This is the last 700 page economics book I plan to read for the foreseeable future. I find the marginal return on this type of undertaking to be diminishing. That said, this book reads more like the history of the industrialization of America than pure economics (in a good way). Gordon sees the century between 1870 and 1970 as a unique period of growth. During that time there were numerous inventions, that could only occur once in history, that made the lives of innumerable Americans better. Furthermore, these innovations cannot be accurately assessed by modern techniques like GDP, both because qualitative differences are hard to quantify and compare across time and because some measurables such as health and life expectancy are not explicitly measured in standard economic terms.
Total Factor Productivity (TFP) is the portion of output not explained by the amount of inputs used in production. As such, its level is determined by how efficiently and intensely the inputs are utilized in production. TFP growth is usually measured by the Solow residual. Gordon seeks to explain how TFP grew so rapidly during this period and why it has stagnated since. He breaks the book up between the periods of 1870-1940 and 1940-1970. He emphasizes the invention of department stores and mail-order catalogues, where for the first time one could buy pre-made clothes for one standard advertised price, grocery stores, where a variety of foods, particularly canned, could supplement home grown produce, electricity spreading into businesses and homes, along with running water, washing machines, refrigerators, toilets, and plumbing. Transportation was transformed again and again- from horse drawn buggies to railways, omnibuses, street cars, then automobiles. With transport vehicles came a network of rails then roads to connect the entire nation. Communication was rapidly transformed from the availability of daily newspapers and magazines like Life and Time for the masses, to telegraphs, and then the telephone, first only for businesses, then to every home, first through the party line system. Entertainment also changed with the advent of radio, the movie house, and eventually television. This entertainment was not just pure pleasure, but had a unifying effect on the whole population. From the Seabiscuit horse race and Edward Murrow’s reports from Europe to Franklin Roosevelt’s fireside chats, for the first time, every American could instantaneously listen to the same piece of news and discuss it at work the next day.
The quantity and quality of life improvements are harder to measure accurately. Gordon points to growing life expectancy, reduced infant mortality, fewer infectious diseases, and the professionalization of doctors and medical advice. In terms of quality of life, he points to less hours worked per week, less death and accidents on the job and, in general, less brutal manual labor, less hours women had to work at home doing chores like washing clothes, emptying chamberpots, and lighting fires, and less child labor and the resulting furthering of their secondary education.
Gordon makes the case that this century of record TFP growth is something we are unlikely to ever see again, not because Americans have gotten too rich, too lazy, or less inventive, but because we have picked all the low hanging fruit. Electricity and the internal combustion engine were general inventions that were then tinkered with and improved, built upon and combined with other inventions, and thus their gains pushed out over the course of decades, before eventually subsiding. These were inventions that transformed humanity once and never again.
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