I Can Predict Exactly How the Superabundant Future Will Look

And more from this week...

A range of debates about the shape and trajectory of the American economy—what role for manufacturing? what effect of artificial intelligence?—require assumptions about future consumption under conditions of rising prosperity. With so many of our needs and wants already met, what will we make and buy next? Will personal services and human interaction become more valuable than ever? Will we opt for and enjoy more leisure?

No.

A better perspective comes from your one thing to read this week, in the Wall Street Journal, “The U.S. Economy Depends More Than Ever on Rich People.”

Higher-income households have always accounted for a disproportionate share of consumption, which is no surprise, after all they account for a disproportionate share of income. What is surprising is how far that share has risen. Whereas the top 10% of earners (roughly speaking, households with income above $250K) used to account for about one-third of consumption back in the 1990s, as of last year they had reached one-half according to an analysis by Moody’s Analytics.

Some might use this research as a springboard to discuss the problem of income inequality. Over at Bloomberg, Amanda Mull has a good commentary about the negative economic and social consequences of a chasm this wide. My own recent piece about the problems at Disney World, Our Mickey Mouse Economy, provided a concrete example. But here I’m interested in something different.

When we try to imagine what our economy would look like after decades or generations of productivity growth, we are not describing some futuristic society of superabundance and or fully automated luxury communism. If artificial intelligence can someday soon do 80% of all current work in the economy, effectively quintupling output, we actually know what that could mean. We are basically describing a world where the average household can enjoy what the professional class enjoys already. The open-concept kitchen, the $3,000 bicycle, the personal propeller plane, the family safari.

Look at it from the micro level of a typical worker. The median wage earner in the United States today earns $23.11. After 80 years of 2% real wage growth, that figure would nearly quintuple, to the median wage of a family physician today.

Or, look at it from the macro level of the economy’s overall output. How much more would our economy need to produce, to have enough output for the average household to consume the way the top 10% does today? How much faster would we have to churn out new cars, how many more high-end hotels and restaurants would need to accommodate how may more travelers arriving on how many more airplanes at how many more airports?

Most of you, dear readers, if I may make an assumption about the Understanding America readership, are enjoying a life that the typical American is two generations away from enjoying. You are consuming at a rate that most Americans cannot possibly enjoy until we achieve the kind of productivity explosion that even most AI fantasists would say is still far in the future.

So no, we do not need to worry about what kind of work everyone will do in the future. Nor can we shrug that there just isn’t as much need for a robust industrial base in a modern economy or a prospectively much wealthier one. Rather, the people who are paid to spend their days pondering such things should turn their attention to the more salient question of how to build an economy in which the typical American can share in what they already have.

(*Note: The Journal’s figures seem high to me, suggesting that average consumption in the top 10% is nine times higher than average consumption outside of it. By comparison, the Department of Labor’s Consumer Expenditure Survey suggests that average consumption in the top 10% of households by income is about three times higher. The broader point, and the wage data, stands.)

WHAT ELSE SHOULD YOU BE READING?

Tyler Cowen, the Man Who Wants to Know Everything | John Phipps, The Economist

This seems to me to be an extraordinarily harsh profile of Cowen, who the piece dubs “Silicon Valley’s favourite economist,” and so by extension a harsh profile of Silicon Valley. Cowen’s main insight highlighted in the piece, and the basis of his appeal to the tech crowd, is “that America was turning into two countries: one with a booming class grown affluent on the profits of tech, and one with everyone else. Those who missed out would have jobs as servants and service-providers for the ultra-rich. He called this new dispensation ‘hyper-meritocracy.’” His economic analysis is presented as applicable only where human factors are not present, in other words, not often.

The kicker leaves little doubt what the author thinks of it all: “I asked him what he’d learned playing basketball alone for decades. ‘That you can do something for a long time and still not be very good at it,’ he said. The car began to roll downhill.”

Defending Our Pro-Worker Constitution | John Ehrett, Federalist Society

Senator Josh Hawley’s chief counsel offers a strong defense of the pro-labor reforms that Hawley is now advancing to protect worker interests during organizing and bargaining. It’s notable that such debates are now playing out at the Federalist Society, and clear that the Old Right is unaccustomed to mounting coherent critiques of conservative labor policy.

China Is Trying to Reshape Global Supply Chains | Kyle Chan, High Capacity

In another reminder that China’s economic activity is controlled by the Chinese Communist Party, Chan looks at how Chinese firms are building supply chains and industrial capacity strategically in countries around the world to strengthen the CCP’s influence. “In a not-so-ironic twist,” he concludes, “China’s approach looks more like that of another great power, namely US efforts to cut out China.”

This continues the theme highlighted frequently here at Understanding America, about the inevitable retrenchment of the global trading system into competing U.S.- and China-led blocs. Meanwhile, on the American side, the Trump administration continues to send clear signals that it wants American partners to adopt American trade barriers vis-à-vis China. See, for instance, Treasury Secretary Scott Bessent’s comments today on Bloomberg Radio that Mexico and Canada should match U.S. tariffs on China, to form a “fortress North America” against China’s imbalances, as well as this story: Trump Team Pushes Mexico Toward Tariffs on Chinese Imports.

Choosing Victory | Jonathan Bronitsky, The New Criterion

Funny story (no? too soon?) about how an AEI intern’s casual research became a cornerstone of the Bush administration’s “surge” strategy in Iraq. Come for the important observations about the realism, not idealism, of Irving Kristol’s original neoconservatism. Stay for the remark about “AEI’s old office at 1150 Seventeenth Street NW, a wood-paneled space with low ceilings that epitomized the classic think-tank aesthetic. It stands in stark contrast to AEI’s opulent new home, a half-wedge-shaped Beaux-Arts building on Dupont Circle. But back then, the setting perfectly matched the institution’s ethos: substance over style.”

HIGHLIGHTS FROM COMMONPLACE

William F. Buckley, Jr. and the Politics of Reality | Mike Lind

The long-time leader of the American Right sought to promote a viable conservatism.

Overdue for an Overruling | Chad Squitieri

The Supreme Court has the chance to restore executive power by overturning Humphrey’s Executor.

Democracy Dies in Delusion | Batya Ungar-Sargon

The Washington Post’s new view on which opinions matter is a 1980s call-back.

And on the American Compass Podcast, Colin Kahl, former undersecretary of defense for policy in the Biden administration and current co-director of Stanford's Center for International Security and Cooperation, joined me to discuss what the AI debate gets wrong and what it will really take for the U.S. to win.

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Enjoy the weekend!