from Kevin Williamson at National Review, The Great Leap Forward:
It is rare to see such dramatic growth in a country that already has an advanced economy. It’s partly a question of low-hanging fruit: Moving from an economy of subsistence agriculture, handicrafts, and small-scale industry to an economy based on modern technology and trade dramatically increases the value of land, capital, and human resources. (That’s why real estate in Hong Kong costs $11,000 per square foot.) Think of it this way: If the Reagan-era economic boom that kicked off in 1982 had seen the U.S. economy grow at the Chinese rate from then until now, U.S. GDP today would be almost five times as large as it is — about the size of the entire world economy in 2017.
But the United States in 1982 was not a country with a backward agrarian economy. We did experience a long boom from the Reagan years until the turn of the century, with dramatic economic growth in the 1990s driven by a new crop of relatively low-hanging fruit in the form of new technology that freed up labor and capital both to be put to better uses. The development of desktop computers and, later, of the Internet changed the economy in ways that were difficult to foresee, and those changes were not without pain for some people. In my business, newspaper publishing, work that had been done by dozens of skilled and specialized workers (compositors, paste-up artists, camera operators, platemakers) could suddenly be done by one person sitting at a computer. It was better to be that one person sitting at the computer than one of the consequently unemployed paste-up artists, but with the economy booming the way it was during that period, they — and other workers in thousands of other occupations made redundant by new technology — were absorbed into new positions. There was deep disruption and low unemployment.
But that isn’t the sort of thing that can be engineered. You can move from low-level agriculture to advanced manufacturing and services only once. The PC gets invented only once. The Internet changes everything only once. There will be new innovations in the future, and some of them have the potential to be as transformative as the Internet — and maybe even as transformative as the Industrial Revolution. But such things cannot be exnihilated into existence, predicted, managed, or relied upon. The wiser course of action is to be modest in our expectations, to keep our economy open to innovation, and to welcome unexpected economic overperformance as a windfall.
Great moves forward, disruptive ground changing innovations do not happen consistently. They do not adhere to a plan or a budget. The best we can do is create an environment that does not stifle them, that attracts the bright and the motivated, but we do not know if they come from great tax policies, cultural collusion, ethnic diversity, great education, or just an environment of free thinkers.
We fear the future because we can not envision how those people replaced by technology will find a job, yet here we are at a point following disruptive innovations and job killing technologies with the lowest unemployment rate in quite a while. And much of that improvement happened before Trump, during a political reign that kept economic growth low. Yes, the measurements of those out of the workforce distort that, but it was still improving.
The greatest loss during the previous administration was the sharp drop in startups, and that is where the future growth lies. Trump’s policies are a great boom to existing companies, but the real test is what it will do for future companies.
The FANGs, Facebook, Apple, Netflix, and Google, are old news.