Yesterday, my co-bloggers, Arnold Kling and Bryan Caplan posted critical comments on Tyler Cowen's "Great Stagnation" thesis. Tyler replied as a commenter to both.
Tyler insisted to Arnold that he is being misunderstood. The growth in economic well-being for the median family, argues Tyler, has not ended; rather, growth has declined. The median family is better off today than 30+ years ago, says Tyler, but the increase in well-being is less than in the previous period of the same length.
First, let me say, because some of these niceties are sometimes missed in the blogosphere, that I like and respect all three gentlemen, and I don't use the word "gentlemen" the way cops sometimes do when they talk about suspected perps. My Encyclopedia wouldn't be nearly as good as it is had not Tyler not gone above and beyond in his role on the Board of Advisors. Arnold has doggedly pursued truth on this blog all these many years, and it wouldn't have existed without Arnold. And Bryan has insight after insight, both in his academic work and in his blogging. To take one instance, he has increasingly radicalized me on the issue of immigration.
Second, I think a lot of these differences could have been avoided had not Tyler titled his piece "The Great Stagnation." What do you think of when you read that something that has stagnated? Do you think it has grown, gotten better, improved? I don't. Economist Steve Horwitz, in a comment on Bryan's post, writes:
The language of "stagnation" suggests that it is about the first derivative. To stagnate is to STOP growing, not to grow more slowly. FWIW, Dictionary.com has the third definition of "stagnation" as:
"to stop developing, growing, progressing, or advancing"
That's the point. Tyler seems to want to communicate two contradictory ideas. In the actual piece, he argues that the growth in well-being is positive but less than it had been. Fine. I won't be surprised if, when I actually figure out how to use my Kindle, and I buy his mini-book, he actually persuades me of that. I won't be surprised if he doesn't persuade me either. [I'll briefly note the irony that I, who have not yet learned how to use my Kindle, am arguing that the incredible advance in electronic technology has made people's lives much better.] But Tyler's title communicates something different. So, by the way, does his subtitle. It's "How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better." Got sick? Really? That makes it sound worse than the great stagnation. That makes it sound like the great regression.
In his post, Bryan gave Tyler an out. Bryan wrote:
Of course, Tyler might say that his thought experiment works for 1900 versus 2000, but not 1973 versus 2010.
This was the thought experiment in which you have the same number of nominal $ to spend and you're trying to decide to spend it on items in the 1900 catalogue or the 2000 catalogue. Tyler would have spent it on items in the 2000 catalogue.
But Tyler surprised me. He didn't take the out. Instead he changed the subject. He wrote, as a commenter:
Michael Stack is exactly right. Furthermore it is more than strange for Bryan to think that the earlier era, with the federal government at less than five percent of gdp, and open borders, did not have much higher growth for the typical family! You are the one caught in a contradiction, not I.
But those are not mutually exclusive propositions. Bryan could well be caught in a contradiction, although I don't think he is. The concept of ceteris paribus enters here. I have no doubt that Bryan would say--I certainly would--that we would be even better off with open borders and a government spending less than 5% of GDP. But even he is caught in a contradiction, what does that have to do with whether his criticism of Tyler is right?
I would still like to know Tyler's answer on choosing between spending a given number of nominal $ on items in the 1973 catalogue vs. spending on items in the 2000 catalogue. Even better would be 1973 vs. 2010.