Those who support the policies that have brought us economic stagnation, endorse Robert J. Gordon who believes that doom and gloom are inevitable. With Gordon to rely on, they do not have to face responsibility for the effects of their policies, or go through the cognitive stress of changing their views.
Contra Gordon, if we adopt policies friendly to innovative entrepreneurship, opportunity and growth will return.
(p. B1) The idea that America’s best days are behind us sits in sharp tension with the high-tech optimism radiating from the offices of the technology start-ups and venture capital firms of Silicon Valley. But it lies at the heart of the current political unrest. And it is about to elbow its way forcefully into the national conversation.
Robert J. Gordon, a professor of economics at Northwestern University who has patiently developed the proposition in a series of research papers over the (p. B9) last few years, has bundled his arguments into an ambitious new book, “The Rise and Fall of American Growth” (Princeton University Press).
The hefty tome, minutely detailed yet dauntingly broad in scope, offers a lively portrayal of the evolution of American living standards since the Civil War. It also adds up to a dispiriting forecast for American prosperity in the decades to come. “This book,” he writes in the introduction, “ends by doubting that the standard of living of today’s youths will double that of their parents, unlike the standard of living of each previous generation of Americans back to the late 19th century.”
. . .
Skepticism is warranted, to be sure. Since the time of Thomas Malthus, eras of depressed expectations like our own have inspired predictions of doom and gloom that were proved wrong once economies turned up a few years down the road.
“For reasons I have never understood, people like to hear that the world is going to hell,” the economic historian Deirdre N. McCloskey of the University of Illinois, Chicago, wrote in an essay about “Capital in the Twenty-First Century,” the blockbuster about income inequality by the French economist Thomas Piketty. “Yet pessimism has consistently been a poor guide to the modern economic world.”
Optimism, though, is also subject to cognitive biases. It’s not just that the income of our optimistic techno-entrepreneurs is growing faster than gross domestic product. A lot of new innovation — the rockets to vacations in orbit, the Apple Watch and Google Glass — also seems custom-designed for them.
“If you are sitting in Silicon Valley, rich and at the frontier of technology,” said Lawrence F. Katz of Harvard, “it is probably true that things are getting better.”
The same can’t always be said for the rest of us.
For the full commentary, see:
Eduardo Porter. “ECONOMIC SCENE; America’s Best Days May Be Behind It.” The New York Times (Weds., JAN. 20, 2016): B1 & B9.
(Note: the online version of the commentary has the date JAN. 19, 2016.)
The Gordon book discussed in the commentary, is:
Gordon, Robert J. The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War, The Princeton Economic History of the Western World. Princeton, NJ: Princeton University Press, 2016.
