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Book Summary: The Rise and Fall of American Growth by Robert J. Gordon

My Personal Summary

This book is about the rise and fall of American economic growth since the Civil War.

From 1870 to 1970, the U.S. experienced rapid economic growth and improvement in the average person’s quality of life, mostly due to inventions that could never be made again like electricity, the internal combustion engine, advances in medicine, and countless others.

Since 1970, growth has slowed noticeably except in areas like computing and entertainment.

Book Notes

  • “Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Then – just a couple hundred years ago – people started getting richer.”
  • What makes 1870-1970 so special is that many inventions occurred that can never be repeated. Electricity, the automobile, refrigeration, the telephone, public waterworks for clean water, antibiotics, x-rays and more inventions completely changed daily life.
  • Since 1970, most progress has been limited to entertainment, communications, and information technology. Most of the physical world hasn’t changed in 50 years. Kitchen appliances are the same, clothing is the same (just different styles), cars are the same (just different styles and safer) and air travel is actually worse as airlines have made seats smaller to fit more passengers and airport security lines are a nightmare.
  • The transcontinental railroad was completed in 1869.
  • The starting point for measuring the standard of living in the U.S. in this book is 1870. This follows the end of the Civil War in the 1860’s. At the time, the U.S. population was 40 million, light was obtained by candles and whale oil, and the main form of transportation was horses. Average household size was 5.3 compared to 2.6 today. Infant mortality rate (number of children per 1,000 who die before age 1) was 175.5 compared to 6.8 today. Only 4% of the population lived in the Mountain and Pacific states.
  • In 1870, pork was the dominant meat eaten because pigs were so easy to raise and corn was another staple because it grew so well in so many environments. Refrigerated rail cars had yet to be invented, which meant it was basically impossible to ship meat across the country to different cities.
  • In 1870, members of most households only owned two pairs of clothing and they only got washed once per week since it had to be done laboriously by hand.
  • In 1870, zero households had electricity, indoor plumbing, or central heating.
  • In 1870, horses were so prevalent in city life that one of the most common jobs was picking up horse poop. In 1870, Boston had 250,000 citizens and 50,000 horses.
  • In 1870, there was no good treatment for cholera, typhoid, yellow fever, smallpox, hookworm or a myriad of other diseases.
  • In 1870, 50% of all workers worked on farms. Today about 1% do. “Plowing a field with a horse or mule in 1870 was much tougher than guiding an air-conditioned 2010 tractor equipped with electronic gadgets.”
  • In 1870, retirement wasn’t even a concept. Peopled worked up until death because they had to.
  • In 1870, the average housewife would have to haul water into the home and haul away dirty water as well as haul wood into the home for cooking and for heat and haul away ashes, along with cleaning clothes by hand and cooking food.
  • Starting in the early 1900s, department stores became widespread. Due to economies of scale, they could offer a wider variety of items at cheaper prices than consumers had ever seen before. Housewives benefited the most from this because they could finally buy clothing instead of make it all at home by hand.
  • From 1910 to 1940, the percentages of homes that had electricity skyrocketed from 10% to 80%. This is an example of a one time invention that completely changed the lives of most humans and it can’t be repeated again.
  • In 1900, the “greatest curse of the housewife was the need to carry fresh water into the house and dirty water out of the house.” Municipal waterworks didn’t become common until the 1920’s and “most communities drank their own sewage or that of their neighbors upstream” which made typhoid fever and dysentery quite common.
  • From 1850 through the early 1900’s, the expansion of railroads made travel faster and had the advantage over ships that railroads could be built in straight paths and not just where pre-existing rivers were located and rivers also froze over in the winter, reducing commerce in those months to nearly zero.
  • In 1900, horses were still the most common form of intracity transportation and “was a source of urban pollution, disease, and occupational misery for workers whose job was removing horse waste from streets.” The invention of cars replaced horses and also led to the development of highways, suburbs, supermarkets, and a brand new market for leisure travel.
  • In 1879, the internal combustion engine was invented. In 1900, there were 8,000 registered cars on the road. By 1905 there were 80,000. From 1908 to 1927, the model T produced by Ford was the best selling car in the U.S. because he made it affordable for so many Americans. He was able to reduce the price so much because his costs were so low due to vertical integration (they made most of their parts in house) and the assembly line design (workers only had to specialize in one specific task). Car ownership by household went from about 0% in 1900 to 93% by 1930.
  • “The internal combustion engine and electricity share the gold medal for most important invention of all time and they were invented within 10 weeks of each other in 1879.”
  • In 1844, the telegraph was invented which made it possible to communicate with dot-dash codes over long distances through wires.
  • In 1876, Alexander Graham Bell invented the telephone and it slowly become more common in households over the next four decades.
  • In 1887, Edison invented the phonograph which was the first device that could capture musical recordings and replay them at a later date.
  • In 1920, the radio was invented and by 1940 about 85% of all homes in the U.S. had one. This was a revolutionary step forward in both entertainment and news because people could hear about events in real time when they happened instead of waiting to read the newspaper. It’s said that in the 1930’s “Americans would rather sell their refrigerators, bath tubs, telephones and beds to make rent payments rather than part with their radio box that connected them to the world.”
  • Wild stat: High infant mortality rates in the late 1800’s made most of the difference in lowered life expectancy compared to today. If people survived childhood, they actually lived roughly as long as people today. As an example, John Adams lived until 90 and Thomas Jefferson lived until 83, both dying in 1826.
  • The main cause of increased life expectancy from 1870-1940 was due to municipal water systems that brought clean filtered water into homes and improved sewage systems to remove dirty water from homes. This greatly reduced waterborne diseases like typhoid fever which were some of the most common killers at the time.
  • From 1870-1940, there was also a major reduction in food contamination due to refrigerated railroad cars and food and drug regulation.
  • From 1870-1940, the germ theory of disease, development of anesthetics for surgery, and overall improved cleanliness of hospitals made overall healthcare better for the average American.
  • In 1870, about 80% of all jobs were dangerous or unpleasant including farming, intense heat at steel mills, injury-prone work on railroads, dangerous conditions in mines, and filth and stench at stockyards. Gradually these types of jobs shifted to indoor office jobs by 1940 including salesmen, managers, clerks and other white collar professions.
  • Between 1900 and 1920, consumer credit became common. This allowed households to buy large purchases such as cars and electric appliances with only a portion of the money down and then use installment plan payments to slowly pay the remaining balance over time. Life, fire and automobile Insurance also became common, which reduced the risk that disasters could wipe out a households finances.
  • Between 1930 and 1960, supermarkets became the most common form of do’s purchasing for most households since a huge variety of food could be purchased all in one place. The invention of the barcode in the 1980’s made supermarkets even more efficient. The share of food consumed away from home has steadily increased since 1940 as fast food chains have become more prevalent.
  • Air conditioners became common only in the 1950’s. “Without air conditioning we wouldn’t have Las Vegas, Miami, Houston or Los Angeles.”
  • The interstate highway system was built from 1958 to 1972, enabling more convenient travel over long distances.
  • The first modern airliner was introduced in 1936. Since then, airplanes have become drastically safer and more affordable over time.
  • In 1950, only 9% of Americans owned a TV but this number grew to 90% by 1960.
  • In the mid 1990’s, cellphones became popular and by the mid 2000’s smartphones became widespread.
  • In the 1960’s, mainframe computers started becoming common in business. By the 1980’s, personal computer became more common. The Netscape web browser came around in 1994 and Americans soon gained access to the internet, which eventually led to the rise of e-commerce and the modern day internet as we know it.

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