The End of Affluence
Madrick estimates that if the American economy had continued expanding at the average annual rate of 3.4 percent recorded for 150 years, it could have produced an extra $12 trillion in goods and services, “more than enough to have bought each of America’s homeowners a new house, or paid off all of our government, mortgage and credit card debt, or replaced all of our nation’s factories, including capital equipment, with new ones.” After 1973, however, the annual average GNP shrank to 2.3 percent because of such factors as foreign competition and the decline of old-fashioned mass production.
During the heyday of mass production, the United States had an enormous advantage over the rest of the world because of abundant natural resources and an enormous domestic market. As production methods evolved, American business did not keep up with the rest of the world.
Madrick does not believe the GNP can accelerate significantly again. Spurts will be offset by declines, as has been the case since 1973. Social unrest, he believes, is inevitable and already evident in hot-button issues such as affirmative action, immigration, welfare reform, Social Security, environmental protection, and health care.
He focuses on quantity because quality cannot be quantified or displayed on graphs. If a lawyer sues the government for $3 million and earns a fee of $1 million, he may have added a million dollars to the GNP but has he added to the nation’s wealth? If gun manufacturers increase production to meet demand spurred by rising crime, is this adding to the nation’s wealth?
THE END OF AFFLUENCE has received praise in many major periodicals. Since Madrick is not an academician but a popularizer of economic history, his achievement is in presenting accepted concepts to more people. The book’s appearance near the beginning of an election year could help Democrats and hurt Republicans. Madrick sounds objective but foresees more government intervention—including higher taxes, subsidized research and development, and redistribution of wealth—as inevitable. We cannot resolve our economic dilemma, he writes, “by assuming that this new world has remained as accommodating as its predecessor and all that ails us is that we have taken a wrong moral or ideological turn.”