James Pethokoukis has read recent claims that America’s exceptional growth in years past, aligned with the larger trend of unprecedented Western industrial growth, can be traced to a “series of random, one-off technological innovations” unlikely to be repeated. Pethokoukis explains for National Review Online readers why he’s not buying into that pessimistic assessment.
If treated as premonishment rather than predestination, [the] 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.
