Question:
Off and on for years, I have wondered about the veracity of a claim posited by a fellow reader via a Goodreads review for Brian Alexander’s book Glass House:The 1% Economy and the Shattering of the All-American Town. The review states in part that “The era after WW2 was a one-off. Never again will this country enjoy such a concentration of forces to bring it such prosperity. Once that’s accepted, the idea that America is failing just demonstrates myopia. No, America is just sliding back to the mean.” Do Americans today have inappropriate expectations for economic growth and opportunity because we are comparing our lives to those lived by parents and grandparents who experienced a singular period of economic opportunity in our nation’s history?Answer:
To begin, for those not familiar with it, Alexander’s book is an examination of the economic decline of Lancaster, Ohio, a city dependent especially on Anchor Hocking Glass. Like many smaller cities throughout the American Midwest that were dependent on a single large manufacturer, Lancaster has been hard hit by globalization. Increased openness to trade and the integration of China into the world economy, as well as relative strength of the dollar on international exchanges has encouraged the movement of manufacturing jobs overseas. At the same time, the high cost of labor in the US has encouraged automation and increased labor productivity in manufacturing, which has meant that fewer workers are required to produce any given quantity of output.
You ask “Do Americans today have inappropriate expectations for economic growth and opportunity because we are comparing our lives to those lived by parents and grandparents who experienced a singular period of economic opportunity in our nation’s history?” The answer is both yes and no. As I’ll explain, the circumstances of the American economy in the late 1940s and 1950s were certainly different from those today, and are unlikely to be repeated. But it is also important to recognize that we are in fact much better off today than we were at that time, and that by most observable measures we are continuing to get better off.
It is certainly true that the period from the end of World War II through the late 1960s was one of remarkable economic progress and relatively low inequality. Some of this reflected catching up after the Great Depression and World War II. Scientific and technological innovations from the 1930s and 1940s had built up and not been put into use because of the depression and war. With the end of the war, their application to industry created unusual opportunities for advancement. Moreover, some economists, most notably Robert Gordon in “The Rise and Fall of American Growth”, have argued that the sources of economic growth in this period were unique and cannot be repeated.
At the same time, however, it is important not to overly romanticize our image of the past. Recent decades have produced remarkable progress in medicine, the computer and smart phones have vastly changed how we live and work, and advances in air travel combined with airline deregulation have vastly increased access to travel. I’m sure you can think of other technological advances in your own life.
While it is certainly true that places like Lancaster, OH, have not kept up with the overall economy, the growth of material well-being in the economy as a whole since 1947 is both remarkable and relatively steady. One summary measure of this growth is the increase in Real Gross Domestic Product per capita. Adjusted for inflation it has grown from about $15,000 in 1947 to almost $69,000 at the end of 2024. As this graph suggests, this growth has been continuous, although rates of growth have slowed since the 1980s.
What this says is that on average Americans today enjoy considerably more goods and services than they were able to consume in 1947. Of course, the distribution of these gains is not equal. Places like Silicon Valley in California, Austin, TX, and Boston, MA have all experienced rapid growth, smaller towns like Lancaster have stagnated. Moreover, since the 1980s, much of the increase in incomes has been captured by those at the top of the income distribution. Material well-being need not result in increased happiness. Opioid addiction rates, and increased rates of suicide are all indicators that some segments of the population are increasingly dissatisfied with their situation. Moreover, one may be concerned that current rates of growth are unsustainable as the economic effects of climate change are becoming more visible (think CA wildfires, stronger hurricanes, rising sea levels).
In the end, the answer to your question is: “it depends on where you look and what you look at.” The American economy is dynamic and constantly changing. These economic forces produce winners and losers. As a society we face the choice of how and how much to shield losers by redistributing the gains of winners. Certainly the situation at the end of WW II was very different from today, but I suspect that most of us would not give up the modern conveniences we enjoy to return to that earlier era.
