Book of the week: The Great Stagnation by Tyler Cowen

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

(Dutton, $4; e-book only)

Tyler Cowen’s new $4 e-book may be “the most debated nonfiction book so far this year,” said David Brooks in The New York Times. The well-known economist and blogger has created a stir by compellingly (and, at 15,000 words, briefly) proposing that the American economy has stagnated since 1974 because it simply ran out of the “low-hanging fruit” that had fueled the previous century of gangbusters growth. No longer do we have a vast population of farmers waiting to be educated, and we’re unlikely to develop new technologies that could propel growth and improve standards of living the way the spread of electricity, automobiles, and plastics did. But has innovation stalled, as Cowen says, or have our aspirations changed? Maybe a 23-year-old who writes an art blog isn’t creating a lot of material wealth, but his “happiness gains” should count for something.

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Cowen might even be underselling the wealth-creating potential of computer technology, said The Economist. While it’s true that the digital revolution has created far fewer jobs than industrialization did, “society is only beginning to reorganize itself” around what computing and the Internet can do to improve management and augment our brainpower. Yet Cowen’s treatise might be most useful in what it says not about the future but about the past 35 years, said Steven Pearlstein in The Washington Post. It seems that much of the growth we attribute to the period “may, in fact, have been a mirage.” Far too much of that growth occurred in just three sectors—education, financial services, and health care—where we happen to get less than a dollar of value for every new dollar we spend.

Such insights make The Great Stagnation a work that should reframe many of our current debates about the U.S. economy, said Kelly Evans in The Wall Street Journal. It’s “exciting to imagine students, economists, and scientists across the country reading the book” and applying themselves to the challenges it outlines. But don’t hold your breath waiting for another homegrown Edison, said Ezra Klein in The Washington Post. One implication of Cowen’s argument is that pressing for rapid change in developing nations is among the best ways to improve the lives of average Americans. Countries that haven’t yet tapped their populations’ full potential are the ones most likely to begin buying our products and “inventing things we need.”