Review: Tyler Cowen’s The Great Stagnation
February 9, 2011 Leave a comment
Tyler Cowen’s latest book (or, rather, extended essay) has a rather impressive title:
The Great Stagnation
How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better
Economists aren’t noted for their lack of verbosity.
But it’s an interesting read and I whole-heartedly agree with lots of it.
The (economic) core of his argument is that America (and not just America – but that’s his focus) has consumed most of the easy stuff and has now reached a plateau where not much innovation is happening. Growth has stalled and where technological progress is happening (the internet) it’s not really helping that much in terms of economic growth. The internet isn’t really employing too many people – and it’s keeping a lot of us occupied with stuff that’s not great in terms of revenue generation. (You’re reading this, aren’t you, and it’s free).
Politicians don’t really get it either. The discourse is still focused on growth and returning to growth – like the fruit can be consumed forever, just like it always used to be. But perhaps we need to recognise that the branches are bare and autumn is a long time away and some of the trees are dying. The debates still swing around the same things – tax cuts or spend-for-growth. The political dialogue is itself part of the problem. Politics is becoming dysfunctional.
And how did we get here? Cowen sums it up neatly – we all thought we were richer than we were. He does a good job articulating how we might get out of the sorry mess (although the US, and other bloatfested ‘developed’ economies may have some time to wait). The growth – a different kind and for a different purpose – will come from different types of economies with new and different work ethics and attitudes to technology.
But the lesson to be learned is that new expectations are required. Sometimes all that glisters is not gold.
Tyler Cowen’s book, the Great Stagnation, is published by Dutton (Feb 2011). He blogs at http://www.marginalrevolution.com/