Why America's growth is slowing, and a solution

Summary: The 21st century holds many economic challenges for the world. Rivals (eg, China). The robot 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?

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.

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 (by 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.

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 book, War 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.

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

(a) Posts about growth: