The United States continues to produce new jobs because our economy is dynamic. A dynamic economy that is allowed to adjust to changes in prices, incomes, and technology will produce new firms, new products, and new jobs. Forty years ago the economist Joseph Schumpeter described the capitalist engine of growth as a process of creative destruction. He argued that this machine for improving the living standard of everyone is durable and self-sustaining, but he warned that it could be destroyed “with sufficient help from the public sector.” This will surely happen if the government bows to special interests and protects them from competition.
DBx: Indeed so.
I’m a time-traveler from 1987, the year the above words were published. I can attest that in 1987 there was no shortage of people who dismissed as utopian, or at least as hopelessly unrealistic, optimistic claims such as expressed here by Dan Oliver. But ponder what has happened over the course of the 38 years that it took me to travel from then to now.
In 1987 the Internet was not yet a commercial thing, and the term “web designers” referred only to creatures with eight legs. Google was still 11 years away from being born, and Amazon 7 years in the future. There were no smartphones (although a few wealthy people did have “car phones”). Desktop computers were just then becoming popular and widely used, but these devices were to the laptop computers of 2025 what Model Ts were to automobiles of 2025. (Indeed, the advances in automotive technology over the past 100 years, while enormous, was likely less than were the advances in computer technology over the past 38 years.)
Overnight delivery, while available, was still too costly to be regularly used by ordinary Americans.
Anyone in 1987 who asked to purchase “streaming music” would have been looked at with very funny stares.
Ride sharing was done overwhelmingly with family and friends and carpools; ride sharing as we know it in 2025 wasn’t even imaginable, and much less a thing.
The selection of beer was paltry; the quality of coffee bad.
No one was meeting together who were not face-to-face in the same room.
Almost no one used email (or had even heard of it).
In 1987, 17 percent of working Americans worked in manufacturing, and the unemployment rate was 6.2 percent. Today, 8 percent of working Americans work in manufacturing, and the unemployment rate is 4.2 percent. Industrial output today is 79 percent higher than in 1987, and industrial capacity is higher by 87 percent.
Those of us alive and aware in 1987 America were by no means poor, and we had no sense of being deprived. But, trust me, if any of us today were cast back to 1987 America, we would – and with good reason – feel ourselves to be poor and deprived. The reason is that, by the standards of 2025, all middle-income Americans were indeed poor and deprived.
The notion – peddled incessantly by pols and pundits on the left and right – that the U.S. economy has been decimated, if not destroyed, by trade and technological innovation simply will not withstand factual scrutiny. Nevertheless, this myth continues to be peddled because large numbers of Americans mysteriously wish to swallow this dangerous hallucinogen.
