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Boudreaux to NYT on Brooks on Cowen on The Great Stagnation

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I can't resist quoting my colleague Don Boudreaux latest letter to the editor verbatim:
To the Editor:

David Brooks appropriately devotes today's column to my GMU Econ colleague Tyler Cowen's important new book "The Great Stagnation" ("The Experience Economy," Feb. 15). Mr. Brooks offers the intriguing hypothesis that what accounts for the relatively 'stagnant' measured economic growth since the mid-1970s isn't so much the absence of remaining "low-hanging fruit" (as Tyler argues) but, instead, a shift to less materialist values.

I have a different hypothesis: what has stagnated isn't the economy but, rather, economists' and statisticians' capacity to measure economic activity and its contribution to human well-being.

As Mr. Brooks notes, Americans today demand more unique and nuanced experiences. Unfortunately, though, the economic value of experiences - unlike that of more corn, more cows, and more cars - is difficult to measure using mid-20th century national-income-accounting categories. But we are demanding these experiences NOT because we're becoming less materialistic or less wealthy. We're demanding these experiences precisely because, rather than stagnating, our economy and our wealth continue to grow so impressively that they are outstripping last-century's economic categories and measurement techniques.

Donald J. Boudreaux
Professor of Economics
George Mason University
Think about it this way: If economic statistics arose in medieval times, we would have measured well-being in something like pounds of grain per capita.  Around 1900, these ossified medieval statistics would probably have revealed a Great Stagnation - followed, I suspect, by actual decline due to the growing diversity of the American diet.

P.S. If you know of actual historical data on grain per capita, please share.

Comments and Sharing

COMMENTS (6 to date)
Yancey Ward writes:

Professor Boudreaux nailed it.

Alex J. writes:

I suspect grain-per-capita went up at least for a while even as people at less grain. They ate more meat, and a pound of farm animal eats much more than a pound of grain.

Tracy W writes:

On the other hand, if this wealth doesn't show up in taxable income, it does create a lot of political problems.

Yancey Ward writes:


I was thinking the exact same thing reading this letter and the last Kling blog post below this one. Government may be tempted/forced to assess taxation in other ways- like time, perhaps?

David C writes:

I suggest measuring human welfare in gigabytes.

Craig Richardson writes:

Fernand Braudel's book, The Structures of Everyday Life, Civilization and Capitalism 15th-18th century, has an excellent chapter on p. 104, titled, "Daily Bread." The average Parisan spent 41 percent of his budget on bread in the late 1700s.

The output of grains also exhibited an initial stagnation followed by further high returns,

Cereal yields in England were a grain to seed ratio of 3 to 1 from 1200 to 1250.

From 1251 to 1499 England went up to 4.1 to 1.

From 1450 to 1700 England went up to 7 to 1.

After 1750 yields jumped to 10.6 to 1.

p. 123.

On another point, does Cowen account for the fact that health insurance costs have swallowed up an increasingly large share of total employee benefits that are not being captured by median income? This is leading to a significant downward compression of median wage growth over the last 20 years.

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