I recently read Laura Hillenbrand’s Seabiscuit. I certainly enjoyed the book as a sports story, but I also enjoyed learning about that period of time in American history. Charles Howard, Seabiscuit’s owner, made his money in the auto business. At the time he started, transportation options were greatly in flux. Cars were the noisy, inefficient playthings of the rich. People rode horses for short distances, and trains for long ones. It would have been difficult to look at that situation and predict that automobiles would rise as a massive industry — to the point that there would be more vehicles than drivers in this country — dictate the layout of every city built or updated afterwards, and generate amazing economic growth as people gained the ability to make quick work of medium distances. We’re still dealing with some of the downsides to cars, of course, but life as we know it is unthinkable without them.
I’ve been pondering that as we celebrate Independence Day here in the US (hello international readers! I love you! Please humor me for today). Joseph Stiglitz wrote a piece in the Financial Times arguing that America is no longer a land of opportunity; various polls find about half of people think the American Dream is dead or a myth. Of course, that all depends on what you think the American Dream is. In general, I’d say it’s the belief — on a personal level — that hard work will lead to a better life and the belief — on a societal level — that America’s best days are always ahead.
There are reasons for pessimism, to be sure. Those of you who’ve read this blog for years know that I have fairly free market sympathies. If the government is going to spend money, though, which it always will, it’s important to look at what we spend money on. In recent articles about the so-called “God particle,” it’s been reported that the giant collider doing experiments related to the particle was shut down for budgetary reasons. What does get funded? Entitlements like Social Security and Medicare, and a gigantic Pentagon budget that seems to enrich defense contractors more than funding research or actual soldiers on the ground. The capital class enriches itself and a society spends its riches on promises made in the past rather than investing in the future.
But history features many moments of reinvention. Cars remade America in their image, generating entirely new industries from fast food restaurants to gas stations to highway building. More recently, the internet and mobile technology have created wealth too. The other day, I paid to renew the LauraVanderkam.com domain name for 5 years. I love having this writing outlet, so I’m happy to do it. But needless to say, payments to domain companies weren’t an economic event 30 years ago. I just wrote a short book that does not exist in a physical state. I’m quite sad about the shrinking market for print content in newspapers and magazines, but when I started my writing career, there was no way to distribute a 35-page manifesto, with almost no transaction costs, to 10,000-plus paying customers.
So what’s to say that the best days can’t still be ahead? I suppose I’m an optimist, but I envision some sort of energy production breakthrough that will pollute less, cost less, and thus lower the costs of everything we do. As a side gig, I’ve been working on a project researching personalized digital learning — a concept that could possibly lower education costs while boosting outcomes (see the Rocketship schools for one example of how students get more hours per day of deliberate practice on basic skills, and more one-on-one time with teachers at a 15% margin with California’s per pupil allocation). If education has powered past economic breakthroughs, it can power another if kids actually learn. Or perhaps there will be some other breakthrough — cleverly disguised now as another inefficient plaything of the rich (private space flight? random wacky health treatments?) — that will change everything.
I don’t know and no one does. As long as the rewards for innovation are great, people will keep trying. And though some policies certainly seem to squelch innovation, given that a 20-something guy became a billionaire by giving people a way to learn what their friends ate for breakfast, and he in turn just made other people multi-millionaires for generating a fun way to share quirky photos, it seems that we haven’t really squelched this impulse yet. Let’s hope, this fourth of July, that we don’t.
Photo courtesy flickr user brittanylynae. The caption on this flag at flickr says it's flying over Robert E. Lee's house, which brings to mind another example of American reinvention — coming back together after a massive civil war. Quite something, if you think about it.