Living in the Past

It’s tempting to compare our current slump with the Great Depression, but it runs the risk of failing to see how the world has changed over the last 80 years.  David Leonhardt of New York Times falls head over heels into this trap in his recent think piece on the upside of the Depression.

He makes a number of errors and omissions along the way (including a glaring ecological fallacy), but I’m not keeping score.  It’s his big idea that is so fundamentally wrong.

Leonhardt correctly points out that the 1930s was a decade of extraordinary technical advance, laying the basis for new industries that would propel economic growth after WWII.  He is also correct in seeing that the leading sectors of recent US expansion, health, finance and housing (read: suburbanization), are mostly bloat.  What has changed utterly since the days of Sloan and Sarnoff, however, is the national character of technology: there is none.

It used to be that nations really possessed technologies.  A corporation centered in a single country was the world leader not in a specific process or market niche, but an entire industry.  A country that could establish dominance in a rising industry could significantly boost its prosperity and power, and, in one form or another, industrial policy was king.

That’s over.  Engineering cultures around the world have largely converged, and progress is made via internationally coordinated partnerships.  Technologies do not have locations.  It doesn’t matter where the next new thing is originally developed; it will be financed, produced and marketed globally.  It is anachronistic to expect some new, world-shaking product to pull the US out of its long-term rut.

Of course, it is profoundly self-destructive for this country to starve its schools, not to mention spending billions to warehouse a large chunk of what is clearly seen as a surplus population in our prison archipelago.  Priorities certainly need to change, but the pathway out of the Depression is a poor guide.

Postscript: Maybe the next new thing (for the world economy) is cleaning up the mess left by some of the previous things, starting with decarbonization.