THEGOOD ECONOMY
DANE STANGLERBO CUTTERROBERT LITAN
Bo Cutter is Senior Fellow and Director of the Next American Economy project at the Roosevelt Institute. Robert Litan is Adjunct Senior Fellow at the Council on Foreign Relations. Dane Stangler is Vice President of Research & Policy at the Kauffman Foundation.
About the Roosevelt Institute
Until economic and social rules work for all Americans, they’re not working. Inspired by the legacy of Franklin and Eleanor, the Roosevelt Institute reimagines the rules to create a nation where everyone enjoys a fair share of our collective prosperity. We are a 21
st
century think tank brining together multiple generations of thinkers and leaders to help drive key economic and social debates and have local and national impact. For more information visit www.rooseveltinstitute.org.
About the Ewing Marion Kauffman Foundation
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo., and has approximately $2 billion in assets. For more information, visit www.kauffman.org, and follow the Foundation
on www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn
Copyright © February 2016 by the Roosevelt Institute and the Kauffman Foundation. All rights reserved. The views and opinions expressed in this book are those of the authors and do not necessarily represent the views of the Roosevelt Institute, the Kauffman Foundation, or their donors and directors.
2 “
The future is like a corridor into which we can see only by the light coming from behind
.” —Edward Weyer Jr. “
The idea that the future is unpredictable is undermined every day by the ease with which the past is explained
.” —Daniel Kahneman
The New Entrepreneurial Economy: A Future History
1
The twenty years between 2020 and 2040 turned out to be the best twenty-year period of US economic performance since the 1950s, 1960s, and early 1970s. •
Productivity grew at slightly more than 2 percent per year, overall economic growth grew at 3 percent per year, and real per capita growth rose by 2 percent per year. •
Business creation reached its highest levels in decades. •
After continued decline to 2019, labor force participation grew steadily, reaching new highs in the mid-2030s. •
Unemployment, on average, hovered between 5 and 6 percent. Job churn rose to high levels. Self-employment represented the fastest-growing category of employment, reaching 30 percent of the workforce by 2035. •
Federal debt held steady at about 60 percent of gross domestic product, due to entitlement policy reforms (including a higher retirement age) and rapid rates of economic growth. The nature of work in America changed substantially. Employment grew even as large chunks of the service economy were increasingly automated. Once-synonymous concepts like “work” and “job” became dissociated from each other. American citizens bore more personal responsibility for health insurance and retirement planning. Indeed, the very language that characterized economic commentary in 2016 had, by 2040, shifted. In addition to “work” and “job,” new meanings became attached to words like “career,” “wage,” “education,” “safety net,” and “factory.” Significant individual adjustments and policy reforms were required, but it was all accomplished without economic or political disaster. This was a marked departure from what many people expected from trends that were evident in 2016. What happened?
Eight Surprises
1
A version of this section was also published by the Kauffman Foundation in February 2016.
