Top economist Brad DeLong speaks on student debt, NIMBYism, inflation and his new book on our economy slouching towards dystopia

To hear DeLong tell it, Hobsbawm just didn’t live long enough to see himself proven wrong, as DeLong’s “long 20th century” from 1870 to 2010 was a period of unsurpassed economic growth. The problem, DeLong says, is that’s been over now for more than a decade and the global economy might never recapture its momentum. Humans got closer to utopia than ever before, but we’ve been slouching toward it for too long.

He sat down with Fortune ahead of his book’s release to talk about whether the economy’s best days are behind us, or if we are doomed to live in a dystopia full of killer robots flying through the air, scorching summer temperatures wrought by climate change, and, to paraphrase Allen Ginsberg (DeLong loves economic paraphrases, as the title of his book indicates), the best technical minds of the world turned to selling ads by figuring out how to scare people. 

But he says he still believes that the United States is the “furnace where the future is being forged.”

The following interview has been lightly edited and condensed for clarity.

Congratulations on your book and thank you for taking the time after walking your dog.

Yes, we got two dogs during the plague year. It’s very good to have the daily exercise of dog-walking: It’s an effective way of gaining and outsourcing additional willpower.

I’ve been a reader of yours for a long time, and you have always had this unique style among economic writers. 

I personally really love this book, because I have long been a big fan of Eric Hobsbawm and his concept of the “long 19th century.” When did you first read him?

I first came across Hobsbawm when [former Harvard economics professor] David Landes made me read them back when I was an undergraduate, around 1980 or so. Landes would say, “I don’t really recommend left-wing students read Hobsbawm, because he’s too convincing, but you’re enough of a right winger that it will annoy you, but also teach you and you’re really the kind of person who ought to read this.” 

Well, thinking about the long 19th century, you have democracy and industry starting off together in the middle of the 1700s, and then the globalized industrial revolution with steam, the industrial economy changing to coal and oil, and empire. That then takes you up to 1914 and the catastrophe that starts there. The arc of those three books is, I think, quite wonderful and extremely successful. Especially the first two. 

Your “long 20th century” runs from 1870 to 2010, when the world had a burst of economic progress that you say is now over, thus proving Hobsbawm wrong. So is it really over?

In 1870, the last institutions fall into place to produce technology that doubles every generation, thus enabling Schumpeterian creative destruction in which the next generation is twice as rich, but also a huge chunk of industries, occupations and patterns of life vanish in order to make that happen, and that makes a lot of people angry. Whatever running code of societal organization you crafted, the forces of production as they existed at any moment after 1870, those no longer work 30 or 40 years later, and you have to build new and different patterns and institutions on the fly. And that’s a very hard task, and it’s now very hard.

As for when it ends, you could say between 2001 and 2003, when the George W. Bush administration says the United States is no longer the benevolent, hegemonic, technological pioneer, we’re just another country and we’re going to follow our own interests. 

You could say 2006, when my friend John Fernald says it becomes clear that information technology is actually not going to be as big a deal for most people as electrification or the internal combustion engine or modern materials. 

You could say it’s 2007, when the idea that you actually needed to manage finance because it wasn’t trustworthy on its own turned out to be nonexistent.

Or you could say 2010, at a time when standard Keynesian theory would say the private sector has sat down on spending and the government sector needs to stand up, and even Barack Obama is saying no, the government must tighten its belt, and if the Democratic Congress actually passes any spending bills, I’m going to veto them.

You could also say it’s 2016 with the election of Donald Trump. And if I had to write it over again, I would say there’s a case for saying it’s 2022, with the return of major power war [between Russia and Ukraine]. 

But sometime between 2002 and 2020 the whole complex of things that gave us the long 20th century—this technologically progressive, globalized United States, the furnace where the future was being forged—dissolves piece by piece, and it leaves us in a new world in which China and India are likely superpowers and in which dealing with global warming is likely to become all important. 

You know, you go around the world and ask about Xi Jinping and hear back that he may have some rough edges, but at least he’s been tested as a competent administrator and someone who listens to advice, as opposed to the ethnonationalist politicians being thrown up by the industrial democracies right now—Trump was no prize and Boris Johnson was no prize. That’s a very strange configuration of things. And people have not quite wrapped their minds around this new world yet.

Another part of this new configuration is the high inflation we’ve been experiencing. What are people not wrapping their minds around with this highest inflation in 40 years?

On inflation, my view was that we were going to have some coming out of the plague. And it was going to be by and large, a good thing.

Let me explain: The plague has given us maybe 15 years of metaverse-style technological development in just over two years. And the economy has a new configuration: Fewer in-person workers in retail establishments, a lot more delivery orders, substantially more goods production, and also substantially more information entertainment and production as well. That requires that we shift a lot of people into new jobs, and you can’t cut anyone’s wages nominally without making them extremely angry at you, which means that in the expanding sectors, you have to raise wages in order to pull people into what are the growth sectors of the post-plague economy, and that’s going to give us a bunch of inflation. 

Plus, when you reopen the economy, you discover all the supply-chain bottlenecks, and you need the prices of things where there are bottlenecks to go up in order to get people focused on how do we produce more of this stuff or how do we use less of it? 

Your book is called Slouching Towards Utopia because you describe how we made so much progress in the 20th century and then stalled out, but now that we have gone through this accelerated metaverse evolution, do you think in a way we’ve sprinted towards a new kind of economic utopia, coming out of the plague?

I wrote in my book that I saw the best technical minds of the world turned to selling ads by figuring out how to scare people, so their eyeballs stayed glued to the screen. 

And they figured out how we can use the screen you’re looking at to hack your brain so that you keep watching so we can sell you more ads. 

So do you see this as a dystopia that we have emerged into?

It certainly has dystopian elements. Technological progress always has dystopian elements implicit in it, of which large-scale thermonuclear war is only one, and now we are also cooking the planet—how hot is it in Beijing today? Is reaching 120 degrees or so a normal climate kind of thing? We have gotten extremely good at advancing our technology but extremely poor at using it to build a proper socioeconomic political system that makes us happy. 

We also shouldn’t underestimate the fact that while three-quarters of the world went to bed seriously hungry in 1870, now it’s only about one-fifteenth of the world that does so today. It’s a huge accomplishment when one of your chief mental concerns is where am I going to get my food tomorrow, rather than which of the 93 things I might want tomorrow should I pick up at the supermarket?

But revealed political preferences are that this does not make people happy or satisfied or thinking that things are going well.

So is it possible to recapture our momentum with economic progress, or is that asking the wrong question? It sounds like we still have a lot of progress, but you’re describing a crisis of values about how that technological progress is used.

Well, we certainly could recover our momentum.

The nice thing about invention is that two heads are not twice as good as one, but two heads are far better than that. And now the potential of the scientists and engineers that we could deploy, if we really wanted to, is absolutely enormous. Yes, the low-hanging fruit has been picked and it’s getting harder and harder to push the technological frontier forward. But our resources are still immense and they still scale.

There are people, my colleague and neighbor Fred Block among them, who think that one of the big things my book misses is the neoliberal turn in the United States that pushed corporations toward declaring maximum short-term profits, which means all the Xerox Parcs and the IBM Labs and the Bell Labs were essentially dismantled, and business started saying, instead of doing research, just figure out how to make what we’re making 1% cheaper next year. And the loss of those semi-public industrial research lab organizations—which because they were research-oriented were for the benefit of all, but were inside corporations and actually focused on technologies that might work—has been a huge minus and a major cause of the slowing down of technological progress. 

Another huge cause of the slowdown is our failure to keep expanding education. When my father went to Harvard in 1955, it admitted 900 men and 300 women. Now it has 700 men and 900 women. That’s only gone up from 1,200 to 1,600 in total over 65 years, not a huge increase in capacity in a country that’s much more than doubled in size and in a world in which maybe five times more people are qualified for an Ivy League education. That failure to scale is really quite remarkable and amazing. 

The problems with education at the private level are very much the NIMBYism, that is the not expanding capacity. At the public school level, it’s simply that we seem to be pretty good at what we do at teaching people things and preparing them for lives in which they appear to be very productive, but we have no idea how we do it. We really have zero idea about what parts of the educational process are useful. What are we doing that is simply a medieval ritual that was a response a long time ago to bad educational technology, and what things actually encourage people to think and talk and acquire skills so they can then better understand and deal with the world? American education is still an attractive thing to people from all over the world, but it needs to be reformed and we have very little idea of how to reform it. So it’s a big puzzle.

And understanding NIMBYism, the “not in my backyard” mentality, comes from how the creative destruction process indeed destroys a lot of things. But we live in a market economy where the only rights that really matter are property rights. And if you have property rights, then you tend to think you should have a voice about the surrounding built and natural environment not being changed without your buy-in, or at least without you getting bought off in some way. 

Huge numbers of people are tremendously offended at the Biden student loan relief plan, but whoever we are, we have all had more than $20,000 of good or bad luck affect our lifetime income paths. There are a lot of people who went to school, and then with the totally crappy labor market of the past 15 years, it really didn’t pay off. So if your principal reaction is that those people are getting something they don’t deserve, that shows a very powerful thing about human psychology. 

Also, many people do not like creative destruction at all. The idea that your job or your industry, the fabric of your life, might blow away if some rootless cosmopolis decides the business you work for no longer satisfies a maximum profitability test gets people very angry. These things have been animating progress and its effect on politics ever since the days of William Jennings Bryan. 

Well that’s quite a note to end on, a reminder that these are not new concerns even if they feel that way, and that creative destruction versus NIMBYism is a major issue to resolve. 

What I hope is that a lot of younger people read my book. When you get to my generation, you look around and it’s by and large a retrospective on what went wrong while we were supposedly in control. And I’d like the younger generation to have a stronger sense of how this kind of conflict between property rights and other rights on the one hand, in an environment of repeated creative destruction, on the other hand, has greatly hobbled our ability to actually use our huge technological powers to build a kind of human world as opposed to a world in which Beijing’s temperature reaches 120 degrees Fahrenheit and in which right now, killer robots are flying in the skies above Ukraine looking for people to kill.

You know, back when I was 12 or 13, there was a difference between the utopian science fiction novels with amazing technological competence and virtual reality and so forth, and the dystopian science fiction novels in which you had excessive heat from the greenhouse effect and killer robots, and yet it turns out in real life those have become something like the same thing. Yeah. We have managed to purchase both.

Wow, well that really sums it up. Ijust want to say I read your book and I devoured it. I really loved it.

Thank you. Oh, that’s excellent. That’s excellent. I remember [UC Berkeley colleague and former Obama advisor] Christina Romer saying, “Wow, this is actually readable.” And the more people who say that, the happier I am.