Tyler Cowen is an economic historian, because anyone who didn’t drink the Samuelson Kool-aid of incomprehensibly elegant mathematical economics can’t be an ‘economist’. After the 2008 economic shock, he started telling people that America wasn’t as brilliantly innovative as it’s dominant ideology suggested, and it was time to get serious about working hard, rather than grabbing for the productivity. His sub-title says most of what he has to contribute in this little book: how America ate all the low-hanging fruit of modern history, got sick, and will (eventually) feel better. The low-hanging fruit were free (aka stolen) land to fill up, education of a relatively uneducated population, and growth through health, education, and welfare in the public sector. He doesn’t write about the defence-industrial complex or the role incarceration, policing, and the homeland-security boondoggle, particularly over the last decade.
It’s a generally convincing (albeit incomplete) argument, that he took on the road with Ted-X talk in 2011. In his chapter on the government of low hanging fruit, he blames government for handing out goodies based on low hanging fruit - basically becoming a government of extraction, including the business of subprime mortgages and give-aways to banking and finance. He says the financial crisis was a big correction, fundamentally because we are not as rich as we think we are. We have to start saving and investing. He sees eventual salvation in more consumer imports from China and India, internet generation of revenue, and better quality and accountability of education k-12 (compare the 1895 Grade 8 exam to today’s knowledge levels?) His final exhortation is to raise the status of scientists, but it’s unclear whether this extends to non-Samuelson economists!
David Last, April 16, 2014