New Politics for the Next Economy (or, the transition that explains why you're feeling so stressed about American politics)

Feeling stressed about politics and the country? That makes sense. You’re living through a transition into a new America.

As the table shows, the US has already been four Americas: Jefferson’s agricultural economy, Lincoln’s industrial economy, FDR’s full-employment economy and Reagan’s information economy. Each began with a transitional president, and each had its own limit to progress. Now we’re moving into a fifth America, an entrepreneurial economy, where the limit to progress shifts from culture to entrepreneurship. Of all the things that means, here is the most exciting: a shift from institutions using individuals as tools to individuals using institutions as tools.

Land, capital and labor are the classic factors of production, and each limited one of the first three Americas. Less obviously, culture belongs on that list. Culture is a community’s know-how and its values. Do you know how to make steel? Cars? Computer chips? How to edit DNA, make a latte or write a song? What you know how to make shapes your economy. What you value shapes your community: what you praise or criticize, tax or subsidize, make legal or illegal. Romantic ideals or warrior spirit? Great art or science? Turn those dials and you get very different economies, very different communities, and very different kinds of children.

Entrepreneurship is to institutions what invention is to technology: the ability to create, change and improve them. We live better than the great apes because of our technology, but also because of our institutions, which let us do together what none of us could do alone, from raising a barn to launching a spaceship.

Markets have never rewarded institution-building more. The world’s ten richest people, all American men, are together worth about $3 trillion, and most of them built their fortunes on companies they founded. Yet Americans have rarely trusted their institutions less. Gallup has tracked Americans’ confidence in defining institutions such as Congress, churches, big business, the courts and the media since 1979. The share expressing a great deal or quite a lot of confidence has fallen from about half to about a quarter. We value what institutions can do, and we’re frustrated with the ones we have.

That calls for a different kind of politics, one focused less on culture and more on creating and improving our institutions. Picture public-sector entrepreneurship working like Silicon Valley. Most initiatives will start locally, simply because there are far more local governments than state or national ones, but they can start at any level: helping immigrants settle in, launching careers for kids not bound for college, giving parents and preschoolers safe and fun places to play and connect. Many - probably, as happens in Silicon Valley, most - will fail. Some will succeed and stay local, because they fit one community’s culture but not another’s. A few will succeed spectacularly and spread to other cities, states, even the nation. In a country of many cultures, the right scope for a solution isn’t decided in advance. Call it scalable but it's essentially discovered.

The transition into a fifth America, perhaps beginning with the next president in 2029, will be as big a change as Lincoln’s or FDR’s. It will be stressful, but it can be invigorating: the stress of building something, and of institutions finally becoming tools for the people who use them.