Cowen’s discussion of the technological plateau and move away from innovation in the productive economy is insightful at first. He is right that the 30 year cycle we saw with major innovations in most fields seemed to stop in the 1960s, and these cycles have shifted. He does mention as a off-hand aside that this was partly because of stolen land, and he does seem to talk about educational plateaus. He mentions India and China, and then things start to slide. For example, he seems to think marketizing schools would make them more proficient. I realize this is gospel in most George Mason economics circles, but there is actually no evidence for and plenty of evidence against it. See the competition in the for-profit (not merely private) sector of higher ed in the states–it is basically consists of things that are barely above diploma mills. Cowen might reply that this is due to the distorting factor of loans: then he should actually study China, Korea, and Latin America. There is a glut of for-profit private education there as well, and it exists without the government loan system in the US, so the market failures cannot be explained by rent-seeking behavior alone.
His answers are standard center-right economist answers even if he is much better at spotting the problems. He does not deny the centralization of wealth, nor is dishonest about tax breaks. It is sad that conservatism in the United States has come to those two talking points alone because otherwise it would be clear where Cowen’s ideological presumptions lie. For example, he briefly says that the Reagan (or Volker) revolution set the US right, but he has already proved economic stagnation continued unabated since the 1960s forward. Both statements can’t be truth. He is right about Keynesian retribution schemes being very limited in time frame (something that even Keynes’s himself pointed out), and generally are only affective after massive destruction of capital (after World War 2), but doesn’t seem to have an answer for why the austerity in Europe has not cleared out the “rot” and let to renewal in GDP in the EU outside of Germany and Nordic countries (who he makes a swipe at).
He is right that America is beyond the lowing hanging fruit, but does not seem to see that India and China’s rapid industrialization is also in a similar pattern of development. It is easy to grow massively when you are establishing yourself and opening up new markets: declines in the rates of profits per unit don’t kind in as quickly in those states and the need for extreme intellectual property to try to artificially force prices up through removal of competition isn’t a problem at that stage either. This, however, is rooted in historical economics which is something the synchronic thinkers in the neo-classical school of economic do not admit. Cowen is not different here.
So while Cowen’s diagnosis is in some ways dead-on: his prescription is more cliche from the Tom Friedman-style center-right school, and his optimism at the end may be a false note.
Symptomatic Commentary 