The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War
Robert J. Gordon
Princeton University Press
Price: Rs 2,154
Has America reached the end of the dream run it had, emerging as the number one nation in the last 100 years, accomplishing hi-speed development and setting envious standards of income and lifestyle?
Yes, says Robert J Gordon, in his latest book The Rise and Fall of American Growth, The U.S. Standard of Living Since the Civil War. Gordon, who has been keenly following the growth story of America for nearly six decades now feels that America needs to buckle up and take correctives to stay in the path of growth.
Gordon, through painstaking research and meticulous documentation has established how America made whirlwind progress between 1920 and 1970 and how, since then, it has slowed down. Till 1920, the American growth was steady, but slow. It took off in 1920. Gordon has kept track of the growth process of America since 1965, his first summer job after the first year of graduate school in MIT. He refutes the dominant theory on American growth, which says that the economic growth of the country varied systematically over time, rising to peak in mid-twentieth century and then falling.
His theory is supported by not just economic indicators but social as well. “The flood of inventions that followed the Civil War utterly transformed life, transferring human attention and energy from mundane to soaring skyscrapers and airplanes. What makes the period 1870-1970 so special is that these inventions cannot be repeated.” For instance, electricity made it possible to bring light with a flick of a switch. Now, whatever be the innovations, they can only better the quality of light and not the process of the click of switch itself. Similarly, when elevators were invented, the whole concept of land use changed forever.
The speed of growth and transformation that America achieved is envious for any country, especially India. In the U.S. not a single household was wired for electricity in 1880. And by 1940, nearly a hundred per cent of American household were wired. Domestic electricity in India came to Calcutta in 1897. As on 2015, only 78.7 per cent of population has access to electricity. What America did in 60 years we have not matched three-fourths in 115 years.
In the same period the percentage of American urban homes with clean running water and sewer pipes for waste disposal had reached 94. And 73 per cent had gas for cooking and heating.
In 1851, at an exhibition at London Crystal Palace Americans stunned the world by displaying remarkable technological advance. “Americans (were thought to be) little more than amiable backwoodsmen not yet ready for unsupervised outings on the world stage” But the Americans stunned the world. “… nearly all the American machines did things that the world earnestly wished machines to do—stamp out nails, cut stone, mold candles….most exciting of all was Samuel Colt’s repeat-action revolver, which was not only marvelously lethal but made from interchangeable parts…”
Gordon elaborates on almost all the social aspects of an average American. And how each invention dramatically changed the life for the better. The greatest curse of the rural and urban housewife, Gordon says, was the need to carry fresh water into the house and dirty water out of the house. Even in early twentieth century, working-class housewives had to haul water from hydrants in the street, a task little different from centuries when farm housewives had brought water from the nearest creek or well. All the water for cooking, dish washing, bathing, laundry and house cleaning had to be carried in and then hauled back after use. But the water supply and sewage system changed all that.
The transition from horse-drawn streetcars to electrified streetcars was complete between 1890 1902, saving time on travel and hence increasing movement across the country.
The growth of press was also equally impressive. The Daily, Sunday and Weekly newspaper circulation increased from 7 million in 1870 to 39 million in 1900 and 96 million in 1940. They were cheap and unrestricted, as compared to the British media, which had controls exercised by the Church and was burdened by tax.
The Rural Free Delivery (of mails) revolutionized communication in 1901 and took a decade to complete.
Gordon, through painstaking research and meticulous documentation has established how America made whirlwind progress between 1920 and 1970 and how, since then, it has slowed down.
If you thought America was always nothing by McDonald, Pizza and SubWay, come again. Salted and smoked pork was the dominant meat. Not only because it was easily preserved but pigs needed little attention. There was very little of fruits and vegetables. The major vegetables were turnips, pumpkins, and beans. This was largely due to the cold weather in the north and lack of storage conditions in the south.
The only area in which America has made less progress than other nations in Western Europe is the health-care, says Gordon. “The United States combines by far the most expensive system with the shortest life expectancy.”
So what went wrong with the American growth story? Gordon feels America has stopped reinventing itself and is assailed by four headwinds. They are: Tardy education, increasing inequality, demography (ageing population) and government debt.
“The book’s sober ending requires a distinction between the past and the future. The past is a matter of record, the future a matter for speculation. We know that the growth rate of labor productivity since 1970 has been disappointing and the growth rate of TFP (total factor productivity) since 1970 is barely a third of the rate achieved between 1920 and 1970.” Growth has not been shared equally. Population is ageing, educational attainment is flagging.
He extrapolates today’s findings on future. “The generation of baby boom is now between fifty and sixty eight. So we can predict the effects of their retirement. If American high school students regularly rank poorly in international tests of reading, math, and science then a sudden spike in score level is improbable. If stock market continues to advance we know that inequality will increase, for, gains on equities accrue disproportionately to the top income brackets.”
Gordon offers suggestions on how each of these headwinds can be handled. Those who believe that Gordon is wrong and that American growth is a up and down systematically are the “techno optimists” says he, adding they believe that technology will continue to support American growth. The contention of Gordon, a mix of economics and history, is supported by more than 120 graphs and tables. Gordon is not an alarmist, far from it. His is a sober voice of concern, of caution, which needs to be heard by those in the helm in America. And a fascinating lesson for ambitious and growing countries like India.
The reviewer is the former National Convener, BJP Intellectual Cell, and Member BJP National Training Programme, Publicity