The View | The rise and fall of American economic growth
The arrivals of economic populists Trump and Sanders on the US political scene lies in stagnant economic growth after 1970 and rising income and wealth inequality after 1980
Why Donald Trump? Why, for that matter, Bernie Sanders? Why did two economic populists from outside the American political mainstream set the tone for the recent presidential election?
Part of the answer lies in stagnant economic growth (after 1970) and rising income and wealth inequality (after 1980).
And those two trends are painstakingly outlined in a latest book on US economic history.
Robert Gordon’s The Rise and Fall of American Growth (2016) shows that US labour productivity was at its peak during 1920-70, but fell off significantly during 1970-2014, despite the information technology revolution.
The fast growth of labour productivity from 1920 to 1970, at 2.82 per cent per annum compared with periods before (of 1.50 per cent per annum) and after (of 1.62 per cent per annum), is due mainly to total factor productivity, which represents innovation and technical change.
Gordon tells us economic progress occurs much more rapidly in some eras than in others. There was virtually no economic growth for millennia until 1770, only slow growth in the transition century before 1870, and remarkably rapid growth in the special century of the second industrial revolution from 1870 to 1970.
