Bookends: "The Great Stagnation"
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"Bookends" is a new book review column where we highlight the best books about free enterprise, innovation , business, and the economy. For your summer reading pleasure, look for several of our book selections between now and Labor Day, then monthly thereafter.
Imagine for a moment that you were coming of age at the turn of the last century. What innovations would you have seen in your lifetime? You would have seen airplanes take to the sky, light bulbs turned on in your house, cars hit the road, telephone wires strung down your street, the atom bomb light up the sky, and many more widespread revolutions occur. All of them would have appeared before 1950.
Fast forward to today and we reach what seems to be an age of stagnation. It is a “new normal” marked not by painless prosperity but by incremental advancements. While the Internet and biotechnologies have added convenience and years to our lives, there is little else past 1950 that counts as truly groundbreaking change. Stagnant incomes arise from stagnant growth, which is linked to stagnant education, and it all rests on a lack of revolutionary innovation quite unlike the first part of the 20th century.
In only 15,000 words, Tyler Cowen’s The Great Stagnation lets loose a torrent of debate on the true state of the American economy. He argues that our country has already plucked its “low-hanging fruit” of ideas and reached a “technological plateau.” We have used up all of our one-off opportunities for rapid development. We’ve been educated, settled the frontier, and capitalized on the Industrial Revolution.
Whatever growth we have is in areas of our economy that are hard to value or that are gripped by government’s heavy hand, such as health care and education. Productivity in these sectors has been anemic at best. Government itself is producing a larger share of GDP, but it’s hard to argue that it’s really making a comparable impact on our living standards or “felt wealth.”
Cowen believes that we should be prepared for more years of stagnant growth. Simply being aware of this will help policymakers and business leaders actually work to make greater growth arrive sooner. Even as we reset our expectations to what may be achievable, we must also realize that we sit on the frontier of innovation. The gains will be harder and the future less clear, but the potential is far greater.
What else can be said about one of the most talked about books of the past few years? Only that the answer to stagnation is innovation. And that if you haven’t read Tyler Cowen’s work before now, you should.
Click here to learn more about or to order The Great Stagnation.