The Great Stagnation

If you have time to read only 70 odd-pages today and yet you want to understand what lies at the root of the seemingly endless (and often frustrating) debate of re-distributionists vs fiscal conservatives in United States, you must read this lucid book written in the kind of accessible language that Tyler Cowen prefers on his marvelous blog ‘Marginal Revolution' (which I must admit I have followed for years). Tyler, one the sharpest heterodox thinkers of our times postulates that the United States has entered a period of ‘Great Stagnation' since the 1970s, wherein despite superficial and marginal improvements in living standards, wide-ranging availability of free/cheap online pleasure and accessibility to information on the internet- technological progress has largely plateaued because the national economy has already picked the ‘low hanging fruits' to their fullest, and as a consequence median incomes remain stagnant. He further clarifies that the fiscal-stimulus driven minimal growth that has accompanied the post-financial crisis recovery has also largely been ‘jobless' and the country is looking toward a future where the most dynamic sectors of its economy are employing historically minuscule numbers of people (i.e digital companies) while at the same time the sectors of the US economy where government spending is increasing the most are displaying worse-than expected levels of productivity/ return on investment. If any of you follow Eric Weinstein's Portal you would know that what Tyler is essentially articulating in this book is what Weinstein calls the EGO (Embedded Growth Obligations) of institutions that were designed and premised to function in a world where growth is endless, and so is technological progress. Every line of this book is a cold hard wake-up call for an obsolete gamut of politics that surrounds the kind of wishful thinking surrounding ‘economic growth'.

An interesting, fast read, although it left a couple of major areas un-addressed. In particular, I think there's a lot more to discuss about why the Internet does not generate so much revenue. Cowen basically states this as an inevitability due to the nature of the Internet, but I don't see why it's not a matter of the market hasn't rationalized it yet. Cowen also has kind of a cartoonish view of bureaucracy, with no consideration for the many good reasons the administrative state exists. I think the basic analytic framework is pretty interesting (we've plucked all the “low-hanging fruit,” ranging from the Industrial Revolution to communications technology, and gotten accustomed to a rate of economic growth associated with those innovations), though I'd be interested in reading how historians of science have responded.

The author forgot the low hanging fruit of labor oppression, genocide and outright slavery. We didn't just walk into an empty continent and find a bunch of natural resources ripe for plunder.

I agree with the premise that as we try to do less of that (mostly because there isn't much left to steal anymore) it's going to get harder to get productivity gains. But have we considered hunting the billionaires like dragons? If we slay the dragon, we get to take the dragon hoard for ourselves? It would also be an economic activity that has a lot of usefulness. I think we should consider it.

Anyways, short book kind of meanders along. It's not terribly important to read imo.

For pop-economics, this is an interesting and unusual read. It doesn't swing predictably Republican, Democratic, or other, and it's on a refreshingly more macro level than the ‘random walk' trend. Where other writers lean toward character judgments of the rich or the poor, Cowen tries to present the problem as more deeply-embedded, as a cyclical slowdown in mankind's progress itself.

He is oddly dismissive of the internet as a technology. It's true that job creation has revenue on the internet has been limited, but the examples in this book are thin and the language, which is otherwise nice and balanced, distills the internet down into a “fun” fad. His focus is heavily on media companies on the internet - wouldn't be more interesting to compare, say, Amazon to Wal-Mart?

All in all, it's a worth a read and I appreciate the pacing and brevity - it feels exactly as long as it should be.