The Evolution of Business Entertainment in America From Dinners to Digital

In 2000, we were 82% more productive than the ordinary American worker. By 2020, that figure had declined to 77 percent. We perform worse on that scale than Italy, France, the United Kingdom, and Australia. Assume the French are doing better because of their vacation time, meal breaks, and rules prohibiting workers from taking work home. According to one study, the Canadian worker would need to work 30% more hours to match the productivity of the American worker. Canada's most productive corporations are falling behind global leaders. Ottawa is trying again by establishing the Canada Innovation Corporation (CIC) to promote innovation and R&D. Unfortunately, cajoling businesses to catch up will not work.The rationale may be found in the work of economist Edmund Phelps of Columbia University, who received the Nobel Prize in Economics in 2006. His latest book, with the rather boring title of My Journey in Economic Theory—but don't let that put you off, it's a terrific read—Phelps has spent the last twenty years thinking about why certain countries are better than others when it comes to creativity and invention. His solution is in a country's culture, rather than sponsored government programsTo appreciate what Professor Phelps is saying, we need to look at the history of what drives economic growth. According to Austrian economist Joseph Schumpeter, who worked at the turn of the century, capitalism economies are never stagnant and are continually developing. Capitalism fosters new ideas that disrupt old methods of doing things, resulting in what he refers to as "creative destruction" that forces out old ways of doing things. At the core of free market systems is the entrepreneur, who recognizes the potential of fresh ideas and brings them to market. Schumpeter realized that the entrepreneur was the primary generator of economic growth. Schumpeter had no time for the brilliance of businesses and bankers, whom he claimed lacked originality.

Another Nobel economist, Robert Solow

noted in the mid-1950s that productivity increase was driven by these so-called "exogenous" shocks from people's minds, like Ely Whitney, Thomas Edison, and Steve Jobs. Solow's contribution to economic growth was similar to Schumpeter's in that they were unable to fully explain why these ideas germinated.Phelps wondered what would happen if these fresh ideas and breakthroughs did not arrive out of nowhere but were "endogenous." That is, forces within the economic system may explain inventions. Could it be that the typical worker, rather than scientists, inventors, or entrepreneurs, could generate ideas and breakthroughs for a country?According to Phelps, in order to create "wide indigenous innovation in a country, it is crucial that the many workers have the qualities needed for dynamism." But what is this dynamism, and how can you quantify it?He identified two cultural elements that might be measured: the value of work, the motivation to get up every day and go to work, and involvement in one's work, the inclination to perform a good job. Given Europe's craft and guild tradition, Phelps expected Europeans to score higher on both criteria, but Americans outperformed Germans, French, Italians, British, and Canadians. He concludes that a nation with the correct principles "is capable of much innovation beyond what may be imported from abroad [or] opened up by new scientific discoveries at home."If Phelps is correct, a country's values are critical to creating widespread prosperity, as he argues in his 2013 book Mass Flourishing. The genius of prosperity is found not in government stimulus programs, but in ordinary folks' work ethic and discovery, which they take delight in. Prosperity and economic growth driven by ideas begin from the bottom up, not the top down. 

Property rights and stable government are important 

institutions in Phelps' society, but they are secondary rather than primary. The actual activity occurs on the ground, where the spirit of the typical worker thrives. This view of the future contrasts sharply with the more pessimistic conclusions in Bradford DeLong's recent book Slouching Towards Utopia (2023), which concludes that the era of growth in America began in 1870 and ended around 2010 when America's engine of productivity began to stall under a failed neoliberal democracy. Phelps' vision of the future is based on the culture and values of ordinary people, not just the skills of trained experts or hard-working entrepreneurs. He acknowledges the climate crisis and the need for technical expertise in a rapidly changing world.If culture and workplace principles are crucial, where does public policy stand in the battle to catch up with America's greater levels of productivity? First, we must recognize that top-down policies have limited effectiveness in promoting innovation. Second, public expenditures should be better spent imparting the virtues of pride in labor as soon as children begin attending school. 

On a larger scale, if culture is more 

important than the political and economic issues that marked the conclusion of the long twentieth century, we may be fortunate to live in Edmund Phelps' world rather than Bradford DeLong's.Your typical Canadian will not compare himself or herself to previously starving youngsters on another continent. This will remain true regardless of how frequently we are informed that the world is improving. The problem is that the traditional statistics—increasing earnings and life expectancy, falling infant mortality and poverty—are global averages. People will compare their current economic circumstances to that of their parents and grandparents, as well as to that of prior years. When the average Canadian does this, he or she realizes that housing is prohibitively expensive, the health-care system is slow and inefficient, and incomes are struggling to keep up with an ever-increasing cost of living. We work harder than our parents and earn less.