David Leonhardt’s Bleak View Of The Long-Term Outlook

The consensus today is that for all the incredible misery of the Great Depression, the 1930s were also a period of very important technological advance in terms of the application of electricity and internal combustion. At the time, many people feared that post-war demobilization would lead to a renewal of Depression conditions. It turned out, however, that after the war shocked the economy back to a high-employment equilibrium that tons of new things had been developed in the thirties that could drive the next 20 years’ worth of prosperity. David Leonhardt says we’ll have no such luck next time:

It would clearly be nice if we could take some comfort from this bit of history. If anything, though, the lesson of the 1930s may be the opposite one. The most worrisome aspect about our current slump is that it combines obvious short-term problems — from the financial crisis — with less obvious long-term problems. Those long-term problems include a decade-long slowdown in new-business formation, the stagnation of educational gains and the rapid growth of industries with mixed blessings, including finance and health care.

To offer a slight ray of sunshine into a gloomy-but-persuasive article, one good thing about relative American decline is that with every passing year it becomes more and more likely that something cool and useful will be invented in some foreign country. Inventions happening abroad isn’t as good for the USA as inventions happening domestically, but it’s still better than them not happening at all. And growth in the developed world means that the circle of potential innovators is growing much larger. That at least creates the conditions under which we might see some good luck.