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.
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Book Description
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 blogs at Marginalrevolution.com, the world's leading economics blog. He also writes regularly for the New York Times, and he has written for Forbes, the Wall Street Journal, Newsweek, the Washington Post, the Los Angeles Times, and the Wilson Quarterly. Paul Boehmer appeared for two seasons at the Old Globe Theatre in San Diego, California, where he played Oberon/Theseus in A Midsummer Night's Dream and Lucius in Titus Andronicus. He also appeared in The Constant Wife, played Banquo in Macbeth, and was Antipholus of Syracuse in The Comedy of Errors in the 2005 Summer Rep Season at the Globe. He has appeared in Sir Peter Halls's acclaimed Broadway production of Oscar Wilde's An Ideal Husband, Off-Broadway in the New York premiere of Miss Evers' Boys, and Off-Off-Broadway in New Yorrick, New Yorrick and End of the Day. He has appeared regionally at the Pioneer Theatre Company, Arena Stage, Seattle Rep, Huntington Theatre Company, Cincinnati Playhouse in the Park, Cleveland Playhouse, Missouri Repertory Theatre, Walnut Street Theatre, Syracuse Stage, Berkshire Theatre Festival, and Theatre Works Palo Alto. His film and television appearances include The Good German, The Thomas Crown Affair, Star Trek: Enterprise, Star Trek: Voyager, Star Trek: Deep Space Nine, Frasier, Judging Amy, Guiding Light, and All My Children. Paul is most proud of his award-winning unabridged recording of Moby Dick. He holds a BFA in acting from Southern Methodist University and an MFA in acting from the Professional Theatre Training Program at the University of Delaware.
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Most Helpful Customer Reviews
149 of 155 people found the following review helpful
By Bill Jarvis
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?
This issue of whether future technology will create large numbers of jobs is explored in great depth in this book: The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future.
I would encourage anyone interested in this issue (and everyone should be)to read both these books and note that many of the observations are quite similar, while the conclusions and proposed solutions are very different. Innovation won't create broad-based prosperity unless it creates jobs that can be done by most people in the population. Without this, the danger is that future progress will just drive inequality to new heights.
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?
This issue of whether future technology will create large numbers of jobs is explored in great depth in this book: The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future.
I would encourage anyone interested in this issue (and everyone should be)to read both these books and note that many of the observations are quite similar, while the conclusions and proposed solutions are very different. Innovation won't create broad-based prosperity unless it creates jobs that can be done by most people in the population. Without this, the danger is that future progress will just drive inequality to new heights.
107 of 117 people found the following review helpful
By Chuck Crane
Format:Hardcover|Amazon 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. by ridiculous patent laws that grant monopolies for
...... incandescently obvious ideas, enabled by our retarded judiciary)
....3. Recent financial innovations (CDO's, derivatives, etc.) that benefit Wall Street at public expense.
....4. THESE ALL RESULT IN INCREASED INCOME INEQUALITY.
II. Our New (not so productive) Economy
..A. Most recent productivity gains in the private sector have been achieved by cutting out dead wood
....("discovering who isn't doing much and firing them").
..B. GDP statistics are flawed because they value expenditure at cost; actual value of the expenditure is
.... unknown in sectors where market forces do not operate.
..C. Underperforming sectors where valuation at cost is a big problem:
....1. Government.
......a. The marginal value of government, even if positive, falls as government grows larger.
........(1) Basic expenditures deliver high value. e.g. police, basic infrastructure, national security)
........(2) Ancillary expenditures deliver less value (e.g. bridges to nowhere, urban renewal boondoggles,
......... salaries for school administrators and federal drones
......b. Because government contribution to GDP is valued at cost, the larger the government grows,
........ the more GDP growth and living standards are overstated.
....2. Health care
......a. No bloody clue what things are actually worth; they are valued at cost.
......b. America currently spends 17% of GDP on health care, with outcomes worse than countries
....... that spend far less.
......c. Disproportionate spending on end care for the elderly.
......d. David Cutler's study: health care productivity growth 1995-2005 was negative.
....3. Education
......a. 6% of GDP at present.
......b. No improvements in student reading or math performance since mid 70's.
......c. But we are spending (constant dollars) twice a much now per student as we did then.
......d. High school graduation rate peaked at 80% in late 60's.
......e. Government claims of 88% graduation rate are nonsense.
......f. 20% of all new high school credentials each year come from passing equivalency tests.
..D. INNOVATION MUST OCCUR IN THESE UNDER-PERFORMING SECTORS
... This is where Cowan fails to state solutions clearly, which may disappoint readers, but his point is that
... these are areas where innovative thinking is required and good solutions need to be developed. My summary
... and suggestions:
....1. "If you can't measure it, you can't manage it." Use market approaches, intelligently ascertain value by
..... other means, and if measurement fails, arbitrarily force cuts in low-performing sectors (as a last resort).
....2. Government: 10% staff cuts. Strict spending limits pegged to per-capita government spending during a
.... benchmark period.
....3. Education: Standardized tests, charter schools, e-learning, vouchers (all of course resisted by the
..... education lobby).
....4. Health care: determine what works and pay only for that. Extending the life of an 90-year-old terminally
..... ill person for one month at a cost of $200,000 is not something that works.
III. Does the Internet Change Everything?
..A. Similar to early years of industrial revolution (advances made by amateurs)
..B. Hard to measure its productivity because its value lies largely in the mental dimension; most stuff on the
... internet is free.
....1. Traditional activity does occur (advertising, sale of goods). eBay, Amazon, Craigslist, ads on Google.
....2. While a public good, benefits of the Internet skewed to the intellectually curious.
....3. GDP is understated to extent it does not include the value of free internet pleasures.
..C. As an innovation, the internet has generated few jobs and revenue, compared to earlier innovations.
... (Example: Google employs 20,000, Twitter 300)
..D. Internet has also destroyed jobs in the music industry, book stores, and other forms of entertainment.
..E. So we're getting away from materialism, but it really hurts and people are yelping about it.
IV. The Government of Low-hanging Fruit
..A. Days of government largess are past; we can't slop the public trough like we used to.
..B. We won't be getting real income growth of 2% to 3%. We'll be lucky with 1%.
..C. Tax cuts without spending cuts (right wing approach) are untenable in the long term.
..D. Taking from the rich is also untenable in the long term; top 5% already pays for 43% of the federal
... government; top 1% for 27%.
..E. As real growth stagnates, demands from interest groups (corporations for tax breaks, K-12 teachers for job
... security, medical device makers for Medicare payments, public employees for pensions) will grow more
... strident. Expect more vociferous arguments about how to divide up the stagnant pie.
..F. Because government cannot continue to grow under current conditions, Liberals have become the new
... conservatives, supporting the status quo of handouts, bribes, and squandering.
V. Why did we have such a big financial crisis?
..A. Eight words: "WE THOUGHT WE WERE RICHER THAN WE WERE".
....1. We made plans expecting continued 3% productivity growth and the asset prices such growth would bring.
....2. We were lulled by successful handling of prior crises (e.g. the S&L bust and real estate bubble in the
..... 80's) into believing all risk could be managed effectively.
....3. Overconfidence was the problem. For everyone. Borrowers, investors, bankers, politicians, regulators.
..B. Markets and government failed miserably in estimating risk.
..C. Government encouraged risk by taking by overlooking accounting scandals (Freddie and Fannie) and promoting
... home ownership for everybody.
..D. Short-term response to stagnant incomes was to borrow against appreciated assets (home equity loans,
... mortgage refis), foolishly expecting continued asset appreciation. From 1993 through 2005,
... homeowners extracted equity equal to 11.5% of GDP.
..E. Fiscal stimulus in 2009 was inadequate, but a larger stimulus would not have helped. Problem is not lack of
... aggregate demand, but lack of revenue-generating innovation.
..F. Replacing private debt with public debt solves nothing. Sooner or later you have to pay the piper.
..G. The internet, by giving people much to do for free, may be exacerbating the current stagnation.
VI. Can we fix things?
..A. Promote favorable trends
....1. India and China
......a. Science and engineering interest in India and China: should yield innovations we can exploit.
......b. Offloading unskilled labor abroad gives us more time to pursue innovation (if we are smart enough).
......c. Consumers in China and India can offer a market for our innovations.
....2. Internet may do more for revenue generation in the future
......a. Promotes scientific learning and makes science more of a meritocracy; ideas rapidly shared and improved.
........ (Archaic intellectual property laws will need to change if we are to take advantage of this)
......b. Promotes self-education; a lot better than watching TV.
......c. These should all yield productivity gains.
....3. Improvements in K-12 education
......a. Majority of electorate no longer sides with education lobby.
......b. School choice, charter schools, incentives, better monitoring are now in favor.
....4. Raise the social status of scientists
......a. Science is what fuels economic growth, yet we reward law, medicine, and finance.
......b. [Aside: this is not the case in China and India, where engineers and scientists are more highly
....... esteemed, and occupy the highest offices in government. Here, we have poli sci graduates running things.]
......c. Culture of science is what drove the industrial revolution.
......d. Read more ›
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. by ridiculous patent laws that grant monopolies for
...... incandescently obvious ideas, enabled by our retarded judiciary)
....3. Recent financial innovations (CDO's, derivatives, etc.) that benefit Wall Street at public expense.
....4. THESE ALL RESULT IN INCREASED INCOME INEQUALITY.
II. Our New (not so productive) Economy
..A. Most recent productivity gains in the private sector have been achieved by cutting out dead wood
....("discovering who isn't doing much and firing them").
..B. GDP statistics are flawed because they value expenditure at cost; actual value of the expenditure is
.... unknown in sectors where market forces do not operate.
..C. Underperforming sectors where valuation at cost is a big problem:
....1. Government.
......a. The marginal value of government, even if positive, falls as government grows larger.
........(1) Basic expenditures deliver high value. e.g. police, basic infrastructure, national security)
........(2) Ancillary expenditures deliver less value (e.g. bridges to nowhere, urban renewal boondoggles,
......... salaries for school administrators and federal drones
......b. Because government contribution to GDP is valued at cost, the larger the government grows,
........ the more GDP growth and living standards are overstated.
....2. Health care
......a. No bloody clue what things are actually worth; they are valued at cost.
......b. America currently spends 17% of GDP on health care, with outcomes worse than countries
....... that spend far less.
......c. Disproportionate spending on end care for the elderly.
......d. David Cutler's study: health care productivity growth 1995-2005 was negative.
....3. Education
......a. 6% of GDP at present.
......b. No improvements in student reading or math performance since mid 70's.
......c. But we are spending (constant dollars) twice a much now per student as we did then.
......d. High school graduation rate peaked at 80% in late 60's.
......e. Government claims of 88% graduation rate are nonsense.
......f. 20% of all new high school credentials each year come from passing equivalency tests.
..D. INNOVATION MUST OCCUR IN THESE UNDER-PERFORMING SECTORS
... This is where Cowan fails to state solutions clearly, which may disappoint readers, but his point is that
... these are areas where innovative thinking is required and good solutions need to be developed. My summary
... and suggestions:
....1. "If you can't measure it, you can't manage it." Use market approaches, intelligently ascertain value by
..... other means, and if measurement fails, arbitrarily force cuts in low-performing sectors (as a last resort).
....2. Government: 10% staff cuts. Strict spending limits pegged to per-capita government spending during a
.... benchmark period.
....3. Education: Standardized tests, charter schools, e-learning, vouchers (all of course resisted by the
..... education lobby).
....4. Health care: determine what works and pay only for that. Extending the life of an 90-year-old terminally
..... ill person for one month at a cost of $200,000 is not something that works.
III. Does the Internet Change Everything?
..A. Similar to early years of industrial revolution (advances made by amateurs)
..B. Hard to measure its productivity because its value lies largely in the mental dimension; most stuff on the
... internet is free.
....1. Traditional activity does occur (advertising, sale of goods). eBay, Amazon, Craigslist, ads on Google.
....2. While a public good, benefits of the Internet skewed to the intellectually curious.
....3. GDP is understated to extent it does not include the value of free internet pleasures.
..C. As an innovation, the internet has generated few jobs and revenue, compared to earlier innovations.
... (Example: Google employs 20,000, Twitter 300)
..D. Internet has also destroyed jobs in the music industry, book stores, and other forms of entertainment.
..E. So we're getting away from materialism, but it really hurts and people are yelping about it.
IV. The Government of Low-hanging Fruit
..A. Days of government largess are past; we can't slop the public trough like we used to.
..B. We won't be getting real income growth of 2% to 3%. We'll be lucky with 1%.
..C. Tax cuts without spending cuts (right wing approach) are untenable in the long term.
..D. Taking from the rich is also untenable in the long term; top 5% already pays for 43% of the federal
... government; top 1% for 27%.
..E. As real growth stagnates, demands from interest groups (corporations for tax breaks, K-12 teachers for job
... security, medical device makers for Medicare payments, public employees for pensions) will grow more
... strident. Expect more vociferous arguments about how to divide up the stagnant pie.
..F. Because government cannot continue to grow under current conditions, Liberals have become the new
... conservatives, supporting the status quo of handouts, bribes, and squandering.
V. Why did we have such a big financial crisis?
..A. Eight words: "WE THOUGHT WE WERE RICHER THAN WE WERE".
....1. We made plans expecting continued 3% productivity growth and the asset prices such growth would bring.
....2. We were lulled by successful handling of prior crises (e.g. the S&L bust and real estate bubble in the
..... 80's) into believing all risk could be managed effectively.
....3. Overconfidence was the problem. For everyone. Borrowers, investors, bankers, politicians, regulators.
..B. Markets and government failed miserably in estimating risk.
..C. Government encouraged risk by taking by overlooking accounting scandals (Freddie and Fannie) and promoting
... home ownership for everybody.
..D. Short-term response to stagnant incomes was to borrow against appreciated assets (home equity loans,
... mortgage refis), foolishly expecting continued asset appreciation. From 1993 through 2005,
... homeowners extracted equity equal to 11.5% of GDP.
..E. Fiscal stimulus in 2009 was inadequate, but a larger stimulus would not have helped. Problem is not lack of
... aggregate demand, but lack of revenue-generating innovation.
..F. Replacing private debt with public debt solves nothing. Sooner or later you have to pay the piper.
..G. The internet, by giving people much to do for free, may be exacerbating the current stagnation.
VI. Can we fix things?
..A. Promote favorable trends
....1. India and China
......a. Science and engineering interest in India and China: should yield innovations we can exploit.
......b. Offloading unskilled labor abroad gives us more time to pursue innovation (if we are smart enough).
......c. Consumers in China and India can offer a market for our innovations.
....2. Internet may do more for revenue generation in the future
......a. Promotes scientific learning and makes science more of a meritocracy; ideas rapidly shared and improved.
........ (Archaic intellectual property laws will need to change if we are to take advantage of this)
......b. Promotes self-education; a lot better than watching TV.
......c. These should all yield productivity gains.
....3. Improvements in K-12 education
......a. Majority of electorate no longer sides with education lobby.
......b. School choice, charter schools, incentives, better monitoring are now in favor.
....4. Raise the social status of scientists
......a. Science is what fuels economic growth, yet we reward law, medicine, and finance.
......b. [Aside: this is not the case in China and India, where engineers and scientists are more highly
....... esteemed, and occupy the highest offices in government. Here, we have poli sci graduates running things.]
......c. Culture of science is what drove the industrial revolution.
......d. Read more ›
37 of 41 people found the following review helpful
By Chris Varo
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? The author should have addressed these questions.
Tyler Cowen understands very well the importance of technical innovation as the engine of general prosperity. Close to the end he says something good about science and scientists - raise the social status of scientists!
This is very nice, indeed, but seems to be just wishful thinking. The decline of science has a long history. Hollywood movies and popular media have generated and confirmed a very negative image of the man of science. He is usually weird, a loner, with grey standing up hair, and very often with mental of physical problems. The scientist is definitely not a role model. How can one change this? May be by government financing?
Remember the Texas Superconducting Supercollider? In 1993, after investing more then $2 billion into this project, President Clinton and Congress cancelled it entirely. The Supercollider would have been a great boost for science. This 1993 decision reveals something important about the priorities of the establishment.
Tyler Cowen's comments and suggestions for fighting the recession, unfortunately, are almost naďve. There is nothing written in the book about the problems and expenses of health care, social security and defense spending. Talking about scientific and technological innovation, one should consider the general industrial picture. A country cannot successfully develop scientific innovation without the underlying foundation of industry and manufacturing. When manufacturing is outsourced, science follows too. Toyota's hybrid car Prius, for instance, was not born in an ivory tower; it was the culmination of a long sequence of engineering efforts. Such innovation can only be born in the womb of a vibrant manufacturing industry. But manufacturing is not vibrant now in America. Vibrant is the financial industry, attracting the best and the brightest, and producing derivatives, credit swaps and speculative bubbles. All this is very profitable for a small group of people, but detrimental for the whole society.
I still recommend the book. The good points are many and the omissions have the potential to provoke a healthy dialog with the author.
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? The author should have addressed these questions.
Tyler Cowen understands very well the importance of technical innovation as the engine of general prosperity. Close to the end he says something good about science and scientists - raise the social status of scientists!
This is very nice, indeed, but seems to be just wishful thinking. The decline of science has a long history. Hollywood movies and popular media have generated and confirmed a very negative image of the man of science. He is usually weird, a loner, with grey standing up hair, and very often with mental of physical problems. The scientist is definitely not a role model. How can one change this? May be by government financing?
Remember the Texas Superconducting Supercollider? In 1993, after investing more then $2 billion into this project, President Clinton and Congress cancelled it entirely. The Supercollider would have been a great boost for science. This 1993 decision reveals something important about the priorities of the establishment.
Tyler Cowen's comments and suggestions for fighting the recession, unfortunately, are almost naďve. There is nothing written in the book about the problems and expenses of health care, social security and defense spending. Talking about scientific and technological innovation, one should consider the general industrial picture. A country cannot successfully develop scientific innovation without the underlying foundation of industry and manufacturing. When manufacturing is outsourced, science follows too. Toyota's hybrid car Prius, for instance, was not born in an ivory tower; it was the culmination of a long sequence of engineering efforts. Such innovation can only be born in the womb of a vibrant manufacturing industry. But manufacturing is not vibrant now in America. Vibrant is the financial industry, attracting the best and the brightest, and producing derivatives, credit swaps and speculative bubbles. All this is very profitable for a small group of people, but detrimental for the whole society.
I still recommend the book. The good points are many and the omissions have the potential to provoke a healthy dialog with the author.
Most Recent Customer Reviews
1.0 out of 5 stars
Lacked substance.
Seems to have been written over a weekend. Interesting idea, but lacked data and analysis. The "Low hanging fruit" idea was a crutch. Wouldn't recommend it!
Published 10 days ago by Katherine Bailey
4.0 out of 5 stars
The Great Stagnation or Not?
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. Read more
Published 25 days ago by Jeff J. Watts
5.0 out of 5 stars
A refreshing alternative to binary economics
Reads like an economics history version of Megatrends. Convincing in the need to stop framing current and future debates within a context of what worked in the 50s and 60s cannot... Read more
Published 1 month ago by G. Skoy
2.0 out of 5 stars
Meh
The overall theory was interesting, but I was hoping for more "meat." The book seemed like a superficial treatment of an important topic.
Published 1 month ago by Cory C. Wagner
5.0 out of 5 stars
intriguing and well writen
greatly enjoyed both the opinion and the way in which Mr. Cowen presented his argument. A very well referenced and researched piece and one that i iwll be recommending to... Read more
Published 4 months ago by FCBwolf66
5.0 out of 5 stars
Should be read by left and right
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... Read more
Published 5 months ago by R. Lay
3.0 out of 5 stars
this book
doed not have 480 pages. it was more or less of a rehash of an interxiew author did on a talk show.
Published 5 months ago by Bill
4.0 out of 5 stars
I really enjoyed this read
It's short, it doesn't take too long to read and it is technical enough but not overly technical whereby I would throw away the book. Read more
Published 5 months ago by JaclynB
5.0 out of 5 stars
Promotes an Unpopular, But Thought Provoking, Thesis
My review is probably a little biased since I arrived at a similar conclusion about the state of economic development in the world a few years ago. Read more
Published 6 months ago by David Clark
5.0 out of 5 stars
Short and cogent
Cowen makes a number of points in a surprisingly short essay. (Shorter is better, I'm paying for points made, not pages used to make them. Read more
Published 6 months ago by Mec
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