The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will( Eventually) Feel Better
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America has been through the biggest financial crisis since the great Depression, unemployment numbers are frightening, median wages have been flat since the 1970s, and it is common to expect that things will get worse before they get better. Certainly, the multidecade stagnation is not yet over. How will we get out of this mess? One political party tries to increase government spending even when we have no good plan for paying for ballooning programs like Medicare and Social Security. The other party seems to think tax cuts will raise revenue and has a record of creating bigger fiscal disasters than the first. Where does this madness come from? As Cowen argues, our economy has enjoyed low-hanging fruit since the seventeenth century: free land, immigrant labor, and powerful new technologies. But during the last forty years, the low-hanging fruit started disappearing, and we started pretending it was still there. We have failed to recognize that we are at a technological plateau. The fruit trees are barer than we want to believe. That's it. That is what has gone wrong and that is why our politics is crazy. Cowen reveals the underlying causes of our past prosperity and how we will generate it again. This is a passionate call for a new respect of scientific innovations that benefit not only the powerful elites, but humanity as a whole.
education results that matter, and we are again back to mediocre performance. Most of what we spend on education is dominated by government. So unlike the expenditures on apples, our educational spending is not facing a strong market test. The higher-education arena is more competitive than the K-12 because you’re not so closely tied to attending the school in the town where you grew up. I’m also heartened by how many students from foreign countries wish to study in the United States,
I like to call the “honest middle” cannot be heard above the din. People often blame the economic policies of “the other side” or they belligerently snipe at foreign competition. But we are failing to understand why we are failing. All of these problems have a single, littlenoticed root cause: We have been living off low-hanging fruit for at least three hundred years. We have built social and economic institutions on the expectation of a lot of low-hanging fruit, but that fruit is mostly
citizens. For instance, the British government did not organize its paper records as “files” until 1868. The technologies discussed above all had slightly different rates of arrival and dissemination, but they came clustered around the same time. With the exception of the railroads and the telegraph (both coming into widespread use in the mid-nineteenth century), most arrived in the late nineteenth century, exactly when governmental growth gets under way in most parts of the West. The
forever or visit a Mars colony. Life is better and we have more stuff, but the pace of change has slowed down compared to what people saw two or three generations ago. It would make my life a lot better to have a teleportation machine. It makes my life only slightly better to have a larger refrigerator that makes ice in cubed or crushed form. We all understand that difference from a personal point of view, yet somehow we are reluctant to apply it to the economy writ large. But that’s the
pharmaceuticals. The famous RAND Corporation study of the 1970s gave thousands of Americans 100 percent free medical care, while the control group had to face insurance co-payments for care, as under normal circumstances. The group with free care consumed 25-30 percent more medical services. Yet, except for the very poorest group, the free health care didn’t make people any healthier. Most plausibly, that outcome is because many factors besides health care influence our health. When it comes