As Luck Would Have It

David Brooks says that the reason America was the 20th century’s big economic power was, “a ferocious belief that people have the power to transform their own lives gave Americans an unparalleled commitment to education, hard work and economic freedom.” Ezra Klein says, duh, we also didn’t get attacked multiple times between 1900 and 1945.

Both are kind of right. Clearly our economic institutions didn’t do too much damage (though they did sometimes do quite a bit of damage), but the same can be said about other nations, as well (particularly Britain, excepting some unfortunate postwar choices). America’s educational choices were also savvy relative to other states, especially the decision to invest heavily in land-grant and technical schools focusing on applied science and engineering. The early development of applied geology schools would prove very fortuitous indeed.

And certainly our ability to avoid invasion was helpful, but primarily because that allowed us to avoid significant institutional upheaval. Note that this applies to Britain, as well. And we were very, very lucky that the Civil War was fought before the period of heavy industrialization and primarily on agricultural land in the south.

We were very, very lucky in lots of ways, if we’re going to be honest. The secret to our incredibly rapid productivity growth and rise to industrial dominance came in large part because we had developed a massive, homogeneous, and insular domestic market. That is, we erected tariff walls but let millions upon millions of people stream in. As such, we had a huge domestic market ripe for American manufacturing firms to exploit. Even better, the vanishment of European class-structures in America meant that there were mass market tastes to be satisfied.

So what happened? Well, we developed a system of mass-throughput technologies that made tons of identical goods for sale around the country. And we did that, in part, by exploiting the massive resource reserves we were busy discovering, thanks to our mining engineers. As it turns out, throwing a pile of resources into a factory making hundreds of thousands of similar products is very productive. Far more so than the labour intensive niche-market production found in Europe.

And Europe couldn’t really adopt those technologies successfully until conditions in those nations fit the production means–until mass markets developed. And that required the end of nobility, and peace, and trade. And when those conditions did obtain, Europe caught up with us at an astounding pace. But it’s important to point out that we didn’t do all that stuff on purpose. There was no plan, really. It just happened to work out.

Which isn’t to say that none of our wealth and power was earned or deserved. It’s just to say that we should be careful patting ourselves on the back too much, and we should be careful not to rely to heavily on future events going as well for us as past events did. Sometimes you have to make your own luck.

Comments

  1. monkeyrotica says:

    One of the big economic disadvantages Europe had was a rigid class system. If you were a serf in Russia you were pretty much doomed. And if you’re a Jewish officer in the French military, you get scapegoated and sent to Devil’s Island. America had it’s own class structure, but freedom of movement allowed Georgia sharecroppers to migrate to Chicago and take their music and barbecue with them. Unfortunately, most of that wealth has been concentrated in fewer and fewer hands and it seems as if Europe is leading in the egalitarianism race.

    But we still have the barbecue.

  2. BeyondDC says:

    Are you aware of Modelski’s long cycle hegemony theory? Fascinating stuff.

  3. Daniel Hall says:

    So what happened? Well, we developed a system of mass-throughput technologies that made tons of identical goods for sale around the country. And we did that, in part, by exploiting the massive resource reserves we were busy discovering, thanks to our mining engineers. As it turns out, throwing a pile of resources into a factory making hundreds of thousands of similar products is very productive.

    Change a very, very small number of words in that paragraph and it sounds an awful lot like some other country that I just can’t seem to recall the name of right now… something about the Olympics I think.

  4. D.Schleicher says:

    Ezra’s comment is particularly odd given Mancur Olson’s famous development idea that NOT getting invaded led to long-term economic decline as, absent some shake-up, time would permit groups to organize (solving the collective action problem) and then become able to divert government policy from wealth generation to dividing up the pie. (Now, I’m not sure about this model — it certainly looked better when it was written, when long-term uninvaded democracies like the us, britain and india, were suffering through slow growth, and the losers of WWII, Japan and Germany, were growing through the roof). But it something else to throw in the mix..

  5. James says:

    Are any of you familiar with the concept of the “sclerotic society”? Basically, the idea is that as a particular society ages, the number of interest groups, institutions, and red tape become so great that it becomes impossible to get anything done, leading to a long, slow decline. The theorist who came up with this used it to explain the growth of Japan and Western Europe post-WWII, because so much of the sclerosis, if you will, was wiped away through total war.

    In our case, the inability to take on the huge, vital projects that we so desperately need to undertake, beginning yesterday – the death of our can-do spirit – appears to be a highly correlated with our own societal sclerosis.

  6. You forgot another key element: a country blessed with abundant natural resources (oil, land, coal, iron ore, copper, water, etc.) especially during the time when long distance transportation was particularly difficult.