A week before the 1980 presidential election, Ronald Reagan famously asked a debate audience, “Are you better off than you were four years ago?” Though political circumstances change, the question remains: are we in the U.S. better off than we were in the past? Can we expect to be better off in the future? And, most important for the readers of this column, what role will design engineers play in future improvements to the U.S. standard of living?
Economist Robert J. Gordon has pondered these questions most of his life, and has delivered his answers in the form of a 762-page book called The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. The book confirms something that I have long suspected, and makes hard-databased predictions that engineers need to bear in mind.
Gordon’s basic message is simple. The period 1940 to 1970 – the economic golden age when a U.S. citizen with only a high-school education could get a good job, marry, have children, and afford a new house and a new car – was very likely unique, and will never return. Gordon judges its uniqueness by a measure he calls “total factor productivity” or TFP.
You have probably heard of gross national product, or GNP, which is basically the total output of a nation’s goods and services. As I understand it, TFP is the amount of economic output for a given input of labor and capital. Any innovation that lets someone produce more value (a widget or a service) with fewer people or fewer dollars invested in capital equipment will increase TFP. And a growing TFP is what makes an economy attractive to live in. It opens up good employment opportunities, encourages productive investment, and makes life easier in general.
As Gordon shows in near-exhaustive detail, that is just what happened in the U.S. as the nation shook off the effects of the Great Depression in its all-out effort to out-produce the Axis during World War II. Once the great engines of production got going during the war, they managed a smooth transition to making the peacetime abundance of consumer goods that characterized the 1950s: cars, TVs, air conditioning, computers, and all the rest. But once that wave of innovation ended, things slowed down again.
To quote data from just one of the hundreds of graphs and charts in the book, in the period 1890 to 1920, TFP in the U.S. rose at an average rate of 0.5 percent a year. From 1920 to 1970, it sped up to about 1.8 percent a year. And from 1970 to 2014, TFP fell back down to only about 0.6 percent per year. In a numerical nutshell, that is the story Gordon tells.
Couldn’t it happen again? Not in the U.S., Gordon says. Barring some unanticipated universal disaster, you can wire a nation for electricity and pipe it for indoor plumbing and air-condition its buildings only once. The profound technological innovations that made everyday life and work much more pleasant now than for the preceding several thousand years took place in the U.S. largely between 1920 and 1970. It is very hard to imagine any comparable future innovations that could make as much of a positive difference to the everyday lives of most people as automobiles, clean water, sanitary sewers, electricity, and air conditioning have made already.
But what about the rapidly increasing pace of innovations that design engineers face every day? Product life cycles that used to be measured in years are now measured in months or weeks, which is why designers are so busy keeping up with the competition and taking advantage of new components and software.
Gordon distinguishes sharply between the pace of innovation, which he admits is speeding up, and the impact of innovation. Yes, smart phones, Facebook, streaming TV shows over the Internet, and other such innovations have wrought huge and rapid changes in some industries. But these communications-technology innovations have not contributed to TFP nearly as much as the innovations of the earlier twentieth century did.
Fortunately, there will always be something for design engineers to do. But it may be more along the lines of changes in style than of fundamental improvements in the quality of life. Volkswagen’s New Beetle and Chrysler’s PT Cruiser may be the shape of things to come: products that embody forms from the past, but with updated technology. Up to now, engineers have rarely thought like dress designers, who face the perennial problem that there are only so many ways to clothe the naked human body, but manage to come up with new styles every season.
If Gordon is right, the future of engineering design may look more like fashion design: a constant reshuffling of the same basic ingredients. In such a world, there will always be novel products for engineers to design. But if Gordon is right, novelty, rather than fundamental improvements in the standard of living, will be the main reason that people buy them.
Do you think the best years of American economic growth are behind us, or do you think there will be another technological advance that will surpass what happened in the 1940 to 1970 period? Send your response to [email protected]
Filed Under: Industrial automation