Now, think about doing the calculation over a longer period. What is the value of a smart phone produced in 2024 compared with a smart phone produced in 1974, when the “productivity slowdown” supposedly began?
It’s a trick question. There were no smart phones in 1974. There was no general public access to the Internet in 1974. In America, telephony was still an AT&T monopoly in 1974. No one made video calls in 1974. You had to pay for long-distance phone calls by the minute in 1974.
The term “productivity slowdown” is used to claim that the rise in living standards was higher between 1924 and 1974 than it was between 1974 and 2024. This may be true in some sense, but to me it is an apples-and-oranges comparison.
Between 1924 and 1974, many more households acquired automobiles, washing machines, and air conditioners. In 1924, radio was novel and television was nonexistent. By 1974, everyone had a radio and a TV.
The improvements from 1974 to 2024 were not so much in quantities of appliances but in qualitative factors that are more difficult to measure. Better health, less pain and discomfort, more variety.
Today, many fewer people work in jobs that expose them to danger and long-term disability. People spend much more of their lives out of the work force—they spend more years in school and more years in retirement. The health of people over the age of 65 is far better than what it was fifty years ago.
Johan Norberg explores the causes of human progress. Three slices:
To make progress, we must do something differently from what we did yesterday, and we must do it faster, better, or with less effort. To accomplish that, we innovate, and we imitate. That takes a certain openness to surprises, and that openness is rare. It is difficult to come up with something that never existed. It’s also dangerous, since most innovations fail.
If you live close to subsistence level, you don’t have a margin for error. So, if someone wants to hunt in a new way or experiment with a new crop, it is not necessarily popular. There is a reason why most historical societies that came up with a way of sustaining themselves tried to stick to that recipe and considered innovators troublemakers.
That means that innovation depended on stumbling on a new way of doing things. Someone came up with a new and better tool or method by accident or by imitating nature or another tribe. But when populations were small, few people accidentally came across a great new way of doing things, and there were few people to imitate. In other words, there is a limit to what can be done in small, isolated societies.
It took greater population density and links to other groups to get the process of innovation and specialization going. Cultures at the crossroads between different civilizations and traditions were exposed to other ways of life as merchants, migrants, and military moved around. By combining different ideas, they set the process of innovation in motion. Ideas started having sex with each other, in the British writer Matt Ridley’s memorable phrase.
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Economic, intellectual, and political elites in every society have built their power on specific methods of production and a certain set of mythologies and ideas. The vested interests have an incentive to stop or at least control innovations that risk upsetting the status quo. They try to reimpose orthodoxies and reduce the potential for surprises, and sooner or later they win, the efflorescence is stamped out, and society reverts to the long stagnation.
An escape from stagnation requires a culture of optimism and progress to justify and encourage innovation, and it takes a particular politico-economic system to give people the freedom to engage in the continuous creation of novelty.
Luckily, this culture emerged forcefully in western Europe in the 17th and 18th centuries, in the form of the Enlightenment, which replaced superstition and authority with the ideals of reason, science, and humanism, as the Canadian psychologist Steven Pinker summarizes it, and classical liberalism, which removed political barriers to thought, debate, innovation, and trade.
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“It may be that the Enlightenment has ‘tried’ to happen countless times,” writes the British physicist David Deutsch in The Beginning of Infinity. And therefore, it puts our own lucky escape into stark perspective: All previous efforts were cut short, “always snuffed out, usually without a trace. Except this once.”
It should make us deeply grateful that we are among the few who happen to be born in the only era of self-sustained, global progress. But it should also make us focused and combative. History teaches us that progress is not automatic. It only happened because people fought hard for it and for the system of liberty that made it possible.
If we want to remain the one great exception to history’s rule of oppression and stagnation, every new generation must find it within itself the desire to make the world safe for progress.
“The world’s poor get richer.”
GMU Econ alum Romina Boccia reports on the dire fiscal condition of Social Security.
GMU Econ alum David Hebert identifies a likely cases of cost-free ideological posturing.
Here’s David Henderson on Jonathan Lipow’s defense of economics.
