The Imagination Age
Total Page:16
File Type:pdf, Size:1020Kb
THE IMAGINATION AGE America’s Fourth Wave of Economic Progress O’Neil Center 2016-17 Annual Report 1 2016-17 Annual Report • William J. O’Neil Center for Global Markets and Freedom • SMU Cox School of Business TABLE OF CONTENTS A Message from the Dean..................................1 The Imagination Age........................................2 A Disruptive Technology’s Pains and Gains.......6 Commodity Supplier Diversifies Just in Time.....12 2016-17: Year in Review..................................16 Global Economic Freedom ...................18 State and Metro Economic Freedom.......21 Texas Economic Freedom.....................23 The William J. O’Neil Center for Global Markets Student Enrichment and and Freedom was founded in 2008 with an initial Public Outreach.........................................24 grant from William J. O’Neil, a 1955 SMU business school graduate, and his wife Fay C. O’Neil. Its broad mission is the study of why some economies prosper and others do poorly, focusing on two critical issues for the 21st Century economic environment— globalization and economic freedom. The center’s programs promote understanding of how capitalism works among the general public, policy makers, business managers and the next generation of business leaders. To these ends, the O’Neil Center teaches SMU Cox students, conducts economic research, publishes economic reports, sponsors conferences and educates the public through the media and speeches. SMU will not discriminate in any program or activity on the basis of race, color, religion, national origin, sex, age, disability, genetic information, veteran status, sexual orientation, or gender identity and expression. The Executive Director for Access and Equity/ Title IX Coordinator is designated to handle inquiries regarding nondiscrimination policies and may be reached at the Perkins Administration Building, Room 204, 6425 Boaz Lane, Dallas, TX 75205, 214-768-3601, [email protected]. Design by WiswallMcLainDesign A Message from the Dean Dean Myers When I took over as dean at SMU as an evolving organism, constantly Cox and Alm are reassuring Cox earlier this year, so many of the innovating and adapting but without being Pollyannas. They building blocks of a great business generally moving in the direction acknowledge the job losses and other school were already in place—a of material progress. This idea stresses that come when economies top-notch faculty, a dedicated staff, permeates the essay that starts on the shift from one age to the next. They great students, a solid reputation, next page. “The Imagination Age,” urge us not to forget the past—that support from businesses and the local written by O’Neil Center founding the arrival of new ages has always community. For that I feel extremely director W. Michael Cox and co- brought pain and progress. Many fortunate to be at The Cox School today. author Richard Alm, tells us that of us live well today because past The assets I inherited include 15 today’s unsettling times reflect the generations endured the turmoil donor-funded centers and institutes economy’s transformation to a new of transition from agriculture to dedicated to research and student age that requires new skills and offers industry and from industry to the development in such fields as new opportunities. Information Age. entrepreneurship, energy, real estate The essay couldn’t be more timely. I urge you to keep reading after and finance. The O’Neil Center for Its insights are relevant to questions the essay. The Year in Review that Global Markets and Freedom studies a lot of us have been asking: What’s starts on Page 16 chronicles these why economies succeed or fail, taking happening to the jobs and incomes activities and accomplishments for an empirical approach with measures that support American families? Why the 2016-17 academic year. Our of economic freedom. Here’s a less do so many people in this wealthy students, the university and the Dallas formal way to look at it—the O’Neil country seem so worried about their community benefit from the O’Neil Center knows capitalism. futures and their children’s futures? Center’s efforts to help all of us better These researchers see our economy Have we lost our way? appreciate how capitalism works. Matthew B. Myers Dean, Cox School of Business O’Neil Center 2016-17 Annual Report 1 THE IMAGINATION AGE America’s Fourth Wave of Economic Progress By W. Michael Cox and Richard Alm Traditional jobs are disappearing at current economic situation. What if our progress by leaps and bounds. Americans’ an alarming rate, raising fears about free-enterprise system isn’t really broken? living standards—still the envy of the American living standards, not just An alternative explanation for our world—wouldn’t be what they are today if today but in the future. Growing gaps collective angst views labor markets’ not for the economy’s past progressions. in wealth and income jab at the nation’s turmoil and the soaring riches among The lessons are clear: Embracing the fault lines—rich versus poor, white collar upper-income earners as signs of shift to the Imagination Age will make versus blue collar, new economy versus capitalism churning forward, just as it has America better off; rejecting it will impede old, big cities versus rural areas, coastal in the past, creating the foundation for the march forward, setting the country on versus the Heartland. progress and a more prosperous future. a path toward economic decline. Making Job losses and increasing inequality The American economy is in the throes the right choice will require a better have many Americans asking whether of an epic transformation. One economic understanding of the orderly process U.S. capitalism—for generations the age is passing. Another is emerging. We of how economies progress by jumping source of wealth and progress—is still call it the Imagination Age for reasons from one age to the next. working the way it should. Erosion that will become clear in the pages that The Imagination Age has already begun of faith in our economic system leads follow. It’s a new story and an old one. in the United States, with little fanfare. Its to calls for bigger government in the The country went from the Agrarian changes will ripple through the economy, form of restrictions on immigration Age to the Industrial Age in the 19th impacting the way we work, what we and international trade, higher taxes on Century, from the Industrial Age to the consume and so much more. Making the wealthy and additional benefits for Information Age in the 20th Century. the most of the new age will require beleaguered working families. Past age shifts brought turmoil enduring the short-term disruptions Fixes like these will slow economic and hardships for many Americans in our daily lives, adapting to seize the growth and add to the burdens on unprepared for the upheavals—but for opportunities of a mutating economy struggling Americans—so they shouldn’t society as a whole the payoff made the and, perhaps most of all, refusing to lose be adopted without a full vetting of our pain worthwhile. Each new age delivered faith in American capitalism. 2 O’Neil Center 2016-17 Annual Report Through the Ages internal combustion engines, automobiles, The first successful product was the airplanes and the assembly line. electronic calculator, introduced by The United States began as a primarily The Industrial Age delivered more Dallas-based Texas Instruments in agricultural economy. In 1800, more material progress in a decade than the 1972. As chips grew more powerful and than nine of 10 Americans depended on world had known since nomadic bands versatile, the Information Age gave us farming for their livelihoods, growing settled into farming. Between 1870 personal computers, cell phones, VCRs food to feed their families or trade for and 1929, real U.S. per capita income and other products. By 2000, per capita a small bundle of household goods nearly tripled from $3,422 to $9,656. income had risen to $49,551 a year. produced by local artisans. The country achieved the gains despite The 200 year-plus sweep of American The Agrarian Age arose several frequent financial panics and recessions. economic history shows a relentless millennia before Europeans stumbled By the 1950s, the United States stood transition. Agriculture’s share of private- onto what would become North America. as the world’s industrial colossus, but the sector employment fell to 45 percent in During all this time, farming dominated technologies that would eclipse the age 1950, then continued downward to below and progress was glacial—a settler in were already seeping into the economy. 10 percent in the early 1960s. Today, just the Ohio Valley in the early 1800s lived Over the next two decades, computers 2 percent of Americans farm—but they’re pretty much like an Egyptian under the and related innovations would shove enormously productive, feeding 320 reign of the pharaohs. the United States forward into its next million people at home and exporting Agriculture’s staid and steady life phase of economic development—the food to the rest of the world. might have gone on forever if not for Information Age. At first, farmers laying down their the Industrial Revolution, which began The new order, like the one that plows found employment in the in England and migrated to the United preceded it, gave birth to new industries, factories of the burgeoning Industrial States. After the U.S. Civil War, a spurt particularly after the commercialization Age. The ranks of goods producers— of innovations came in rapid succession— of the microprocessor, the tiny chip that those in manufacturing, mining and telephones, light bulbs, electric motors, makes all modern electronics possible. construction—rose steadily from 27 O’Neil Center 2016-17 Annual Report 3 percent of private jobs in 1870 to a peak that includes highly paid white-collar suit new economic realities.