The U.S. presidential candidates have made the usual pile of promises, none more predictable than their pledge to make the U.S. economy grow faster. With the economy struggling to expand at 2% a year, they would have us believe that 3%, 4% or even 5% growth is within reach.
But of all the promises uttered by Donald Trump and Hillary Clinton over the course of this disheartening campaign, none will be tougher to keep. Whoever sits in the Oval Office next year will swiftly find that faster productivity growth—the key to faster economic growth—isn’t something a president can decree. It might be wiser to accept the truth: The U.S. economy isn’t behaving badly. It is just being ordinary.
Historically, boom times are the exception, not the norm. That isn’t true just in America. Over the past two centuries, per capita incomes in all advanced economies, from Sweden to Japan, have grown at compound rates of around 1.5% to 2% a year. Some memorable years were much better, of course, and many forgettable years were much worse. But these distinctly non-euphoric averages mean that most of the time, over the long sweep of history, people’s incomes typically take about 40 years to double.
That is still significant progress. Looking back over an 80-year lifespan, a typical person in a wealthy country would have seen his or her annual income quadruple. But looking from one year to the next, the improvements in living standards that come from higher incomes are glacial. The data may show that life is getting better, but average families feel no reason to break out the champagne.
Today, that is no longer good enough. Americans expect the economy to be buoyant, not boring. Yet this expectation is shaped not by prosaic economic realities but by a most unusual period in history: the quarter-century that began in the ashes of World War II, when the world economy performed better than at any time before or since.
The victory of the Allies in 1945 was followed by economic chaos. In 1946, France’s farms could produce only 60% as much as they did before the war; many of Germany’s remaining factories were carted off to the Soviet Union as wartime reparations; and anger over price and wage controls—imposed during the war to stanch inflation and channel resources into critical industries—brought strikes across Europe, North America and Japan. Japan and most European countries couldn’t import coal for power plants and grain to feed their people. The future looked bleak.
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