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There is something I really like in this Ygeslias article. Whatever is causing more partisan politics it’s not the economy. We’ve done well the past few years.
https://www.slowboring.com/p/how-obama-and-trump-and-biden-beat
Macroeconomic management has been actually really good the last 15 years. Someone can argue we could have had a few million more people employed between 2010-1016, but that’s like 2% of gdp. Trump did close that gap and I’m not sure if he was brilliant or lucky but he yelled at the Fed for being too hawkish.
I like how he led with the shale Revolution. I’ve been saying this for years. Tech gets all the fan fare but if Tech was the Jordan of the economy American energy independence over this time frame was the Scottie Pippen in creating wealth for America. I think part of the reason it doesn’t get the fanfare is because it doesn’t create 12 figure networth people. Its a constant costs business versus moat building business. Of course if the businesses are not as profitable then the surplus value went to consumers in the form of lower energy costs versus companies having high margins. Also likely led to America not needing to write giant checks to the Saudis which meant our trade deficit could fund other things and those depend more on price leading to the strong dollar. People working in constant-costs businesses (farming, manufacturing, energy) tend to vote red; people working in wide moat with ability to extract economic rents or winner take all markets tend to vote blue. Someday I should write a long article on this because I have not seen anyone write about it. But the split in voting patterns makes a lot of sense based on the economics of their business. It would even make sense to have different tax regimes for these businesses but would be impossibly hard to execute. As a driver of political views it seems as powerful as male-female splits which seems a lot more talked about.
I think maga and the left like to cite American wealth not making it to the middle class etc. But honestly this much wealth creation can’t just be consumed by the 1% it pretty much has to flow to others. Perhaps, the middle class isn’t doing as well as we want them to be doing but the counter factual (Europe) would be poorer than what we got.
The GDP numbers are more pronounced because we calculate things in currencies and the cited figures were when the dollar was weak. The gap has definitely shifted in favor of the US but I do think this overstates the change.
The Tea Party seems underrated to me. They put a halt to more government spending. Less fiscal policy meant the fed could keep rates lower which basically crowded-in private investment in tech and shale and a host of things with cheap money. The current situation is the opposite of this where we increased federal spending from about 20.5% last decade to 24% now. And that’s caused a massive change in rates to get inflation close to target.
Culture Wars seem to have little to do with economic mismanagement by either side. I think the right is correct that the fall of small towns is bad but I think that largely came from economic forces (like productivity) gains that couldn’t be prevented. And there small towns have also been hurt by the people (probably like myself) who would be logical local elites moving away.
As much as national divorce or something always sound appealing it’s just going to make us all poorer. To break up economic integration would make our economy much more like Europe. We would run into something like Brussels that is ineffective at macro management and lose the economy of scale.
As someone who knows little about economics, I am curious about how much the various economic metrics actually correspond to quality of life. Certainly I feel that there is good reason to be a bit suspicious about such metrics in general. They inevitably simplify complex realities, they can be cherry-picked by biased "experts", and then there is Goodhart's law.
I see that much of the US heartland looks like a hollowed-out place with few jobs other than at the McDs, gas station, farm, army base, or prison and with massive drug abuse issues. I see how many of the good jobs are concentrated in a few cities. I see the housing crises in the desirable cities. I see the difficulties that people who are not in the upper tiers of birth fortune and/or intelligence have in getting decent jobs. I see how little vacation time working Americans usually get. But when I write all of this, I also know that there is a huge amount of economic success that such a picture misses. There is also a great deal of affluence, success, and dynamism in America.
Overall, I feel that it is hard for me to get a good picture of how well America really is doing economically.
This is an extremely good point that I think a lot of people fail to respect or notice.
That said, if you're looking for a statistical metric that's harder to game, I find that energy/electricity usage per capita is a really good indicator.
Out of curiosity, did proof-of-work crypto show up on such metrics?
I would hope that its electric waste would be dwarfed by industrial processes like aluminum smelting, but I don’t really have an intuition for it.
The chart I'm using is https://ourworldindata.org/grapher/per-capita-energy-use?tab=chart&facet=entity&country=~USA - it has Y-Combinator and Oxford at the bottom so I'm assuming this data hasn't just been pulled entirely out of someone's ass and is actually from the EIA.
But to answer your question - no. When you look at the chart the US economy suffered a big hit in 2007 and has not actually gotten back to that point. Something happened in 2020 that made energy usage per person go down a lot (gee, I wonder what that could be? cough cough) but the overall trend is that the US economy never actually recovered from the 2007 GFC in any real way - which is consistent with the hypothesis that the "recovery" was both unevenly distributed and in some part consisted of statistical chicanery.
Interesting--thanks!
I'm not sure what to think about the metric. It makes sense that more energy spent = more industrial output = more material prosperity. Some parts track pretty well: sustained growth through the 90s. Dips after the OPEC crisis, dot-com bubble, Recession, and COVID.
But...did the end of the 70s really collapse harder than all of those combined? By this chart, American quality of life peaked during either the OPEC crisis or the Carter years. I'm not sure I know anyone who voted in that election and feels the same way.
Conversely, where's the Nixon Shock? "Stagflation" dates back to 1970, which according to this plot, is barely a delay in skyrocketing prosperity.
This metric is much harder to game, but I don't find it very easy to interpret.
The 70s was when the US hit peak domestic conventional oil production. Petroleum is the lifeblood of modern industrial economies, and when you can no longer produce enough of it domestically you're forced to go elsewhere. Throw in the oil embargo of the 1970s and you've got a recipe for a truly brutal economic contraction. While the Petrodollar system implemented afterwards did actually provide a lot more cheap energy, the costs associated with it are substantially higher(the US enforces the petrodollar militarily, and last I checked the US military was very expensive), and as energy is the basis for effectively all economic activity, increases in the price of energy ripple through the entirety of society.
While you're totally right that it doesn't track quality of life perfectly, part of that is due to the distribution of the pain - and part of it is thanks to the massive outsourcing project that the US embarked on. The US used substantially less energy per person because a lot of consumer goods were being manufactured in a variety of developing world sweatshops with brutal labour practices and no pesky environmental protection regulations, as opposed to local manufacture. If you live in the privileged classes of the USA (to borrow someone else's classification, if you earn a salary rather than a wage), you would have seen your quality of life actually improve - products made in China are much cheaper than ones made in the USA after all. Of course, if you're someone who lives in small-town, flyover America you didn't see any recovery from the 1970s. Instead, you saw the factories which gave your town stable employment get shipped off to China and replaced with malign neglect of local infrastructure and fentanyl addictions - I'd argue that those parts of the country most definitely did not recover from the 1970s depression in any real way.
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