In other words, as Cowen makes clear, many of this era's technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity.
This is Tyler Cowen's Internet story. Lots of value, but not much economic activity.
It feels wrong to me. If I use the Internet, then other people are voluntarily doing something for me, so it meets my criteria for economic activity. I think that what is going on is that I am getting a lot of consumers' surplus relative to what it costs. That is not stagnation.
Imagine that a lot of people became hooked on virtual reality and cut back on purchases of traditional goods and services. To me, that will change the patterns of specialization and trade. Presumably, people will produce less traditional goods and services and instead produce goods and services that are more complementary to virtual reality. Everyone may choose to take more leisure, because virtual reality generates much more happiness per unit of labor. But the end result (and it may take decades for people to adjust) is not mass unemployment, and it is certainly not stagnation. You may find such a society repugnant to contemplate. But, properly measured, its productivity will be far higher than its predecessor.