The Great Stagnation
How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better: A Penguin eSpecial from Dutton
America is in disarray and our economy is failing us. We have been through the biggest financial crisis since the Great Depression, unemployment remains stubbornly high, and talk of a double-dip recession persists. Americans are not pulling the world economy out of its sluggish state -- if anything we are looking to Asia to drive a recovery. Median wages have risen only slowly since the 1970s, and this multi-decade stagnation is not yet over. By contrast, the living standards of earlier generations would double every few decades. The Democratic Party seeks to expand government spending even when the middle class feels squeezed, the public sector doesn’t always perform well, and we have no good plan for paying for forthcoming entitlement spending. To the extent Republicans have a consistent platform, it consists of unrealistic claims about how tax cuts will raise revenue and stimulate economic growth. The Republicans, when they hold power, are often a bigger fiscal disaster than the Democrats. How did we get into this mess? Imagine a tropical island where the citrus and bananas hang from the trees. Low-hanging literal fruit -- you don’t even have to cook the stuff. In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century: free land; immigrant labor; and powerful new technologies. Yet during the last forty years, that 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 and the trees are barer than we would like to think. That’s it. That is what has gone wrong. The problem won’t be solved overnight, but there are reasons to be optimistic. We simply have to recognize the underlying causes of our past prosperity—low hanging fruit—and how we will come upon more of it.
Visit www.TheGreatStagnation.com for more information.
“Can you sign my Kindle?” I guess authors on publicity tours are assuming this line is a joke, but it soon won’t be. Clever entrepreneurs are developing ways that authors can electronically sign a fan’s Kindle, Nook, iPad, or any such device, sometimes together with a photograph of the author and reader, ready for posting on Facebook and Twitter. One version of this new idea is called Autography.
That’s a neat trick, but it’s not yet for everyone. One of the core messages of The Great Stagnation is that innovations take a long time to work their way through society. They can take decades to spread and to transform our daily practices, and in the meantime a lot of the gains of those innovations go unexploited. Many of the potentials gains from “eReading” are still sitting on the proverbial shelf, just as it took electricity many decades to transform the U.S. economy. As both producers and consumers, we haven’t been nearly as radically innovative as we often like to think.
The original publication of The Great Stagnation was in eBook form only, and I meant for that to reflect an argument of the book itself: The contemporary world has plenty of innovations, but most of them do not benefit the average household. After all, the average household does not own an eReader. It’s not even clear whether the average household buys and reads books. So I viewed the exclusive electronic publication, somewhat impishly, as an act of self-reference to the underlying problem itself. It was therefore a bit amusing when some critics suggested that the new medium of the eBook itself refuted the book’s stagnation theory—quite the contrary.
It turned out that The Great Stagnation was more successful than I and just about everyone had expected. Such diverse sources as The New York Times, Forbes, The Economist, and the Financial Times called it the most talked-about economics book of the year, which in turn sparked further attention and discussion. This resulted in a greater demand for the book—so I am responding with a greater supply, as a good economist should.
Some readers, usually the more technologically advanced ones, were frustrated with the Digital Rights Management systems embedded in nearly all published electronic content. Theses systems mean you can’t pass around an eBook like a paper book. Libraries don’t necessarily own eBooks forever; it’s possible for the publisher to flip the switch and literally take them back—debate on this topic is raging. Paper books are easier to give as gifts and easier (sometimes) to use in the classroom. On top of all that, Amazon.com, B&N.com, the iBookstore, and related services do no yet reach into every corner of the globe. Paper books can get to remote places a little more reliably. Personally I like reading books on trips and dropping them somewhere creative, in the hope they will be picked up by a surprised and delighted future reader.
Those were all reasons to proceed with a paper edition of The Great Stagnation.
But don’t worry, my next book will not be called The Great Retrogression! The electronic edition will continue to be available, and I encourage you to choose, based on what is best for you. I will not discourage you from buying both.
I have avoided the temptations to make changes in the text and so this edition reads as the original does. Although the eBook appeared only in January of 2011, for me the arguments have held up well and if anything they appear more to the point today than at the time of publication. I have, however, added a few citations in the notes to chapter one to reflect due credit to other writers. I also would encourage readers to visit my blog, www.marginalrevolution.com, for a compendium of reviews, debates, and critical reactions starting on January 22, 2011.
Both versions of the book are cheap and also easy to read. I like to think of the book as some our low-hanging intellectual fruit. Dig in.
Excerpt from THE GREAT STAGNATION © 2011 by Tyler Cowen. Published by Dutton, A Member of Penguin Group (USA) Inc. Excerpted with permission from the publisher. All Rights Reserved.
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“If the measure of a book is the extent of the conversation it generates, Tyler Cowen's "The Great Stagnation" is a really great book. (If the measure is what I think of it, it's also a great book.)”
—Ryan Avent, TheEconomist.com [second time he blogged about it]
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