Brink writes:
Cowen’s message is perfectly suited to the angst and pessimism that wax during a prolonged economic slump. Get used to it, he argues, deteriorating economic performance is the new normal. For hundreds of years the American economy has benefited from “low-hanging fruit,” or easily realized opportunities for robust growth. In recent decades, though, “that low-hanging fruit started disappearing” and now “the trees are more bare than we would like to think.” Most controversially, he contends that we’ve now arrived at a “technological plateau”: basically, we’re running out of good ideas for truly improving human welfare and generating commercial revenue and jobs in the process.
(1) I actually think Tyler is very optimistic about how the economy will evolve, particularly for “infovores.” But he does think that we’re not going to see a near-term explosion in revenue- and job-generating activity.
(2) Tyler has offered thoughts on how to break out of the technological plateau, e.g., more cultural prestige for scientists and less regulation.
Overall, I don’t think Tyler’s book is angsty or pessimistic. Rather, it is a hard-headed call to reassess the implicit middle-series projection that underlies our various arguments about public policy. Brink cites Wired for Innovation, a book I really liked:
“Even if all technological progress were to stop tomorrow,” argue Erik Brynjolffson of MIT and Adam Saunders of the Wharton School in Wired for Innovation, “businesses could create decades’ worth of IT-enabled organizational innovation using only today’s technologies.” Accordingly, they conclude, “we see the technological ‘revolution’ as just beginning.” Meanwhile, exciting progress in biotechnology and nanotechnology hold out the promise of even more breathtaking, transformative progress down the road.
There’s something to this, but my guess is that Tyler has factored in the idea that best practices will continue trickling down to less-productive firms. U.S. firms are among the best-managed in the world — i.e., the bell curve in the U.S. is skewed to the right relative to other market economies — and of course it’s true that there are gains to be made. Part of the missing low-hanging fruit argument, however, is that other countries where firms tend to be less well-managed have more room for growth-enhancing improvement.
Brink ends on an extremely important note, namely that we have huge problems on the human capital front: labor force participation is stagnant, as are rates of educational attainment. Though he doesn’t make the point directly in this post, I’m guessing that Brink and I agree that opening the educational market — not just school choice, but a variety of supply-side reforms designed to encourage new business models and greater specialization in this space — has to be part of the solution. The trouble is that the political resistance will be very fierce, as this approach to raising productivity in education threatens the interests of incumbents.