The Gist: Much less than you’d think.
A review of The Rise and Fall of American Growth by Robert Gordon.
“Everything that can be invented has been invented.”
That’s a quote often apocryphally attributed to the head of the American patent office around 1900. Today, mentioning it is a way to smugly correct the misconceptions of the past as we enjoy the since-invented wonders of the present.
But what if it’s kind of true? What if we have invented, innovated, and adopted the relatively easy, big things – and what’s next is really hard? What if stagnancy is normal?
Figure 1. As you already suspected, the Segway represents humanity’s peak.
That’s the provocative argument of Robert J. Gordon in the Rise and Fall of American Growth, a book recommended to me by a friend working for Peter Thiel, the billionaire investor who has quipped that we wanted flying cars and got 140 characters.
To illustrate the point, let’s compare the average American families in the typical homes of 1820, of 1870, of 1970, of 2020.
Gordon argues that there really isn’t much of a difference between the average home of 1820 and 1870. Or, in fact, between the ordinary American home in 1820 and its Roman counterpart in 20 AD. “According to the great historian of economic growth, Angus Maddison, the annual rate of growth in the Western world from AD 1 to AD 1820 was a mere 0.06 percent per year, or 6 percent per century.” As Gordon vividly portrays it, “A newborn child in 1820 entered a world that was almost medieval: a dim world lit by candlelight, in which folk remedies treated health problems and in which travel was no faster than that possible by hoof or sail.” Or as the economist Steven Landsburg puts it even more starkly: “Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened.”
Figure 2. Landsburg first conceived this argument when he failed to do any of the readings for a history course that required class participation. Worried that any slip in his confidence would reveal his decision to spend the semester partying, he proceeded to dismiss the wheel, the Pyramids, the Bible, the aqueduct, Shakespeare until he exhausted his classmates and could slip back to the frat house.
By 1870, the Industrial Revolution was well under way in the workplace – but it was only just beginning to reach into the American home. Fully adopting its benefits, along with new great inventions, would take the next century. In the meanwhile, “a typical North Carolina housewife had to carry water 8 to 10 times each day. Washing, boiling, and rinsing a single load of laundry used about 50 gallons of water. Over the course of a year she walked 148 miles toting water and carried more than thirty-six tons of water… But that was not all the carrying that needed to be done. In 1870, the gas or electric stove had not been invented, so all cooking involved wood or coal. Fresh wood and/or coal had to be carried into the house—and spent ashes carried out… Keeping a fire burning all day required 50 pounds each day of coal or wood.”
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And yet carrying was hardly the end of her efforts! She had to make her family’s clothes because there was little shopping, not even by mail, which was not delivered to 75% of American homes. She had to diligently prepare her family’s meals, the components of which were inherently limited in variety: “fresh meat was unsafe, so the diet was a monotonous succession of salted pork and starchy foods. Unless home-grown, fruit was all but unavailable except during the summer months, and vegetables available in the winter were limited to a few root vegetables that could be stored.” She had to help with the hard labor of the farm she probably lived on. She had little source of entertainment, not even politics, which denied her the right to vote. And she had to not only suffer from an array of common deadly diseases but had to watch her many children suffer, and often die, of the same. In fact, she might not have lived as long as her grandmother: “there was no improvement in either mortality rates or life expectancy before 1870, and in most data series, there was no improvement before 1890. In 1870–79, male life expectancy at age 20 was identical to that in 1750–79, and that for females was actually lower.”
Over the next hundred years, American lives would be transformed as they were freed “from an unremitting daily grind of painful manual labor, household drudgery, darkness, isolation, and early death.” Only a few homes in 1870 had running water, sewage, or central heating – or could afford to pay people to take care of their basic human needs. No home in 1870 could have acquired electricity, a phone, a washing machine, a dryer, a vacuum cleaner, a refrigerator, a radio, or a television. By 1970, virtually every home that wanted everything above could get them. We went from traveling mostly by horse (which had a record travel speed of 9 MPH over a long distance using multiple rides and riders of low weight), occasionally by rail (then 25 MPH between cities, only 3 MPH in city public transport) to mostly by car (80 MPH on the open road), regularly by jet (575 MPH cruising). In the transition, our streets were cleared of manure, we built a national highway system along with other major infrastructure, and we also adopted an underappreciated form of transportation that transformed the shape of cities: the elevator. Dense, vertical buildings accommodated the massive shift from rural to urban living and from labor-intensive, often dangerous work to alternatives that were relatively cognitive and practically safe. Our food variety and quality, delivered from around the world in new supply chains, increased dramatically. We could enjoy, at the flip of a switch, the world’s most accomplished entertainers. And the list goes on and on, touching every element of how we spend our lives.
So, perhaps the change between the Roman of 20 AD and the American of 1870 is understated – paper and the printing press certainly opened up lots of opportunities, such that about 90% of white Americans then were literate. The compass and other improvements helped global navigation that helped the transport of goods and people. Gunpowder changed hunting and security in profound ways. But whatever improvements you might list, they pale in comparison to the single century change between 1870 and 1970. Those wonders, along with some subsequent ones, lead to a reasonable argument that to be middle class in America today is to be better off than the richest man in the world 100 years ago.
But now we get to Gordon’s most controversial claim: “There was virtually no economic growth for millennia until 1770, only slow growth in the transition century before 1870, remarkably rapid growth in the century ending in 1970, and slower growth since then…the economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could happen only once.” The freeing of hours associated with household chores could only happen once. The value of instant communication, not just for friendly human connection but for price information and other gigantic economic and scientific benefits, could only happen once. The urbanization of America could only happen once. After all the change, what was and is left?
Figure 4. Gordon is wrong, of course. After a nuclear apocalypse, we can repeat lots of these improvements!
Let’s return to our core comparison: how is the typical home different today than in 1970? The obvious answer, of course, features the internet. There are bigger and better televisions that play a greater variety of entertainment. Less obvious might be the microwave and air conditioning – both invented before 1970 but universally adopted in homes thereafter. And beyond that… Gordon argues not much. There have been some increases in fuel efficiency (and associated costs) but basically a light, a refrigerator, a washing machine, a vacuum, a faucet, a toilet basically does the same thing as it did in 1970. Food and clothing might be delivered more conveniently but are apparently not leaps ahead in quality. In some ways, we are actually getting worse. To fly from Los Angeles to New York got faster and faster every year from 1934 until 1958. Since then, every year it has gotten slower.
Figure 5. Unless you have one of those self-cleaning Japanese toilets with warmed seats, automatic flushing, self-opening lids with proximity sensors, water sprays, dryer, glow-in-the-dark armrests, deodorization, stool analysis, massage features, and Wifi and speakers for Spotify syncing or Netflix. Forget the Segway. Here is peak humanity.
You’re skeptical because the internet is gigantic. I get it and I agree. The most compelling response is that, as big as the internet and computing are, they’re not close to being as big as the difference between carrying water and fuel to your home for hours a day to cook and clean versus our modern conveniences, or the difference between traveling cross country by horse versus plane, or the difference between traveling many miles to mail your handwritten letter and waiting months for a response versus instant vocal connection. Gordon goes further. He concedes that electronic entertainment, communications, and information technology have seen big improvements since 1970 that no other sector has but says that total related business and household spending “amounted in 2014 to only about 7 percent of gross domestic product.” And he quotes Nobel Prize-winning economist Robert Solow’s quip that “You can see the computer age everywhere but in the productivity statistics.” Gordon’s explanation is that the improvements gained may actually be covering for slowdowns elsewhere and/or the mass availability of the internet (and therefore cat videos, social media, online shopping) has done as much to impede work as aid it. And Gordon also points to data that, even within this vaunted space, improvements are slowing down. Google’s chief economist “explained that technological change in desktop and laptop computers has come to a halt ‘because no one needs a superfast chip on their desktop,’ so research has shifted into trying to improve larger computers in data centers as well as battery life of portable devices.” In sum, “advances since 1970 have tended to be channeled into a narrow sphere of human activity having to do with entertainment, communications, and the collection and processing of information. For the rest of what humans care about—food, clothing, shelter, transportation, health, and working conditions both inside and outside the home—progress slowed down after 1970, both qualitatively and quantitatively.”
One item on that list we haven’t mentioned yet but you may be wondering about: health. Don’t we live longer, healthier lives? There’s a lot of misconception about life expectancy statistics of earlier ages because the numbers are driven down so much by child, and particularly infant, mortality. So, for context, more than 1 in 5 white infants died in 1890. Today, 1 in 200 do. The vast majority of that gain occurred before 1970. In fact, “the annual rate of improvement in life expectancy was twice as fast in the first half of the twentieth century as in the last half.” Some of the developments we’ve already discussed were perhaps the biggest contributors: running water, sewage, food variety, lack of universal horse manure. The development of germ theory, vaccines, and antibiotics like penicillin did much of the rest of the work: “more than 37 percent of deaths in 1900 were caused by infectious diseases, but by 1955, this had declined to less than 5 percent and to only 2 percent by 2009.” Once common terrors like polio had been virtually wiped out! Other big improvements – the x-ray, radiation, chemotherapy, birth control – were all invented before and in widespread use in or shortly after 1970. Since then, Gordon argues our progress in extending life has significantly slowed. For whatever reason, between 1960 and 2010, the FDA approved half as many new drugs as between 1940 and 1960. AIDS became a health crisis and got remarkable innovative treatment. Fewer people smoke, but more people overeat. The net is that an infant born in 1970 could expect to live over 25 years longer than an infant born in 1870. A child born today could expect to live an additional 10 years longer. But, at the other end of the spectrum, a 70 year old in 1970 could expect less than 5 years longer than a 70 year old would have in 1870. And a 70 year old today can expect to live an additional couple years. The main gains have been made in early life, not at the end, and they’ve been slowing down. Or, in other words, data suggests that you won’t live much longer than your grandfather, who survived childhood to sire your parent – but your kids have a much better chance of reaching adulthood than your grand uncles.
All of which comes down to a classic question: Do you think your children will be better off than you? For most of human history, the correct answer for most people would have been not really. From 1870 until 1970, the answer for most Americans was a resounding yes. “Historical research has shown that real output per person in Britain between 1300 and 1700 barely doubled in four centuries, in contrast to the experience of Americans in the twentieth century who enjoyed a doubling every 32 years.” In other words, “children had the expectation that on average they would be twice as well off at any given age as their parents had been at that age.” Gordon illustrates the slowdown: “In 2014, real GDP per person was $50,600. If productivity growth between 1970 and 2014 had been as rapid as between 1920 and 1970, real GDP per person for 2014 would instead have been $97,300, almost double the actual level.” Driving his book, Gordon says, is the fact that the most recent growth in output per person, measured at the time in 2014, was less than a quarter of the 20th century average – and had been on a decline, with the exception of the late 1990s, since 1970.
Ultimately, Gordon makes a strong argument that big, unprecedented improvements in American quality of life occurred between 1870 and 1970 and a provocative argument that growth has since slowed and may not recover. He doesn’t believe there’s any spur available to reinvigorate growth because he thinks that the major gains could only happen once – but is his a failure of imagination? As Henry Ford quipped, if he had asked what customers wanted, they would have said a faster horse.
Figure 6. Click here to acquire Robert Gordon’s Rise and Fall of American Growth (7/10). The heart of the book is deeply interesting but it is badly organized. Despite his explicit claim of the unique century of 1870-1970, he devotes half the book to the period between 1870 and 1940 and the other half to the time between 1940 and today. He also gets bogged down in telling stories behind inventions and other material less relevant to his central thesis, all of which probably inflates the number of pages by 2/3. Atop all that, his policy proposals call for a redistribution of wealth because the pie isn’t getting bigger faster and he has some questionable analysis of earlier government policy. But it does have notable statistics (nearly 90% of men over 65 and over 30% of boys 10-15 in 1870 were in the labor force) and interesting arguments (growth elsewhere in the world has been fueled by attempts to catch up to American standard of living). I’ll leave you with this analysis of fast food:
“Go into the kitchen of a Taco Bell today, and you’ll find a strong counterargument to any notion that the U.S. has lost its manufacturing edge. Every Taco Bell, McDonald’s, Wendy’s and Burger King is a little factory, with a manager who oversees three dozen workers, devises schedules and shifts, keeps track of inventory and the supply chain, supervises an assembly line churning out a quality-controlled, high-volume product and takes in revenue of $1 million to $3 million per year, all with customers who show up at the front end of the factory at all hours of the day to buy the product…. The big brands spend hundreds of millions and devote as much time to finding ways to shave seconds in the kitchen and drive-through as they do coming up with new menu items.”
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