Wednesday, February 27, 2013

The Decline of America in One Chart

ZeroHedge posted a couple of interesting charts on the long term decline of Italy and France.  They essentially showed how real 7 year GDP growth has gone from relatively decent numbers 50 years ago to almost nothing today (or even negative).  So I decided to make the same kind of chart for the United States.  I certainly don't like what I see. Over the last 50 years, our 7 year GDP growth was usually between 20-35 or even 40%.  But recently it's gone down to a paltry 7% (i.e. we are growing on average 1% a year for 7 years):

Obviously both parties are to blame.  The Democrats for over-regulating every industry so that compliance is  both expensive and nearly impossible and the Republicans for letting them (and joining in, in some cases).  Peter Thiel put it really well in his debate with Eric Schmidt:

PETER THIEL:  The why questions always get immediately ideological.  I'm Libertarian, I think it's because the government has outlawed technology.  We're not allowed to develop new drugs with the FDA charging $1.3 billion per new drug.  You're not allowed to fly supersonic jets, because they're too noisy.  You're not allowed to build nuclear power plants, say nothing of fusion, or thorium, or any of these other new technologies that might really work. 
So, I think we've basically outlawed everything having to do with the world of stuff, and the only thing you're allowed to do is in the world of bits.  And that's why we've had a lot of progress in computers and finance.  Those were the two areas where there was enormous innovation in the last 40 years.  It looks like finance is in the process of getting outlawed. 
So, if you ask why did all the rocket scientists go to work on Wall Street in the '90s to create new financial products, and you say well they were paid too much in finance and we have to beat up on the finance industry, that seems like that's the wrong side to focus on.  I think the answer was, no, they couldn't get jobs as rocket scientists anymore because you weren't able to build rockets, or supersonic airplanes, or anything like that.  And so you have to ‑‑ it's like why did brilliant people in the Soviet Union become grand master chess players?  It's not that there's something deeply wrong with chess, it's they weren't allowed to do anything else.

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