Observation Deck

“The Greatest Story Never Told”:
Today’s Economy in Perspective

Patrick Toomey is president of the Club for Growth. A graduate of Harvard University with a degree in government, he served as a member of the U.S. House of Representatives from Pennsylvania’s 15th Congressional district from 1999-2005. In 2005, he co-founded Team Capital Bank, and is co-chair of its board of directors. He also sits on the boards of directors of the Lynde and Harry Bradley Foundation and the Commonwealth Foundation.

The following is adapted from a speech delivered at Hillsdale College on January 29, 2008, during a seminar co-sponsored by the Center for Constructive Alternatives and the Ludwig von Mises Lecture Series.


THERE IS a debate going on today over whether our economy is in recession. Polls show sagging public confidence. But some perspective is sorely needed. The fact of the matter is that we in the United States, and to a lesser degree the entire world, have just lived through—and continue to live in—the greatest period of prosperity in human history. Over the last 25 years, more wealth has been created, more people have been lifted out of poverty, standards of living have been elevated more dramatically, and the quality and length of life have improved, more than ever before in recorded history. Unfortunately, as Larry Kudlow says, this is “the greatest story never told.” We need to start telling the story, and also to think about its causes.

First, let us focus on the United States (and I say this with full knowledge that the State of Michigan is a unique exception among the 50 states to America’s extraordinary recent prosperity; but the causes of Michigan’s peculiar problems are a topic for another day): Average economic growth in the U.S. has not only been positive for almost the entire last quarter century, but for much of this period the rate of growth has accelerated. Our nation’s total economic output in 1982 was $5.1 trillion; last year it was $11.3 trillion (in real 2000 dollars). Per capita economic output in 1982 was $22,400; last year it was $37,807 (in real 2000 dollars). The average unemployment rate in the 1970s was nearly seven percent; it has been declining, on average, every decade since, and has remained below five percent since 2003. The service sector of our economy has been on fire, growing from $1 trillion in 1982 to $5.5 trillion in 2006. And do you know how far back one has to go to find the year when America’s total manufacturing output peaked? All the way back to 2007! Yes, U.S. factories produced more last year than in any previous year in our history. That’s the “hollowing out”—as its critics like to say—of America’s economy.

Continue reading "This from Hillsdale"