By James Pethokoukis
Is America just cosmically lucky? All that stuff we tell ourselves about American exceptionalism, maybe it’s merely the self-serving mythology of a people born on third base but absolutely sure they hit a triple. The “special snowflake” syndrome on a national scale.
That’s the question asked — and kind of answered, really — by writer Benjamin Wallace-Wells in his nearly 5,000-word New York magazine story “The Blip.” The subtitle: “What if everything we’ve come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course?”
The piece is based on a much-debated 2012 research paper “Is U.S. Economic Growth Over?” and includes a mini-profile of the paper’s author, Northwestern University economist Robert Gordon, whom Wallace-Wells portrays as a weepy, wistful seventysomething professor spending the final years of a distinguished academic career waking his countrymen to an awful reality: The New Normal is permanent and our expectations must be permanently lowered.
Gordon’s thesis is that we will not tweet ourselves out of our great stagnation. He argues that the 4,000 percent increase in the West’s standard of living since the mid 18th century was driven by a series of random, one-off technological innovations — the cotton gin, railroads, electricity, public sanitation — whose impact and scope will never be matched by whatever Google has coming down the pike. And free-riding Americans have drafted off the “historically singular event” of the Industrial Revolution for 237 years, Wallace-Wells writes, resulting in “our laissez-faire-ism; our can-do-ism; the optimistic cast of our religiosity, which persisted even when other Western nations turned toward atheism; our cult of the individual.” Obama’s “you didn’t built that” jab as macro theory, in other words.
If treated as premonishment rather than predestination, Gordon’s argument should motivate. America isn’t entitled to ever-increasing prosperity, after all, or to keep getting richer as fast as it used to. What we do matters. The quality of economic policy matters. A 2013 study from economists John Dawson and John Seater, for instance, estimates that the past 50 years of federal regulations have reduced real U.S. GDP growth by roughly two percentage points a year on average, from 5 percent to 3 percent. That is, “GDP at the end of 2011 would have been $53.9 trillion instead of $15.1 trillion if regulation had remained at its 1949 level,” the authors conclude. If America were that rich it might even be able to afford Obamacare. And with the economy of 2080 in 2013, we might even have those flying cars.
Going forward, it will take smarter tax, regulation, health, infrastructure, and education policy for America to grow as fast as it did in the past, or even close. America is getting older; labor-force growth is slowing. In designing policy, we should assume the recent productivity slowdown is a problem rather than a pause.
It probably isn’t, though. Who wants to bet against another incredible wave of game-changing innovation — genetics, robotics, nanotech, artificial intelligence — not to mention better use of the current IT revolution? What’s more, as Asia and Africa catch up to the West, we’ll have billions of additional educated minds coming on line ready to invent and innovate — as long as societies are open to accepting those innovations and the creative destruction they bring.
And it’s that last point that “The Blip” fails to grasp when it urges a focus shift to wealth inequality from wealth creation. Consider: Maybe the Industrial Revolution didn’t just randomly happen, with America fortuitously emerging at roughly the same time, able to exploit its technological fruits. Maybe starting in the mid 1700s, the Dutch and the English and then, most completely, Americans started thinking and acting differently toward innovators and the commerce class.
The West, as economist Deirdre McCloskey puts it, started treating “marketeers and inventors as having some dignity and liberty. . . . This contrasted with the earlier mentality, still admired on the left, that treats each act of innovation as an occasion to go looking for its victims. Victims there were, but they were greatly outnumbered by winners.”
America’s ideals drove our success, not the other way around. And as long as we don’t forget or abandon that formula, the American experiment should be in no danger of demise.
James Pethokoukis is a columnist at the American Enterprise Institute. Previously, he was the Washington columnist for Reuters Breakingviews, the opinion and commentary wing of Thomson Reuters.