Looking at gross domestic product, real-goods production as a share of real (inflation-adjusted) GDP is close to its all-time high. In the first quarter of 2003 — the latest data available — real-goods production was 39.2 percent of real GDP. The highest annual figure ever recorded was 40 percent in 2000. By contrast, in the “good old days” of the 1940s, 1950s, and 1960s, the U.S. actually produced far fewer goods as a share of total output. The highest figure recorded in the 1940s was 35.5 percent in 1943; the highest in the 1950s was 34.9 percent in 1953; and the highest in the 1960s was 33.6 percent in 1966.This despite declines in manufacturing employment. How are we doing it? Productivity is rising, which is a benefit to everybody, even the laid off workers at Pillowtex. If workers are more productive, companies can pay higher salaries. Higher salaries create a higher standard of living which makes people want to consume more goods and services. New businesses start to meet that demand and, voila, our textile worker has an interview on Monday.
All right, not really. As I've acknowledged, global capitalism does cause pain, and there's no guarantee Joe Textile will land on his feet, no matter how many government sponsored retraining programs we create (in fact, I bet they're another part of the problem, but that's another day's argument). But it's that pain that has given us the largest, most important economy in the world. Our standard of living (which is more than BMW's and lattes; it's also health and safety and the time to worry about whether our kids should watch another half hour of Barney) and the rest of the world's is higher now and continuing to improve because of the the economic growth that is the flip side of the coin.
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