My core contention is that with the right choices, America’s economic future is bright. Indeed, we are the lucky beneficiaries of a revolution in technologies that can raise prosperity, slash poverty, increase leisure time, extend healthy lives, and protect the environment. It sounds good, perhaps too good to be true; but it is true. The pervasive pessimism—that American children today will grow up to worse living standards than their parents—is a real possibility, but not an inevitability.
The most important concept about our economic future is that it is our choice and in our hands, both individually and collectively as citizens.
Economic growth, social fairness, and environmental sustainability are mutually supportive, and future growth now depends on addressing the two neglected pillars of sustainable development. Choosing our economic future is the key idea. Economies don’t just grow, achieve fairness, and protect the environment of their own accord. Economic theory and experience make clear that there is no “invisible hand” that produces economic growth, much less sustainable development. Even Adam Smith was clear on that point, and wrote Book V of The Wealth of Nations to emphasize the role of government in infrastructure and education.
But how do we choose? Mainly, we choose our economic future through the decisions we make concerning saving and investment. Societies, like individuals, face the challenge of “delayed gratification”: We achieve future growth by holding back on current consumption and by investing instead in future knowledge, technology, education, skills, health, infrastructure, and environmental protection. And if we invest well, we hit the trifecta, achieving an economy that is smart, fair, and sustainable. Such an economy will create decent jobs, ensure ample leisure, promote public health, and underpin competitiveness in a highly competitive world economy.
The second is the need for more public investment to spur private investment. Ever since Ronald Reagan told us “Government is not the solution to our problem; government is the problem,” we have cut public investment to the bone. We experience it every day with decrepit highways, bridges, levees, and urban water systems; aging airports and seaports; and neglected hazardous waste sites. Yet without government’s role in building infrastructure and guiding the energy transition, private investors—with trillions of dollars under management—will remain stuck on the sidelines, not knowing where to place their bets.
With breakthroughs in smarter machines and information systems, new materials, remote sensing, advanced biotechnology, and much more, there are innumerable ways forward toward sustainable development and higher living standards, including healthier lives and more leisure. But can a complex modern society actually achieve these goals and balance the budget at the same time? I’m going to show why the answer is yes and, even better, look to other countries that are ahead of the United States and are forging the way to the future in meeting certain key challenges such as education, skills training, fairness, and low-carbon energy.