America’s Best Days Are Not Behind Us
I generally read books that I expect to enjoy. But based on reviews I had seen, I was prepared to be more frustrated than fascinated by Robert Gordon’s new book, The Rise and Fall of American Growth. So you can imagine my surprise when I discovered how much I liked it.
Most reviews have focused on the “fall” indicated in the title: the last hundred pages or so, in which Gordon predicts that the future won’t live up to the past in terms of economic growth. I strongly disagree with him on that point, as I discuss below. But I did find his historical analysis, which makes up the bulk of the book, utterly fascinating. (And, at 743 pages, the book has a lot of bulk. Gordon’s two-part piece in Bloomberg View is a helpful summary for anyone who won’t get through the whole thing.)
Gordon paints a vivid picture of the years between 1870 and 1970, a century of unprecedented growth in the United States. This was the century that brought us the great inventions that fundamentally changed our standard of living—inventions like the electrical grid, indoor plumbing, automobiles, and antibiotics.
Gordon does a phenomenal job illustrating just how different life was in 1870 than it was in 1970, through both an economic analysis and engaging narrative descriptions.
Consider that in 1870, most homes were lit by candles and whale oil lamps. To use the bathroom, your choice was an outhouse or a chamber pot. Your world was confined to the distance your horse could travel. You would spend long hours of your short life doing backbreaking labor, owning only two changes of clothes, and eating a whole lot of pork and grain mush.
By 1970, homes—and people—became, to use Gordon’s term, networked. The advent of electricity, cars, indoor plumbing, and telephones meant that people were more connected than ever, dramatically improving quality of life and increasing productivity to previously unseen levels.
What really amazed me was not the speed of innovation but the speed of adoption. In 1910, there were 2.3 motor vehicle registrations for every 100 households. By 1930, there were eighty-nine.
In its impact on the standard of living, the arrival of the automobile was rivaled only by the commercialization of electricity. It’s hard for many of us to imagine living in the dim, smelly, and smoky dwellings of 1870, washing clothes by hand, heating irons on a gas or wood stove, and eating only food that didn’t require refrigeration. By 1970, you could walk into most houses and see a refrigerator, an iron, a washing machine. It would look pretty much the same as any house you’d walk into today, with a couple notable exceptions like the microwave (and color schemes with a lot less harvest gold).
I found Gordon’s historical analysis eye-opening. And that’s why I think the attention that reviewers have paid to his predictions for the future, which make up only two chapters, distracts from the impact of the book.
Gordon argues that American growth can never be what it was between 1870 and 1970 because the fruits of the digital revolution will not live up to the legacy of the great inventions that transformed life in the 19th and 20th centuries.
I couldn’t disagree more.
Gordon’s premise is that what he calls the third industrial revolution, the one driven by computers and digitalization, is limited to communication, information, and entertainment. I believe it’s far broader than that.
The digital revolution affects the very mechanism of the marketplace. How buyers and sellers find each other, how we amass information, how we can create models to simulate things before building them, how scientists collaborate across continents, how we learn new things—all of this has changed dramatically thanks to digital innovation. Yes, household appliances look pretty much the same now as they did in 1970, but that doesn’t mean our lives in 2070 won’t be profoundly different.
As Gordon acknowledges many times, we don’t have a good tool for measuring the impact of innovation on people’s lives. Like other economists, Gordon uses something called Total Factor Productivity (TFP), which is meant to capture efficiency due to innovation. TFP is based on GDP but takes into account the hours we work and the equipment we use.
The truth is, while economic measurements like TFP can be useful for understanding the impact of a tractor or a refrigerator, they are much less useful for understanding the impact of Wikipedia or Airbnb. GDP may not grow as fast as it did in the past, but that alone doesn’t tell you whether people’s lives are going to get better...
Source: Gates Notes
Questions 1-7: Answer the following questions with no more than three words AND/OR a number for each answer.
1. Which part of “The Rise and Fall of American Growth” is the author particularly interested in?
2. From 1870 to 1970, why did the ways in which American people lived change?
3. In addition to developing quality of life, what was another benefit of great scientific breakthroughs in 1970?
4. What makes the revolution with increasing use of refrigerators, irons and washing machines feasible?
5. Robert Gordon believes that significant growth seen from 1870 to 1970 can never be experienced again due to the differences between the speed of innovations and what?
6. Where does the author believe that the digital growth is having an impact?
7. Which two factors are included in analysis that involve the use of the Total Factor Productivity index?
Please find the answers here.
How many correct answers did you get? Please share your result by leaving a comment.
Watch this video, produced by Vox, to understand how the US grew from a colony to the world’s most developed economy.