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on 31 March 2016
The Great Stagnation reflects one side of the macroeconomics debate regarding growth. Cowen argues that we are inventing less, at least less economically powerful inventions. The internet - the obvious exception - is often revenue-light and so doesn't help growth.
The ebook is presented in a short format - easy to read, and gives a very readable summary of the academics
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on 15 November 2014
a present
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on 25 June 2013
Some good ideas and observations. Not so well put forward as after a few pages it sounds a bit like a broken record player: no more low hanging fruit, no more low hanging fruit, no more...
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on 31 March 2013
Very well written. But well researched and with many useful references. A great alternative to standard mainstream economic analysis of the developed world's problems.
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on 12 April 2012
Great little book this. Quick read, but the author has manage to include a lot that most politicians and economists refuse to see.
The title refer to USA, but the content is completely valid in western Europe and other old economies (what we used to call the 1st world). US politicians might be slightly more in denial then some other places, but I think in the UK at least we can recongise similar debats e.g. in parliament.
This is well worth a read, and as it gives a different view, it allows you to listen to economists and politicians in a slightly different way. E.g. how does what George Osborn (or his shadown opposite) says about tax and economic growth relate to what Tylor Cowen says?
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on 9 February 2012
I was very frustrated by reading this book. It gives a very poor representation of the causes of the 'Great Stagnation', essentially blaming the exhaustion of 'low-hanging fruit' from the American economy and referencing very few other causes. In fact, all it does is repeat 'low-hanging fruit' over and over for tens of pages before coming to an extra-ordinarily brief section on a possible solution. This is the fabled solution hinted at in the Title byline - "How America....will (Eventually) Feel Better."

Perhaps the reason you may be looking at this book is to read of inventive or well thought out ideas on how America (and perhaps the world) will get out of its economic strife. If so, you will be bemused to learn that Cowen's only idea (if you can call it an idea) is to value scientists more. That is it. No thoughts on deleveraging, rebalancing economies, increasing education standards, better regulation of banking (and the like), no thoughts how the political situation in America allowed such a housing bubble and a moral-hazard bailing out of the banks. Instead, we should value scientists more. This is a worthy goal, but not a solution, and certainly not one that merits the grandiose reference in the book's title.

If you are looking for a well thought out, well researched and well written book on the causes and solutions to the World's ills, do not buy this book, at any price.

Another review of the book by Howard Davies , the former head of the FSA (British banking regulator) is worth a read. His conclusion: "So, Cowen has clearly described an interesting phenomenon, advanced a partial explanation of it, and identified a frankly daft solution. "
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Tyler Cowen's `The Great Stagnation' is less a full-length book than an extended essay which attempts to explain current economic and median-income stagnation in the USA, and what might happen in the future. The author's basic idea is that between 1880 and 1970 the USA benefited from an abundance of `low-hanging fruit': almost limitless land resources relative to population; technological breakthroughs like electricity, indoor plumbing, railroads, automobiles, radio, telephones, tape recorders, mass production and the availability of reliably tested pharmaceuticals; and a continuous supply of first-generation immigrant labor to do all the hard jobs at low rates of pay. This party is now over, and the hangover has set in.

Cowen's analysis of historical trends in technological innovation reveals a plateau since the 1970s in the adoption and wide dissemination of useful new technologies: i.e. like in the 1970s we still drive cars powered by gasoline, and use refrigerators and TVs; they're just incrementally improved but not radically different in concept. Now they're made elsewhere in the world by newly industrialised economies which have imitated the industrial practices of the US and Europe, and are imported rather than home-produced. The newer technologies like the internet and cell phones are for communications, and don't need a lot of workers to run them.

The author goes on to analyse the incremental value of increasing spend on education, which he sees as offering diminishing economic returns, and writes an excellent section analysing healthcare spending - again, beyond a certain point doubling spending offers smaller and smaller incremental returns in health benefits. Cowen uses a graph to demonstrate that although every major European country has a total healthcare expenditure per capita of less than half that of the USA, they all have longer life-expectancy and lower infant mortality - so it's not to do with money per se, but how things are done and how the money is used.

The author's fix-it ideas include raising the social esteem in which scientists are held: well, amen to that, but is that really going to make a big difference? The biggest earners in the USA are now in the financial sector. Trading credit default swaps, derivatives and securitised financial products may enrich the tiny part of the workforce concerned with such chimera, but they tend to relatively impoverish everyone else and do not spread wealth around as in the industrial age, when millions of people were employed in designing and making real, useful things which improved people's lives and which everybody wanted. Cowen predicts we might be in for a longer and deeper economic recession before new scientific innovations can renew society again, and that the rate of progress will remain uneven and people might "look back to the current era with a gloss of nostalgia" - hardly an optimistic prognosis.

The text of this hardcover was originally an e-book, printed to take in new audiences and offer a more permanent artefact than an online blog. Despite its shortcomings its 89 pages present punchy, lucid arguments and make for an easy read of a few hours, brevity and clarity among its chief recommendations.
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'The Great Stagnation' is a short, incisive disquisition, primarily from a North American perspective, on the macroeconomic historical origins of our current situation. Tyler Cowen - a highly influential American academic economist and columnist - doesn't so much disagree with other analysts of our recent troubles as propose that behind the specific problems they identify - such as perverse incentives for bankers - there are deeper ills at work that short-term fixes - such as better banking regulation - will not address.

Cowen proposes that First World economies are the victims of a slowing in the rate of revenue-producing innovation, against a background of the exhaustion of the most easily-exploitable ('free') resources dating from the early '70s. He marshals evidence to show that the extremely rapid rise in standards of living in the developed economies from the Industrial Revolution until shortly after the Second World War were the product of an unrepeatable combination of factors.

From an American perspective, he isolates three factors in particular: free land; significant technological breakthroughs; and a large body of educable, and previously uneducated youth. By the 1960s at the latest, he suggests, there were already clear signs that these 'low-hanging fruit' had been plucked. Cowen argues that electorates and politicians alike had by then become accustomed to rapid rates of growth - and thus rising personal wealth - as facts of nature. When growth rates began to fall as technological innovation slowed and spending on government activities rose, political left and right alike were disconcerted. In their different ways, they began to make promises to the electorate that their standard of living would nonetheless continue to improve: by redistribution of wealth (according to the left); or by lowering of personal taxation by restrictions on government spending 'waste' (for the right).

The general population, accustomed to these siren voices, refused to heed the tiny minority of commentators who were arguing that the party must soon end. A huge expansion of personal debt, coupled with an ever-rising but unproductive proportion of GDP devoted to increasingly ineffective government spending, sustained for a time the illusion of rising real standards of living. This complacency in turn led to overconfidence among both lenders and borrowers. For Cowen, the housing market bubble and subsequent financial crisis was only one aspect of an entire unsustainable system.

Cowen goes on to suggest that there may be remedies for these problems: but it's clear from his analysis that he envisages the necessity for a thoroughgoing change in attitude and a chastening of short-term expectations. Throughout, he eschews party-political point-scoring in favour of unexpected and unfashionable insights - as, for example, the idea that the West may now have something to learn from Japan in how to manage a slow-growing economy. As a result, there is likely to be something here to annoy almost everybody.

Cowen writes clearly but without condescension for a general audience. There is food for thought here well beyond the text. Recommended for anyone who wants to see the economic debate go beyond technical 'fixes' to issues of substance.

Note: The Kindle text runs about 15,000 words. This includes notes - with hyperlinks to source documents - and suggestions for further reading.
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