Tuesday, January 26, 2016

The Rise And Fall Of American Growth

Paul Krugman reviews a book by Robert Gordon which argues against the techno optimist assumption that our best days are ahead of us.  Gordon uses the period from 1870 to 1940 as a benchmark for progress.  It is a stiff benchmark to surpass.  During that period we made real progress in how we lived and how we worked.  The typical household became equipped with electricity,  inside toilets and access to water without a well.  The automobile replaced the horse and carriage and modern travel had arrived.  The workplace also required less toil and effort to produce an income that made those innovations more broadly available.

Gordon realizes that the Internet and social media have been beneficial to many people but he argues that that the information technology revolution has already happened.  The techno optimists don't have a whole lot more to offer us.  The IT revolution is history and there are serious headwinds that will affect our future.  Inequality will continue to rise and we have reached a plateau in educational attainment.  That along with slow population growth leads Gordon to conclude that we have entered a period of slower economic growth and less real change in how we live and how we work.

Gordon did not have much to say about government but we are in deep trouble if our politics continues in its current direction.  A recent poll shows that Donald Trump has a good chance to become the GOP candidate, and that he is more electable than any Democrat.  David Brooks believes that this could be the end of the Republican Party.  His conservative mentor, William Buckley had a similar concern about right wing populism many years ago.  He was worried about the impact of the John Birch Society in the Republican Party.  The sons of one of the Birch Society founders has succeeded in organizing the Tea Party to do what the John Birch Society failed to accomplish. Its influence is strongly apparent in the GOP primary campaign, and in the takeover of state governments in many areas of the US.  Its hard predict what might happen to this movement if we are really in a period of slow economic growth and stagnant household income growth for most Americans.

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