Wednesday, August 03, 2016

Life has never, ever been this good!

A couple of years ago, a 700-page book that very few people read (not me!) was discussed by a whole lot of people (including me, of course!)  I am deeply  impressed with the ability of those who can read that kind of a lengthy work.  I think it is harder for a reader to go through those pages than it is for the author.  Imagine being the editor for such a book; phew!

This time, it is another 700-pager: The Rise and Fall of American Growth.  The book has a subtitle too: The US Standard of Living Since the Civil War.  I wonder why this was not the favorite beach read for millions of Americans, who instead preferred to play Pok√©mon Go ;)

Anyway, first from the author, Robert J. Gordon, who is a highly respected academic:
Can future innovations match the great inventions of the past? Will artificial intelligence, robots, 3D printing and other offspring of the digital revolution do for economic growth what the second industrial revolution did between 1920 and 1970? The techno-optimist school of economics says yes. I disagree.
The rise in the U.S. standard of living from 1870 to 1970 was a special century -- and won't likely be repeated.
BTW, what a clear statement upfront, right?  I wish more people would write like that!

Gordon adds:
Growth over the next quarter century will resemble the slow pace of 2004–2015, not the faster growth rate of 1994–2004, much less the rapid rate achieved between 1920 and 1970.
700 pages to back up that argument.  That is some serious scholarship, which is what I would expect from a respected academic at one of the elite research universities.  I wish the teaching universities would abandon their pretentious pursuit of intellectual onanism.  But, I digress.

The NYRB has a review essay, whose author, William Nordhaus, too is a highly respected academic.  He too leads off with clarity, (along with a humorous note that "at nearly eight hundred pages it weighs as much as a small dog"):
The message of Rise and Fall is this. For most of human history, economic progress moved at a crawl. According to the economic historian Bradford DeLong, from the first rock tools used by humanoids three million years ago, to the earliest cities ten thousand years ago, through the Middle Ages, to the beginning of the Industrial Revolution around 1800, living standards doubled (with a growth of 0.00002 percent per year). Another doubling took place over the subsequent period to 1870. Then, according to standard calculations, the world economy took off.
Gordon focuses on growth in the United States. Living standards, as measured by GDP per capita or real wages, accelerated after 1870. The growth rate looks like an inverted U. Productivity growth rose from the late nineteenth century and peaked in the 1950s, but has slowed to a crawl since 1970. In designating 1870–1970 as the special century, Gordon emphasizes that the period since 1970 has been less special. He argues that the pace of innovation has slowed since 1970 (a point that will surprise many people), and furthermore that the gains from technological improvement have been shared less broadly (a point that is widely appreciated and true).
Nordhaus highlights a point that Gordon makes in his book:
A consistent theme of this book is that the major inventions and their subsequent complementary innovations increased the quality of life far more than their contributions to market-produced GDP…. But no improvement matches the welfare benefits of the decline in mortality and increase in life expectancy….
Yes, this is something that we far too often forget when we are obsessed with economic growth and whether we have the latest Iphone model.  Our lives have never, ever, been so good with long and healthy lives.

Such optimism comes naturally to the wealthiest guy on the planet, who also reads a whole lot of books in his downtime.  Bill Gates found the book to be "a fantastic read, and well worth the time" and writes:
How do you calculate the value of millions of pages of free information at your fingertips? ... In the future, GDP may not grow as fast as it did in the past—or, for all we know, it may—but that alone doesn’t tell you whether people’s lives are going to get better.
Gates makes an important point:
And I should add that Gordon limits his scope, understandably, to the U.S. But you can’t read his book without thinking about the billions of people around the world for whom a quality of life equal to the America of 1970 would be a vast improvement.
Learning about the speed at which the U.S. was able to spread innovations—from sanitation to electricity—makes me more hopeful about what is possible for the world rather than less hopeful about what is in store for America. 
Indeed.  For hundreds of millions of people around the world, it would be a dream life to live like how the typical white American lived in 1970.  I wish people--especially the Berniacs and Trumpsters--would adopt such a global view.  

I will end it with the optimist's words:
When it comes to choosing a side in the debate between optimism and pessimism, my money is on the incredible forces of technological progress at work every day. Although the book is called The Rise and Fall of American Growth, I am confident that “fall” will not be the final word in America’s story.
If only the ultimate pessimist would read the book, or at least Bill Gates' review!


Most read this past month