We're going through a tough stretch right now. But my best guess is that there are two big culprits here, and neither one of them is a fundamental slowdown in innovation. The first is that, even after 30 years, we still haven't figured out how to effectively manage and regulate the post-union, post-globalization, post-Bretton Woods economy. This is a relatively short-term kind of problem, but there are still a lot of bumps left on that road.
(Emphasis supplied.) First, to say we have not figured out how to effectively manage the economy is to misstate the problem. We know how, but we do not. Why? Joe Stiglitz explains (h/t MoBlue):
[A] modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.
[. . . O]ne big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
(Emphasis supplied.)The gains of innovation of the previous half century have been reversed by retrogade public policy. Moreover, these reverse have stifled new innovation.
Drum notes that much innovation now is geared towards leisure and luxury. This is not surprising in that that is where the money is (to borrow from Willie Sutton.)
The gains in innovation and productivity have been superseded by the retrogression in public policy.
Our elites are utter failures.
Speaking for me only
