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DAVID WEBBER: Cowen is thought-provoking, yet frustrating

Tuesday, February 19, 2013 | 6:00 a.m. CST; updated 7:06 a.m. CST, Tuesday, February 19, 2013

Tyler Cowen, an economist at George Mason University, is gaining attention for a simple and powerful idea but one that might take us down a wrong public policy path. The simple idea is that America’s slow rate of scientific innovation for several generations is a major cause of a multidecade economic stagnation.

Cowen is thought-provoking yet frustrating. His short book, "The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will Eventually Feel Better," was first a rapid e-book success before being converted to print in 2011. The low-hanging fruit is the land, technology and uneducated population whose productivity was quickly and easily increased during the first half of the 20th century. However, it has been harder to continue productivity as the more easily obtained resources are exhausted. This has contributed to America’s slower economic growth, especially median wages, since the 1970s.

Cowen argues that we are living off the successes of past innovations and points to the claim that 80 percent of economic growth between 1950 and 1993 is from the application of old inventions as opposed to the creation of new products and processes.

At one level, Cowen is right. A declining rate of return on innovation is simply an application of the law of diminishing returns that is taught in every principles of economics class. Like many general principles of social science, it should be applied with care. The law of diminishing returns could be used to argue against additional years of higher education or to argue that the last month of life does not have as much value as the preceding month.

Cowen focuses too narrowly on economic growth as calculated as the gross domestic product, a rather easily calculated, yet misleading, statistic. He acknowledges this difficulty by addressing how government services and health care are calculated into GDP by their input prices rather than their true value. Nowadays we should be focusing on broader virtues such as national welfare, general happiness or full-employment of human beings.

It is this simple view of economic growth that allows him to make more outlandish claims in several related publications. Cowen recently fine-tuned his argument in a Time interview titled “What if America’s Best Ideas were Behind It.” His work was also the basis for an article in the Jan. 12 print issue of The Economist. That issue is the one with the cover showing Rodin’s “The Thinker” sitting on a toilet wondering “Will we ever invent anything this useful again?” While Cowen probably had nothing to do with that cover, in this case a picture is worth a thousand words because it reflects Cowen’s view that there is not much new in America.

Cowen argues that life for people before World War II was pretty much like life nowadays because our grandparents had cars, ovens and knew about air travel. While I agree that the difference between having a car and not having a car is a bigger difference than a 1909 Model T and a 2013 Lexis, the popularity of motorized vehicles has transformed American life by creating the suburbs, the interstate, joyriding and NASCAR. Similarly, air conditioning, microwave ovens, birth control pills, cardiac care and video games have changed society drastically since the 1970s. While narrow economic analyses of technological change might not be able to capture their impact on economic growth as measured by the change in GDP, my grandparents would be stunned to learn the extent of the popularity of each in today’s America.

Cowen presents many thought-provoking insights for policy-making in 2013. Three important ones are:

  • That much of the improvement in economic growth has come from improvements in private goods — not public goods. 
  • That without the availability of low hanging fruit for pork barrel politics, politics will be more sluggish
  • That Americas have unrealistic expectations of what government can deliver.

Cowen is on-target in warning that as education and health care become a larger part of economic activity, productivity as conventionally measured is unlikely to increase.

My biggest disagreement with Cowen is his major recommendation: the need for more scientific breakthroughs. He proposes more social and financial support for science and technology. While more scientific innovations might reduce pollution or infant mortality or help achieve other desirable goals, waiting for a scientific breakthrough that increases economic growth as much as the automobile is misdirected and seems far-fetched. Our challenges are governing. It does not take a scientific breakthrough to reduce the federal deficit, or to adopt effective financial regulation or to commit to improving children’s literacy. These are political problems, not scientific or technical ones. Solving them takes political commitment and administrative know-how.

David Webber is an associate professor of political science at MU where he is currently teaching a course on "Is America in Decline?" He can be reached at webber@missouri.edu. Questions? Contact Opinion editor Elizabeth Conner.


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Comments

Skip Yates February 19, 2013 | 7:12 a.m.

Well, I haven't read economist Cowen's book, but I wonder what scientific stagnation/breakthroughs he is talking about. Perhaps he could Skype me. I may not have time for him though as I'm saving up because now a private citizen can take a ride in space. But, I see his point somewhat. Maybe more students should major in civil or mechanical engineering rather than sociology or political science?

(Report Comment)
Michael Williams February 19, 2013 | 8:53 a.m.

SkipY: "Maybe more students should major in civil or mechanical engineering rather than sociology or political science?"
__________________

Indeed.

Hints as to a nation's directional arrow (up, down, or sideways) can be viewed by comparison to nations once considered far behind. When compared to those nations, are we a leader and accelerating, are we a leader but decelerating, or are we not a leader at all? How intellectually hungry are we compared to others?

IMO, resting on national laurels is not a very good posture.

I believe a nation that turns inward is a nation in decline.

(Report Comment)
Ellis Smith February 19, 2013 | 9:56 a.m.

Perhaps an easier, and more easy to compile, metric would be the ratio of engineers to lawyers in the United States versus the ratios in the United Kingdom, France, Germany, Switzerland and Japan, especially Japan. Today it's agreed that Japan is in a state of economic stagnation and has been for some years, but the cause is political/governmental, not scientific.

As for ruination of natural resources, wasn't it our federal government that championed settlement and soil cultivation of the portion of our territory that lies between the 100th meridian and the Rocky Mountains? There has yet to be anyone's federal government anywhere, [somewhat] free or not, that can't make a mess of things.

If you wish to simultaneously study both ecology and engineering, try Geological Engineering. One University of Missouri System campus offers that degree.

(Report Comment)
Michael Williams February 19, 2013 | 10:25 a.m.

Ellis: "...wasn't it our federal government that championed settlement and soil cultivation of the portion of our territory that lies between the 100th meridian and the Rocky Mountains?"
_____________________

I've actually thought about this.

One day I wake up thinking the prairies should never have been tilled, and the next day I think about how the railroads got a track and money to build it with, while we got the internal makings of a nation and a boatload of grain/cattle. The Ogallala aquifer proved a boon to agriculture although we aren't treating it very well. And 'tis true the initial soil conservation practices were quite poor.

Nature abhors a vacuum, tho. Niches always get filled up somehow, in this case with (in order of events) buffalo, hunter-gatherer nomads, or farmers.

(Report Comment)
frank christian February 19, 2013 | 11:58 a.m.

"Today it's agreed that Japan is in a state of economic stagnation and has been for some years, but the cause is political/governmental, not scientific."

Thinking of "economic stagnation", think in 3's, Japan, EU and U.S.

Thinking of "cause is political/governmental", think Trilateral Commission. J.E. Carter, G.H.W. Bush, W.J. Clinton, all members. Obama appointed 11 trilateral members to cabinet or advisory posts. Just noting some of life's coincidences.

(Report Comment)
Ellis Smith February 19, 2013 | 2:10 p.m.

Michael:

If you haven't done so, suggest you read "The Worst Hard Time" by Timothy Egan. As for the aquifer, once it is pumped dry it will take millenia, not centuries, to completely re-charge it.

BTW tapping underground water by drilling deep wells is considered a form of mining.

(Report Comment)
Michael Williams February 19, 2013 | 4:21 p.m.

Ellis: Thanks for the book tip.

Yes, that aquifer is recharged from one helluva long way away. It will take thousands of years. Many thousands.

As for the "metric" you were discussing, I would think the ratio of ALL gov't employees versus "not" gov't employees would be a good thing to look at. There's got to be a productivity breaking point in that ratio that hinders technological progress, but I don't know what it is.

I do think that this anti-science thingie we have going on in the US and other parts of the world is of concern. I'm a religious person but I DO NOT LIKE many Christian attitudes towards science. I think it hinders those of us who have wonder in our eyes, and then go out and do something about it...our children. Personally, I think there are few things more valuable to a nation and its educational system than excitement in our children...e.g., Kennedy saying "Let's go to the moon!" There is little excitement when a nation turns inward.

Other than mucking up gov't when they get in charge, this is about my only other complaint against my fellow religious souls.

(Report Comment)
Richard Saunders February 19, 2013 | 5:45 p.m.

Funny, as always, the main culprit, the Not-Federal, Not-Reserve Bank goes unmentioned.

Any system that silently transfers the wealth from the 99% to the 1% will ultimately undermine any system that relies upon it.

Between the Fed, and the myriad of agencies it funds (via bond purchases), they have gained title to nearly ALL assets. Look around you, and you'll discover the land once owned by the people is now owned by various shadow entities all "backed" by the federal government.

Simply put, the people have unwittingly been disenfranchised by the banksters. But, since the banksters are the government, and the government is in charge of the school systems, their secret is kept safely hidden in the bliss of apathetic ignorance.

As I noted in my first sentence, the main culprit is NEVER mentioned. Perhaps now it's easy to see why.

(Report Comment)

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