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on April 21, 2011
I thought the first 2/3 of Cowen's short book was pretty good -- describing low-hanging fruit that the US has already plucked (and that our competitors are plucking now), and explaining "Why Did We Have Such a Big Financial Crisis?" ("We thought we were richer than we were.")

His last 1/3 -- "Can We Fix Things?" -- seems overly optimistic to me.

1) "The first favorable trend is the interest in science and engineering in India and China which will lead to more innovation here." I think this trend is much less beneficial for the US than it is for India & China.

2) "The second ... is that the Internet may do more for revenue generation in the future than it has done to date." Yes, but revenue at low margins. The Internet brings costs down but prices even more. Its greatest benefit will be offshore.

3) "Third, we now see a critical mass in the American electorate favoring ... greater quality and accountability to K-12 education." Agreed, but it will take 1-2 decades to match our competitors, even if we maintain focus.

4) "What else to do? Raise the social status of scientists." How? In the U.S. most media, politicians, CEOs and citizens themselves are unsupportive or even hostile. Unlikely here but happening offshore; this gap will widen.

5) "What else? We should have a greater awareness that there is a political malaise and we should not add to it." We should, but most media and politicians benefit from increased conflict, since most viewers/voters give more attention and ratings to conflict, not to tedious, detailed, boring, half-satisfying compromise. A change here requires a change in human nature and self-interest (very unlikely), or a change in political structure (also unlikely, though California's Top Two Primaries Act may help). Many competitors overseas have more effective political systems.

Conclusion: "In the meantime, we need to be prepared for a recession that could last longer than we are used to." I think he is admitting that his envisioned fixes, even if they do happen, will not help us for years.
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on February 7, 2011
I highly recommend Tyler Cowen's new e-book "The Great Stagnation"; it could end up spurring a debate and having long-term policy implications enough to make it one of the more important economic writings of the last decade or so. While naive in some ways, especially with regards to how technology typically emerges, I'd argue that the conclusion is essentially sound. The impact of such stagnation for an industry dependent on activity choice for leisure time and discretionary spending are quite obvious. It's short and a relatively quick read (perhaps 60 to 90 minutes). It's Kindle only right now, but Kindle software is available for nearly everything. I'm expecting that it'll be expanding into a full conventional book shortly.

Cowen's thesis is that growth of real income in the US has stagnated primarily due to a decline in technological innovation, but secondarily due to new technologies no longer resulting in real income growth for the majority. For an example of the latter, consider the internet. While leading to new innovations and an increase in the quality of life, it has arguably not resulted in the creation of very many new jobs. Furthermore, nearly all of these new jobs require specialized skills that most people don't have.

For failure of innovation he focuses on the great promised lands of robotics, nanotechnology and artificial intelligence. These also happen to be three of the areas of technology where the long-term implications are the least clear; scenarios from a perfect paradise to the extermination of our species have been envisioned for all three (nanotechnology: writings of Kim Drexler; artificial intelligence: writings of Stanislaw Lem; robotics: classic 1951 film "The White Suit"). Robert Merton's cautionary note regarding unintended consequences and Frederic Bastiat's parable of the broken window have relevance for all three areas.

While Cowen's arguments and conclusions can be attacked in many areas, stagnation does appear to be happening. Whether or not this is the case, and if so what can be done about it, are still in the early stages of discussion. Additional areas I'd like to see addressed as part of this debate for me would be the three areas of growth in true costs for health care, higher education and housing. The costs for all three have outstripped inflation without a corresponding impact on either real income growth or quality of life, and consequently there are implications for real income growth.
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on February 6, 2016
This is more of a long essay than a book. Cowen's analysis will discomfort both the left and the right. Basically, he argues that because economic growth has stagnated, we can't afford the tax cuts that the right typically calls for and we can't afford the expanded welfare state that the left desires. He argues that growth has stagnated, because the US has picked all the low hanging economic fruit. We've expanded across the continent, we face more international competition, and the rate of technological innovation has slowed down. He is short on specific solutions. Generally he says that we need to rethink how we educate people, we need to value scientists more socially, we need to encourage innovation, and for the time being, we need to lower our expectations.
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on December 20, 2012
More than once I have considered adopting Cowen's texts for my classes. He abhors the posturing of left and right leaning economists and politicians, sticking to economic reality and math. If my liberal friends want to know why I think of the Democrats as economic liars and the Republicans as overly dependent on tax cuts then read this ebook. It is, by far, the best current explanation of why the political process is ill-equipped to solve our economic problems. It also reveals why the liberal and conservative press (The Nation, National Review, et al) contribute little to the debate as they are also grounded in a post WWII era where America could afford to play with economic theory. When your economy is at the top of the heap and reaping that low-hanging fruit, you can raise taxes, cut taxes, grow government, and shrink government without any ill effects since economic growth offsets these theories put into practice. The world is different now and this small epistle reveals the "why."
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on June 20, 2015
I didn't read this book until 2015 and still found a great deal of valuable lessons. Tyler Cowen is one of my favorite applied economics writers because of his ability to convey complex concepts in easy-to-understand forms. I have minimal economics training but this book helped me better understand why our (American and the world's) economic situation is the way it is and how to be better prepared for the future. Obviously this book doesn't get into the complexities of many contemporary economic issues (it's less than 100 pages), but it conveyed its big, bold concept (that the economic slowdown of the last decade is an inevitable process) in a clear and persuasive manner. I really liked the metaphor of low-hanging fruit (which is used repeatedly throughout the book), as it helped me conceptualize the rather abstract concept of national/global economics in a tangible, visceral manner.

I would highly recommend reading this, either in kindle or hardcover form.
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on April 25, 2013
Tyler Cowen is in general well written and thoughtful. This is a fairly short treatise on why we (OCED countries) might be seeing a decades long slow down in growth. Despite the title it doesn't predict a dismal future. It just assumes that the slow down is a result of the natural progression of idea discovery and that we might expect to see the rate of growth slow down to less than the phenomenal rate we saw in the 20th century.

Certainly the most advanced countries have seen a slow down in growth for the last 20 years. It's starting to look as if the slow down isn't a periodic slowdown, but instead a change to a slower rate of progress. If that is truly the case then this book offers one possible hypothesis as to why that's the case.
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on September 16, 2012
While I agree with most of the message, it was a disappointing book in the depth of economic history presented and the analysis. More importantly, there is no good explanation of how the stagnation will eventually be overcome.

At least Cowen acknowledges that we are in a stagnation and that the technologies that contributed to economic growth in the past are subject to diminishing returns. The productivity slowdown dates to the early 1970s and is well known to economists. (See the works of Denison, Robert J. Gordon and Alexander Field and Robert Ayres)

Books that anticipated the stagnation were Turning Point by Robert Ayres and The Evolution of Progress by C. Owen Paepke, both excellent. The End of Work by Jeremy Rifkin is also recommended. Perhaps the best economic explanation is by Gordon Bjork in The Way It Worked and Why It Won't: Structural Change and the Slowdown of U.S. Economic Growth. Bjork shows how structural change in the size of economic sectors affected productivity and economic growth. In the transition from agriculture to manufacturing, workers moved to a higher output per hour, high productivity growth sector. As productivity in manufacturing succeeded in lowering prices and employment, the relative sector size decreased. The growing sectors of government and services are lower output per hour and lower productivity growth.
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on March 21, 2011
Yes, it was short and there were issues he could have covered in a lot more depth. But let's not forget one major thing--it's $4! For that price, it's well worth buying. Cowen covers a variety of subjects--health care, education, how GDP can be misleading, why the tax rates of the 1950s should not be revived, why we are facing a "jobless recovery (it's the Internet's fault)," etc.. Cowen leans conservative/libertarian but there was no obvious partisan or ideological bias in The Great Stagnation. He criticizes both left and right throughout the book; for example, he criticizes conservatives who push tax cuts without matching spending cuts, but he also warns liberals that they cannot just keep raising taxes on the top wage earners.

I'm sure most economists would agree (Cowen certainly would)--buying this book at this price passes any rational cost-benefit analysis.
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on December 24, 2011
For once, we see a 100 page, tiny book filled with ideas instead of the same ideas stretched into 300 pages of repetition. Kudos to Cowen. Interesting set of ideas, described well by other reviewers. It would have been useful to add a scientific chapter about how some of the specific low hanging fruit has been eaten. Specifically, new materials (advanced steel, aluminum, plastic) had a huge impact from 1900 to 1970, but there is very little improvement left in the periodic table, fundamentally limiting new materials going forward. Likewise switching from coal to oil had a huge GDP impact, and there aren't really any more energy dense fuels than oil.

Nonetheless, an excellent, quick read.
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on December 17, 2013
I always enjoy pieces that have that "the emporor has no clothes" flavor and this one certainly does. Right now I am concerned that America has too many defenders operating from ideologies that have little to do with the original ideas that led to the formulation of the Constitution, not really Americans in the truest sense. Cowens piece brackets the reality of the pile of riches early Americans stumbled onto when the country was young and point out that we have now reached a place in our history where the ideas of our foundrs will be put to the truest test.

If you have ever run a business you know it is easy to think you are smart when a rising tide is floating all boats. You find out not only how much acument you have but what your true values are when the going gets tough. We are there, our adolescence is complete, it is time to grow up as a nation and see whether we are really worthy of the vision we have inherited. Cowens short essay and likely the book that follows points out that we are in dire need of the development of the collaborative skill that our forefathers displayed when they created the foundation for the country. In that regard we are sort of like the children of riich parents who have never had to really earn a living, we are now early in our real education as citizens.

I'd also recommend George Packer's the unwinding of America as a way os eing what the larger patterns discussed by Cowen look like at the level of the individual in the country today.
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