Henderson on Cowen on the Great Stagnation

by Don Boudreaux on July 1, 2011

in Books, Education, Growth

In one of the most concise and well-reasoned reviews that I’ve read in a while, EconLog’s David Henderson – writing in Regulation – challenges the thesis Tyler Cowen offers in The Great Stagnation. (Scroll down to page 4 of the link to find the start of David’s superb review.)

I here add only this observation: although I don’t particularly like Tyler’s analogy of pre-1980s growth being the result of people having taken advantage of the “low-hanging fruit” of technological breakthroughs, large numbers of smart, educable kids yet actually to be educated, and free land (One objection: Frederick Jackson Turner lamented the close of the free frontier in 1893), the vast majority of K-12 schools in America today are filled with what appear to me are “low-hanging fruit” of the sort that Tyler believes no longer exists: boys and girls ‘educated’ in a government-owned and operated school system dominated by teachers unions bent chiefly on feathering their members’ own nests rather than expanding as much as possible the minds of their students.  Destroy this monstrosity of an ‘education’ system and there’ll be plenty of low-hanging fruit to pick.

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Mike July 1, 2011 at 2:16 pm

Excellent point Don.

RC July 1, 2011 at 2:31 pm

Excellent point, Don.

I always wonder: why haven’t market-based reforms (and I’m not talking about the pseudo-voucher experiment in Sweden) in education been introduced in any country in the world? Such a country would gain an incredible advantage over its neighbours; they would have to follow suit or fall behind.

Are all rulers of the world corrupted by teacher unions? Sure seems that way.

norman July 1, 2011 at 4:38 pm

Education is not the key to a countries prosperity. Entrepreneurs and capital risk takers are. There are too many under-achieving college graduates, even Ph.Ds throughout the world. Non-government schools might result in tax reductions which would help in capital conservation and social progress. By 8th grade you should know how to Google anything you need to know.

vikingvista July 3, 2011 at 5:29 pm

Stossel’s latest on college was interesting.

muirgeo July 1, 2011 at 9:21 pm

I love your question. You should think about that more. Also, ask yourself why there are no libertarian organized governments.

Tim July 2, 2011 at 1:48 am

By Jove, you stupid colonials. There are no such things as representative democracies in this, the Year of Our Lord 1776. Now give up this stupid independence thing already.

Dude, you picked a really stupid weekend to disparage never-before-seen forms of government.

kyle8 July 2, 2011 at 7:44 am

Because the world is full of stupid wannabe tyrants like yourself who will gladly cut off their nose to spite their face.

muirgeo July 2, 2011 at 9:18 am

I think I missed some sarcasm… good job.

Ameet July 2, 2011 at 11:11 am

To answer the question: “Power tends to corrupt, and absolute power corrupts absolutely.” Allow a politcian enough power, and it’s no wonder he will grub for more and cause a government to emerge that is not limited and libertarian.

Really, you should study your mental models. You may learn something.

muirgeo July 2, 2011 at 11:44 am

And if you want to control the power of the politician who do you want him to be faithful representing. The needs of the average person or the needs of multinational corporations and the elite super wealthy? It’s not that complicated. We are in the position we are in because we allowed the latter to be over represented. That is the end result of the libertarian confusion of economic freedom with true freedom.

How would you answer my question or explain why its not relevant.

Dallas Weaver July 1, 2011 at 2:35 pm

Tyler Cowen’s thesis of low hanging fruit has some problems with regard to his assumption about decreasing innovation. Yes, some of the big things like the airplane, cars and computers have already been done and thermodynamics limits a lot of dreaming and forces smaller and smaller improvements per innovation cycle in any specific area (you can’t exceed 100% efficiency). However, the number of possible future innovations increases combinatorially with the number of existing innovations. Even with smaller impacts per innovation, the number of possible innovations is growing faster than the impact per innovation is decreasing.

Many major innovations today are combinations of existing innovation that change the entire world. For example, when we get computers driving cars/trucks and communicating car to car and get the humans out of the drivers seat we will almost triple the capacity of existing highway lanes by creating car/truck trains following 1 inch apart at 65 MPH. The cars/trucks groups would then get better fuel millage than rail road or mass transit system, which would be put out of business. The annual mortality of 30,000 per year would also be drastically reduced. This innovation will occur in some country before anyone will pay off new bullet trains or subways. The only thing holding this innovation back is the resistance from existing laws, but this combination of personal transit vehicles and computers is an obvious example of low hanging fruit of major significance.

tdp July 1, 2011 at 3:49 pm

But, on the downside, within a generation or two, nobody will know how to drive a car anymore.

kyle8 July 2, 2011 at 7:45 am

Not necessarily a bad thing.

anomdebus July 1, 2011 at 2:39 pm

After a month and a half of berry picking, I can say that though the fruit may hang low, if obscured by leaves they are not easily found.

Kevin L July 1, 2011 at 3:17 pm

RC, I think teacher unions are only ancillary. Look back to the prototype of the modern state educational system: early 20th century Germany. Dewey and others used that as a model, and its stated purpose was to make good citizens. Of course states are going to support the forced proselytizing of young minds with nationalist ideas while forcing the parents to pay for it. The government has nothing to lose and so much power to gain.

tdp July 1, 2011 at 3:51 pm

Teachers and students need to have more discretion over what they learn and school boards and standardized-test writers less. Finland spends far less on its schools but gets better results because teachers have more autonomy and discretion in designing curriculum, much like college professors here.

kyle8 July 2, 2011 at 7:47 am

Or in the case of the modern western nations, indoctrinating the children into anti-nationalist values, and instilling a hatred for their own civilization.

Iain July 1, 2011 at 3:27 pm

Exactly Kevin and not only that, but mostly everyone is fooled into supporting the current education system one or another.

tdp July 1, 2011 at 3:35 pm

Keep in mind that because schools are controlled by state and local governments, some public school systems are very well run and some are not. A uniform bashing of America’s public schools doesn’t expose the real problems, and not all the problems are because the schools are public.

-Not enough good teachers, for a great number of reasons, of which the most important is that highly skilled people don’t want to be teachers.
-The poorly run public school districts are usually in poor inner city or rural areas and students thus have few alternatives to the public schools
- Teachers’ salaries are based primarily on tenure and not performance
-Teaching students to pass standardized tests instead of helping them actually learn, resulting in cafeteria curriculum and very little flexibility and choice in preparing courses
-Asinine decisions such as eliminating Fs, lowering standards to get more kids to pass tests, and this: http://www.nationalreview.com/articles/229102/fairness-education/thomas-sowell
-Sometimes, as P.J. O’Rourke bluntly puts it, “The problem isn’t inadequate funding or overcrowding or teachers’ unions or lack of equipment in the classroom. The problem is your damn kids.”

Fake Herzog July 1, 2011 at 4:04 pm

Well said tdp. Or to put it another way, a big part of the problem with education in America is “bad students, not bad schools”:


Gil July 2, 2011 at 4:02 am

Isn’t it the same with immigrant workers being the best? They have no sense of entitlements and simply work hard fior whatever the employers are offering.

tdp July 1, 2011 at 8:30 pm

Here’s another Sowell link that is an intellectual nut shot to trendy “modern” educational doctrine: http://www.tsowell.com/speducat.html

muirgeo July 1, 2011 at 9:20 pm

If there are any teachers or more specifically a profession, specifically the economics profession, to blame for our countries current economic woes its those teaching classical economics. It is taught as if it’s relevant to the modern world when in fact it is a proven failure. It now is simply a facade, a part of a modern matrix of propaganda instilled through the media, the think tanks, through our politics, the money and lobbyist of the political class and their higher institutions of learning to keep power for the current wealthy elite political class. It is clear that this is the case because the rent-seeking wealthy will uniformly tell you both they are libertarian or free markets capitalist and that the best rate of return comes from investing in the government. But they need the propaganda to keep the rank and file supporting them. And they indeed have it down to an art capturing all the major talking points in the modern political media milieu and keeping the government at a standstill to prevent any new policies or true progress that might effect their cash flow and their power. Just like even Muammar Gaddafi with power, control and propaganda is able to keep a huge contingent of supporters the modern American political class is adept at using its power and wealth to keep the wool over the eyes of enough Americans that the failed neoliberal policies we see are hard to dislodge. A big part of their propaganda machine is finding scapegoats. The modern public education system, it’s unionized teachers and the deficit being big winners with their contingent… along with medicare and social security which have not added one cent to the current debt… but their propaganda is THAT good… and the modern economic profession is mostly captured for that purpose.

HaywoodU July 1, 2011 at 9:31 pm

Cut and paste much?

Subhi Andrews July 1, 2011 at 9:42 pm


Cut the hyperbole. Critique Henderson’s critique of “The Great Stagnation” thesis or the “The Great Stagnation” itself. Let’s keep this an honest and earnest exchange. The hosts here have given you a free ride that you won’t get in most blogs with some famous names in the progressive blogosphere. You are a physician , you can write very well when you want to, and like most normal people would want to be respected. Why wouldn’t you want act like an intelligent grown up?

Don’t fall prey to the provocation.

muirgeo July 2, 2011 at 12:11 am

Do you think it is fair to blame our greta stagnation on teachers unions or pubic education?

Every other nation which is passing us by are doing so with public education, teachers that are unionized and much greater access to higher education.

Subhi Andrews July 2, 2011 at 2:07 am

Do you think it is fair to blame our greta stagnation on teachers unions or pubic education?

I want to hear you make a logical, impassioned case. I will read it.If I may give you one advice, don’t take it personally when it is not directly addressed to you. If someone acts in an uncouth manner with you, it reflects badly on their character not yours.

muirgeo July 2, 2011 at 9:33 am


I don’t need to make an impassioned case against the idea that our teachers unions are to blame for all our problems. It’s such an absurd consideration it really deserves no reply. i just find it all very depressing…. a tenured college professor making multiples of income that an inner city teacher makes blaming the world on them as , in my opinion , he teaches propaganda with no balance to his on students. Propaganda that a very good argument can be made is responsible for the beliefs that are bringing our country down.

These people and their economic ideas brought the economy down and now they have the nation focused on government spending and the debt as if that were the problem and not a result of their policies. This country is truly captured by this propaganda and our children will pay.

Look around the world and you will see riots. They are happening now… those may very well come to our shores this August 2nd when the debt ceiling is do to be raised. even with out that the Neoliberals HAVE picked all the low hanging fruit… they are now stripping the bark and things will only get worse. At some point even the Tea Partiers are going to see who’s thumb they really are under. I fear democracy has failed… been bought and the ugly solutions that existed when democracy did not may return. it’s very sad… all because of greed but it always is.

Subhi Andrews July 2, 2011 at 10:25 am

I am a graduate student, and I know a thing or two about what is being taught in schools. I agree a lot of propaganda are taught in univesities today, some with subtlety and some just is out there in the plain open. However, I have not found anyone who is teaching some sort of neoliberal( I get a feeling that you don’t understand who a neoliberal is )propaganda where I go to school.

Academia, in social sciences, is much like an old boys network, almost as if they all came out of an assembly line – fine tuned to perform beautifully to a far agenda, since they tend to be in charge of shaping the minds of future generations, they produce people who robotically follow the same programming they received in college.

Being a democrat, you should admiit that difference in opinion and debate is a healthy thing, and the debate is completely lopsided. It is GMU ( at least part of it )versus the entire higher education system, and that is no debate at all.

These people and their economic ideas brought the economy down and now they have the nation focused on government spending and the debt as if that were the problem and not a result of their policies. This country is truly captured by this propaganda and our children will pay.

I could agree with you on this statement to some extent, if it was directed at some keynesians like Ben Bernanke or Greg Mankiw or Paul Krugman. Not only do they have outsized influence on policy, they have directly worked with some of the federal administrations of recent times. From what I can gather, Don or Russ have never worked in any capacity to directly or indirectly influence government policy. Cafe Hayek is not even the most popular blog in the world. So you are making some wild accusations without any basis.

If you go an read some of the epithets that people like de Long, or Krugman fling at Austrian School, you will realize that its influence on policy is inconsequential. So, let’s keep it realistic. Blame the people who have had influence on policy, if at all.

And, sometimes, no one needs to take blame, because world ain’t perfect. A devastating Tsunami or Earthquake can happen, as we have seen in recent years, for no fault of any academic. As a man of science, you should know this better than anyone. Economists are not Gods, and economics is not physics – if anything, I would ask non-Austrian economists to stop pretending that world works perfectly as described in their neat equations.

muirgeo July 2, 2011 at 10:37 am

From Wikipedia;

Neoliberalism is a label for the market-driven approach to economic and social policy based on neoclassical theories of economics that stresses the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the political and economic priorities of the state. The term is almost always used by opponents of the policy.

muirgeo July 2, 2011 at 10:41 am

The point being the swing in policy direction over the past 3-4 decades has been decidedly in the neoliberal direction and the results are clear. They were clear in 1929 and they are clear today but for the power of modern day high tech propaganda.

The fact that you’ve never heard the term neoliberal I find interesting.

Subhi Andrews July 2, 2011 at 11:27 am


The point being the swing in policy direction over the past 3-4 decades has been decidedly in the neoliberal direction and the results are clear.

How do you quantify the size of any such swing? Why pick 3-4 decades. I could say that the policy direction over the last 11 decades has been decidedly in the progressive direction, and the results are clear! What is the proof that you are not cherry picking dates to suit your pre-conceived notion?

I might as well say it’s all fault of FDR & 8 decades of policy folly.

They were clear in 1929 and they are clear today but for the power of modern day high tech propaganda.

If 3-4 decades is how long it takes for these policies to rot, then it makes it even clearer that 1929 was the result of first experiment with progressive policies!


muirgeo July 2, 2011 at 11:53 am


I am off for a hike in our one of our National forest.

My claim is this simplistic graph is and it’s inflection point reveal when major policy shifts occurred.


muirgeo July 2, 2011 at 11:56 am

From my own website here is a succinct summary of the policy changes that created the inflection point on the graph in my last post.


If I was to recommend one book that best discusses my position I would suggest for you to read Jamie Galbraith’s “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too”.

Subhi Andrews July 2, 2011 at 3:55 pm


Thanks for that graph. I didn’t read your summary, but I searched for this pattern in your summary of policies – “197″ & “196″. That’s I searched to find if there were any policies in the late 1960s or early 1970s that might have caused the inflection point ( granting you for the time being, that the chart’s data is accurate. I’m not going to ask you the source).

I see references to 1980/1980s a couple of times, and references to 1929 and 1930s. I don’t see any references in your summary that points to changes in 1960s or early 1970s.

I looked at the chart again. It is obvious to me that the inflection you are pointing to started close to 1970. So what changed permanently in late 1960s or early 1970s. I can’ think of great society, end of Brettonwoods gold exchange standard, etc. Of course, Vietnam war was raging, but that ended a couple of years later. What is your theory?

Enjoy your hike. I’m going out to lunch with my family.

Tim July 2, 2011 at 2:26 am

They’re also spending far less per student. With most of the best educational systems in the world being East Asian, a rational human being would assume that a cultural high regard for intellectual performance, not teacher’s unionization, is the primary driving force of good educational institutions.

I remember well many individuals in school who had no work ethic whatsoever. Didn’t do homework, didn’t study. We even had a rule made where students weren’t allowed to leave the classroom where finals were administered until the entire allotted time for testing was over, because students were handing in tests only half-finished just so they could leave school a half-hour earlier.

How does it fix this to pay teachers more?

indianajim July 1, 2011 at 9:59 pm

Our ancient ancestors literally picked the low hanging fruit and made no progress for hundreds of thousands of years. The “great stagnation” is NOT historical significance is not the mentioned in Cowen’s book claiming Great Stagnation as a title. No it is what McCloskey and Coelho and Ridley and others have pondered. Cowen is pandering just pandering to the self absorbed modern twits who know think that history began in the 1950s. (This IS smart on Cowen’s part because a lot of those historically ignorant twits have money and have demonstrated a willingness to pay for modernistic bullshit that excuses their ignorance).
Well screw Cowen and his “low hanging fruit” metaphor. This is Silly with a capital S. The great stagnation of our species, the one that lasted hundreds of thousands of years, was because the ratio of “raid” to “trade” was HIGH. Today the ratio in America is rising, not via violence but via vitiation (of free enterprise). Today’s “great stagnation” is a variation on theme and the remedy requires the recognition of the cause, which is again the damping down of trade by random and ruinous raid.

vikingvista July 2, 2011 at 12:19 pm

It IS vitiation via violence.

indianajim July 2, 2011 at 4:44 pm

Try violence back all the BS.

indianajim July 2, 2011 at 4:46 pm

True, not try in my previous; your point is well taken.

indianajim July 1, 2011 at 10:01 pm

Need an edit function. The above need work, but the basic ideas I wanted to express can be discerned by all who I’m trying to reach.

muirgeo July 2, 2011 at 12:15 am

Tyler Cowen is like the mouse that roared.

He dares to recognize the productivity wage gap but unfortunately mis-diagnoses the cause. But for daring to step out of line he will continue to be castigated by his colleagues.
I think he has a chance of breaking free from their ideological grip and joining the ranks of the free-thinking economist.

Methinks1776 July 2, 2011 at 2:05 pm

Congratulations on the use of a thesaurus and having one of the cats in your zoo check your spelling and punctuation was a smart move.

You couldn’t diagnose a wart, so you understand how much your “diagnosis” means around here.

Whiskey Jim July 3, 2011 at 11:19 am

Given the way we learn, I am surprised education has not evolved towards apprenticeships rather than destroying them.

There are millions of good workers sitting in desks until they are 20+ who would be much better served learning many of those subjects by applying them.

Name Redacted July 3, 2011 at 5:21 pm

Roughly half the US is still unoccupied.
We still have lots of free, unused land… only its illegal to use it. We don’t have a resource problem… or even a lack of low hanging fruits problem, we have a government problem.

John Dewey July 3, 2011 at 11:29 pm

I haven’t read Tyler Cowen’s book. I considered the premise silly. But apparently enough other bright people believe Tyler is “on to something” so I guess I should offer an opinion.

If Tyler believes that technology development the past 30 years has not been astounding, my guess is that’s because he is not employed in an industry where such development is occurring.

Someone above listed the airplane as “low hanging fruit” which was developed decades ago. Nothing could be farther from the truth. Airplanes may look to the uninformed observer to be the same as they did 40 or 50 years ago. But those of us in the industry know better. Examples:

- Modern avionics which completely transformed the cockpit and the manner in which pilots fly the aircraft.

- Composite materials which are sharply reducing the aircraft weight and increasing fuel efficiency.

- the NextGen air traffic guidance system which is replacing 60 year old radar tracking with GPS tracking.

I could list much more.

My industry is not being radically transformed. It is evolving. Evolution and continuous improvement offer every bit as much promise for economic growth as does the so-called technological breakthroughs – changes which only seem to be breakthroughs when viewed as historical events. In fact, the development of modern aviation was not a case of “low hanging fruit” or even a breakthrough. Rather, it was a long string of continuous improvements – a string which has not been broken or even slowed.

John Dewey July 4, 2011 at 7:53 pm

David Henderson: “Cowen states that we will have more scientific discoveries and innovations if we respect scientists more. He is probably right.”

As I haven’t read Tyler’s book, I’m not sure what he means by “respect” scientists. David did not explain why he agrees on this point

I question whether Apple Computer was able to develop the Mcintosh computer, the Imac, the Ipod, and the Iphone because it “respected” its scientists. No doubt it did treat them fairly and offered adequate compensation for their efforts. But it was truly Steven Jobs entrepreneurship, leadership, and vision which enabled the development of Apple’s most successful innovations.

Consider that Apple Computer employed many of the same scientists from 1985 to 1997 as it did before and after. Yet the company’s success during this 12 year period pales in comparison to the rest of the company’s history. Why? Those were the 12 years in which Steve Jobs was not running and providing vision to Apple Computer.

Entrepreneurial vision – not respect for science – is the key to innovation. That was true in Thomas Edison’s day and it is true today.

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