From David Leonhardt at the New York Times, a good, if very partial explanation of why the overall future of the US and the Global North generally doesn’t look as promising as the 30s. See if you can guess what’s missing from the article.
Still, the reasons for concern today are serious. Even before the financial crisis began, the American economy was not healthy. Job growth was so weak during the economic expansion from 2001 to 2007 that employment failed to keep pace with the growing population, and the share of working adults declined. For the average person with a job, income growth barely exceeded inflation.
The closest thing to a unified explanation for these problems is a mirror image of what made the 1930s so important. Then, the United States was vastly increasing its productive capacity, as Mr. Field argued in his recent book, “A Great Leap Forward.” Partly because the Depression was eliminating inefficiencies but mostly because of the emergence of new technologies, the economy was adding muscle and shedding fat. Those changes, combined with the vast industrialization for World War II, made possible the postwar boom.
In recent years, on the other hand, the economy has not done an especially good job of building its productive capacity. Yes, innovations like the iPad and Twitter have altered daily life. And, yes, companies have figured out how to produce just as many goods and services with fewer workers. But the country has not developed any major new industries that employ large and growing numbers of workers.
There is no contemporary version of the 1870s railroads, the 1920s auto industry or even the 1990s Internet sector. Total economic output over the last decade, as measured by the gross domestic product, has grown more slowly than in any 10-year period during the 1950s, ’60s, ’70s, ’80s or ’90s.
What’s missing, of course, from this discussion is another thing the ’30s had that the early 2000s don’t – a rapidly growing energy surplus to be expended on economic growth, in which the powering force of the economy was cheap and readily available.
This article is as good as any to demonstrate the problems of an analysis that takes energy resources for granted, and doesn’t view them as a fundamental defining factor. We tend to view energy as something to be lumped in with human ingenuity – ie, something there’s always more of somewhere, rather than something that can bump up against significant physical limitations of access. That’s a profound mistake, and our failure to understand energy as a root cause leads us to miss a lot – that in some ways it isn’t the technological leaps that are missing in creating new industry, it is the root force that could drive such economic growth.