One upbeat view and one possible bit of good news

James Joyner writes, Arnaud de Borchgrave and Thomas Friedman notwithstanding, the U.S. is probably not in permanent decline. It includes this impressive graph, and while I can't personally vouch for the numbers, I've seen similar graphs, at least for the post-1900 period:

 

Second, part of the current problem seems to be that banks are hoarding cash. And part of the reason for that may be that they are waiting for settlement of the derivative securities created by Lehman and other failed firms. Supposedly, Lehman securities will be settled this Friday, and the Feds are working on creating a central clearinghouse.

Those things may help, but don't, on my account, bet on it.

Comments

[spencer]

I've worked with this data and if you do the trend based on log growth rates since 1900 it shows a clear long term trend from 1900 to 1980 of 3.5%. Moreover, just about every 25 year sub-period from 1900 to 1980 also demonstrates about a 3.5% trend growth rate. But if you calculate the trend growth rate using the same methodology since 1980 the trend growth rate slows to 3.1%. Of course the dominate reason for the slow down since 1980 is slower population growth as per capita real gdp has not shown such a pronounced slowdown.

Of course what this implies that all the tax cuts since 1980 have had no significant economic impact unless you want to argue that the slowdown would have been worse without the tax cuts.

[spencer]

Sorry, did not realize that the chart was a per capita chart until after I posted.

[kyle8]

I would certainly argue that Spencer, it is almost beyond belief that anyone could hold that the 70% top rate and the high capital gains rates like we had before 1980 would have been able to sustain our place in the modern emergent global economy. The flight of capital would have been outrageous.