"How America Got Rich"

Historian Arthur Herman summarizes.

How did the Great American Transformation take place? Not by government intervention or investment or fine-tuning—or through other modalities Keynesian-minded economic advisers have tried to reproduce, most recently in the Obama $800 billion stimulus.

It was, instead, a threefold combination of renewing economic productivity, imposing tax cuts, and encouraging business savings capitalized as investment—together with the bias toward entrepreneurship and innovation that has always characterized the American economy. It needed its Milton Reynoldses and Ray Krocs, as well as its GMs and U.S. Steels, and in the end the forces that fueled the former have proved more durable than the ones that undergirded the latter.

Comments

[Patrick R. Sullivan]

I hope Mitt Romney reads Herman's piece before tonight's debate.

[Ken]

Deirdre McCloskey makes a pretty convincing case that culture more than anything is responsible for the success of Anglo-Saxon economies. For most of human history, various things like tax cuts, saving, and capital investments were tried in various places, even all at the same time. The primary driver behind the last few hundred years power house economics occurred because of a change in culture.

People stopped seeing businessmen as parasites and dirty money changers. The infusion of dignity on bourgeois values, which changed businessmen from parasites to respectable people and even roll models, caused the massive wealth creation we see today.

[kyle8]

Yes, Ken that's a great book. I would not place 100% emphasis on her theory, but it is, I think, mostly true.