The Great Stagnation

The Great Stagnation: How America Ate all the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better

© 2011 Tyler Cowen

110 pages

In The Great Stagnation, Tyler Cowen takes a long view of human economic history,  asserting that the explosive growth that followed the Industrial Revolution has tapered off and been reversed not because of human mistakes, but because the particular situations which allowed for rapid, expansive growth no longer exist,. These conditions are the "low-hanging fruit" of human history. In the United States, this fruit existed in part in the sheer bounty of resources and land the early Republic had access to, and the drastic, rocketing climbs in production that establishing transportation and communication networks allowed. But now we are in the era of diminishing returns: adding extra roads doesn't contribute to our economic strength the way the early interstate system did.  The same goes for consumer goods: while early appliances may have revolutionized the way people lived, saving them hours of work and energy, a new washer today can only be a marginal improvement over yesterday's. The global economy responded to industrialism like a flame roaring in response to gasoline thrown upon it, but now that gas, that low-hanging fruit, is gone. We can no longer experience the industrial boons of yesteryear, and our new service economy, increasingly dominated by healthcare and education,  can only marginally add more value...if any.  However, we have continued to live as though the fruit were still available  The economic crisis, Cowen maintains, was fundamentally an issue of our thinking we were richer than we are.

Cowen says all this and more in just under a hundred pages, and he presents his own low-hanging fruit --  the kind that Tantalus was offered, the kind that seemed so enticing but ever escaped his grasp. Cowen presents a fundamentally insightful idea here,  but he speaks throughout the book in generalizations.This is frustrating not just because it robs the book's big idea of its potential, but because the generalizations Cowen makes sometimes sweep over the issues. He champions the "Reagan Revolution" and its deregulation as reviving the American economy from the 1970s slowdown, ignoring the fact that the absence of oversight allowed and encouraged banks to make risky loans of the kind that led in part to the fiscal fiasco of late 2007. But Cowen absents governments, corporations, and so on of responsibility in this matter, because the key to prosperity in his view is technology, and at the moment we're just waiting for some new breakthrough to ignite a new era of low-hanging fruit. In the meantime, he says, we should just sit tight and..wait.  His chief advice is to raise the social status of scientists to encourage interest and enthusiasm in science, and thus hasten the coming of the next breakthrough.  While there may be potential in that -- I look forward to reading Neil deGrasse Tyson's Space Chronicles, which in part views a new space race as a solution to our economic  sluggishness -- ultimately the casual approach Cowen takes to the  book is disappointing.

Related:

• Interview with Tyler Cowen, "On the Great Stagnation"