The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War (The Princeton Economic History of the Western World)

Category: Economics
Author: Robert J. Gordon
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by lkrubner   2019-06-21
Lots of people make that argument, but when asked "What are we under counting?" no one's been able to come up with a story that remains consistent when applied to multiple industries. Computers got much, much faster, but everything else stagnated.

It's fairly easy to measure how much money is produced per employee. That number grew 3% to 4% a year for most of the 20th Century, till 1973, when it collapsed. Since then it's average 1.5% a year (again, with a few good years in the 1990s, and with some up and down wobbles during the Great Recession).

The central fact is the big push towards automation in the 1930s and 1940s and 1950s simply had a bigger impact than the kind of breakthroughs we've had in the last 40 years.

The automation of the telephone systems, and the removal of all the women who worked as operators, was huge in the 1940s and 1950s (and a fantastic boost to the computer industry). The later boom in multiplexing made capital investments more profitable, but did not increase the amount of money made per employee.

The introduction of the modern combine tractors on USA farms lead to a fantastic increase in agricultural productivity in the 1930s and 1940s and 1950s and 1960s, and nothing since then has had a similar effect on agricultural productivity.

The introduction of digging robots transformed the coal industry in the 1930s and 1940s and 1950s. Mountain top clearance was another huge change in how the work was done. Nothing since the 1960s has had anything like a similar impact. In fact, the opposite is true, increased environmental protections have, if anything, decreased productivity in that sector, or at least slowed the increase.

And on and on.

The transformations in the early to mid 20th Century were huge. The more recent transformations have been small. The Great Boom gave way to the Great Stagnation.

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The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War