Book Time #16: Rise and Fall of American Growth

The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War, Robert Gordon

A person time traveling the 54 years from 1970 to today would mostly recognize the world as they knew it. They’d be able to take the train or drive a car, go to the grocery store, cook, go to the bathroom, go to the movies, and hang out with friends more or less as they knew it with minor instruction or assistance. In half a century, the important things haven’t really changed.

But try the same exercise for the 54-year duration prior to that, from 1916 to 1970. This time traveler would be utterly helpless. In 1916, many homes didn’t have electricity or gas hookups. Most rural homes didn’t have a car, and most city-dwellers didn’t use one. Those that did exist operated entirely differently than cars in 1970. Cities were still crowded with horses—and horse manure. Running water and basic sanitation including bathrooms were still quite new and not yet widespread. There was no radio or television, no commercial airplanes, no highways and few paved streets. “Movie palaces” were only just opening. Grocery stores as we know them didn’t exist; A&P was the dominant chain and each store, which functioned totally differently than grocery stores today, was the size of a modern 7-Eleven. Doing virtually anything would have required learning new customs, habits, and processes, almost all of which would have been slower, harder, and less sanitary. 

This thought exercise is, essentially, the thesis of Rise and Fall of American Growth. The U.S. economy and the quality of life of its people—not always the same thing—experienced a surge during the “long century” of 1840 to 1970, with most of that improvement occurring from 1870 to 1940. The root causes of these improvements—electricity and natural gas hookups to homes and businesses, widespread implementation of water and sewer systems slashing infant mortality rates and making the population overall healthier, the proliferation of machine-based transportation, and communication technologies like radio and television—were one-time upgrades and by definition could only happen once. You can’t re-create the productivity growth of hooking a home up to electricity and all the appliances that come with it by hooking it up to electricity again. Hence the post-1970 “fall” of American growth, during which time we made only marginal improvements to existing technologies. 

This explanation feels intuitively correct to me because it differentiates change from progress. A car in 1970 may look different, with fewer screens and more chrome trim, but it was just as productive if slightly more polluting than a car today. A television in 1970 didn’t have nearly as clear a picture but was still a television you could watch sports and movies on. A faucet in 1970 turned on just as a faucet does today, unless you have one of those fancy touch-activated faucets in which case...well, that’s change versus progress for you. 

This is the crux of Gordon’s argument. The changes in the first half of the century mattered a great deal. Infant mortality plummeted, life expectancy skyrocketed, living standards and economic productivity surged. The changes in the second half of the century, by and large, did not matter in any larger sense except for added niceties and marginal improvements that have also rapidly accelerated the poisoning of our planet. Life expectancy has leveled off and all of these fancy screens and electric doodads are not showing up in the major economic indicators the way that, say, the proliferation of refrigerators did.

Many techno-optimists confuse change with progress. We all have smartphones now, which is a change. But it’s not showing up in any aggregate data about societal well-being or economic growth (unless you count all the aggregate data about increased levels of anxiety, depression, and social alienation). One of the most important economic observations of the last 40 years is the proliferation of the internet barely registers in labor productivity statistics. It could be that we’re failing to measure something important about how the internet has impacted productivity. Or, more likely, we waste as much time on computers as we save.

Again, this feels correct to me, but Gordon also has the receipts. He goes to exhaustive, and exhausting, lengths to prove it. I both appreciate this and also lament that it makes the book off-putting for a general audience. I am willing to hack my way through dozens of pages of statistics, charts, and graphs, but a lot of people understandably aren’t. Still, I enthusiastically recommend this book to any curious reader if only for the introductory chapters. Few books have shaped my thinking about economic change and progress as much as this one.

Like all great academic works, Rise and Fall of American Growth has an important takeaway for a general audience. It is about grounding our expectations not in the world of 30-second campaign ads but in how the world actually is. Gordon wrote that “economic growth is not a steady process that creates economic advance at a regular pace, century after century. Instead, progress occurs much more rapidly in some times than in others.”

His point is not a hopeless one. We can either continue to misunderstand our historical moment and fashion policies that attempt to do the equivalent of re-inventing electricity, repeatedly placing false hope in the Next Big Thing to make the growth charts go up and to the right, or we can share the fruits of our unprecedented quality of life as widely as possible. It won’t Make America Great Again or return the country to a time of a robust, blue-collar middle class of factory workers and single family homes, but it would help. Gordon is being realistic. It feels revolutionary when applied to a nation increasingly living in fantasy.