The consensus outlook for the U.S. economy is, to put it mildly, pretty bleak. The boomers are retiring, the debt-fueled consumer-spending binge of the 2000s has ground to a halt with nothing to replace it, and American manufacturing workers are trapped in a brutal competition with hundreds of millions of cheap, eager workers from all over the developing world.
Worst of all, as middle-income Americans get squeezed, the very richest Americans are amassing wealth as never before. And they are deploying it to lock in their advantage. The chances of a young American from a lower- or middle-income family moving up the economic ladder are now poorer than in most major industrialized countries. A nation with our traditions should be deeply ashamed.
But the gloom can be overdone. Opinion-makers were similarly depressed at the start of the 1990s, which turned out to be one of the most productive and high-growth decades in the country’s history. The key development, the advent of the internet, seemed to come out of left field. Even Bill Gates didn’t see it coming, although the government had been working on it for a long time. It was the kind of game-changer that transformed business productivity in fundamental ways.
To get out of today’s impasse will require another such deus ex machina—some new large-scale development that could generate a step-change in American...