Reasons for Our Economic Stagnation

The causes of U.S. economic slowdown, according to a professor at Northwestern University, are “mega-political rather than “political” and will happen because they lie outside the reach of policy decisions.

The notion of “progress” would be strange to ancient Egyptians, Greeks, Aztecs, Mayans and other who tended to believe in cyclical theories of history and “eternal” return.

Robert Gordon’s, “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds,” recently published by the National Bureau of Economic Research, says, “Doubling the standard of living took five centuries between l300 and l800. Doubling accelerated to one century between l800 and l900. It peaked again between l929 and l957 and he predicts it will slow back to a century again between 2007 and 2100.

Gordon identifies these six headwinds to the economy’s growth:

1) Population decline of those in their peak working years.

2) Marginal returns in education, or, the fact that the U.S. spends more than any other country while our students lag in test results suggest that declining marginal returns in education are a drag on economic growth.

3) Widening economic inequality, or, now that our economy has evolved, it has become ever more challenging to earn a superior income.

4) Greater competition due to globalization leads to lower relative incomes for unskilled Americans in the years to come. Wage inflation in the U.S. has taken place over the last decade as high-paying jobs move to low-wage countries, such as China, and get replaced with low-paying service jobs in the U.S. “There can’t be sustained economic recovery in the U.S. while consumer incomes are plunging.”

5) Higher energy costs and growing environmental challenges give less return on investment, so the economy slows down.

6) High levels of consumer and government debt : debt tends to grow when the economy slows.

The next blog will explain the major factors that the U.S. has exploited which aren’t there anymore.

The rapid growth characterizing our economy during the l9th and 20th centuries may be historical curiosities that will not carry over into this century.

Stay tuned. There’s more information which can put into perspective the complex puzzle of why the U.S. has changed.

It’s as if the things puzzling us about what’s happening to our robust economy are given form and can be understood.


Author: lebensbornnovel

There at the base of a mountain, I live in a rustic cabin with my engineer/writer husband and loving cat, Alfie. I am a former journalist and pr consultant. In my blog I attempt to capture a sliver of WW history, the Lebensborn program to create a Master Race, and to add newsworthy tidbits which are 'somewhat' relevant to this subject.

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