More personally, friends and family accuse me of too much gloom and doom. That might also be true and if it is I want to make amends because things are really getting better.
In 1930, in the depths of the Depression in England, John Maynard Keynes wrote an essay "Economic Possibilities for Our Grandchildren". Keynes looked 100 years into the future and saw a richness and prosperity that others considered an impossible dream.
Keynes predicted that in 100 years the economy would grow by four to eight times and that the economic problem would be solved. The US economy proved him right! In the 70 years between 1930 and 2000, our economy grew about six times. In the next 20 years, to 2020, (using a growth rate of 3.5% per annum), total output and income will double again.
Think of that! In another 20 years, we will have twice the output that we have now. And we will do this with fewer workers and far more non-workers. It is really dumb to worry about Social Security and Medicare as though we could not support our aged and ill. You have to somehow claim that we cannot afford a 1% increase in the Social Security tax out of an average family income of $100,000, in today's money,
The marvelous machine that is capitalism has not run out of spark. We have just begun the incredible upswing that we are now in. It should continue at least through 2025 or 2030. Think of the period 1900 to 1930 when we went from a horse drawn world to a car in every garage. The same thing is happening again. Capitalism is putting in place an entirely new technology and social structure.
The world, and not just the United States, is in the midst of a technological, sociological and political restructuring, or revolution if you will, that nothing, not even the mess we have created in the Middle East, can stop. This long wave of growth will raise the standard of living across the globe leaving no area untouched.
This long wave of economic progress and decline had it's beginning in China and the Far East in the 1980s based on a technology we invented. The rest of the world caught the rising wave just before the millennium. That revolution is now clearly visible in places like Latin America, South Asia and even Africa.
This sort of long wave is driven by what the economist Joseph Schumpeter called a gale of innovation. The technological innovations of this wave are not just in quantum physics and the electronics that make it all possible but they are in computing and information, in biology and chemistry and in transportation and education. These changes are fundamental and pervasive.
The changes in technology and industry will force changes in the social structure of the surrounding economy. A new direction and a new generation of leaders in technology and industry are required to keep the process moving. And a redistribution of income and wealth has to occur when brand new industries are created.
All of these changes require costly adjustments. That is why we are struggling with high energy costs, the falling dollar and the increasing cost of environmental damage. But the concurrent cost-cutting benefits are so enormous that the adjustments are easily paid for.
The revolution in technology and the economy, in turn, require a new politics. Old politicians, the old industry leaders and those with vested interests will try to hold onto their power and control the new profits. In the end, they will fail, swept away by history but they will cause mischief in the time being.
And that brings me, I can't help it, to a Jeremiah-like lamentation or warning.
This long-run economic expansion cannot be stopped -- but it can be slowed and we can come out the other side well behind the EU, China and Latin America in wealth and power.
America is not going to be the world's only superpower and if we insist on that we will be irrelevant. The world is over the Cold War, even if we are not.
The American people realize this and that's the reason 80% of them want us to go in a new direction. The American people are ready but we do not yet have in place the new leadership that will put the neo-cons and their militarism behind us.
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