Analysis of Tyler Cowen's "The Great Stagnation"

According to Tyler Cowen's "The Great Stagnation", the American economy has been through a lot of great changes and innovations since the 1800's but has now slowed down when it comes to growth and is "stagnating" along with other developed economies. Developed countries have been stuck making adjustments to already existing technologies and thus their rate of growth is decreasing steadily and are in need of a new era of a technological breakthrough. Cowen discusses the major problems and factors that have led America to its financial crisis of 2008 and that continue to pose a threat to the economy. Moreover, he uses his analysis to explain why the economy is experiencing such high unemployment and such a long period of recession.

In chapter one, Cowen talks about "low hanging fruits" that he claims the Americans have used up ever since the seventeenth century. Low hanging fruits are the things that were made easily available for Americans to reach back then, such as land, technology and intelligent but uneducated kids. He talks about how land was free for anybody to cultivate and make use of, and this attracted many Europeans and immigrants who took this as a chance to produce a high standard of living for their own work. This in turn made America very wealthy at the time, and Cowen states that "so much fertile land coupled with a relatively high degree of social freedom explains much of this transformation" (Cowen, 2011). Next came technology; the scientific breakthroughs of the century. These included innovations in chemistry, electricity and industry. Household technology appeared to change drastically, as it now contained a long list of new advancements such as laundry machines, air conditioning, televisions, dishwashers, ra...

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...nd their agreement to improve educational policies in the USA. Cowen also believes that by raising scientists' social status, we can achieve higher motivation than by simply using money as a motivating factor.

Simply put, the American economy has reached a plateau when it comes to technology. The features that contributed to economic growth for most of America's history are mostly exhausted, and today's technological developments mostly involve slight changes to existing machineries. Consequently, average American wages have grown slowly since 1973, and employment creation in the last ten years has been virtually low. Information technology, among the few new innovations available, will have the most effect on improving the quality of life and standards of living for society even if the consequences are elimination of jobs and inequality in distribution on income.