BETWEEN 1950 and 2000, GDP per person in America grew at an average annual rate of 2.3%. In 2000-18 that pace fell by roughly half. Often this slowdown-also seen in other rich countries-is taken as a sign that economic policy has failed, and that policymakers must inject stimulus or somehow restore capitalism's lost dynamism. But for Dietrich Vollrath of the University of Houston, low growth is reason for cheer. In a new book he argues that America's growth has slowed because so much in the economy has gone so well. A big chunk of America's economic advance in the 20th century was driven by improvements in "human capital", the size and the skills of the workforce. In 1910 only a tenth of Americans completed high school; by the 1970s four-fifths were graduating. Many more now go on to college. A baby boom after 1945 increased the workforce; women piled into paid work in the 1970s and 1980s. All this added nearly a percentage point to annual per-capita gdp growth from 1950-2000. Since then, however, human capital has shrunk, reducing growth by 0.2 percentage points a year. It is the chief culprit behind the slowdown.
展开▼
