Lessons from History and Implications for the Future
Before 1770, there was little economic growth for thousands of years.
From 1770 to 1870, the world economy experienced only slow growth.
The period from 1870 to 1970 was a golden age of rapid economic and social growth for humanity, with the United States leading the way and driving global growth.
After 1970, the economic growth of the United States slowed down, and until now, the growth rate of total factor productivity in the United States has only been one-third of the previous century.
After 1970, China's economy started to take off rapidly, mainly due to its low starting point. The technological advancements that previously propelled the US economy after market openness also occurred in China. However, this high-speed economic growth is unlikely to be sustained as a norm, just like what happened with Japan in the past. After a few decades of rapid progress, it eventually leveled off.
Yes, it's true that the United States has been affluent since 1970. However, this affluence primarily benefited the wealthy in the United States and did not benefit the general population equally.
From 1917 to 1948, income equality improved significantly. The real income of the bottom 90% of the income group increased by 1.43% annually, which was more than double the growth rate of 0.58% for the top 10% income group, with an average growth rate of 1.11%.
The notable fact from 1948 to 1972 was that the growth rates of the bottom 90%, top 10%, and average incomes were roughly the same, and each group experienced rapid real income growth. The average real income growth rate from 1948 to 1972 was 2.58%, more than double the average growth rate of 1.11% from 1917 to 1948, and more than five times the average growth rate of 0.48% from 1972 to 2013.
Robert Gordon said: The 25 years after 1948 were a golden age for millions of high school graduates who could secure stable jobs in unionized industries without a college education. Their income was sufficient to afford houses in suburban areas with backyards, own one or two cars, and live a life that was the envy of the middle-income groups in most other countries.
However, since the early 1970s, there has been a significant gap in real income growth between the bottom 90% and the top 10% of income groups. In 2013, the average real income of the bottom 90% was lower than in 1972. In fact, the peak real income for the bottom 90% group was $37,053 in 2000, barely higher than $35,411 in 1972. By 2013, this average had decreased by 15% to $31,652.
If we examine the economic rise and fall patterns of Western Europe, the previous economic powerhouse before the United States, as well as Japan, a potential powerhouse after the United States, we will find similar patterns.
These patterns may not be subject to the will of any individual or organization. Therefore, I believe our country will not be an exception. However, we can learn more lessons and take mitigating measures. For example, promoting common prosperity is a response to the increasing inequality observed in other countries when their economies reach a certain stage. If the government does not intervene and relies solely on market forces, the problem will be unsolvable.
Therefore, perhaps we should have a certain expectation and not always assume that future opportunities will be more abundant than they are now. Instead, we should strive to seize the current opportunities and adopt a more practical mindset.