Are America’s Best Years Of Innovation Over? by [email protected]

According to economist Robert Gordon, today’s innovations might dazzle, but they don’t transform everyday lives in the way that the internal combustion engine, the refrigerator, air conditioning and the elevator transformed the fabric of America from 1870 to 1970. This article reviews Gordon’s new book The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War, which explores a time period that he says included unprecedented advances in productivity and quality of life that are unlikely to be repeated.

In 1970 Alvin Toffler published Future Shock, a book about a “fire storm of change” sweeping Western industrialized society with “waves of ever accelerating speed and unprecedented impact.” In this and subsequent books, he writes breathlessly about the “quantum leaps” of innovation and transformation we should all brace ourselves for; and a substantial cottage industry of futurist writers continues that tradition. Prominent among them is the MIT-trained author and scientist Ray Kurzweil, who posits a “law of accelerating returns” in information-related technology and has most recently written about a union of human and machine he calls The Singularity.

Economist Robert Gordon proposes we view 1970 as a time when change in fact began to slow down, to decelerate. He has for years expressed skepticism at the speculations of those he calls “techno-optimists.” It’s not that he dismisses today’s technological innovations as unimpressive or unimportant. But however much they might dazzle, they don’t transform everyday lives in the way that, say, the internal combustion engine, the refrigerator, and the elevator transformed the fabric of post-Civil War America. His new book, The Rise and Fall of American Growth, is a deep dive into the past with an eye to the future. His central questions are: How and when did American productivity and standard of life experience such profound gains in the last century and a half? And what does that tell us about prospects for the future?

The Bad Old Days: Daily Life in 1870

Gordon’s central thesis is that the hundred-year period from 1870 to 1970 is a “special century” that is unprecedented and unlikely to be repeated in its breadth and depth of change. To make that case, he devotes the book’s opening chapters to a close examination of his baseline: not just the numbers cataloguing the production and consumption of American society in the wake of the Civil War, but “the small details of everyday life and work.”

[drizzle]One of the things that inspired him to try to capture the tedium, drudgery and danger of nineteenth century life in the United States was a book he stumbled on called The Bad Old Days: They Really Were Terrible. In 1869, a ceremonial golden spike was driven in Utah to create the first transcontinental railroad, symbolically ushering in a new era of modernity. Many of the inventions and innovations that would transform daily life were only a decade or two away. Yet that was no comfort to the men, women and children who endured a standard of living primitive by contemporary standards.

“Gordon’s central thesis is that the hundred-year period from 1870 to 1970 is a ‘special century’ that is unprecedented and unlikely to be repeated in its breadth and depth of change.”

Louis Pasteur was only just beginning to develop his germ theory of disease, and a staggering number of children died during their first year. Industrial accidents were common, life expectancy was a mere 45 years, and (for reasons not entirely understood) the average height of native-born American males actually declined almost two inches from 1830 to 1890. Edison didn’t demonstrate his first electric light bulb until 1879, so homes were lit with candles and kerosene lamps, creating indoor pollution and considerable hazard — thousands died every year from lamp accidents. In the absence of plumbing, toting water for washing and cooking was a time-consuming and laborious task.

Innovation – The Great Leap Forward

The closing decades of the nineteenth century produced a series of innovations that would completely transform American life. Foremost amongst these was electricity, and the refinement of the internal combustion engine. It took a while for both to become economically viable and widespread, and Gordon points to the years from 1910 to 1940 as the most intensive period of change.

Cities experienced the most rapid and striking change, propelled by a very particular synergy of electricity and the automobile. “In the seven decades between 1870 and 1940, the urban dwelling was utterly transformed from a primitive state hard to imagine to a level, in 1940, surprisingly similar to the way we live today.”

Some might wax nostalgic about the horse and buggy days, but the use of horses for urban transportation created serious health problems — generating five to ten tons of manure per square mile. Cars and electric street cars changed all that, and allowed for a different type of urban development. Electricity remade the urban household, powered industry, and, through the elevator, enabled buildings to extend vertically, changing the very nature of land use and creating the urban density we take for granted today.

In 1900, 35% of the population still lived on farms, and the transformation of rural America was slower in some ways, but no less fundamental. Life in the farmhouse may not have been radically altered, but the nature of work was. Over a period of just 15 years, U.S. farms were equipped with 370,000 trucks, 450,000 tractors, and over 4 million automobiles. In Iowa, 93% of farmers owned cars by 1926, a higher rate than in cities.

Home life in America was “revolutionized” and productivity in the workplace “exploded.” Yet the most profound progress made during this period may have been in the form of reduced mortality rates, especially among infants. In the first half of the twentieth century, life expectancy improved at an annual rate twice as high as in the last half. Although medical care did witness important improvements, this startling progress was due more to environmental changes brought about by electricity, indoor plumbing and running water.

“No other era in human history, either before or since,” Gordon sums up, “combined so many elements in which the standard of living increased as quickly and in which the human condition was transformed so completely.”

Measuring Progress

One of the book’s ongoing projects is the challenge of quantifying the progress of The Great Leap Forward in fresh ways, and of capturing that which can’t be quantified. A key measure in Gordon’s argument is Total Factor Productivity (TFP) — a tricky one in that it is not so much measured as inferred. It is the X-factor or residual that remains when total economic output is divided by a weighted combination of labor and capital inputs. (It is credited to economist Robert Solow, and thus sometimes referred to as “Solow’s residual.”) It is in essence a kind of catch-all for intangibles driving economic growth — including technology, innovation and knowledge. Because TFP comprises factors that cannot be quantified individually, it has been the subject of some criticism and debate.

“The closing decades of the nineteenth century produced a series of innovations that would completely transform American life. Foremost amongst these was electricity, and the refinement of the internal combustion engine.”

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