Taking a long historical perspective, we can see that the United States has ushered in transformational workplace technologies for more than two hundred years: mechanized textile production and other basic manufacturing in the late eighteenth century; a range of stunning new transportation technologies (canals, roads, steamboats, and railroads) in the early nineteenth century; scientific agriculture and steel-making in the mid-nineteenth century; electrification, telecommunication, advanced construction (long-span bridges, high-rise buildings, underground transportation), and petroleum extraction and refining in the late nineteenth century; assembly-line manufacturing of automobiles and a wide array of consumer products from the early twentieth century on; highly efficient mass-market media and retailing at all times; and, most recently, information technology and biomedicine in the late twentieth century. From minor innovations such as safety pins, zippers, and soft drinks, to iconic breakthroughs such as telegraphs, telephones, electric lighting, automobiles, airplanes, and the Internet, American inventors and scientists have been responsible for each of these technologies and, just as important, American businesses and consumers have been quick to adopt them. However, in most cases, direct or indirect government subsidies played an important catalytic role.
For America’s human-capital leadership in the workplace to continue, the pace of technological innovation—grounded in scientific discoveries—must accelerate and its businesses must find it profitable to apply new technology rapidly in commercial applications. In his book The Great Stagnation, Tyler Cowen notes the centrality of American-led technological innovation in fueling the economic ascendancy of the United States over the last century and a half—and also suggests (hence the book’s title) that U.S. technological progress since the 1970s has slowed so much that it has led to most of the country’s current economic woes.8 While Cowen may be too pessimistic about U.S. prospects, and also mistaken in believing that we have already maximized potential gains from education and other aspects of human capital (like immigration), he is surely correct in asserting that unless the U.S. technological enterprise is in high gear there can be only limited progress in further workplace productivity—and concomitant rising American incomes.
Unquestionably, high-technology workplaces result from the decisions of far-sighted entrepreneurs. But most entrepreneurs are not inventors, or necessarily even tech savvy (there are very few contemporary Thomas Edisons or Henry Fords). They rely, instead, on the emergence of new technologies arising from research in the nation’s laboratories operated by universities, corporations, and branches of the federal government. Universities are the most dynamic generators of new research and have been since at least the nineteenth century. While universities divert some revenue from their main line of business, teaching undergraduates, to finance faculty scholarship, academic research funding depends heavily on government grants, primarily federal ones. Corporations focused on new product development, like those in the pharmaceutical and computer industries, have a strong incentive to invest in laboratory research but they also count on government support, through both grants and favorable corporate tax treatment. The federal government engages in research more directly through its national laboratories (such as Brookhaven National Laboratory, affiliated with my university), which are overseen by the Department of Energy, the Defense Department, and other federal agencies.
Has federal support for university and corporate research been worth it? Unlike the often uncertain outcomes of government-led educational reforms, when it comes to science and technology, the connection between government inputs and measurable results is much more direct and predictable—albeit less immediately apparent. A nation’s investments in scientific research invariably generate proportional increases in scientific discoveries. A nation’s increment of scientific discoveries spawns proportional gains in technological applications. And, barring excessive or ill-designed taxation or regulation, new technological applications will most quickly be commercially adopted in the workplaces of the nations where they are conceived. This simple syllogism has served the United States well, and, together with the nation’s long-standing (but now eroding) educational leadership, it is the bedrock of the country’s centuries-long economic success. How America’s lead in workplace technology can be sustained, even in the face of fierce international competition, is the subject of chapter 6.
Among workers in the world’s advanced economies, Americans have long exhibited the strongest work ethic. Given Americans’ eagerness to work—at all ages and under nearly all circumstances (for example, while attending school, raising children, suffering from disability)—one of the easiest ways to raise the aggregate human capital of the United States, and American workers’ corresponding income, is to encourage them to work as much as they are able. After all, payment for work is by far the largest source of family income—far outpacing social security, pensions, or any other kind of income transfer, and the longer people work, the greater the lifetime return on initial educational or other human-capital investments to both the individual and society.
Although Americans still (just barely) work longer and harder than workers in most other rich countries (accounting for the United States’ continuing productivity superiority—despite the relative decline in educational achievement), a growing percentage of working-age men are not in the labor force. Adult male labor participation, which in the 1970s averaged 78 percent, fell to 71 percent in 2010 and even before the recent economic collapse was only 73 percent. While some of this is because more men are in college, and the impact of this shift on the overall American labor force is partially offset by a big increase in the percentage of working women, if men returning to the workforce were to join the growing cohort of women workers, the United States would realize a painless human-capital windfall.
The decline in labor force participation is the result of both an institutional “push” and personal calculation “pull” dynamic. Workers are pushed out of the labor force by the impact of periodic downturns in the business cycle, such as the unusually severe one that began in 2008. In response to such economic conditions, too many decision makers in the government and labor unions, guilty of overly simplistic economic reasoning, foolishly subscribe to the “fixed lump of labor” view of the economy: a belief that keeping potential workers out of the labor market is a viable way to reduce the official unemployment rate. This leads them to promote “early retirement” and indiscriminate authorization of disability eligibility. On the pull side, fully capable workers who are laid off or discontented with their jobs are quick to jump at pension or disability stipends when these become too readily available. At the epicenter of these dynamics are federal entitlement programs and state and local public employee contracts. How these can be realistically restructured to let the American workplace take full advantage of our workers’ natural propensity to work—and to work hard—is the subject of chapter 7.
Immigration Immigration has also been one of America’s most singular human-capital advantages; we have always admitted far more immigrants, and assimilated them more thoroughly, than any other country on earth. Now, after years of complacently tolerating immigration policies that are simultaneously incoherent, unfair, and unenforced, ordinary Americans are thoroughly confused about the issue, and their political leaders are having a hard time agreeing on sensible reforms.
Most obviously, immigrants were needed in the nineteenth century to settle the United States’ expanding western frontier and operate its rapidly growing number of farms, factories, and shops. But regardless of the circumstances of the time, immigrants have built American human capital uninterruptedly from the first settlers to the present day, and at every level of the economy. Each year around the Fourth of July, The New York Times carries a full-page advertisement celebrating the contributions of eminent immigrants, past and present. The page is dense with iconic names from Joseph Pulitzer and Andrew Carnegie in the nineteenth century, Albert Einstein, Samuel Goldwyn, and Irving Berlin in the mid-twentieth, to Henry Kissinger and George Soros today. Throughout American history, immigrants were the indispensable Americans, building railroad, manufacturing, financial, and entertainment empires; making the world’s most notable breakthroughs in scientific research and technological inventions; and cementing the United States’ renown in music, the fine arts, and literature. Other immigrants entered politics and throughout American history have occupied every political office, at every level of government—federal, state, and local—except