Enlightenment Now: The Case for Reason, Science, Humanism, and Progress

The first raincloud is economic stagnation. As the essayist Logan Pearsall Smith observed, “There are few sorrows, however poignant, in which a good income is of no avail.” Wealth provides not just the obvious things that money can buy, such as nutrition, health, education, and safety, but also, over the long term, spiritual goods such as peace, freedom, human rights, happiness, environmental protection, and other transcendent values.⁵

The Industrial Revolution ushered in more than two centuries of economic growth, especially during the period between World War II and the early 1970s, when the Gross World Product per capita grew at a rate of around 3.4 percent a year, doubling every twenty years.⁶ In the late 20th century, eco-pessimists warned that economic growth was unsustainable because it exhausted resources and polluted the planet. But in the 21st, the opposite fear has arisen: that the future promises not too much economic growth but too little. Since the early 1970s, the annual rate of growth has fallen by more than half, to around 1.4 percent.⁷ Growth over the long term is determined largely by productivity: the value of goods and services that a country can produce per dollar of investment and person-hour of labor. Productivity in turn depends on technological sophistication: the skills of the country’s workers and the efficiency of its machinery, management, and infrastructure. From the 1940s through the 1960s, productivity in the United States grew at an annual rate of around 2 percent, which would double productivity every thirty-five years. Since then it has grown at a rate of around 0.6 percent, which would require more than a century to double.⁸

Some economists fear that low rates of growth are the new normal. According to “the new secular stagnation hypothesis” analyzed by Lawrence Summers, even those paltry rates can be maintained (in conjunction with low unemployment) only if central banks set interest rates at zero or negative values, which could lead to financial instability and other problems.⁹ In a period of rising income inequality, secular stagnation could leave a majority of people with static or falling incomes for the foreseeable future. If economies stop growing, things could get ugly.

No one really knows why productivity growth slacked off in the early 1970s or how to bring it back up.¹⁰ Some economists, like Robert Gordon in his 2016 The Rise and Fall of American Growth, point to demographic and macroeconomic headwinds, such as fewer working people supporting more retirees, a leveling off in the expansion of education, a rise in government debt, and the increase in inequality (which depresses demand for goods and services, because richer people spend less of their incomes than poorer people).¹¹ Gordon adds that the most transformative inventions may already have been invented. The first half of the 20th century revolutionized the home with electricity, water, sewerage, telephones, and motorized appliances. Since then homes haven’t changed nearly as much. An electronic bidet with a heated seat is nice, but it’s not like going from an outhouse to a flush toilet.

Another explanation is cultural: America has lost its mojo.¹² Workers in depressed regions no longer pick up and move to vibrant ones but collect disability insurance and drop out of the labor force. A precautionary principle prevents anyone from trying anything for the first time. Capitalism has lost its capitalists: too much investment is tied up in “gray capital,” controlled by institutional managers who seek safe returns for retirees. Ambitious young people want to be artists and professionals, not entrepreneurs. Investors and the government no longer back moonshots. As the entrepreneur Peter Thiel lamented, “We wanted flying cars; instead we got 140 characters.”

Whatever its causes, economic stagnation is at the root of many other problems and poses a significant challenge for 21st-century policymakers. Does that mean that progress was nice while it lasted, but now it’s over? Unlikely! For one thing, growth that is slower than it was during the postwar glory days is still growth—indeed, exponential growth. Gross World Product has increased in fifty-one of the last fifty-five years, which means that in each of those fifty-one years (including the last six), the world got richer than it was the year before.¹³ Also, secular stagnation is largely a first-world problem. Though it’s a tremendous challenge to get the most highly developed countries to become even more highly developed, year after year after year, the less developed countries have a lot of catching up to do, and they can grow at high rates as they adopt the richer countries’ best practices (chapter 8). The greatest ongoing progress in the world today is the rise of billions of people out of extreme poverty, and that ascent need not be capped by the American and European malaise.