Arnold Kling  

Poorer than we thought?

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Evidently Tyler Cowen will offer that message in an "e-book single." From the description:


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.

So, we have an innovative product--a mini-book that will sell for just $4--to tell us that we have stopped coming up with valuable innovative products. I have not read it yet. But it would appear to be both self-recommending and self-refuting.


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COMMENTS (17 to date)
Lord writes:

Perhaps he thinks it should be worth $8.

MichaelM writes:

There are always low-hanging fruit available to be had. The question is whether you have an institutional set-up that is capable of taking advantage of those fruits or not. Here in the US, we have had the fortune of well-designed institutions which jumped at any opportunity. That advantage, however, is disappearing and we're too busy arguing with each other to save it.

Lewis writes:

The low hanging fruit now is entertainment/experiences, not material items.

Andrew writes:

I haven't read the book either, but on the face of it, equating powerful new technologies with labour and land, then describing them all as being "low hanging fruit" seems somewhat incongruous.

George Selgin writes:

Not having read the e-book, I suppose there may be something more to Tyler's version than to previous ones, but his thesis as summarized here is all-too-reminiscent of the old "passing of the frontier" argument that was so thoroughly (but, alas, perhaps not permanently) cut-down by George Terbogh in his Bogey of Economic Maturity. That was in 1945--before actual experience could put paid to the idea. Perhaps it's no coincidence that a new crisis and downturn have brought in their wake another version of the old post-crisis thesis.


George Selgin writes:

A little tidbit, from Terbogh's book:

"It is true that the discovery of new processes of manufacture will undoubtedly continue...but it will not leave room for a marked extension, such as has been witnessed during the last fifty years, or afford remunerative employment of the vast amount of capital which has been created during that period... The day of large profits is probably past."

--Report of the U.S. Commissioner of Labor, 1886.

As Terbogh remarks elsewhere, past prophets "have on the whole a miserable record not only in forecasting new discoveries and inventions--where their failure is to be expected--but also in foreseeing the evolution and commercial application of discoveries and inventions that have already been made...[they] assume, because they cannot see what is coming, that nothing is coming."

Dave writes:

Not only that, but the Russians, er, the Japanese, er, the Chinese are going to overtake the US.

And the Euro, er, the SDR's, er, the yuan is going to be the world's reserve currency.

Philo writes:

Tyler is getting strange. You quote him as writing: "the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century: free land; immigrant labor; and powerful new technologies." Now, the land wasn't *quite* free--it had to be wrested from the Indians by violence--but admittedly it was cheap. (Note, however, that originally it was not nearly as valuable as it became through the development of modern transportation.) But *immigrant labor*? We could have *a lot more* of that right now if we wanted--just take down the barriers! And as for the decline of technology (powerful and new)--Arnold effectively ridicules that claim.

ZMP workers, and now this!

George Selgin writes:

Philo has a point. I'm not in the least worried about U.S. entrepreneurs running out of "low lying fruit." But it makes me tremble to think that Tyler Cowen may actually have run out of good ideas!

MernaMoose writes:

In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century

Only in retrospect was it in any sense "low-hanging".

Go back over the past two centuries and ask all the would-be entrepreneurs who tried and never quite made it.

Go ask any entrepreneur today what it's like to stake everything you've got on one half-baked idea that you must know, somewhere down inside, just might not work out the way you're thinking it should.

Now, if he had written

In a literal sense, the American economy has grown faster than the government was able to impose dead weights that it must drag along with it, since at least the seventeenth century, but maybe, those days are done and over.....

then he might be getting warm.

Hyena writes:

I think it's a perfectly plausible argument. A lot of technologies seem to have stalled significantly and until that works out, a lot of growth is going to be from trade with the developing world.

I think there's a knee-jerk reaction to this from technophilic libertarians, but it's not actually strange or unusual. The 19th century saw much less technological progress than often imagined, much of the economic growth really consisted of extending the same technologies to more people.

Currently I think we've hit a point where many breakthroughs require a lot of capital, either financial or intellectual. IP law is probably making this very difficult because it magnifies the risks immensely.

MernaMoose writes:

IP law is probably making this very difficult because it magnifies the risks immensely.

In what ways, just out of curiosity.

Nathan Smith writes:

But *immigrant labor*? We could have *a lot more* of that right now if we wanted--just take down the barriers!

Well, yes, but since the American people have degenerated to the point where we're too morally benighted to do that, Cowen's point stands.

Hyena writes:

Fellow animal,

Mostly through the patent system, which hasn't been well-tended by the PTO. For example, Apple's multi-touch patents are just over user interface concepts but are the reason a lot of smartphones didn't have multi-touch until recently.

The IP system is simply a minefield at this point and the legal expenses are enormous. It's to the point that there are companies like Intellectual Ventures which exist simply to collect and sue.

Floccina writes:

It has come up lately (as a person I know was looking to build in a rural area) that a 1000/sq foot home with high speed internet is better than a 2000/sq foot home without. In the the end he got speed internet in a rural area but without it he would not have built there. Stagnation ha!

jwogdb writes:

BTW IMO new roads still effectively make new land in country with the road and population density of the USA.

Jacob Oost writes:

George Selgin's right about Philo bein' right.

Any slow-downage of the US economy and US techno-innovation I put down to government-created stickiness. For instance, in the financial sector or the credentialed sectors of the economy.

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