2011/07/11 Andreas Jungherr

Page-Turners of June 2011

Tyler Cowen (2011) The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. Dutton: New York, NY.

In this essay the economist Tyler Cowen advances an enlightening conjecture on the reasons for the ongoing troubles of the US economy. He argues that there are two sources for widespread economic growth. To him one source is the development of new technologies and the attempt to solve hard social and scientific problems. As a second source he identifies economic growth based on the widespread adoption of new technologies and solutions of formerly hard problems. For Cowen the US, and probably in extensio the West, has spent the last century caching in the dividends of technological and social revolutions of the late 19th century. He calls this process “eating the low-hanging fruit”. Nothing wrong with that except that this source of economic growth over time yields increasingly low results and the ongoing allocation of ressources to these low-hanging fruits keeps a society from working on the hard problems. To Cowen this is the reason for the current economic stagnation in the US. The solution:

Raise the social status of scientists.

Which sounds about right to me, since who wants to live in a world run by glorified accountants and process optimizers?

To me, the most interesting argument was the chapter in which Cowen focuses on innovations brought on by the internet. He argues that the internet, while bringing its innovations to an ever increasing number of users, has not created significant revenue for society as a whole since most of its services are brought to the users for free. Also he points out that the most successful internet companies employ comparably few people. For Cowen this is one of the reasons for the “jobless recovery”.

This book advances a very interesting argument and offers an original perspective on how to think about innovation and economic growth. For an in-depth review of someone who actually knows economics have a look at The great stagnation on the Economist’s Free Exchange blog.

Nassim Nicholas Taleb (2010) The Bed of Procrustes: Philosophical and Practical Aphorisms. Random House: New York, NY.

This is a fun read that I suspect I’ll come back to many times. In this little book Taleb is his usual self, if his public persona is his usual self. In this collection of aphorisms he comments on the present with the eyes of a man steeped in classical thought. Taleb writes with a healthy distrust in institutions, especially academia, and with furor against thought practices that

“squeeze a phenomenon into the Procrustean bed of a crisp and known category (amputating the unknown), rather than suspend categorization, and make it tangible.” (p. 105)

To him this leads to sucker problems that lay also at the heart of his earlier writings:

“when the map does not correspond to the territory, there is a certain category of fool – the overeducated, the academic, the journalist, the newspaper reader, the mechanistic ‘scientist’, the pseudo-empiricist, those endowed with what I call ‘epistemic arrogance,’ this wonderful ability to discount what they did not see, the unobserved – who enter a state of denial, imagining the territory as fitting his map.” (p. 106)

For everyone interested in reality and bored by the accountant’s truths of our present day, for everyone who feels the present is lacking in erudition, wit, effortless style, and greatness – in short sprezzatura – this book will be a joy.

, , , ,