The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War

"This economic history, exploring the drivers of American prosperity and stagnation, fits Patrick Collison's interest in long-term societal progress and the forces shaping economic growth. It aligns with his work at Stripe and broader intellectual pursuits."

"Yes. There’s been a long debate in economics, especially since the crisis, around secular stagnation: this low growth world that we’re living in, is it permanent? Is there something structurally that’s going on that has made our economies less productive or is it just that governments aren’t spending enough money? Robert Gordon has become associated with the view that technology is not really giving us the bang for its buck that it used to. In the past, you had really transforming technologies—like the flushing toilet—which did a lot more for mankind and economic growth worldwide than Facebook. “In the past, you had really transforming technologies—like the flushing toilet—which did a lot more for mankind and economic growth worldwide than Facebook.” In a way, his argument has been taken as technological pessimism. It’s been oversimplified in the way he’s talking about us reaching the end of growth. When you read this book, what he says is more nuanced than that. But what’s really interesting, why this book is really a fantastic read, is the way he goes through economic history, and points to how all the improvements—like the flushing toilet and having a washing machine in the house—changed people’s lives without really being reflected in economic statistics. For me, the biggest takeaway from it is that now, when we’re so mesmerized by our own technological improvements and how our world has changed—how could we live before internet and smartphones—he shows really clearly, or at least makes a convincing case, that the living improvements and changes were much greater in the past. There’s nothing particularly special about what’s happening with the internet now. “There’s nothing particularly special about what’s happening with the internet now” If you want to read an economic history—certainly of America’s economy but also of developed economies over the last 150 years—he has lots of wonderful examples. He writes very well for an economist. It’s a good book. Yes, it genuinely is. I always think the most readable and probably the most useful economics is economic history and this book makes that case extremely well."

"This is a fantastic book. It deserves the word magisterial — it’s a big book and it’s going to be one of the reference books about American economic history. The first half is the history. It’s a survey of late 19th century America onwards and is absolutely peerless as an analysis, focusing on innovation, structural change and the political and social changes that go alongside that. It’s also a fantastic read, so the pages zip by. The second half takes what you learn from the history and applies it to thinking about what’s happening now and in the future. Get the weekly Five Books newsletter Robert Gordon is well known as one of the proponents of ‘secular stagnation.’ This is the idea that we’ve already enjoyed the best fruits of technological innovations and growth. He points to things like electricity, the arrival of mass entertainment, public health, improvements in the way houses were built and clean water in the home as being so fundamental that we’re never going to get those same kinds of welfare gains again. That’s behind us, and we’ve got to face up to much slower growth in future. The innovations he talks about happening now are frivolous things: Think about Pokémon Go — is that really a life-changing innovation? Obviously not. This is where I part company with him. It’s obviously true that you’re never going to get those public health gains again. That is clearly absolutely transformative. But I think he underestimates the potential of some new technologies to be transformative as well. If we have properly personalized cancer medications, or Alzheimer’s treatments, for example. That’s perhaps not going to change life expectancy, but the quality of life at the end of life, which would be amazing. If there is really the possibility of clean, low carbon emission energy coming along, that will transform our potential on this planet. So I think he underestimates those sorts of opportunities from technology. “There have been households where people have either not been working or in horrible jobs for two to three generations now.” Having said that, there are obviously headwinds: demographic change and addressing these distributional issues that have cropped up in votes on both sides of the Atlantic. I don’t want to say, ‘What nonsense! There’s going to be massive growth, let’s be techno-optimists about it!’ — because the social challenges of technology are huge. But the fact that it’s different and that you can’t repeat the old doesn’t mean you aren’t going to get amazing things still happening in the future. It’s using history as a way of thinking about the present and about these big-picture structural changes. The other great thing about this book is that Robert Gordon is a brilliant, technical economist. To see someone of that stature in the profession saying, ‘You know what, economic history is really important’ is very healthy for economics. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . When I was a graduate student, we had compulsory economic history courses. But I’m old and that dropped out of graduate programmes soon after. It really ought to get back in there. A good thing about technological revolutions is that, as in any long-term trends, you have to look back at history. Yes, not anchoring it to the real world in some way. Economics is like many other historical sciences. Like geology or evolutionary biology, it’s hard to do experiments. You’re always looking at historical evidence to provide those experiments for you, especially in macroeconomics that’s about these aggregates and where you’ve got very little information to go on — because you can’t replay history over and over again, as you can in a chemistry lab. Yes, you can do them for small things. You can do them for what health intervention will make mothers get their children vaccinated, or, ‘Is it better to spend your money on mosquito nets or on some other bit of aid spending?’ That’s where they have started to be used quite substantially. “You can’t rerun recessions to see what happens if you do something differently.”” Or in bits of social policy in all kinds of countries. You can do experiments with different groups to see which kind of intervention might work, or you can do it for a short period of time for a particular policy. They are being used much, much more in economics. But for the macroeconomy, you can’t rerun recessions to see what happens if you do something differently…"

"My last book follows on directly from Brad’s (though it was published earlier) and is another way of telling the same story, but it’s more technical. It’s built around specific revolutionary developments. What were the great technological transformations that led to this extraordinary explosion? Bob Gordon, who is also an American economist—he’s at Northwestern University—has done this wonderful history, which talks about the range of technological transformations of the late 19th and early 20th centuries. Electricity was one of the most important. There was the internal combustion engine, which gave us motorcars and civil aviation (which we now think are pretty horrifying). There was universal sanitation and I think people should understand how transformative that was. Clean running water is, I think, perhaps the most important innovation in the history of urbanized humanity. There was the chemical industry, which among other things meant we could properly package food. Along with refrigerators and electricity, that meant we wouldn’t need to eat contaminated food again. We tend to forget that our great-grandparents routinely got fantastically ill and died from unpasteurized milk—pasteurization being another great invention of this period, by the way. Then Robert explains how this led to urbanization, and so forth. A big part of his story is that these are one-off transformations. For example, we’ve got much closer to the longest it seems easy for us to live. Life expectancy rises have slowed, in fact, in many countries like the UK and America, they’ve stopped. There are many reasons for that, and it’s partly that we haven’t done as well as we could. But one of the reasons is that we’re getting much closer to the limit. Now people are thinking about whether we can re-engineer the human genome to live for 200 or 300 years. That’s a much bigger project. But rising life expectancy may be getting to as far as we can get. Similarly, maybe most of the machinery that can really help us we’ve got already. Some of it turns out to have difficulties—like the car—so we’ve got to change that. So maybe we’re moving to a world which is post-growth. That fits in with Brad’s argument and it’s also a bit in my book, though people disagree. I’m a bit more optimistic, but I may be wrong. But if we’re in a post-growth world—or at least a completely different world where all the growth is in IT and AI —a lot of things we’ve taken for granted about how the economy interacts with politics and society may no longer be relevant. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . My view, and the crucial point in my book, is that modern democracy and modern society came out of the Industrial Revolution and this transformation of our economies that Brad and Bob are writing about, what’s sometimes called the ‘Second Industrial Revolution’. That’s what created these new social forces and ways of living that led to the demand for an open and democratic society as against the hierarchical, aristocratic, rentier societies of the 16th, 17th, and 18th centuries and before. These books are profound explorations of the great transformation of the last 150 to 200 years, and put forward pretty credible pessimism about whether it will continue. I think that for many people who are thinking about the future, it’s really important to confront those questions. Some people welcome it or say, ‘This is the way to lead a more natural, healthy, ecologically appropriate life.’ But you have to ask yourself—I do in my book—if we try to make that shift away from industrial society, what might we lose in the process? How many of the gains we achieved in political and social life will be reversed? I would argue, for example, that the most important change of my lifetime, the transformation of the role of women in society, is related to those changes. In America, we’re beginning to see a backlash. It’s very disturbing and may be related to what’s happening in the economy. So these are big subjects, which people should read about. None of these books I’m recommending require technical economics. There’s no math. They’re stories. But they’re important stories, and they’re stories that I am interested in. They’re open-ended. We don’t know what the answers are, but I think people will find these books interesting."