By Bob McCracken – “Nye County History”
For the past 15 years or so, I’ve had the vague sense that the American civilization wasn’t doing as well as it once had. It seemed our previous vigor was on the wane; there wasn’t as much of that old “can-do” spirit that made us what we were. Our once-vivacious optimism about life’s possibilities, symbolized most of all by going to the moon in 1969, often seemed in short supply.
Yet, despite these feelings, I couldn’t put my finger on the cause of this supposed waning of our pizzazz. What was behind it? Was it even real? Perhaps it was all my imagination.
Something Paul Krugman, Nobel Prize-winning economist, mentioned in passing in a recent column in the New York Times helped put me on the track of perhaps understanding these feelings I had been having.
Krugman noted a recent report by Robert J. Gordon, an economist at Northwestern University, that focused on faltering innovation in America. I tracked it down (www.cept.org). What Gordon had to say fit perfectly with my understanding of what makes human societies tick.
Technology, defined as the means by which a people attain the necessities of life — energy, food and fiber, shelter and transportation — determines how they live.
More than anything else, the machines and the knowledge used to create products needed for maintaining a way of life determine the basic character and wealth of a society. The more developed the technology, the greater the wealth and complexity of a society.
In his report, Gordon writes that prior to 1750, there was “virtually no economic growth” in America. Since then, there have been what he calls three industrial revolutions, all based on invention of new technologies, that propelled America to its existing wealth and dominant status in the world today.
The first revolution lasted from 1750 to 1830 and was based on the inventions of the steam engine, cotton-spinning, and railroads. The second occurred between 1870 to 1900 with the invention of electricity, the internal combustion engine, and indoor plumbing. It took 100 years for the inventions of the second revolution and their byproducts, electric-powered homes and factories, highways, automobiles, flush toilets, etc., to be fully integrated into American life.
The fastest period of growth of wealth in American history was during the middle part of the twentieth century and it transformed American life. The third wave of innovation was associated with the development of the computer and information technology after 1970 and, though important, it has not had nearly the economic impact of the first two waves.
Though not an innovation, I would add a fourth factor to Gordon’s list of elements that helped grow and transform American society: the acquisition and distribution of enormous quantities of cheap land.
Between 1800 and 1900, America increased its land holdings by more than 400 percent, and much of that newly acquired land was put into the hands of communities and average men and women.
Unfortunately for America’s future economic growth, as Gordon sees it, no conceivable new technology exists on the horizon that might rival the first three periods of invention in stimulating economic growth, especially the second. And nobody’s making any new land. As a consequence, whereas in the past, the American economy typically grew 3 to 4 percent per year, in the future it likely will grow no more than 1 percent a year, if that.
Gordon presents some interesting but troubling figures. In England, it took 500 years, from 1300 to 1800, for the standard of living to double, and it doubled again in the next 100 years.
In the U.S., the rate of economic doubling peaked at 28 years between 1929 and 1957, with yearly per capita income going from $8,000 to $16,000. It doubled again in the next 31 years up to 1988, from $16,000 to $32,000.
Sadly, per capita growth in the American economy was only 1.8 percent per year between 1987 and 2007, and the top 1 percent of the population got the better part of that. Gordon believes the growth rate of per capita income will slow even more and take 93 years to double between 2007 and 2100.
I suggest that the slowing economic growth in America is what lies behind my own and many others’ sense of the nation’s malaise, some would say decline. Of course, no comparable slowing of China’s, among others, economy is expected — a lot of flush toilets and roads to install there.
As if such predicted long-term reduced growth rate weren’t troubling enough, Gordon also suggests the U.S. economy will be fighting a half-dozen “daunting headwinds,” as he calls them, in the years ahead that will likely further negatively impact future economic growth.
Economic headwinds include retirement of large numbers of baby boomers; declining rates of higher education attainment; rising rates of income inequality; outsourcing and use of inexpensive foreign labor; increasing economic impacts of global warming; and high household and government debt.
Predicting the future of a large and complex society such as America is risky business and one can easily miss the mark. Nevertheless, Gordon has suggested that the “rapid progress made over the past 250 years could well be a unique episode in human history rather than a guarantee of endless advance at the same rate.”
It may be that we Americans alive today have lived during a period of unprecedented growth in human prosperity that is likely not sustainable. Nature offers no guarantees such growth will continue. Certainly the vigorous growth rate of prosperity from 1929 to 1988 has not continued over the last couple of decades, presuming Gordon’s figures are correct.
If this slowdown does continue indefinitely, I suggest we can expect increased pessimism, negativity, and fractiousness in America’s political, social, and economic life.
If the pie isn’t going to get bigger every year, as most of us have come to expect — and borrowed heavily as growth slowed, thinking the good times would soon return — I suspect American life will become more quarrelsome and crime-ridden, with considerable finger-pointing.
I suspect the recent decline in the rate of economic growth and its consequent impact on people’s wealth is what substantially underlies the deplorable and counterproductive behavior of so many of our political leaders these days.
Closer to home, if Gordon is right, one wonders what effect his predicted economic slowdown might have on the future of Las Vegas. Vegas, after all, came to flower during a time of unprecedented economic growth in America. If America’s rate of growth does indeed slow for the foreseeable future, will tourism be affected?
Moreover, if slow U.S. economic growth becomes the norm in the decades ahead, how much more unwise and foolish will so many of Nevada’s leaders seem for their efforts in blocking the development of Yucca Mountain and other possible important nuclear research and technology efforts in Nye County and southern Nevada? We may need those jobs more than ever.
If the American economy does enter an era of long-term “permanent” slow growth, if not outright decline, how much more difficult will it become to finance multi-billion-dollar infrastructure, including nuclear power plants, Yucca Mountain, and big-time energy research projects, once our leaders wise up to the outsized economic, social, and environmental benefits at stake?