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Where Did It All Go Wrong?

Where Did It All Go Wrong?

James Pethokoukis’s new book dives into the fall of “Up Wing America,” but offers few answers.

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The Conservative Futurist: How to Create the Sci-Fi World We Were Promised, James Pethokoukis, Center Street, 336 pages

The modern political right lacks two things: optimism and an understanding of the role of material progress. These qualities are unmistakably present in James Pethokoukis’s new book, The Conservative Futurist. He poses important questions that conservatives too rarely seek answers to, yet not all the answers Pethokoukis provides are conservative.

The Conservative Futurist presents first and foremost a certain vision of 20th century American history. The high point comes after World War II. Interestingly, it was a time marked by persistent pessimism. Despite emerging relatively unscathed from the victorious war, America inspired particular anxiety among economists who believed that the transition from a war economy to a free market would bring about disruption due to soldiers returning home in search of work and a reduction in military spending. Pethokoukis quotes Paul Samuelson, who announced a coming period of the greatest unemployment the world has ever seen. Alvin Hansen of Harvard claimed that the U.S. was entering an era of secular stagnation and Americans should lower their expectations for the future. Reality would soon contradict the gloom of these forecasts.

The 1950s and 1960s went down in the history of capitalism. The rapid increase in the average American’s standard of living seemed unstoppable. In 1950, almost every household owned a car; by 1970, two-car households had become commonplace. Luxuries once available to only a few were becoming widespread. For instance, in 1950, only one in ten households had a television set, but by 1955, two-thirds did. Between 1948 and 1973, the standard of living improved twofold.

Pethokoukis refers to this period as “Up Wing America.” It was a time when technological advances seemed to know no bounds. The cities in the clouds and flying cars depicted in The Jetsons were reflections of the era’s collective imagination. Serious think tanks mirrored science-fiction writers in their glowing predictions and the government listened eagerly, trusting that America would continue to soar towards ever-greater technological achievements, extending its ascent indefinitely.

As it turned out, the optimists got it wrong. In the 1970s, our own era began as productivity slowed and the culture became soaked in pessimism. The U.S. economy, which had grown rapidly after the war, especially in terms of productivity driven by innovation, experienced a significant deceleration. Pethokoukis estimates that if the postwar productivity trend had continued, the U.S. economy could have reached $40 trillion today, instead of $20 trillion, and the median household income could have been $140,000, not $70,000. Large corporations would be colonizing space rather than focusing on shrinking our attention spans. Instead, the narrow cone of progress concentrated on information technologies, leaving the world of atoms locked in stagnation. 

What caused the U.S. to fall into stagnation in the first place? The author cites a number of interesting studies and hypotheses that illuminate and complete the picture of what happened in the 1970s. “The productivity slowdown of the 1970s,” claimed Nobel laureate William Nordhaus, “does appear to be a major distinguishing feature of the last century.” Still, economists have not reached a consensus on what caused it. The answer seems to be a combination of various factors, as Pethokoukis suggests.

Many economists have blamed OPEC and the oil shocks. After 1973, oil prices quadrupled, and then doubled again in 1979 following the Iranian revolution. Another contributing factor is the increased difficulty in finding new ideas. As one paper cited by Pethokoukis argues, all the low-hanging fruit has been picked and R&D spending would need to double every 13 years to overcome the growing challenge of achieving novel breakthroughs.

Another cause of technological deceleration is safetyism. Beyond a certain threshold of prosperity, safety becomes a desired luxury good. An extreme version of this obsession, prioritizing safety over innovation and prosperity, has led to the decline of the U.S. nuclear sector. Following the Three Mile Island accident, barely half of the 129 approved nuclear projects were completed. 

Another hindrance to American progress is the explosion of regulations, largely due to a shift towards a safety-first mentality. It could be argued that environmental regulations have played the pivotal role in derailing the country’s growth trajectory. Pethokoukis cites a study contending that, if regulation had remained at its 1949 levels, the U.S. economy could be nearly four times larger today.

Another partial explanation for the slowdown is the lack of funding and adequate attention to projects that could help snap America out of stagnation. The Conservative Futurist points to nuclear fusion and nanotechnology, among others. Yet what has atrophied is the ability to imagine the future. Yale economist Ray Fair highlights an interesting parallel: At the same time that the percentage of U.S. GDP devoted to infrastructure began to fall, large budget deficits began to mount. Fair sees this as a symptom of a major swing in social orientation—from a patient focus on the future to frantic chase after gratification. The economist speculates that the American character may have been enervated by a cascade of events: the coming of age of the baby boomers, the assassinations of JFK and Martin Luther King, Jr., the cultural impacts of Woodstock and Stonewall, and then those of the Vietnam War and campus protests.

Gerontocracy and population aging are factors that the author does not emphasize. While he mentions that having more elderly than young people in a society makes it difficult to generate bold ideas, he does not explicitly identify population aging as one of the barriers to reigniting dynamism. Political scientist Kevin Munger refers to this issue as “boomer ballast.” He explains that the boomers’ hold on institutional and economic levers of the country has led to a system primarily focused on addressing the problems of the post-war, 20th-century order. Meanwhile, the U.S. is one of the most gerontocratic societies in the West. In 2014, America set a record for its oldest Congress, a record that was subsequently broken in 2016 and again in 2020. Two-thirds of the senators are boomers, and Biden is the oldest president ever elected in U.S. history.

Another issue overlooked by The Conservative Futurist concerns the intra-elite conflict prophesied by Peter Turchin, who predicts civil unrest stemming from overproduction of elites. This conflict could impede technological progress, particularly if new technologies threaten the status of professions that serve as gateways to status, such as the law. (In fact, dissatisfied lawyers have historically been among the most subversive forces in society—Robespierre, Lenin, and Castro come to mind.)

The book mentions the idea that rivalry with China could act as a catalyst for renewed American dynamism, similar to how the confrontation with the Soviet bloc spurred the rise of “Up Wing America.” Pethokoukis does not, however, further develop this theme. It is regrettable that The Conservative Futurist neither explores how the relationship with China has shaped American productivity nor addresses the potential impact of decoupling or de-risking on economic stagnation.

It is not exactly clear why Pethokoukis calls himself a conservative futurist. He defines “conservatism” as a commitment to the “classical liberal tradition.” Although he quotes Burke on the community that comprises those who preceded us and those who will follow, he does not give any consideration to how technological stagnation has influenced family formation.

Pethokoukis places Reagan within the “Up Wing America” camp. The historical role of the Gipper is undeniable; he arguably won the Cold War. Yet some recognize that he contributed to undermining the conditions necessary for sustaining American dynamism.

Reagan, spearheading a wave of neoliberalism, marked the beginning of a transformation that did not so much shrink the government as erode the state capacity. This revolution led to a fissured economy, in which, as Julius Krein explains, “intellectual property and financial rents became the main drivers of corporate profits,” bringing about outsourcing and deindustrialization, and eventually stagnation. The great progress in the world of atoms, envisioned by Pethokoukis, presupposes a fundamental reshaping of the economic incentives created by neoliberal policies, something the author himself does not acknowledge.

The Conservative Futurist mentions the Apollo or Manhattan projects, yet there is no hint at all that the state could play a positive role in future large scale initiatives. Industrial policy is portrayed as an unwanted intervention that leads inevitably to failure. In this context, Pethokoukis warns that some conservatives (and leftists) are tempted by the model pursued by the CCP. The experience of Asian tigers achieving rapid industrialization through intelligent state activism is entirely ignored. The author’s blindness to examples of constructive cooperation between the state and the private sector extends even to technologies where he hopes for breakthroughs, such as the next-gen geothermal energy. 

This is not to say that industrial policy is universally effective, but when executed well it can alter a country’s fortunes. It is worth pondering that the economists who first described the “China shock” seem to suggest that countries without industrial policy will find themselves at the mercy of those that have it: “The next China shock may be more likely to be triggered by industrial policy, e.g., if China makes good on its promise to support advanced technology industries.”

According to Pethokoukis, the restoration of dynamism won’t happen without free trade and openness to immigration. He treats both subjects superficially, and often repeats ideas reminiscent of Paul Krugman’s Clinton-era columns. A recent poll conducted by American Compass reveals that “Americans hold generally negative views of globalization and trade with China.” This fact alone calls for a greater attention to the arguments presented by opponents of free trade.

Openness to immigration is also a problematic aspect of Pethokoukis’s “conservative futurism.” If one can try to build a case in favor of high-skilled migration—for example, in the context of the war for talent with China—it is nevertheless difficult to support the entry of millions of illegal immigrants to the U.S. through the southern border without any selection.

Liberal futurism points to the horizon of technological developments that are worth achieving. The path Pethokoukis outlines does not describe historical possibilities, but rather an ideological narrative. American nationalism must still wait for its vision of the future.

The post Where Did It All Go Wrong? appeared first on The American Conservative.

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