From Colonial America to this era of Trump, Greenspan sees “creative destruction” at work. Referencing Joseph Schumpeter’s construct, Greenspan believes capitalism is never stable. It is constantly evolving, creating the new, destroying the old. America is successful because it has been good with “creation" and ready to take on the “destruction” part as well, whereas Europe has not. Greenspan believes America is a “caravan” economy compared to Europe’s “citadel"; he sees Americans constantly exploring and the Europeans protecting. This, to Greenspan, accounts for the difference in productivity gains and hence superior GDP and personal income growth in America. He cited the Pacific Railroads, Standard Oil, US Steel, Sears Roebuck, Ford exemplars of the earlier era and the modern day examples include Google, Microsoft, Apple, Amazon and Tesla.
Greenspan sees this happy confluence of events rapidly coming to an end because of slowing productivity gain in the last fifteen years. America is entering a stagnation phase, haunted, in part, by over-regulation and entitlement. Given the demographics, this will get much worse during the coming decades. Greenspan sees the political consequence of this pain of “destruction” and how it is affecting less educated white men making up Trump’s base. The post-WWII GI Bill and expanding economy enabled returning young men to move to the suburbs to build families and careers during the sixties and seventies. The impact of global competition, massive entry of women into the labor force, and information technology caused widespread dislocation among the white working class. Greenspan characterizes this “Death From Despair” common among the unemployed. “Nonwork often goes along with a life of petty crime and drug addiction,” opioids and meth in particular.
Greenspan proposes (1) deregulation, (2) restructure entitlement benefits and (3) raise capital reserve requirements in banks to reduce systemic risks. Given the political climate, these will take years to pull off. Concurrently, we need to seriously look at the impact of machine learning and robotics on employment. Instead of focusing just on Medicare Medicaid and Social Security, we need to understand the cost of universal income and potential funding mechanism. The world is radically changing and we need to be ready.
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This should replace most US history textbooks
Really interesting book throughout, it gives you the extremely detailed view of the economic history of the US (which to a good degree IS the history of the US, as the book makes abundantly clear).It is not for the faint of heart, this reads more like a college level history textbook as the authors offer great evidence and statistics to support the arguments being made and the narratives being argued.Despite the hard read I, a not infrequent reader about US current affairs and history, learned a great deal and developed a new perspective on where we are today and the historical forces that shaped our history.
