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The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better: A Penguin eSpecial from Dutton [Kindle Edition]

Tyler Cowen
3.7 out of 5 stars  See all reviews (96 customer reviews)

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Book Description

America is in disarray and our economy is failing us. We have been through the biggest financial crisis since the Great Depression, unemployment remains stubbornly high, and talk of a double-dip recession persists. Americans are not pulling the world economy out of its sluggish state -- if anything we are looking to Asia to drive a recovery.Median wages have risen only slowly since the 1970s, and this multi-decade stagnation is not yet over. By contrast, the living standards of earlier generations would double every few decades. The Democratic Party seeks to expand government spending even when the middle class feels squeezed, the public sector doesn’t always perform well, and we have no good plan for paying for forthcoming entitlement spending. To the extent Republicans have a consistent platform, it consists of unrealistic claims about how tax cuts will raise revenue and stimulate economic growth. The Republicans, when they hold power, are often a bigger fiscal disaster than the Democrats. How did we get into this mess?Imagine a tropical island where the citrus and bananas hang from the trees. Low-hanging literal fruit -- you don’t even have to cook the stuff.In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century: free land; immigrant labor; and powerful new technologies. Yet during the last forty years, that low-hanging fruit started disappearing and we started pretending it was still there. We have failed to recognize that we are at a technological plateau and the trees are barer than we would like to think. That’s it. That is what has gone wrong.The problem won’t be solved overnight, but there are reasons to be optimistic. We simply have to recognize the underlying causes of our past prosperity—low hanging fruit—and how we will come upon more of it.


Editorial Reviews

Review

"As Cowen makes clear, many of this era's technological breakthroughs produce enormous happiness gains, but surprisingly little economic activity." ---David Brooks, The New York Times

About the Author

Tyler Cowen is a professor of economics at George Mason University. He is the author of Discover Your Inner Economist and The Age of the Infovore, and he coblogs at www.marginalrevolution.com, one of the world's most influential economics blogs. He writes regularly for The New York Times and has been a contributor to The Wall Street Journal, The Washington Post, The Wilson Quarterly, and Slate, among many other popular media outlets.

Product Details

  • File Size: 360 KB
  • Print Length: 128 pages
  • Publisher: Dutton (January 25, 2011)
  • Sold by: Penguin Group (USA) LLC
  • Language: English
  • ASIN: B004H0M8QS
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Enabled
  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #84,169 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

3.7 out of 5 stars
(96)
3.7 out of 5 stars
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167 of 173 people found the following review helpful
5.0 out of 5 stars Well-written and perceptive, but raises questions... January 26, 2011
Format:Kindle Edition
"The Great Stagnation" offers a very concise and well thought-out essay on the relationship between innovation and prosperity. The first chapter, which shows how median incomes have stagnated in recent years as the economy's "low hanging fruit" has gotten scarce is especially well done. The parts on health care and education are also very good.

Cowen's central idea is that the pace of innovation has slowed, and that we are now on a "technological plateau" that makes further growth challenging. If you consider technology in the broad sense (energy, transportation, home, etc), this makes sense as things have not changed a lot in recent decades. However, I think it is also true that progress has been highly concentrated in information technology and communications, and that things continue to advance rapidly in this area. Cowen notes this but seems to feel that the Internet is the only really major innovation.

Cowen argues that what we need is a new burst of innovation that will propel economic growth. Here is the problem I see with that: Cowen writes that "a lot of our major innovations are springing up in sectors where a lot of work is done by machines, not by human beings." In fact if you look at companies like Google or Facebook, or entire industries like semiconductors, computers, Internet or biotech, there are really not a lot of jobs in total and certainly not a lot for middle skill people. If there is manufacturing it is either heavily automated or offshore.

The question is: if today's innovations are already creating industries that are not labor-intensive and rely instead on technology, why would the future be different? Won't the new burst of innovation that Cowen calls for create even more technology-intensive industries...and few jobs?
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167 of 183 people found the following review helpful
Format:Hardcover|Verified Purchase
Some reviewers have done a good job here, but some have utterly missed major points, if they have read the essay at all, which I doubt, so I will give potential readers an outline.

I. The low-hanging fruit we ate
..A. Examples in the United States
....1. Free land (Homestead Act, etc.)
....2. Technological breakthroughs (electricity, motor vehicles, telephone, radio, television, computers etc.)
....3. Smart, uneducated kids (who were made productive through excellent public education).
....4. This is a partial list; clearly other candidates can be proposed, e.g. cheap fossil fuels.
..B. Examples in other countries ("catch-up growth")
....1. Leveraging the technological breakthroughs of the West (e.g. China, India)
....2. Smart, uneducated kids (e.g. China, India)
..C. MEDIAN income growth in the U.S. has slowed notably since 1973.
....1. Decline in household size is not the cause.
....2. Unmeasured quality improvements (think electronic gadgetry) are not a counter (because there is
...... also unmeasured quality degradation, think traffic jams and AIDS)
..D. Rate of technical innovation has declined notably since 1873 and even more since 1955
....1. Innovation is getting harder; the low fruit has been picked.
....2. Recent innovations have slight marginal benefits
..E. Recent and current innovation is more geared to PRIVATE goods than to PUBLIC goods.
....**This is the driver of the Great Stagnation.
....1. Extracting resources from the government (subsidies for solar power, farm products, other junk;
.....useless construction; useless government employees; legal services, etc.) by lobbying.
....2. Extreme protections of intellectual property (e.g.
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48 of 53 people found the following review helpful
3.0 out of 5 stars Some good points, but many blank spots June 8, 2011
Format:Kindle Edition
Tyler Cowen: The Great Stagnation

This nice little book is worth reading. Tyler Cohen has correctly identified several almost unique circumstances that helped America become great and powerful. Some low hanging fruit like free land, innovation, millions of immigrants seeking work (and ready to work for pennies), millions of young people wanting to get education; scientific progress and technical innovation.

The book contains very sharp observations. For instance, the author notices that innovation has moved lately in the wrong direction:
"If one sentence were to sum up the mechanism driving the Great Stagnation, it is this: Recent and current innovation is more geared to private goods that to public goods. That simple observation ties together the three major macroeconomic events of our time: growing income inequality, stagnant median income, and, as we will see in chapter five, the financial crisis.:

Not only this. Cowen points out that "Top American earners are increasingly concentrated in the financial sector of the economy."

The booklet is easy to read, the style is lively and intellectually entertaining. When I reached the end, however, I said: Oops, was that all? Too many blank spots left!

Here is a major blank spot: The dollar. Talking about low hanging fruit, the author somehow missed the dollar. By becoming the world reserve currency after WW2, the dollar gave this country an enormous financial advantage. It became not only a low hanging fruit, but a ready fruit on the table. The benefits of this fruit only increased when it was freed from gold in 1971 and when OPEC agreed to trade oil only in dollars in 1974. What is the future of the dollar? What are the perspectives to enjoy it free on the table?
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Most Recent Customer Reviews
4.0 out of 5 stars Nothing lasts forever
Good essay to understand that we cannot climb the mountain infinitely.
Published 1 month ago by Donaldo M. Dagnone
2.0 out of 5 stars Small book in every sense of the term
Not a very powerful book. Cowen is an economist at George Mason. I took economics at George Mason.

Of course that was a very long time ago. Read more
Published 2 months ago by Patrick L. Boyle
3.0 out of 5 stars Three Stars
it's an interesting read, but i felt it very much an overview without much support or numbers to support.
Published 3 months ago by SnowDreamer
3.0 out of 5 stars ... it I think the fundamental thesis (which mirrors writers like...
I was intrigued by Cowen's thesis (which is that economic growth in the future will be considerably moderated) - but as I have thought about it I think the fundamental thesis... Read more
Published 4 months ago by Jonathan Brown
3.0 out of 5 stars Read for some insights on the problems, not the predictable answers...
Cowen's discussion of the technological plateau and move away from innovation in the productive economy is insightful at first. Read more
Published 7 months ago by C. D. Varn
4.0 out of 5 stars not bad
Pretty good for an educational book, wasn't bad at all. It was short and sweet. Read it for my government class and probably the best read I've ever been required to do.
Published 7 months ago by Dina T.
5.0 out of 5 stars Short, highly informative book
Very good analysis of our post-crisis economy and where we go from here. The book is a fast read and short, but the pages are packed with thoughtful analysis. Well worth getting.
Published 8 months ago by John Meola
4.0 out of 5 stars a clear and succinct treatise
The book nicely summarizes the issues that developed countries and in particular US face. It is devoid of left or right wing biases and strives to present the author's analysis in... Read more
Published 9 months ago by New Hampshire
4.0 out of 5 stars Worthwhile reading
Although this is not the first time I have read some of the reasons given here for the lack of growth and the present stagnation (in the USA and in other parts of the world) I... Read more
Published 9 months ago by Juan M. Sansinenea
3.0 out of 5 stars An agglomeration of blogging
For active followers of MarginalRevolution.com, this book is unnecessary. The book is a jumbled collation of bloggish thoughts. Read more
Published 12 months ago by ljm
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How many pages does the book have?
I did some number crunching... if you multiply the maximum "Location" by 0.045 you will get the number of pages. So 3884 "Locations" is about 175 pages.
Nov 29, 2011 by Greg |  See all 3 posts
American Ingenuity and not Low Hanging Fruit Be the first to reply
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