The Great Stagnation by Tyler Cowen

How America Ate All the Low-Hanging Fruit
The Great Stagnation by Tyler Cowen

Fascinating! I Just finished reading this short but excellent book last night. Business Week published an excellent article on the semi-autistic author in July called “Tyler Cowen, America’s Hottest Economist” After reading this article,  I ordered this small hardcover book from Amazon for $7.19, an amazingly reasonable price for a current best-seller.

The book is very clear and easy to read, not technical at all. I read it in two evenings while watching the late night news with my cat climbing all over me.

I don’t want to give away too much of the content, but his key summary of the financial crash is:

We thought we were richer than we were.

In this brief 89 page book, he lays out a rock-solid, clear case that the Democrats and the Republicans are arguing about the wrong problem. The issue that we are facing is not that the tax levels and spending levels need to go up or down. The bigger problem is that our society has an entirely unrealistic expectation about endless and continuous economic growth.  That is, the long string of economic growth since the founding of the United States has been heavily dependent on the consumption of “low hanging fruit”. In the author’s perspective, the biggest “low hanging fruit” for the United States was the huge piece of free land and its natural resources. The second biggest piece of “low hanging fruit” was increasing the university educational level from 6% of the population in 1900 to its current level today.

Interestingly, we tend to think of the last 30-40 years as the era of astounding innovation. However, the author’s clear-eyed analysis debunks that myth. His argument is simple. When he was a child in the 1960s, his family had a house, a television, a stereo, two cars and so on. His life today is not all that different. The individual items are somewhat better, but other than the computer and the internet, their functionality is not that wildly changed. On the other hand, his grandmother’s life experience change between age 6 and age 50 was astounding by comparison. Railroads, cars, highways, telephones, televisions, airplanes. Actually, he shows that the last 30 years have actually been an era of rather low innovation.

Definitely worth a read!

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