From the article:
[Phelps] contends that starting around 1970s, America’s commitment to modern values started to recede, and we began reverting to traditionalism. That in turn leads to reduced innovation and slower economic growth.
Evidence for Phelp's position:
- decline in the propensity of young adults to move far from their parents (or even out of the house!)
- increase in NIMBYism (often masquerading as environmental concern), blocking development, for example, of airports.
- lower rate of new business formation
- stifling safety regulations (in nuclear power and in drug development)
- resistance to innovation in food production (GMOs)
- demonization of the 1 percent
- hostility to energy production and consumption
What Phelps means by modern values are individualism, self-reliance, and striving for individual excellence. By his standards, he would argue that those values are on the decline. This is a topic that is a bit squishy for economists to try to grasp, but I am not certain that Phelps is wrong.
Source: Arnold Kling, The Phelps Contention, AskBlog.com, February 23, 2014
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