We produce more, typically much more than other countries in just about every major category. We produce more goods, more services, more agricultural products, and possibly more mined and drilled natural resources (not sure about that last one, but we have to be near the top), all measured by value. Other measurements are rather questionable, if you measure by units does one 10 cent unit of something small count as much as one unit of a 747, if you measure by weight does a ton of concrete count as much as a ton of computer chips? And even by these measures we are at or near the top.
As for a much lower standard of living I see that as very unlikely. OTOH a slightly lower standard for a short time (basically a recession), or slower growth going forward for a decently long length of time, are both possible.
The fed and the government are not acting in as inflationary of matter as the period from the late 60s through the 70s, and we didn't need a much lower standard of living to short out that inflation. But we did need a moderately severe recession in the early 80s (one which was worse than any recession since, but not anywhere close to bad enough to be on the list of worse economic downturns in American history.
Over the short run the economic slowdown and possible recession will itself put downward pressure on inflation, but with things like the $700bil government plan to "clean up bad assets", we may be creating major moral hazard and inflationary risk for the future. Perhaps the 201Xs will be inflationary like the 70s. And then you have the complication of the baby boomers retirement. With retired people not creating much but still using resources (esp. medical care), which can push up prices. If they where really (as is often claimed) on a "fixed income", they wouldn't have the money to push prices up, but since their payments are adjusted for increased in wages before they retire, and for inflation after, they could indeed push inflation. Maybe in the later 2010s to the early 2020s we get a recession which really is "the worst downturn since the great depression", or maybe we fight that off but have slower growth and/or more inflation.
The best way to fend it off would be new technological developments, greater integration with the world's economy, and improved productivity from these things and other sources.
Best case we could have a very rosy economic future over the next several decades from these factors. But at least currently resistance to freer trade and more economic integration across the world is growing, as is pressure to regulate more and generally get the government more involved in and in control of the economy. This opposition to free trade, greater pressure for regulation, and creeping socialism could be setting us up for economic problems. Probably not "a much lower standard of living", but perhaps a stagnation of our standard of living. |
