The Great Stagnation runs through three centuries’ worth of what Cowen calls the “low-hanging fruit” of economic growth: free land, technological breakthroughs, and smart kids waiting to be educated. For developed economies, he argues, none of these remains to be plucked. Yet America, Europe, and Japan have built political and social institutions on the assumption of endless growth. Cowen summarizes the financial crisis in eight words: “We thought we were richer than we were.”
It’s not that he disagrees with any of the better-known explanations for the crisis—easy credit, flawed ratings—it’s that he sees a more fundamental problem, one that can’t be fixed with regulation, bailouts, or tax cuts. Cowen thinks that now that America has used up the frontier, educated all of the farm kids, and built a couple of cars for every family, we might be done growing for awhile. The Great Stagnation is a short work, simply written. It avoids any but the most basic discussion of economics, yet also brushes lightly over all of modern history; behind simplicity in style and argument lies a lifetime of intensely productive reading.
I just downloaded it to my Kindle for a holiday weekend read.