One Thousand Words on Prosperity Growth

Commenters on my cross-post over at Angry Bear have asserted among other things that real GDP/capita growth has been steady for more than a century.

See? This proves, they assert, that the policy differences between Republicans and Democrats don’t really affect anything.

My response was to point out how hard it is to eyeball important changes in this graph — it looks like a straight line with blips for the Depression and WWII. It’s very hard to see what in fact constitute important or even profound changes in our well-being.

In particular, look at growth from 1820 to 1929, and consider how the trend compares to post-war (i.e. post-New Deal) performance:

Growth moved above trend starting the 60s, and has continued doing so since. (You could move the trend line down a little without departing the facts — passing it through the center of the pre-1929 movements rather than the ’29 top — making post-war growth look even better by comparison.)

We can say at least this with complete certainty: the disastrous long-term results predicted for (and contrafactually attributed to) New Deal policies did not occur.