I finally got around to reading Robert Gordon’s Rise
and Fall of American Economic Growth. It is an excellent book. Much of the
book is essentially an expansion of Lebergott’s Pursuing
Happiness. It describes the many ways in which the material conditions of
life (what they consumed, how they worked, and their health) were transformed
from 1870 to 1970. Gordon argues that economic growth this period essentially
created modern economic life: comfortable homes with electricity and clean water, cars parked out front, and all of this purchased with less labor hours and less onerous labor.
Much of the attention the book has received has focused
on Gordon’s argument that current innovations in information and communication
are not transforming life the way the earlier changes did and that the rate of growth is unlikely to return to the rapid pace experienced
for most of the twentieth century. This argument actually occupies a relatively
small part of the book. I also found this part of the argument to be somewhat
more cautiously stated than I think it has been in the popular press and in
blurbs for the book. While Gordon argues that some of these innovations were uniquely transforming and points to specific factors that he believes are
likely to slow growth (e.g. demographic change, education, inequality), he also
has suggestions for policy changes which might mitigate some of these headwinds
(e.g. reducing excessive regulation, policies to reduce inequality). In other
words, he doesn’t appear to believe that the current course is inevitable. He
also acknowledges that any attempts to make predictions about future
innovations are somewhat speculative.
His analysis of the causes of the “Great Leap Forward” also
seems reasonable, though I think he gives too much credit to Alex Field for
pointing out the technological innovations that took place during the Great Depression
and not enough to Michael
Bernstein, who emphasized these changes long before Field.
I do tend to disagree with Gordon and others who underplay
the transformation brought about by information technology. You can say that it
is only entertainment and communication but my children ages 17, 23 and 27 are
never without their phones. They use social media, they watch movies and tv shows.
They listen to an incredible variety of music. When I was a teenager you pretty
much had to pick one kind of music: heavy metal, or punk, or disco. My kids
listen to everything. They listen to podcasts on soccer, cooking, politics,
etc. They can’t get lost. A map is no further than the phone. Maybe it is just
entertainment and information, but it is a world of information and
entertainment in their hand.
I agree with Gordon that attempts to make predictions about
future innovations are speculative, but I tend to be somewhat more optimistic
than he is. In part, my optimism stems from the dismal performance of dire
predictions about the future. Read Jevon’s on the Coal
Question, or Alvin Hansen on secular stagnation.
Part of my optimism is also related to what I think might be
the chief weakness of the book. It tells the story strictly from an American
standpoint. The problem with this is that the same things happened in many
other countries. The United States is not the only wealthy country. One of the
things that I believe I learned from John Nye (listen to John’s Econ Talk on the Great
Depression, Political Economy and the Evolution of the State) is that you
might want to occasionally look outside of particular area to see if the same
thing is happening in other places. If it is, you might want to ask what are
the broader forces at work. I think that if innovations can travel across
borders and innovation is not isolated to Americans there are some good reasons
to be optimistic. Increased economic freedom and access to education in Asia
have the potential to dramatically increase the pool of innovators. I don’t
think that economic freedom is firmly enough established to feel completely secure
about this, but I think the potential is great.
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