Slow growth has been in the forefront of the candidatesâ€™ concerns about the economy throughout this presidential campaign. Theyâ€™re right to point it out: Whatever your view of the past several years, Americaâ€™s economic growth is not what it used to be. Our real gross domestic product roared along from 1947 to 1974, growing an average of 3.8 percent per year, and slowed only slightly until 2004. But since then, itâ€™s dropped by half. Todayâ€™s economy, growing at a sluggish 1.6 percent per year, has been described using an old terminherited from the 1930s, â€śsecular stagnation.â€ť
Yes, the economy is stuck, and all candidates promise to unstick us. But can they? Well, thereâ€™s a good chance they wonâ€™t be able to do anything of the sort. Iâ€™ve spent the past five years looking at what really caused the American economy to grow so quickly for so many years, and the conclusion is that weâ€™re going to have to get used to a very different idea of how fast our economy can grow. Some treat the recent slowdown as an anomaly and assume we can get back to our â€śnormalâ€ť high-growth mode. But a closer look at history suggests that the real anomaly is how fast things grew for much of the 20th century. The reason is not that weâ€™ve stopped innovating. Instead, the basic explanation is that some inventions are more important than othersâ€”and the most important ones happened decades ago.
Economic growth doesnâ€™t happen at a steady pace. Instead, progress jolts forward much more rapidly in some eras than in others. There was virtually no economic growth in human societies for millennia until the Industrial Revolution began around 1770. Growth began at a slow pace from 1770 to 1870, thenâ€”fueled by a unique clustering of what I call â€śthe Great Inventions,â€ť principal among which were electricity and the internal combustion engineâ€”became remarkably rapid in the century ending in 1970.
That century witnessed an economic revolution, freeing households from an unremitting daily grind of painful manual labor, household drudgery, darkness, isolation and early death. By 1970, daily life for nearly all Americans had changed beyond recognition. Manual outdoor jobs had been largely replaced by work in air-conditioned environments. Housework was increasingly performed by electric appliances. Darkness was replaced by light on demand; isolation was replaced not just by travel, but also by color television images bringing the world into the living room. Most important, the arrival of clean running water, to say nothing of indoor bathrooms, waste systems, a safe food supply and modern medical care, utterly changed life expectancy. An infant born in 1870 could expect to live only to age 45, whereas by 1970, the expected life span had reached age 72. The economic revolution of 1870 to 1970 was unique in human history.View Article