We will start where we have been before, but are going to wind our way toward other subjects. We may ramble a bit. Eventually we will try and close the loop on diminishing returns on the industrial revolution, and our current narcissism. It could be said in two sentences (to paraphrase Freya) but there would be no supporting information and links.
Tyler Cowen has had out an e-book, The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. I have mentioned on an earlier post. In it he discusses U.S. income stagnation since the 1970s and attributes it to a deceleration of scientific and technical advances within the U.S. economy.
He commented on Alexander J. Fields work on Total Factor Productivity (TFP) which is total output not caused by inputs. So if you put 1 in, and get 2 out, you have TFP. Technology growth and efficiency are two of the biggest factors in TFP.
TFP growth virtually disappeared in the US between 1973 and 1995. TFP growth was in fact quite robust between the end of the Civil War and 1906.
In a study I found, also by Fields, The Most Technologically Progressive Decade of the Century he commented further:
Because of the Depression’s place in both the popular and academic imagination, and the repeated and justifiable emphasis on output that was not produced, income that was not earned, and expenditure that did not take place, it will seem startling to propose the following hypothesis: the years 1929–1941 were, in the aggregate, the most technologically progressive of any comparable period in U.S. economic history.
[D]uring this period businesses and government contractors implemented or adopted on a more widespread basis a wide range of new technologies and practices, resulting in the highest rate of measured peacetime peak-to-peak multifactor productivity growth in the century, and secondly, that the Depression years produced advances that replenished and expanded the larder of unexploited or only partially exploited techniques, thus providing the basis for much of the labor and multifactor productivity improvement of the 1950’s and 1960’s.
There is now an emerging consensus that, looking back over the course of U.S. history, the period between roughly 1905 and 1966 experienced exceptionally high rates of multifactor productivity growth, substantially higher than those evidenced in the decades preceding and following, when a much higher fraction of labor productivity growth is to be attributed simply to capital deepening (Abramovitz and David, 1999, 2000; Gordon, 1999, 2000a, b, c).
But we are an optimistic crowd. In the past, when you went in debt it paid itself off (we will pretend that the 1920s consumer finance bubble occurred), and our government will go on a huge spending binge and continually devalue the dollar. The long-serving, conqueror of inflation, Greenspan, will leave the dollar at half its value as when he started his term. Eventually we will begin using our homes as piggy banks.
Business drives forward on this spending. It has its usual cycles, but it keeps churning along. But while the children are doing well, most of them will notice that it is not as easy as it was for their post war parents. You went to school, but the automatic 30 year career track was a lot harder to achieve. Companies became much quicker to layoff, and if you were laid off you had a very hard time ever recovering those wages. If you were union labor, a lot of your work went to the non-union, low wage south, or eventually, overseas.
But you are within a very optimistic society. If you are not an optimist, you are bad. One of Reagan’s (and Rush Limbaugh’s) most effective attacks against the Liberals was that they were a bunch of whiny losers. That the Democrats presided over much of the growth period (and in fairness some of the downturns as well) was beside the point. You needed to think positively.
So in a society where success is difficult, you begin to value the feelings of success, the self esteem, more highly then the success. If you cannot be successful, at least you can feel good about yourself.
And thus we train ourselves a wonderful group of high self esteem narcissists.
I suppose you could view it as a blessing. If the whole edifice comes crashing down, they may not do much about it, but they will feel good about themselves.