Books to Get You Thinking
As the United States and nations across the globe continue to struggle under stagnating rates of economic growth, unemployment and rising inequalities, attention is turning towards analyzing historical trends of income, employment and structural growth of economies in search of answers that might provide us with economic remedies and policy tools that could help break the cycle. Two recent outstanding books, the first authored by Robert Gordon and the second written by Peter Lindert and Jeffrey Williamson, do an excellent job of tracking down output, income levels and income distribution as well as patterns of economic growth dating back to the nineteenth century. Fundamental differences in these economic variables are detected when compared to current day economic conditions, this being attributed to the different stage in the development cycle that most countries find themselves in, as well as to steadily rising income inequalities that have resulted from technology development and globalization. The third book in the selection, penned by Alec Ross, looks at technology trends in the coming decades and provides us with some prescriptions for combating the economic challenges ahead.
The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War by Robert Gordon
Robert Gordon is a distinguished economic historian and macroeconomist teaching at Northwestern University. Using exhaustive data spanning over a century, he performs a brilliant study and analysis of income, prices and standards of living over the decades, linking them with the technological inventions and innovations of the times. The central argument of the book is that America is entering into a new age of stagnation, leaving behind the preceding golden age of growth. Gordon’s study highlights that, centuries ago, people lived in a harsh environment depending on whale oil and kerosene for light, water from wells and horses for transport. With no antibiotics, infant mortality was high and life expectancy hovered around 50 years for adults. Things took a dramatic turn with transformative inventions between the period 1870 and 1940. During this era, the development of electricity, the internal combustion engine, communications, plumbing and sanitation infrastructure, and the chemical and pharmaceutical industries completely reshaped the economic landscape, leading to surging productivity levels and robust economic growth. However, in present times, the information technology revolution and growth in modern telecommunications is not likely to generate the kind of soaring economic growth rates that America witnessed during the century following 1870. Despite the changes that new breakthroughs in artificial intelligence and the Internet of things will bring about in the everyday life of people, the levels of economic productivity are not likely to rise and the increasing inequality accompanying such changes will stifle growth in median disposable income over the next generation.
Unequal Gains: American Growth and Inequality since 1700 by Peter Lindert and Jeffrey Williamson
A detailed and lucid statistical analysis of the nature and pattern of income distribution in the United States dating from colonial times makes this book an invaluable contribution to understanding the causes and ramifications of the enormous financial and social inequalities that have accompanied long term growth in the country. Using a novel analysis based on studying income levels rather than production or consumption levels, Peter Lindert from the University of California, Davis, and Jeffrey Williamson from Harvard uncover startling new findings and valuable perspectives on how both market and political factors have influenced the distribution of income and gains from economic development. Tracing income history reveals a steady rise in income inequality without an increase in per capita income, while at the same time there has been an absence of a political will to transfer income from the rich to the poor. Varied forces, including political shocks and wars, growth of the labor force, changing labor skills, competition from imports, technology changes biased in favor of the skilled, as well as the state of the financial sector, have historically shaped rising income inequalities over the years. Another significant finding of the book shows the absence of a positive correlation between equalizing incomes and a decrease in overall income at the macro level—a fact that should encourage introducing policies that seek to address the widening income inequalities.
The Industries of the Future by Alec Ross
A fascinating glimpse into the future—a world we can expect to see twenty years from now—authored by Alec Ross, a technology policy expert who skillfully weaves economic analysis with fascinating stories from his firsthand experience serving as Senior Advisor for Innovation to the Secretary of State. Ross travelled widely, witnessing innovations and changes springing up everywhere. The older industrial economy has been transformed by technology, automation and globalization, leading to spectacular growth in many rising nations but, at the same time, has brought with it displacement and loss of jobs in traditional industries. The wealth, welfare and benefits from such innovations have not accrued uniformly and have disrupted entire occupations and existing socioeconomic and geopolitical frameworks, changing the way people live their lives. Fast forward to the future—Ross examines the transformative changes likely to follow the breakthrough developments that are in the works in diverse areas as big data and information technology, robotics, life sciences, finance and agriculture. Ross stresses the importance of critical changes in education that must take place to meet the challenges posed by the increasingly different nature of employment that will inevitably follow the commercialization of new technology and the industries they spawn. It is imperative that the next generation get ready with interdisciplinary skills that make them competitive for the new jobs and opportunities of the future.
Robert Gordon is a distinguished economic historian and macroeconomist teaching at Northwestern University. Using exhaustive data spanning over a century, he performs a brilliant study and analysis of income, prices and standards of living over the decades, linking them with the technological inventions and innovations of the times. The central argument of the book is that America is entering into a new age of stagnation, leaving behind the preceding golden age of growth. Gordon’s study highlights that, centuries ago, people lived in a harsh environment depending on whale oil and kerosene for light, water from wells and horses for transport. With no antibiotics, infant mortality was high and life expectancy hovered around 50 years for adults. Things took a dramatic turn with transformative inventions between the period 1870 and 1940. During this era, the development of electricity, the internal combustion engine, communications, plumbing and sanitation infrastructure, and the chemical and pharmaceutical industries completely reshaped the economic landscape, leading to surging productivity levels and robust economic growth. However, in present times, the information technology revolution and growth in modern telecommunications is not likely to generate the kind of soaring economic growth rates that America witnessed during the century following 1870. Despite the changes that new breakthroughs in artificial intelligence and the Internet of things will bring about in the everyday life of people, the levels of economic productivity are not likely to rise and the increasing inequality accompanying such changes will stifle growth in median disposable income over the next generation.
A detailed and lucid statistical analysis of the nature and pattern of income distribution in the United States dating from colonial times makes this book an invaluable contribution to understanding the causes and ramifications of the enormous financial and social inequalities that have accompanied long term growth in the country. Using a novel analysis based on studying income levels rather than production or consumption levels, Peter Lindert from the University of California, Davis, and Jeffrey Williamson from Harvard uncover startling new findings and valuable perspectives on how both market and political factors have influenced the distribution of income and gains from economic development. Tracing income history reveals a steady rise in income inequality without an increase in per capita income, while at the same time there has been an absence of a political will to transfer income from the rich to the poor. Varied forces, including political shocks and wars, growth of the labor force, changing labor skills, competition from imports, technology changes biased in favor of the skilled, as well as the state of the financial sector, have historically shaped rising income inequalities over the years. Another significant finding of the book shows the absence of a positive correlation between equalizing incomes and a decrease in overall income at the macro level—a fact that should encourage introducing policies that seek to address the widening income inequalities.
A fascinating glimpse into the future—a world we can expect to see twenty years from now—authored by Alec Ross, a technology policy expert who skillfully weaves economic analysis with fascinating stories from his firsthand experience serving as Senior Advisor for Innovation to the Secretary of State. Ross travelled widely, witnessing innovations and changes springing up everywhere. The older industrial economy has been transformed by technology, automation and globalization, leading to spectacular growth in many rising nations but, at the same time, has brought with it displacement and loss of jobs in traditional industries. The wealth, welfare and benefits from such innovations have not accrued uniformly and have disrupted entire occupations and existing socioeconomic and geopolitical frameworks, changing the way people live their lives. Fast forward to the future—Ross examines the transformative changes likely to follow the breakthrough developments that are in the works in diverse areas as big data and information technology, robotics, life sciences, finance and agriculture. Ross stresses the importance of critical changes in education that must take place to meet the challenges posed by the increasingly different nature of employment that will inevitably follow the commercialization of new technology and the industries they spawn. It is imperative that the next generation get ready with interdisciplinary skills that make them competitive for the new jobs and opportunities of the future.
-Nita Mathur
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