Matt Yglesias reviews *The Great Stagnation*

Tyler Cowen’s new ebook How The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better is a bravura performance by one of the most interesting thinkers out there. I also think it’s a great innovation in current affairs publishing–much shorter and cheaper than a conventional book in a way that actually leaves you wanting to read more once you finish it. My guess is that this is the future of books.

Here is much more, and again the book is here.  Here is coverage from Arnold Kling, though I think he (like some MR commentators) is spending too much time on impressions and not considering (at all) the numbers presented in chapter one.

Comments

Hmm.

I have duelling heuristics on this one.

You're pretty sharp, and thus worth reading, is heuristic A.

But Yglesias likes the book a lot, and "Matt Yglesias is always wrong" is heuristic B.

Is it only available on Kindle? That format is a no-go for me. I would take almost any other format (paper is best in general, google books is the best e-format).

not available in Canada...

What is with all the whiny Canadians today? Move to America if you don't want to live in a culture-less wasteland.

Most of these discussions talk as if the "low-hanging" fruit were the product of purely exogenous technological shocks. But what if the low-hanging fruit are not plentiful due to social changes that have increased rent-seeking, raised transactions costs, and overall weakened society's coordination and consensus mechanisms? In which case the story is a Schumpeterian one. A successful and dynamic West becomes bureaucratic and redistributive starting in the 1930s. But post WWII, catchup and a backlog of innovation fuel growth for a few more decades. In the meantime, the social mechanisms unleashed in the Depression and after start to choke off future innovation. Eventually the dual toll of less innovation and less tolerance of a political economy that exploits innovation well shows up in the statistics.

If this alternative story is true, then nations that don't simply catchup but avoid the rent-destroying traps of prosperity for a bit longer can surpass the US. Hence the fear of what China **might** or might not be able to accomplish.

Not available in the UK...

This sounds like a good book, and I'm glad that it appears not to be ideological, judging by the ideological comments of others.

So, if it is objective and analytical, good for you.

I am also interested in the reviewers comment: "The argument is in many ways a continuation and expansion of Paul Krugman’s themes from The Age of Diminished Expectations, Third Edition: U.S. Economic Policy in the 1990s. Specifically, the argument is that growth has been slow for the past 30-40 years for fairly fundamental reasons related to a slowing rate of increase in basic science and that our politics has become dysfunctional insofar as it’s failed to adapt to those realities."

Now, to take a Krugman thesis and work with it to make something original is good. Eclecticism and pragmatism is good.

Ideologues are bad, so to be fingered by others as in the image above is an image of them, not you.

I’m in Canada and I have it on my Kindle.

and, to the extent that we're working harder to increase the life-spans of the elderly, which serves only to increase the size of the unproductive portion of society (and hence further increase the need for public healthcare and pension benefits to those on low incomes), have we created a new Malthusian trap?

I am still mystified by why Tyler thinks income data is a better guide to changes in "life in broad material terms" than data that actually measures life in broad material terms -- data on housing, transportation, food, health care, education, entertainment and so on.

Sad it's not available in Asia/Pacific

E. Barandiaran needs a blog

I've read this e-book and found it to be a clear summary of the economy today. However, his suggestion at the end that we need to raise the status of scientists I think is somewhat wrong headed.

First, science and scientists are fairly well-regarded. I'm a physicist and people tend to think highly of me even though I'm fairly mediocre at my profession and haven't advanced my field of research very much. I also find there are a lot interest in popular science. I think its because so many scientists are, like me, not really producing ideas that benefit society that we have earned our lower status.

Second, if smarter people moved from finance, where a lot of physicists end up for instance, into science we wouldn't necessarily be better off. People in high status fields tend to be more competitve and vain and get engaged in status wars. Maybe that's good to a certain extent, but it can inhibit good judgement and no one wants to work with a bunch of jerks if they don't have to.

My suggestion for improving science and innovation in the US is to get rid of the graduate degree system and combine our university research system into a set of research institutes. This way young scientists can start their careers right out of undergraduate like most middle class professions. This would mean instead of 5-6 years of minimum wage they can make a modest entry level wages with benefits like maternity leave, etc.The institutes would have classes, but most grad students learn on the job anyway so it wouldn't be all that different. The goal wouldn't be to get a degree or tenure, but to generate ideas that get funding.

The other positve effect would be replacing a bunch of small isolated groups of scientists with large groups who interact and cross-breed ideas and exchange members. Plus, the rest of the university, with its terrible parking situations and so forth, detracts more than adds to research as a whole.

Clint Torres and E. Band are bringing the thunder.

I am still mystified by why Tyler thinks income data is a better guide to changes in "life in broad material terms" than data that actually measures life in broad material terms -- data on housing, transportation, food, health care, education, entertainment and so on.

But why would you focus on narrow measures when trying to make a statement about broad material terms?

Kling's example of having your car break down along the side of the road in the 1950s is a strange one. Sure, you don't have an ATM card or a cell phone. On the other hand, in many parts of the country, you have a somewhat decent public transportation system to get home or to get to a place where you can get help. That same network also means that even with your car in the repair shop means you can still probably get to work and to the grocery store without too much trouble. Do people spend less time sitting in traffic or commuting to work now than they did 50 years ago? The story he is trying to tell isn't simple enough to rely on a few incomplete anecdotes.

But why would you focus on narrow measures when trying to make a statement about broad material terms?

Huh? I'm not advocating a focus on narrow measures. I'm advocating looking at data that actually measures the consumption and quality of material goods and services, rather than data that is a very poor proxy for it (CPI-adjusted income data).

Tyler, when are you going to make some comment on the limited availability out side the US? Including such outposts as Australia, Canada. The following might serve as possible templates for your reply:
- It's technologically too difficult (maybe their electrons have different charge or something?)
- The knowledge is too dangerous for them
- The knowledge is too useful to know, and Mr Obama says we are in a competition between nations
- It violates their anti-child-pornography-laws, or might do so, so we'd play it safe
- You just don't like foreigners
- Something clever about the power of monopolies
- "My publisher did it and I can't resist it; even though I wrote the text and Amazon handles distribution so it might seem like they do nothing, you just don't know how much _power_ they still have over me"
- or something else even more interesting!

At this point (4 threads or so and counting where this has been a common question), your silence on the topic is become a statement in itself.

My last comment was too sarcastic.
But there has to be an interesting economic question here. By this point (assuming you read the comments), you either have or have not asked your publishers/Amazon to make this available to anyone in the globe who has the money and access to Amazon. And if have asked, they clearly have not wish to do so (unless there's some truly inexplicable techical or legal question). If the limitation is economic, as I guess: where, and what makes this rational?

Raising the status of scientists when they are doing it wrong may be wrong. I don't think tenure or degrees are the problem, but academia is a problem and the solution is to really think hard about that problem. Academia is the best academic technology we have. Improving on it will be very hard and probably yield marginal returns.

If I spend $4 at amazon, am I buying this e-book or am I buying a license to view the content of the e-book?

The Great Stagnation has a large blind spot. The mis-named "Defense Budget". If there is any place that calculation of risk is in play it would seem to be the calculations for that budget likewise all the discussion of cost and value would seem to be pertinent. I was struck by this absence and it causes me to consider whether it was a negligent omission or willful omission. Either way the theory seems fatally flawed without it. Did I miss something?

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