Posts Tagged ‘economics’
“No society can surely be flourishing and happy, of which by far the greater part of the numbers are poor and miserable”*…
Progressives have been fighting on the neoliberals’ terms. Nick Hanauer and Eric Beinhocker propose a flip, an approach that is more humane– and that promises a far more prosperous country…
In 1962, the historian of science Thomas Kuhn published a short book that changed how educated people think about intellectual progress. The Structure of Scientific Revolutions argued that knowledge does not advance through the steady accumulation of better facts. It advances through ruptures—moments when a prevailing framework, or paradigm, collapses under the weight of anomalies it cannot explain, and a new one takes its place. The Ptolemaic model of the solar system gave way to the Copernican. Newtonian mechanics gave way to relativity. The shift is rarely smooth or purely rational. People resist. Institutions resist. The old framework doesn’t simply yield to better evidence; it has to be displaced by an alternative that can explain not just the anomalies but everything the old model explained, plus more.
We are living through one of those moments now. The prevailing economic paradigm—the neoliberal consensus that dominated policymaking across the Western world from roughly the mid-1970 to 2020—has collapsed. It has not collapsed quietly, in the pages of academic journals, where it was already in serious disrepute. It has collapsed loudly, publicly, and catastrophically, in the lived experience of hundreds of millions of people who were told the model would deliver prosperity. Instead, they watched it deliver stagnation and insecurity and drew the obvious conclusion: The people running the system either do not know what they’re doing or do not care about them, or both. The democratic consequences of that conclusion are now visible everywhere.
This essay argues three points. First, that the democratic emergency we face—the rise of authoritarian populism across the developed world—is not primarily a political failure but an economic one. It is the result of a failed set of economic ideas: When the neoliberal paradigm lost its intellectual and popular support after the 2008 crisis, there was no credible alternative, and the resulting vacuum was filled by populism. Second, progressive responses—while valuable—have not filled the paradigm vacuum because they have operated largely within the neoliberal frame rather than replacing it. Third, that an emerging modern economic consensus we call Market Humanism has the potential to replace neoliberalism—not by proposing a new set of policies, but by constructing a new paradigm grounded in twenty-first-century science. This new paradigm can not only to help us create an economy that is fair, prosperous, and sustainable, but also repair our broken democracy…
[The authors explain how neoliberalism broke the social contract (and democracy) and why the progressive response has failed. They explain the “scientific revolutions” that set the stage for Market Humanism: “From Selfish Homo Economicus to Cooperative Homo Sapiens,” “From Markets as Efficient Allocators to Markets as Evolutionary Innovators,” “From Value Is Market Price to Value Is Solutions to Human Problems,” and “From Inequality Is Meritocratic to Inequality Is Created by Structure and Power.” They then outline the steps necessary– the four imperatives of Market Humanism: “Grow the economy by making it fairer,” “Grow the economy by supporting the middle class,” “Measure what matters—human flourishing,” and “Make the state a partner in prosperity.” And they explain how Market Humanism can help democracy succeed. They conclude…}
… It is useful to recall what happened during a previous time a major paradigm changed. For most of recorded history—thousands of generations—people looked up at the sky and saw what seemed obvious: the sun moved, the earth stood still. Entire systems of knowledge, theology, and political authority were built on that foundation. Then, in the early seventeenth century, Galileo Galilei perfected the telescope and turned it on the heavens. What he saw—moons rotating around Jupiter and the phases of Venus—was inconsistent with a universe organized around a stationary earth at the center of the universe. Galileo’s theory actually had evidence you could see with your own eyes.
He brought that evidence to the most powerful institution of his day. He showed the Church’s leaders what the telescope revealed. They looked. They understood what they were seeing. And then they told Galileo to shove his telescope where the sun did not shine. He was tried by the Inquisition and spent the rest of his life under house arrest.
Why? Not because they couldn’t see the evidence. But because if the earth was diminished, so were they. The geocentric paradigm was not just a theory of astronomy. It was a foundation of institutional authority, and the people whose power rested on that foundation were not interested in whether it was true. They were interested in whether it was useful—to them.
This is the situation we are in now. The evidence against the neoliberal paradigm is not ambiguous—we can see it right in front of our eyes. But the paradigm has made a small number of people very wealthy, and they have spent decades building the infrastructure that keeps it alive in policy long after it died in the academy. They will not abandon it. They will call the alternative radical, un-American, dangerous. The rich and powerful will circle the wagons and spend whatever it takes.
They will still lose. Not because they suddenly see the light. Because a paradigm that is empirically wrong cannot indefinitely outrun one that is empirically right—not when ordinary people are the ones living the difference and noticing it. The defenders of the old paradigm will lose because stagnant wages, predatory healthcare, and hollowed-out communities are not abstract to the Americans paying their costs. They will lose because ordinary people pick up the telescope, look through it, and refuse to look away.
That is what Market Humanism is. It is not the property of the academics who built it or the policymakers who will implement it. It belongs to the people whose lives it describes—workers, small business owners, teachers, nurses, scientists, young people told their whole lives that the rules of the neoliberal economy are incontestable facts of nature, and who now are beginning to suspect, rightly, that they were scammed.
This paradigm does not need permission from the people in power to take hold. It needs only to be claimed by the people who have been waiting for it. That is how every paradigm that ever displaced a wrong one has won—not because the powerful changed their minds, but because enough ordinary people stopped accepting a story that no longer matched the world they lived in.
That is what is being asked of us now. The telescope is pointing at the sky. The evidence is clear. The alternative is built. What remains is the work of ordinary people, in extraordinary numbers, refusing to live inside a story that no longer explains the world. The people told for 50 years there is no alternative are about to discover that there is—and that it has been theirs all along.
Fascinating, provocative, and eminently worth reading in full: “Market Humanism: A New Paradigm for a New Era,” from @nickhanauer.bsky.social and @ericbeinhocker.bsky.social.
* Adam Smith, Inquiry into the Nature and Causes of the Wealth of Nations, 1776
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As we cultivate change, we might recall that it was on this date in 1991 that Nickelodeon premiered its first three original animated series– “Nicktoons“– Doug, Rugrats, and Ren & Stimpy. One of these was not like the other two.
Ren & Stimpy follows the misadventures of Ren Höek, an emotionally unstable (indeed, psychotic) chihuahua; and Stimpy, a good-natured and dimwitted Manx cat. But while Doug and Rugrats were clearly family fare, Ren & Stimpy featured a surreal blend of dark humor, sexual innuendo, violence, and shock. It’s producers had trouble with Standards and Practices; it’s creator was fired after the first year… but kids loved it. It ran for five seasons and 52 episodes (93 segments).
“Let’s go to the numbers”*…
From the McKinsey Global Institute, the executive summary of their snapshot– a “balance sheet”– of the global economy…
• The global balance sheet takes stock of all assets, liabilities, and wealth, providing a lens into economic health. This annual update estimates that it reached nearly $1.8 quadrillion ($1,800 trillion) in 2025, up from $1.7 quadrillion in 2024. Several asset classes grew further out of balance with the underlying economy, raising the possibility of corrections through inflation, asset valuation losses, or, optimally, productivity growth.
• The balance sheet’s mounting detachment from the global economy was driven by the world’s two biggest economies in 2025. US equity values soared to 2.4 times corporate net assets as profits were double their share of GDP since 2000. China’s corporate debt grew to 80 percent of real assets, versus 50 percent globally. Government debt remains near all-time highs in the United States and has grown most rapidly in China.
• Globally, most corporate and household debt and real estate moved closer to 25-year averages relative to GDP. Inflation helped with this normalization, although values remain well above pre-2000 levels. The ratio of productive assets to GDP held steady amid flat investment.
• Global household wealth growth rose to a new high of $570 trillion, driven by “paper” gains. Only 20 percent came from real capital formation, while valuations of existing assets grew four percentage points faster than already-high consumer price inflation. In the United States and Canada, equity values drove wealth growth. China, France, and Germany saw a drop in paper wealth as real estate prices declined. In the United Kingdom and Japan, inflation pushed up asset values.
• Major economies were on different pathways entering 2026. The United States has been in a “productivity acceleration” scenario, but high public debt and equities add the possibility of “sustained inflation” or “balance sheet reset.” Europe has gravitated toward “secular stagnation” as sluggish demand depresses growth and interest rates. China has experienced a partial balance sheet reset amid declining property values, although government spending and corporate investment have continued to propel balance sheet growth.
In this report, we provide an update on the global balance sheet in 2025, exploring to what extent its recent expansion, and by extension wealth growth, has been “in balance.” The analysis finds that wealth was, to an even greater extent than previously, rooted in asset values rising faster than real economy investment and growth, creating record levels of global wealth “on paper.”
Although many economies that were studied experienced wealth and balance sheet swings, the global picture was largely driven by its two biggest: the United States and China. Higher US equity values and the accumulation of China’s public and private debt brought some near-term economic benefits but left their economies more vulnerable to potential corrections.
Businesses use both income statements and balance sheets to develop a complete picture of their financial health. Analysts of the global economy tend to focus on the former. Since 2021, MGI has developed a “global balance sheet” to fill this gap, representing a clearer view into the world economy’s wealth and health.
Our previous reports found that from the mid-1990s to the COVID-19 pandemic, household wealth expanded faster than gross domestic product. Asset prices for real estate, equities, and bonds grew, as did debt and deposits. This occurred amid declining (and eventually rock-bottom) interest rates, rapidly expanding US profits, and a property boom in China. Productivity did not keep pace across advanced economies, nor did real wealth formation through net new investment.
When the balance sheet outruns the underlying economy, weaknesses can be exposed. When real estate and equity values rise faster than GDP, capital may disproportionately go to asset repurchases, sometimes with a lot of leverage. This may push up valuations but leave the economy deprived of the type of investment that generates long-run growth. For households, wealth rises but merely on paper, with heightened risks of eventual corrections. Growing asset values also tend to exacerbate wealth inequality, as existing owners of wealth see large gains while entering asset markets becomes harder for others (for example, young households trying to buy a home).
Elevated balance sheets may correct in one of three ways. A productivity acceleration scenario involves higher income supporting high asset values and debt; this is the most preferred outcome. A sustained inflation scenario brings down the real values of assets and debt, recalibrating the balance sheet with higher nominal GDP. But it can erode inflation-adjusted wealth along with other undesirable side effects. A balance sheet reset scenario, entailing a drop in asset values, deleveraging, and defaults, would shrink the balance sheet in absolute terms, with severe wealth losses and, often, lengthy periods of lost economic growth. Or the balance sheet may just stay high, particularly under secular-stagnation-like conditions of low investment and interest rates, as seen in the United States and Europe in the 2010s. That’s seemingly good for wealth, but at the cost of low growth and rising leverage.
Historically, most balance sheet corrections have taken place through higher inflation. Indeed, the inflation coming out of the COVID-19 pandemic in the United States and Europe brought a correction in the balance sheet (and wealth) ratio to GDP. In China, a drop in property values drove a decline in wealth to GDP.
In 2025, global wealth reached a higher dollar value than ever before. But how “healthy” was this new growth? After postpandemic corrections, some balance sheet items have resumed expansion and reached new heights. This was particularly the case for US equity as AI fueled market optimism and corporate earnings continued to climb. Rising government debt relative to GDP remains a challenge in many economies amid higher interest rates. Stocks of currency and deposits remain high compared to longer-term historical norms. Altogether, this has culminated in even more wealth on paper than in the past several decades and raises the stakes for US corporate earnings to deliver.
Balance sheets, and macroeconomic factors like productivity and inflation, point to diverging trends across major economies. Recognizing the swing factors that can shift an economy to productivity acceleration is more urgent than ever: for the United States, corporate earnings and greater government saving (in other words, less borrowing); for Europe, greater investment; for China, higher domestic consumption.
Future global wealth and stability may depend on it…
[The report unpacks 0with lots of charts/data) the contents– the constituent elements– of the balance sheet, examines whether or not it is “in balance,” and considers whether the growth that it reflects has been “healthy.” (McKinsey worries that it has not been.) It concludes, addressing the executives who are McKinsey’s primary clients…]
… A balance sheet that is out of kilter with the economy—in other words, with high paper wealth fueled by debt and liquidity levels significantly above historical norms—can unwind via higher productivity, higher inflation, or asset price corrections. Balance sheets may also remain large, typically under secular-stagnation-like conditions, effectively kicking the can down the road for potential correction.
Each of these four scenarios shapes the long-term economic outlook. Only productivity acceleration delivers real economic growth justifying valuations, thus protecting wealth. The others sacrifice wealth, growth, or both. Sustained inflation reduces real values of wealth, secular stagnation sees low growth, and a balance sheet reset signals a loss of wealth and growth. Importantly for business leaders, two scenarios would likely mean structurally higher interest rates: Productivity acceleration would entail greater demand for capital amid higher business investment, while sustained inflation would likely involve central banks tightening policy rates and, ultimately, higher long-term yields.
All scenarios are possible for all major economies. However, they appear to be on different pathways, with different swing factors that could move them from one trajectory to another.
For executives, this means both preparing for an unusually broad array of economic pathways and carefully watching the swing factors, which rise above the noise of daily indicators (see sidebar “Business planning for all scenarios”). Leaders across sectors and industries could also explore ways to encourage the optimal outcome, the productivity acceleration scenario.
Major economies show significant divergence in trends across macro drivers of productivity, inflation, and interest rates, along with fundamental balance sheet components including real estate, equity, and debt.
The United States has seen a structural uptick in both productivity growth and interest rates relative to the prepandemic period. Productive investment, particularly driven by the tech sector, has recently grown. High equity values also signal market confidence, although they may pose some downside risks. Meanwhile, inflation remains above the Federal Reserve’s 2 percent target and government debt remains near all-time highs, adding further inflation risk.
The eurozone has experienced a return to secular-stagnation-like conditions, akin to the prepandemic period, amid flat productivity and higher saving. Europe’s balance sheets overall appear more in balance compared to the US balance sheet (with a few exceptions, such as Italy’s government debt). Productivity growth rates, however, are down across the region’s three largest economies (Germany, France, and Italy). Until recently, inflation was mostly trending toward the European Central Bank’s 2 percent target, although Europe is more exposed to energy price changes. Personal savings rates remain high amid a drop in aggregate demand and per capita household wealth has declined in PPP terms in Germany and France.3 Productive investment remains below prepandemic and global averages.
China continues to work through a partial balance sheet reset in the face of a continued decline in real estate, with questions about future growth drivers amid low household demand and a boom in corporate investment. Productivity growth has receded in recent years, although it remains above the rate in advanced economies. Inflation and, in tandem, nominal interest rates have dropped, and concerns have shifted to dealing with deflation risks. At a macro level, lower household property investment has been offset by higher corporate investment, especially among state-owned enterprises, and by government spending. This has coincided with a substantial rise in corporate and government debt, both reaching all-time highs.
While the United States is the only major economy showing signs of productivity acceleration, it is not guaranteed long term, and other economies have a potential path to it. Focusing on “swing factors” could help filter signal from noise in the daily flow of indicators, market fluctuations, and political headlines. These factors differ by economy.
In the United States, swing factors that could knock the economy out of productivity acceleration include the “fiscal tightrope” and corporate earnings.
- Government debt stands at about 120 percent of GDP. Combined with higher interest rates, this means more public spending will need to be directed toward debt repayment. Public spending could come under pressure, especially from bond investors, in the form of higher market interest rates. These translate into higher business costs of capital. If fiscal policy tightens too little, a public debt crisis or sustained inflation becomes more likely. Too much, and secular stagnation is a potential outcome. To bring budgets back into balance, greater fiscal saving (or lower borrowing) on the order of three percentage points of GDP would be needed.
- On the corporate-earnings side, an equity or wealth reset could be triggered by a large structural shift in the longer-term outlook—for example, from AI disappointment or large geopolitical disruption. Equities are at all-time highs, at 3.7 times GDP and 2.4 times net assets, and constitute nearly 40 percent of household wealth. A price correction could result in a sharp pullback in demand, ushering in an extended period of low growth. It is thus imperative that corporate earnings deliver on high expectations…
Eminently worth reading in full: “The global balance sheet 2026: Imbalance and divergence.”
See also: “World Economic Situation and Prospects 2026” from UNCTAD (the UN Trade and Development Organization), whose review of the global finacial situation resonates with McKinsey’s, but whose recommendations are targeted to global policy makers and development champions:
• Strengthen coordination across macroeconomic policies. Monetary policy alone cannot manage persistent price pressures. Better alignment between monetary, fiscal and industrial policies is essential to stabilise inflation, support investment and protect vulnerable groups.
• Use fiscal policy strategically and credibly. Targeted and temporary measures can help protect households from high prices and support social cohesion, while credible medium-term fiscal plans and prudent debt management are essential to rebuild fiscal space.
• Scale up multilateral cooperation and development finance. Implementing commitments under the Sevilla Commitment, including debt reform and expanded concessional and climate finance, is vital to closing investment gaps and reducing systemic risks.
• Reinforce an open, rules-based trading system. Strengthening transparency, predictability and cooperation in global trade remains central to sustaining growth and limiting fragmentation in an increasingly uncertain global economy.
And for a differently-flavored kind of accounting: “What the Big Mac index reveals about a global currency beef.”
* Catchphrase often used by financial and sports journalists to transition to statistics or financial data, e.g., on public radio’s wonderful Marketplace.
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As we ponder the political economy, we might recall (hoping that history doesn’t repeat itself) that on this date in 1929, while the U.S. economy was already showing signs of strain (agricultural strains and a sagging consumer market), the U.S., its businesses, and its financial markets were still in the “Roaring Twenties.” Roughly three months later (on October 24, 1929, “Black Thursday,” and October 29, 1929, “Black Tuesday”) America– and the world– suffered the Wall Street crash of 1929 and began the slide into the Great Depression.
By this date in 1932, stocks had lost roughly 90% of the value they had had three years earlier. GDP in the U.S. had fallen 30%; GDP around the world was down 15%. International trade fell by more than 50%, and unemployment in some countries rose as high as 33% (peaking in 1933 at 25% in the U.S.).
“It’s the economy, stupid”*…
Many Americans take pride in having the largest economy in the world… which, per the chart above, by one measure we do.
But then, if we adjust for population– calculate per capita– the picture changes…
And we note both that, on a PP basis, the U.S. would be lower and, more fundamentally, that the standing of the U.S. is slipping over time.
If we dive more deeply still, the picture complicates further…
This last chart illustrates the wealth inequality in the U.S., which drops from 2nd to 28th when wealth is measured by the median instead of the average… a wealth gap that has been growing since 1985 (and that is combined with an income gap that has been growing since 1980). For more, see World Inequality Database.
* James Carville
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As we search for the source of that smell, we might recall that it was on this date in 1549 that Robert Kett agreed to head a group of rebels in the English county of Norfolk during the reign of Tudor king Edward VI. The rebels were incensed by enclosure (the fencing off of common lands by wealthy landlords, as a product of which many peasants lost access to grazing, fuel, and small plots they had long used), along with rising rents, inflation, unemployment, and declining wages; as a response, they began destroying fences. One of their early targets was yeoman Robert Kett who, instead of resisting the rebels, agreed to their demands and offered to lead them.
Kett and his forces, joined by recruits from the city of Norwich and the surrounding countryside and numbering some 16,000, stormed Norwich and took the city at the end of July. They were besieged by, then routed, a Royal Army detachment led by the Marquess of Northampton who had been sent by the government to suppress the uprising.
But what became known as “Kett’s Rebellion” ended on August 27, when the rebels were defeated by an army under the leadership of the Earl of Warwick at the Battle of Dussindale. Kett was captured, held in the Tower of London, tried for treason, and hanged from the walls of Norwich Castle on December 7.
“It is fun to have fun”*…
… but it’s getting tougher to manage. As Ben Steverman reports, with fewer places to relax and socialize, and steeper prices for entry, having fun is quantifiably harder than it used to be…
Over the course of the past two decades, the US has lost 2,000 golf courses and 7,000 bars and nightclubs, and Americans now own 1.3 million fewer boats. It’s prohibitively expensive to open a new summer camp and practically impossible to build a beachfront resort or marina. Venue shortages afflict musicians looking for performance spaces, children looking to play in local sports leagues and adults looking to go out dancing. The best time to book a rental for this summer was last summer, and the best time to book for next summer is … well, it may already be too late.
America appears to be suffering from a fun shortage. For the industries supplying recreational amenities, this deficit is a business opportunity. But for everyone not positioned to profit from the trend, it’s a source of stress and frustration that’s been building for a while. It also has broad ramifications for the future of the economy, society and politics. On… the country’s 250th birthday, it’s worth pondering whether the pursuit of happiness has become more difficult.
First, a quick definition: Experts on these matters generally agree that the kinds of fun we should be striving for are enjoyable experiences with others. A live show with friends, a vacation with family or even small talk with a stranger can all make us feel more connected and content.
By those measures, it’s clear that Americans are having less fun than they used to. Since its 2003 inception, the Bureau of Labor Statistics’ American Time Use Survey shows double-digit percentage drops in the hours spent each year on arts and entertainment activities, attending sports or recreational events, and attending or hosting social events. In a 2024 US Census Bureau survey, almost 80% of respondents said they saw friends or relatives fewer than three times a week.
The US, along with Australia, Canada and New Zealand, seems to have grown uniquely unhappy over the past 15 years, according to the annual World Happiness Report, which combines data on more than 140 countries. For good reason, we often blame smartphones and social media for making us feel worse. But most of the world uses these digital tools at least as much as Americans do, and the US still came in 23rd on the global happiness ranking in 2026, down from 13th a decade prior. America’s happiness decline must have another major cause, says report co-editor and University of British Columbia professor emeritus of economics John Helliwell. He points to the “often forgotten” factor of fun. “It’s not just connections” with other people, he says. “It’s how much you’re enjoying the connections.”…
… It keeps getting harder — and more expensive — to have fun. A combination of factors is delivering a summer of higher prices, fewer options, limited vacancies and longer lines.
No matter how enthusiastic Americans are for offline experiences, there’s a limit to how much they can afford, with prices rising at the fastest pace in three years. As the cost of commutes, housing, utilities and other necessities climbs more quickly than wages, people have little choice but to skimp on fun. Meanwhile, the prices of some key categories of fun have been rising even faster than inflation. The price of a ticket to one of the top 100 concert tours in North America averaged $134 last year, trade publication Pollstar estimates, a 42% increase from 2019. Vacation rentals in coastal destinations jumped 38% over the same period, to $413 per night, according to data analyst AirDNA LLC.
Fun isn’t just harder to afford. It’s harder to access. The US has lost a fifth of its movie theaters and almost a third of its bowling alleys since 2001, Bureau of Labor Statistics data show. Camp spots for children fill up quickly, with more than 80% of organizations reporting steady or increasing enrollment last summer, according to the American Camp Association. At US country clubs, the median initiation fee has doubled since 2019, to $51,500, at the same time that waiting lists have also doubled in length, according to data firm Club Benchmarking…
… Parks departments have added thousands of pickleball courts to meet demand, but the new facilities often come at the expense of basketball and tennis, which have also been getting more popular, while the rest of the park gets busier as well. Park space per person declined in 65 of the 100 largest cities from 2016 to 2023, according to the Trust for Public Land. Record crowds are also inundating the National Park Service’s most scenic spots and descending on America’s most popular beach towns. With tours, hotels and beach houses booking up early, planning a vacation has turned into a thankless task of gaming out the distant future. “Availability is becoming a bigger issue than price,” says Laura Mattia, a financial adviser at the firm Wealth Enhancement in Sarasota, Florida. “I see clients booking rentals six to nine months ahead, committing before they have fully thought through the trip, or saying yes to expensive options simply because they are available.”
Rising inequality is making the problem worse, as the superwealthy bid up the costs of fun, whether luxury hotels or the best seats at sporting events. A 2011 study showed lower levels of happiness in areas of Switzerland with more Ferraris and Porsches. “Inequality matters objectively to people, but when it’s thrown in their faces, they like it even less,” Helliwell says…
…
… This fun shortage may be shifting American politics in significant ways. Studies in the UK and continental Europe show voters are more likely to vote for right-wing candidates in the years after local social spaces such as pubs shut down. “When the last gathering place in a town goes, people experience it as a sign of being left behind, of a place emptying out,” says Subtil, the author of a new paper showing France’s far-right National Rally party has benefited from the closure of thousands of bars-tabacs, shops where customers can make a bet, get a coffee or pick up a newspaper.
Replenishing America’s inventory of fun won’t be easy at a time when digital tools are absorbing ever more attention and economic resources. It will take creativity and capital to generate real excitement in real spaces where real people interact. Encouragingly, there are signs of a shift: After New York City repealed century-old rules against dancing in bars in recent years, New York Governor Kathy Hochul announced a similar statewide policy in May. Massachusetts, meanwhile, has loosened rules that capped the number of liquor licenses, which Boston Mayor Michelle Wu argued were starving neighborhoods of local gathering places. The city may add 225 liquor licenses, the vast majority designated for areas far from the tourist sites downtown.
Local governments “really need to think about fun, leisure and entertainment for everyone,” including children and seniors, says Jess Reia, a professor of public policy and data science at the University of Virginia.
In the meantime, Americans are finding cheaper ways to fill their free time. Participation in outdoor activities and team sports has soared in the past five years, reaching record levels, according to a long-running survey by the Physical Activity Council, which estimates the number of “inactive” Americans has dropped by 13.6 million, or 18%, since 2020. Plus there are signs that young people are taking up old-school hobbies, such as crafts and birding, Reia says. “People are trying to find the fun where they can.”
“The Fun Shortage Is Real, and It’s Making America Miserable,” gift article from @bloomberg.com.
See also: “Do you believe that everybody should have fun or that only a few people should have fun?” from @garrettbucks.bsky.social.
* Dr. Seuss, The Cat in the Hat
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As we recreate revelry, we might note that today is National Swimming Pool Day. While public baths and dedicated coastal swimming areas have a very long history, the first recorded swimming pool in the U.S. was a public pool built in 1887 in Brookline, Massachusetts, a place to socialize and beat the summer heat before the invention of air conditioning. One of the first residential pools was built on the Vanderbilt estate in Asheville, North Carolina in 1895.
As of 2024, there were 10.7 million pools in the U.S., of which 10.4 million are residential (about 8% of homes). While public pools took an early lead in the build-out, these days only 309,000 are public or commercial pools.
“Always look on the bright side of life”*…
The estimable economic historian Louis Hyman has been engaged in an on-going “friendly debate” with his equally-estimable friend and Johns Hopkins colleague Rama Chellappa on “what AI means”…
… As I see this debate, this question of our age, there are two main questions that history can shed some light on.
- Is AI a complement or a substitute for labor? That is, will it increase demand for and the productivity of workers, or decrease it?
- Will AI be controlled by the few or be accessible to the many?
A Complement or a Substitute?
Consider a some of the most important technologies of the past 200 years.
When I am asked about what automation might look like, I inevitably discuss agriculture. Roughly all of our ancestors were farmers and approximately none of us today are. Yet we still eat bread made from wheat. That shift is possible because of automation.
The mechanical thresher, used to process wheat, was a substitute for the most backbreaking work of the harvest. But it also enabled more land to be cultivated, and that land was cultivated more efficiently, allowing for greater harvests. Mechanization of the farm, like the thresher, turned the American Midwest into the breadbasket of the world.
Those displaced farmers found work on railroads, moving all that. And those jobs, according to people at the time, were a kind of liberation from the raw animal labor of threshing. On net, it created demand for more workers at better wages in work more fit for people than beasts. For those that remained farmers, they found other higher-value work to be done. On a farm, there is always more work to do.
The failure, then and now, is to think farmers were only threshers. That was one part of their jobs. Today, our work, for most people, is also a bundle of tasks. Workers then and now could and can focus on parts of their job that are of higher value. And in a new economy, new tasks in new industries will be created. Many of the jobs that we do today (web designer, UI expert) were simply unimaginable in 1850. That is a good thing.
Consider now the assembly line. I’m sure you all know about the staggering increases in productivity that come from the division of labor. If you take my class in industrial history, you would learn deeply about the story of the automobile. With the assembly line, and no other change in technology, car assembly went from 12 and a half hours to about 30 minutes (once they worked out the kinks). Did this reduce the demand for workers? No. It reduced the price of cars. And that increased the demand for workers, who eventually could demand even higher wages through unionization.
It is important here to realize that better tools don’t make us get paid worse. They generally make us get paid more. Why? Because the tool, without the person, is useless. Even for today’s most cutting-edge AIs, that is true. It can code, but it can only code what I imagine it to code. It can draw, but only what I imagine it to draw. That is true for AIs as it was true for the thresher.
So, I would offer that AI will create more growth, more abundance. In the long run, all growth comes from higher productivity.
I would add one more piece to this story. Economic inequality has worsened since roughly 1970. It has worsened, therefore, not in the industrial era, but the digital era. I have argued elsewhere that this happened because for decades we did not use computers as tools of automation but as glorified typewriters (and then as televisions). Our productivity did not increase, especially to justify the expense of computers. Economists have debated for decades now over the lack of increase in productivity that came with the “digital age” of computing, but it is simple. We don’t use them as computers. Now we can.
For the first time now, normal people with their normal problems can use their computers to solve and automate their problems. AI can write code. AI can automate their tedium. The digital age did not bring any gains because it had no yet arrived. We were living through the last gasp of the industrial economy.
It is now here.
This technology will unleash unimaginable productivity gains. It will level the playing field between coders and the rest of us. Coders will lose their jobs, to be sure, but for the rest of us, the bundle of workplace tasks will become much better.
And truthfully, the demand for real computer scientists will probably increase in the era of vibe-coding. Computer science itself is a bundle of skills, of which coding is just one. The more important skill – software and data architecture – will only increase in demand as the usefulness of software expands…
[Hyman goes on to explore the dangers of monopolization (which, for reasons he explains, he believes are overstated); the future of softward (which, he believes, will skew to open-sorce), and of hardware (which, he believes will not be a bottleneck). He concludes…]
… Put together we come to a very different picture of what the digital age will be. The industrial age required massive investments to build the factories to make the products that were in demand. In the digital age, in contrast, the factories to build digital products will be made by the AI on your laptop. That is not inequality. That is equality.
The physical products of the Fordist industrial age were made for the mass market. In contrast, the digital products of the post-fordist digital age will be long-tail products. I don’t need to make mass market products; I can make them for a small niche, or just for myself.
Rather than fostering inequality, AI, then, is a great equalizer. To make products for a global market you don’t need a billion-dollar factory. You just need a laptop. That is astonishing.
That said, it will not be all sunshine and rainbows. Will AI solve the inequities of capitalism or its reliance on externalities as a source of primitive accumulation? Probably not.
But at the same time, AI is not a normal technology in that it has the potential to radically undermine many of the tendencies to concentrate capital that we have seen in the industrial age. We have been automated out of work before, that is nothing new, but it has always concentrated capital in the hands of the few. For the first time, there is potentially an alternative path forward.
AI will bring the digital age out of the hands of the coders. AI will not widen the gap—it will bridge it. Its ubiquity will mean that AI will be a tool that nearly all of us will be able to use in our daily work, which will make ordinary people more productive and prosperous…
Eminently worth reading in full: “Hooray! Post-Fordism Is Finally Here!“
Even as Hyman’s message is reassuring in the context of the flood of jeremiads in which we’re awash, it’s worth remembering that eerily-similar points were made a couple of decades ago about the threat/promise of digital publishing/commerce. Given the then-current conditions and then-plausible futures, those predictions might have come true… but in the event, they didn’t pan out as projected. That said, things are changing, so maybe this time things are different?
(Image above: source)
* song (by Eric Idle) from Monty Python’s Life Of Brian
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As we resolve to remain rosy, we might send productive birthday greetings to Andrew Meikle; he was born on this date in 1719. A Scottish millwright, he invented the threshing machine (for removing the husks from grain, as mentioned above). One of the key developments of the British Agricultural Revolution in the late 18th century., it was also one of the main causes of the Swing Riots— an 1830 uprising by English and Scottish agricultural workers protesting agricultural mechanization and harsh working conditions.
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