A few nights ago, a number of us met over dinner to discuss Edmund Phelps’ book, Mass Flourishing. He contends that starting around 1970s, America’s commitment to modern values started to recede, and we began reverting to traditionalism. That in turn leads to reduced innovation and slower economic growth.
The reaction to this hypothesis from several Baby Boomers and younger discussants ranged from skeptical to apoplectic. Not modern? Us? Civil Rights! Women’s Equality! Four-letter Words! Gay Marriage! Smart phones!
Against those, here are some counterpoints, some of which Phelps has noted:
–decline in the propensity of young adults to move far from their parents (or even out of the house!)
–increase in NIMBYism (often masquerading as environmental concern), blocking development, for example, of airports.
–lower rate of new business formation
–stifling safety regulations (in nuclear power and in drug development)
–resistance to innovation in food production (GMOs)
–demonization of the 1 percent
–hostility to energy production and consumption
What Phelps means by modern values are individualism, self-reliance, and striving for individual excellence. By his standards, he would argue that those values are on the decline. This is a topic that is a bit squishy for economists to try to grasp, but I am not certain that Phelps is wrong.
By the way, I reviewed Phelps’ book here. He says that, contrary to my review, he is an anti-Schumpeterian. I am not sure what he means by that. In any case, he believes that innovation consists much more of small, everyday innovation than it does of dramatic examples such as the internal combustion engine. I tend to agree, and that is one reason that I have been unwilling to side with stagnationists who complain that we have not seen anything Really Big in the most recent two decades.
Should there be another “not” in that last sentence? ” … and that is one reason that I have [not] been willing to side with stagnationists who complain that we have not seen anything Really Big in the most recent two decades.
to be “unwilling” is equivalent to “not” being willing.
corrected. thanks
I think there is definitely something to Phelps’ position, although I think part of that retreat can be attributed to increases in the standard of living. That is, we don’t have to be so individualistic anymore, at least economically speaking, when there is plenty of stuff to go around.
There is a lot to be said about what’s happened to Western society and culture over the last 50-100 years. Unfortunately, most of what actually gets said is either a simplistic, triumphal narrative of reason and logic supplanting myth and superstition (ie, progress) or hand-wringing narratives about decline and retreats to barbarism and analogies to the late Roman Empire and so forth (ie, regress). I find neither one to be a terribly accurate picture of reality.
Being of that generation some 10 years or so before Edmund Phelps, actual experiences, but not beyond his scholarship, a reading of his last work did not disclose the role of individuality (distinct from individualism or individualistic) in both innovation and entrepreneurship.
As has been stated elsewhere, since the 1st quarter of the 20th century individuality has been in recession, in some parts of Western civilization, suppressed or repressed, with a critical decline becoming observable around mid century and having serious economic effects at the beginning of the 3rd quarter.
Innovation and entrepreneurship (which brings together innovation with the means for its implementation) are both dependent upon imagination which is a factor of individuality not attained by consensus or committee.
One only has to observe the total devaluation of individual life marked by the conflicts of the 1st half of the last century in order to understand the submergence of individuality under pressures for aggregations of interests into political and economic power. The ascendancy of the “social” over the individual continues. That will continue to suppress the dynamism that Phelps craves because it affects the source of both innovation and entrepreneurship.
Its mostly about the demographic shift to the large sunbelts, California, Texas and then Florida. The tradionalism is these large economies adjusting to volatiliy from DC.
Timely post. I’ve been reading Phelps’ book.
I mostly agree with your counterpoints. Here’s a few thoughts:
We don’t need to move as far away from our parents as we used to. Our “cost function” for where we live and work has changed dramatically due to the dynamism of past and current economies.
Jet travel is a quick and reasonably priced. The Internet allows videoconferencing, lync, faceTime…
I work for a Silicon Valley-based semiconductor company but I work and live in Austin Texas (close to ‘home’). We have direct flights to San Jose and back. I can get almost a full day in at the main office after flying out of Austin in the morning and returning at midnight. (It’s a long day and I’ve only done this a few times.)
I ‘typed’ this on Siri. There’s no Great Stagnation.
The deregulated sectors of the economy (e.g. retail, manufacturing, tech) have become more modern while the regulated sectors (e.g. health care, education) haven’t.
It seems we’ve replaced tolerance for economic risk and technical progress risk with tolerance for goofing off in the name of social progress. “Everybody is wonderful” might be orthogonal or even negatively correlated to ” some people can be excellent.”
I agree with the premise, but you can also approach this from the left. The modern Left has no interest in big plans, or remaking society, they are just interested in using state power to shift a little from one group of haves to another. Nobody is actually talking about improving Medicaid outcomes for example, they are just targeting their tribal opponents. If you look at the 30s-60s there was a genuine belief that society’s inequalities could be fixed. Now all anyone cares about is the wrong people benefitting.
Modernism is truly dead, and a big part of modernism was the ideal of social revolution and the Socialist Millennium. We don’t even have Fordism left.
Joel Mokyr offered some interesting criticisms of Phelps’s position in an interview with Russ Roberts on EconTalk. Mokyr suggested that major scientific breakthroughs are necessary to overcome the diminishing returns of new technologies based on the current level of scientific knowledge. Mokyr was optimistic about continued scientific/technological progress, but I began to wonder whether the complexity of modern science meant that the number of possible innovators would be limited to a small group of highly skilled members of the academic class. There may be fewer of Phelps’s local innovators because technological innovation might require highly specialized education supported by huge investments in infrastructure. The Wright brothers could learn most of what they needed to know from generally available scientific publications, and they didn’t require enormous amounts of capital.
On the other hand, it seems to me that the old American spirit of self-reliance has been pretty well squashed by the general acceptance of the welfare-state model. In my childhood, it was thought disgraceful in my working-class neighborhood in Chicago to be on public assistance; nowadays, anyone who suggests that taking public money is disgraceful (once again, the typical belief of the factory workers I knew in the 1950s) will be vilified as insensitive (at best) or (more likely) as an enemy of the poor.