Why America’s Growth Is Slowing, and a Solution

Summary:  The 21st century holds many economic challenges for the world.  Rivals (eg, China). Therobot revolution (job losses from the next wave of automation). And slowing technological growth, an essential driver of the US economy.  This is a follow-up to Has America grown old, and can no longer grow? Or are wonders like the singularity in our future?

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Debate about the possibility of slow or no growth in America revolves around economic and technological factors, ignoring a simpler possible cause: a change in us. The men and women who build this nation did so by large bold ventures. Private, public, and in partnership.

  • Big investments built this nation, from The American Fur Company and the Pony Express to the IBM 360 and Boeing 747.
  • Massive infrastructure projects supported — even supercharged — America’s growth: construction of dams, canals (starting with the Erie Canal), development of seaports and airports, and the interstate highway system.
  • Massive public-private partnerships, such as the Transcontinental Railroad and the National Institute of Health research that funds the pharmaceutical industry.

Both have become far less common in The New America of the 21st century.

The multi-generational campaign by conservatives has reduced our ability to undertake large government investments. Propaganda has induced amnesia about our history and lack of confidence in the government’s ability to execute large projects (except military adventures, about which conservatives have boundless enthusiasm).

As for American business, large companies prefer to accumulate cash rather than invest in their own enterprises.  As of Q3, the Fed’s Z.1 report shows the US non-financial corporations held over $1.6 trillion in cash-like assets — up $60 billion YoY. But we have a spirit of entrepreneurs.  Venture capital! Billionaire titans of boldness!  It’s mostly malarkey.

 

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How the 1% see leadershipHow the 1% see leadership

Most venture capital funds look for low-hanging fruit (eg, social media), or incremental advances on well-proven paths.  Most American businesses follow the gospel of small-fast-lean:  short supply chains, outsourcing, fast cycles of development – market test – refine.  This is ideally suited to small innovations — from pet rocks to iPads.  It creates a nation of little changes, so that June Cleaver could step from her home in “Leave it to Beaver’s” 1957 pilot episode into her 2012 equivalent and easily adapt. Her only surprise at the technology would be lack of progress.

A decade later Herman Kahn would forecast what technological innovations were likely during the following 33 years (the year 2000).  If we brought him to 2013 he’d be astonished at our lack of progress.

America is marking time until some other people take the torch and blaze a path into the future.

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A Possible Cause

“Why” is the most difficult question when discussing people.  Why have we lost our spark? My guess: rising inequality.

Our ruling elites retain their hunger for more power and wealth, but have chosen a different path to gain it.  After all, there are many ways to make money. Some are safer than innovation or gambling on growth.  Instead the 1% have concentrated their efforts on a multi-generational effort to shift wealth, income, and power to themselves from the rest of us.

It’s an open source movement (see John Robb’s work to see how these work); no conspiracy necessary. They’ve done it all in plain sight. Among their major initiatives:

  • Lowering their taxes at all levels: exemptions from local taxes for new stores and factories, to lower taxes on income and estates.
  • A broad and growing array of subsidies, from ethanol fuel to prohibitions on the government negotiating lower prices (as in this example).
  • Massive expansion of DoD via foreign wars. War has always been the fast easy way to strip-mine the Treasury. (see Butler’s famous bookWar is a Racket).

A key part of this program has been a well-funded and skillfully executed propaganda campaign, inducing amnesia about past accomplishments of government programs — and the desirability of lowering taxes for the rich (funded by higher payroll taxes on workers and benefit cuts on the 99%).  A large fraction of America now believes a history that never happened, and in economic theories with little basis in reality.

They’re winning.  The evidence surrounds us, if only we choose to see it.  We’re prevented from advancing by shackles of the mind.  Like the people in Plato’s Cave, we need only break free and walk into the sunlight.

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Solutions

There are no solutions under current conditions.

Our forefathers were a skeptical and recalcitrant people. Reform remains impossible for America until we change.  We all must work clearer vision for ourselves and those around us (family, relatives, coworkers).  That will lead, potentially, to widespread recognition of our core problems — and hopefully bring forth ideas for next steps (such as those discussed on the FM website).

For More Information

Posts about the future:

See all posts about this topic at the FM Reference Page Forecasts – possible futures for America and the World.

This piece is cross-posted from Fabius Maximus with permission.

4 Responses to "Why America’s Growth Is Slowing, and a Solution"

  1. John   February 5, 2013 at 12:56 pm

    We lost our spark not because of rising inequality. What's the old saying? Shirt sleeves to shirt sleeves in three generations. The rich are playing not to lose – but they'll end up losing it eventually.

    America is the greatest country in the world because ANYONE can make it. I know many immigrants that come to this country with literally nothing – no money, could not even speak English – the deck was stacked against them – and they prospered. Why? Because they had nothing to loose and they took a chance.

    There are plenty of us Americans that got fat and comfortable from the efforts of those that came before us. And when you are fat and comfortable, the drive no longer exists. The "opportunity" is lost behind the generous welfare state that we have become. Why work for $500/week, when you can collect $450/week on unemployment? The noble notion of a social safety net has dis-incentivised individuals from seeking employment.

    Let's scale back the social safety net and let everyone's creativity unleash the prosperity that can only be found in AMERICA. God Bless America.

  2. Dark Helmet   February 5, 2013 at 1:57 pm

    This is without a doubt the most wrong-headed essay I've read so far in 2013. The year is young, though, so who knows?

    First, anyone alleging comparability of the pet rock fad to the iPad cannot be taken seriously on any other subject.

    Second, the idea that 'conservatives' have 'boundless enthusiasm' for 'military adventures' is either ignorant or deliberately obtuse. Most of the conservatives I know had little enthusiasm for involvement in the Balkans, Egypt, or Libya and are hardly straining at the bit to intervene in Syria or Iran. Granted that a lot of conservatives supported intervening in Iraq and Afghanistan. So did a lot of liberals. And a lot of conservatives (mostly paleoconservatives) didn't want to be involved in either.

    On taxes, the tax structure has gotten steadily more progressive over the last few decades, including the Bush tax cuts which shifted the burden measurably toward higher income people. At least those who report higher income.

    But what point is there in a point-by-point debunking? The author simply wanted an excuse to vent at his favorite devils.

  3. joseph glynn   February 8, 2013 at 8:01 pm

    As an inventor and innovator I am inclined to agree with the author . This article raises some important questions which merit serious consideration.

  4. iPad pen   June 7, 2013 at 5:00 am

    Thanks for writing this so clearly. But it seems you presented all the issues well but then failed to balance its weight in solutions.