, in his conviction that he can detect the trajectory of the future. But perhaps this is a corrective to the solipsism of our own optimism, to the convenient way that we forget our distant history and assume that something like this version of America progress, ever-escalating, is both inevitable and sustainable, to our certainty that the future must contain something better to come.

I found it a great food for thought piece.

[LongTomH]

5. The sad, and I think reprehensible, thing about this article is that it makes excuses for the ....

fact that wealth is being transferred to the elite, the upper, upper classes, from the middle.

We're not seeing slower progress, that would be acceptable if it were shared; but, a major transfer of wealth upward.

[Jefferson23]

7. He doesn't do that, if the issues were to change

the outcomes would change as well. You believe we will see a seismic shift on these stated
issues in the near future? * the aging of the American population; the stagnation in educational achievement; the fiscal tightening to fix our public and private debt; the costs of health care and energy; the pressures of globalization and growing inequality.

All I can say is, I hope you're right but seriously, it will take an enormous effort politically for that
to occur.

[LongTomH]

8. That "enormous effort politically" is what this website should be about!

I've already addressed the issue of an aging population. The increases in productivity since 1980 should allow for that, if workers were getting a fair share of the productivity gains.

As for the others: "the stagnation in educational achievement; the fiscal tightening to fix our public and private debt; the costs of health care and energy; the pressures of globalization and growing inequality. " They need to be addressed -- addressed, not accepted.

Look, I'm old - 68. What I refuse to accept is a narrowing of horizons for future generations. It's easy for this 'don' in his 'grand house' to talk about stagnation. I'm concerned for young people starting careers and mid-career professionals, like I was a few years ago trying to achieve at least something of that 'American Dream.'

And by the way, this isn't just academic for me; I took part in the rally for better wages for fast food workers here in KC a couple of weeks ago.

[Jefferson23]

9. It is what this website is about, for the most part. Gordon has formulated a conclusion

on what is, not what could be...so to speak. I doubt he is excited about the outcome he writes of,
if we remain on the course we're on, it is not a far fetched conclusion.

OWS fell apart for a host of reasons, another catastrophe may bring a more cohesive effort
to begin to meet those goals.

btw, nice to meet you LongTomH, we're on the same side, even Gordon, imo.

[LongTomH]

6. There was a great riposte to Gordon's major thesis in the comments section at Nymag

This book falls in the category of “Upper Class Pundits Telling Us Why We Can’t Have Nice Things.”

There is no slowing of the growth in material prosperity. In the last 35 years there has been a radical shift in the distribution of that prosperity. And that is purely the result of power and policy. And yes, it may yet kill the goose that laid the golden egg, because highly stratified societies are much less innovative and productive.

[blkmusclmachine]

10. ?

?

[Fumesucker]

11. What if the problem is not structural/historic but rather political?

Notice when the wage line on this chart starts to flatten out rather than climb with the productivity line.

[Jefferson23]

14. I would agree there are many variables. This guy does have extensive training

and research applied, yet, he seems well aware that his opinion does not necessitate
an error free position. For example, how do you know innovations, whatever they be, will not come
to fruition? How do you measure that? Is the past a fair/accurate predictor?

In addition there were and continue to be voices to address the problem, but they're
ignored, as you know, for the most part.

Jul 18, 2010 8:03 PM EDT

Fifteen million out of work! Sixteen notable economists and historians have joined in a consensus statement for The Daily Beast demanding urgent action on unemployment and the faltering recovery. Alan Blinder, Joseph Stiglitz, Robert Reich, Richard Parker, Derek Shearer, Laura Tyson, Sir Harold Evans, and other leaders have produced a manifesto calling for more government stimulus and tax credits to put America back to work.
http://www.thedailybeast.com/articles/2010/07/19/save-the-economy-a-manifesto-by-harry-evans-joseph-stiglitz-alan-blinder-and-other-leaders.html

Tuesday, 16 April 2013
Joseph Stiglitz and Bruce Greenwald on Productivity and the Great Depression

An earlier article addressed Robert Gordon's grim forecast that America may face a low-growth future, just as all economies suffered pre-1750, before the Industrial Revolution. If he's correct, it'll mean that standards of living in America will increase only slowly in the decades to come, though thankfully, given the immense wealth of the US economy, it'll increase from a high base. Nobel Prize holder Joseph Stiglitz, along with his Columbia University colleague Bruce Greenwald, have contemplated the opposite dilemma: when living standards fall even in periods of high productivity growth - indeed, because of steep increases in productivity. The period that these brave revisionists consider is one that many have sought to understand: the Great Depression.
http://navinvesting.blogspot.com/2013/04/joseph-stiglitz-and-bruce-greenwald-on.html

The OP I posted is a review, Gordon's thesis is here: http://faculty-web.at.northwestern.edu/economics/gordon/Is%20US%20Economic%20Growth%20Over.pdf

* on edit for clarity.

[jollyreaper2112]

12. The kicker

If our growth went to zero and we were stuck with 1960's incomes that wouldn't be too bad for a steady state economy. We could live like that.

The problem is that the rich are addicted to growth so if the pie stops getting bigger, they'll ask for a bigger share of it. Others have to do without for them to have more.

From where I sit, infinite growth is necessary for money to beget money, to allow for debt and interest. It shouldn't be a problem if people actually worked for a living.

I think we could have a fine level of civilization if we just used our resources better. We are like the cartoon rich lady who has so much money she throws logs of it in the fireplace just for heat. Yeah, that works. Or we could use pennies to buy wood and still have heat, no loss in standard of living.

Does anyone really enjoy our modern life? Endless commuting to jobs with very little meaning? It may feel like progress to sit in an office tower instead of a coal mine but does it add anything to the world?

How many people are actually involved in useful work? Growing food, making things, keeping the lights on, running the hospitals, teaching in the schools? How many people are in shit office jobs or fast food restaurants where the only reason they have work is it's not yet cheap enough to have a robot do it?

I think we could jettison half the economy and not actually lose productive things, just drains on productivity. One hedge fund manager made $2.2 billion last year. Is this in any way moral? If you say yes, you are fucked in the soul.

[Jefferson23]

13. A wonderful post, thank you.

2.2 billion for one year while the disparity grows for the majority..sadly, it is not simply immoral
but crooked.. he has a fixed income, if you will. Kind of like the casinos, they always come out
ahead.

[yurbud]

15. the information revolution of the last twenty years will have at least as profound effects

as the previous industrial ones, and least politically.

No matter how crappy the rich make our public education system (and they are trying mightily to do so and profit from doing it), their monopoly on certain information, and the ability to keep it secret for their own benefit is coming to an end.

When that is finally gone forever, the benefits of the industrial revolution that they have increasingly hoarded for themselves will be spread a bit more evenly, and the rest of us won't have to scramble like kids in a coal mine to keep up our house and student loan payments, and food on the table.

It's coming. It's just a matter of time.