The most troubling aspect of the presidential campaign is that neither front-runner has focused on the most critical issue confronting America — learning to grow again.
In this century, gross domestic product (GDP) has advanced a paltry 1.7 percent a year, and annual family incomes have fallen about $4,000, whereas during the Reagan-Clinton era, progress was a lot better.
Donald Trump blames China, but it’s not simply about unfair trade and the art of the deal.
Hillary Clinton implicitly blames white men. Her whole campaign is premised on the notion that universities and corporate managers are handicapping America by conspiring against women and minorities, when the makeup of the student body at most campuses reveals a different story, and businesses nowadays earnestly recruit and pay well women and minorities to avoid lawsuits.
The problems are more radical and paradoxical. Capital and energy — once scarce and expensive — are now in great abundance, and workers — still too expensive in America compared to Asia — are becoming obsolete.
The digital economy based more on intellectual property — computer apps and artificial intelligence — and less on hard assets — industrial buildings and equipment — greatly reduces the amount of physical capital businesses need to make and create products. The machinery we use is more versatile. Look at the range of objects a 3D printer can be programmed to make or tasks your smartphone can accomplish — as compared to the metal presses and desktops they replaced.
Google was launched with only $25 million in 1999 and grew into a $23 billion enterprise at its initial public offering five years later, but it took billions and decades for Henry Ford to create a company of similar value with global scope.
Digital growth is powered by electricity, not petroleum, and even in the old economy, the electric car will displace gasoline-powered vehicles over the next several decades. Abundant natural gas and gradually cheaper solar and wind power will make this electricity, and oil prices will stay down.
Paradoxically, as consumers spend more and life is made easier by telecommuting, Internet shopping and smart phones, the official GDP growth statistics are pulled down almost every quarter by weak business investments in commercial buildings and machinery.
Businesses do spend more on intellectual property — software and the like — but it hardly replaces what they have quit spending on machines and buildings to house them.
At the same time, jobs growth and wages are pushed down by ever-smarter machines. There are automatic tellers at the bank, checkers at the drugstore, and also less visibly, a new army of robots that Amazon is deploying at fulfillment centers to replace store clerks, as online sales cannibalize brick-and-mortar commerce.
Now, the economy is on the brink of an artificial intelligence and robotics revolution with the potential to replace 90 percent of all occupations as we know them — from carpenters to economics professors.
As a nation, we simply fail to grasp the consequences.
Schools spend much more time teaching children about civil rights than computer coding. It’s not about dividing the pie but learning to manage an army of smart machines.
International trade agreements focus most specifically on how much governments tax and regulate foreign goods but hardly enough on industrial espionage. Amazon can protect its web-based software from would-be pirates at IBM, but not very well from Chinese hackers.
With factories in overabundance, trade agreements simply don’t address currency manipulation that permits Asia to sell everything they make at artificially discounted prices and shift the burdens of downsizing and unemployment onto American and European workers. Both Mr. Trump and Mrs. Clinton recognize the need to stand up to China, but fixing the economy only begins there. The endless political obsession with political correctness in schools and the workplace is an important reason why Americans are not doing well these days — and not likely to do well in the future.