You have probably wondered…
…how come US growth rates have fallen so much? The average growth rate was more than 3% per year in the 1960s. In the 1990s, it was more than 2%. Now, it’s less than 1%.
Less growth (per capita) means fewer jobs, lower earnings, and less wealth. Who wants that?
And how come wages are falling? The average person has seen his weekly paycheque fall, in real terms, for the last 20 months in a row.
And why, after so much progress in technology, would productivity be going down? Time is the ultimate limit. Productivity measures how much you’re able to get out of it. Rich countries have high productivity. Poor countries — where people still hew the wood and draw the water by hand — have low productivity rates. So, get this, from CNBC: ‘Worker productivity is falling at the fastest rate in four decades’:
‘Employers are not only battling inflation and slowing growth, but worker productivity that is falling at the fastest rate in four decades. This has been the first year since 1983 to include three straight quarters of year-over-year drops in average productivity per worker, ADP chief economist Nela Richardson said during CNBC’s recent Workforce Executive Council Town Hall.’
Simply put: People are working more and producing less.
The big flop
To ask the question in a broader way…
…why…with such swell capital markets, so many new tools and gee-whiz technology, and of course, an enlightened government in which our economy is guided by the geniuses at the Fed and constantly improved by the 535 members of Congress (including Senators) and the executive team in the White House…
…why is our economy such a flop? If it had just maintained the growth rates of the 1960s, we’d all be vastly richer. Instead, by our calculation, a working man today is poorer than he was in 1975.
We’re not saying he is necessarily worse off. After all, now he can work from home, watch movies on his own sofa, and order his meals from Uber Eats. But he has to work more hours to afford the basics — a car, a house, medical care, and education.
Nowhere in economics — neither popular nor academic — have we seen the answer. But you, dear reader, will be among the first to have it.
As we will see, fish gotta swim; birds gotta fly; and a late, degenerate empire needs to follow the script.
You might think: who has an interest in lower growth…less productivity…and less wealth for everyone? The economy is the backbone of the country; nobody wants a weak country.
This might lead you to think: so surely, we will put our heads together and figure out how to solve this problem, right?
After all, the government is in charge. And as Hillary Clinton says, the ‘government is all of us’. It may make mistakes, but it always has our best interest at heart…and will eventually do the right thing, right?
Alas, Mancur Olson, who taught at the University of Maryland, pointed out the problem in the 1970s. He described it in The Logic of Collective Action. In short, what’s good for some isn’t necessarily best for all.
Yesterday, in our description of the Twitter Files controversy, we offered a prediction. You’ll recall that the feds colluded with Twitter executives as a way of ignoring the First Amendment. In the US, we have a right to say what we want. But the feds found a way — courtesy of Twitter — to outsource censorship. They proposed…and Twitter disposed…of ideas and opinions they didn’t want you to see.
What will happen now? Will federal officials and Twitter executives go to jail for conspiring to deny US citizens their constitutional rights?
The elite media, we guess, will largely ignore the story. And the public won’t care. Mancur Olson explained why. Some people — the deciders, those in control — have a keen, focused interest in suppressing the First Amendment. Most people — the general public — have only a vague interest in protecting it. Like a subsidy to chip makers, some few people will be very much in favour of it. They’ll make campaign contributions to the right people. They’ll get favourable articles written in the press. They’ll make it sound as though it were a matter of national survival. Most people, on the other hand, will not have enough incentive to dig into the issue…understand it…or take action.
But there’s more to the story. If most people don’t really care much about free speech, why was it included as the first item (and presumably the most important) in the Bill of Rights? And if the creators of the US were able to set up a model for a dynamic, successful country, how come we’ve abandoned it now?
Tune in tomorrow…
For The Daily Reckoning Australia