The Rise and Fall of American Growth: The US Standard of Living Since the Civil War
Robert J Gordon (2016)
Why in the world would I review a data-packed economics textbook on this blog? Hang with me for a paragraph of background.
My paternal grandparents, born in the 1890s, raised their seven children on a farm in northwestern Ohio. When I visited them as a child in the late 1950s, we usually sat talking in the kitchen, where Grandma cooked, winter and summer, on a huge cast-iron wood-fired stove. In a lean-to shed attached to the kitchen was a heavy-handled pump that provided all the water in the house. The toilet facility was an outdoor privy that terrified me, but at least I didn’t have to traipse down the path at night. Grandma provided a chamber pot under each bed. There was a wall-mounted party-line telephone and electric lighting on the main floor. I was a city-slicker kid who assumed that most rural Americans at that time lacked indoor plumbing, central heat, and modern appliances.
When I first dipped into Robert Gordon’s The Rise and Fall of American Growth, I was startled to find that my grandparents were outliers. By the late 1950s, fully 90% of all American households had running water and an indoor flush toilet. About 75% had a washing machine, and about 65% had central heat. Virtually all the houses lacking these conveniences were in the rural South. That Ohio farmhouse was at least twenty years out of sync with the rest of the nation. The only reason it even had electricity was the Rural Electrification Service of the New Deal. Well, now I had to read Gordon’s whole 762-page book.
The Rise and Fall of American Growth is a fascinating sociological and technological history of the United States over the past 145 years. Gordon’s central thesis is that the pace of improvements in the US standard of living between 1870 and 2015 had never before been witnessed in the history of the world and will never be seen again. He constructs his argument meticulously, teasing out the intricate details for what constitutes “the standard of living.” Some obvious components are food, clothing, housing, transportation, health care, and communication. But some didn’t immediately come to my mind: entertainment, workplace safety, and the availability of consumer credit and insurance.
In the first half of the book, Gordon traces the specifics of technological inventions in the US in the period 1870 to 1940. Revolutionary changes in individual lifestyle resulted from such innovations as electric lighting, urban sanitation, the telephone, and the internal combustion engine. Even the humble Mason jar (invented in 1859) was a huge advance, allowing women to preserve vegetables and fruits in the summer for consumption in the winter.
Gordon plays out the results of these developments with masses of statistics, demonstrating exactly how specific inventions changed everyday existence for hundreds of millions of ordinary people. For example, before the arrival of the infrastructure for running water, the typical adult female had to hand carry more than 36 tons of water in and out of her house over the course of a year, walking about 148 miles for this task alone. I didn’t know that before legislation in the early 1900s, almost all food consumed in American cities was adulterated, contaminated, or spoiled. Farmers had it slightly better because they grew their own food, but with backbreaking toil. Life in 1870 was brutal. Most Americans survived on fatty salt pork and cornmeal, and they died at an average age of 45.
In the second half of the book, Gordon moves ahead to the period 1940 to 2015. He argues that the improvement in the standard of living in this period was partly due to policies of the New Deal during the Great Depression of the 1930s and partly due to the successful push for high factory productivity to meet the needs of World War II (1941-1945). Gordon has his own complex recalculations of the Gross Domestic Product, by which he shows that productivity growth slowed dramatically after 1970. A brief revival between 1996 and 2005 was probably due to the invention of the web, of search engines, and of e-commerce.
Stepping back for a broader view, Industrial Revolution #1 (1750-1870) is the generally accepted one, which produced such innovations as railroads. Industrial Revolution #2 (1870 to 1970) saw spectacular improvement in the US standard of living and in life expectancy. Industrial Revolution #3, the digital revolution, had its main spurt just in the years 1996-2004 and had much less effect on overall economic productivity growth. Some economists cite Moore’s Law, which states that that the power of computer chips will double every two years, to argue that the digital revolution will continue. But Gordon concludes that Moore’s Law has died out since 2006, since the expense to improve computer chips further isn’t justified.
The major factors that Gordon sees as militating against more growth in the US standard of living in the years ahead include rising income inequality, decreasing educational achievement, rising student college debt, the aging of the population, and growing debt at all levels of government. At the end of the book, he has some brief recommendations for policy directions that could improve productivity growth:
- More progressive taxes
- A higher minimum wage
- Expansion of the Earned Income Tax Credit
- Preschool education
- Better public school funding
- Income-contingent college loans
- Selective reform of business regulations
- Increased openness to skilled immigrants
- Reform of the tax system
A key assertion of The Rise and Fall of American Growth is that Americans must not expect a continuation of improvement in our standard of living at the rate that occurred between 1870 and 2015, and certainly not at the phenomenal rate that occurred between 1920 and 1970. The inventions that spurred development in the US were one-time deals. Yes, there can be further enhancements to the technology already in place. Inventors can (and have) come up with more efficient light bulbs. But there cannot be another invention of electric lighting. Washing machines have become more energy efficient and have larger capacity and fancy electronic controls. But the basic washing machine concept has already permeated the United States. This is about all we’re going to get, folks, unless you want to place bets on Artificial Intelligence, which Gordon does not.
The Rise and Fall of American Growth is at once uplifting and sobering. Most Americans born in the first half of the twentieth century witnessed unprecedented improvement in their standard of living over the course of their lives. But Gordon is not sanguine about the future. It seems highly unlikely that, as a society, we’ll implement the policy changes needed to sustain growth and avoid stagnation.
There’s a lot of repetition in this book, as Gordon hammers his thesis home. So, unless you’re a data nerd, I suggest that you read it selectively:
- Read the introduction to the book to get an overview
- Pick the chapters that interest you—food/clothing, transportation, health care, whatever. Read these chapters in detail and enjoy all the startling nuggets of technological information.
- Skip all the chapter introductions but skim the chapter conclusions.
- Read Chapter 18, “Inequality and the Other Headwinds: Long-Run American Economic Growth Slows to a Crawl.”
- Read the Postscript, “America’s Growth Achievement and the Path Ahead.”
As I plowed through The Rise and Fall of American Growth, I kept trying to figure out why my grandparents’ farmhouse was still so primitive in 1960. Was the soil on their farm inferior? No, it was rich flatland. Were they buffeted by extreme weather? No, Ohio has a more temperate climate than that on the Great Plains. Were these ancestors of mine lazy or stupid? No, they were a hardworking, successful farming family that valued education.
I think that my grandparents, having survived the Great Depression and two world wars, were frugal people. Instead of upgrading their home, they chose to put their resources into farm machinery with internal combustion engines. One result was that the six sons in the family all became mechanical wizards, and three of them made their adult careers in engineering. The lack of household amenities certainly loaded more domestic burdens onto my grandmother and her one daughter. But there were other investments. That farmhouse with no indoor toilet boasted a magnificent piano, a foot-pump organ, and several smaller musical instruments, including my Dad’s trumpet. Grandma’s piano sits in my own living room today. And as a child visiting their farmstead, I got a glimpse into a much earlier era of American history.