End of Growth in the United States



By Alfonso Elizondo  

Created Wednesday, January 27 2016

Although the vast majority of politicians and economists in the United States think that the growth of its economy is a permanent phenomenon since the American state was created in the late 18th century, just a few days ago a book entitled ‘the Rise and fall of the American growth’ came to light, written by professor Robert Gordon, who is a macroeconomist and economic historian at the Norhwestern University; he is against technology optimism that pervades American culture with its information, stating that the United States is halfway through a great revolutionary change. Gordon says that because of the frenzy social networks are causing, we sometimes lose the perspective of reality and that the advances in information and communication technology are not at the same level as past achievements.   

He believes that the IT revolution (Information Technology) is less important than any of the five major inventions that provided the foundation for economic growth between 1870-1970: electricity, urban sanitation, chemistry and pharmaceuticals, internal combustion engines and modern communication. Gordon states that the type of rapid economic growth the average citizen believes will last forever is indeed a unique event without repetition. First came the great inventions, nearly all at the end of the 19th century and then came the refinement of inventions that exerted its maximum effect between 1920 and 1970.    

Gordon says in his book that there will not be any more technological advances; his work is a combination of deep everyday history of recent generations and careful economic analysis. Although you can find graphs and tables on these facts, Gordon never loses sight of people in flesh and blood. His book challenges current views of the future e challenges the way we look at the past.

Almost half the book is devoted to the changes that took place before World War II, although others, such as Daniel Booster, have done it with events after the Second World War in his book “Americans, a democratic experience”. But it’s fascinating when Gordon says that “Except in the rural people, the daily lives of Americans have not changed beyond what happened between 1870 and 1940 ‘. Electric lights replaced candles, toilets the septic tanks and railways and cars replaced horses. Gordon notes that in the 1880s the financial district of New York had manure pits up to 7 feet deep.    

While the physical work, both in the workplace and in the open spaces was largely replaced by less onerous jobs. This situation is forgotten by economists, who only think about the purchasing power of the people and not on what they have to do to get it. He also points out that the working conditions of men and women is as important as how much they are paid.   

 Urban life in the United States on the eve of World War II was already recognizable as modern, and in 1940 potable water, cooking gas; electricity, refrigerator and telephone were already available. Only television and Internet were missing but essentially we would live like when domestic life improved substantially. What the practical application of the greatest inventions in the next 30 years really was is that it led to a rapid rise in incomes and a new lifestyle in the nation.   

According to Gordon everything stopped since then and this technological slowdown would be permanent, so that progress is behind us. He is reluctant to appreciate the wonders of digital technology. Gordon says there is no doubt that social networks cause a positive reaction in people lives, but identifies two key points in the opposite direction. 

Firstly he notes that the great innovations cause big changes in business practices and the workplace, although such changes have already occurred between the 1990s and 2000 and have made little change to domestic life. Secondly, the new official measures of economic growth understate the real extent of progress, because they do not make it accountable for the new social benefits. Gordon believes that progress underestimation was greater during the great transformation of the pre-war than the one that exists nowadays. 

Therefore Gordon believes that the future will be marked by stagnant levels of life for Americans because the effects of the slowdown of technological progress were joined by inequality, stagnation in the level of education and the aging population average. This is a startling prediction for a society whose self-image is tied to the idea of ​​constant progress and social and political results of a new tired generation, whose working class decreases or fails to increase their income.

Gordon is likely to be wrong and we really are on the cusp of a transformational change, as claimed by the millionaires of the Davos Forum. Perhaps because of the advances in artificial intelligence or unusual development of molecular biology. But ultimately Gordon raises a new possibility for the future that no one had done before in the West.    

Addendum: As decadence of capitalism in the United States keeps growing, it will happen what has always happened in the great empires that misconceptions start to appear, and the myths that were built are destroyed while their paradigms are changed.