Monday, November 11, 2013

The Bizarre Thinking of Tyler Cowen

I wrote of Tyler Cowen's last book:
The Great Stagnation is one of the most confused economic books I have ever read, bar none.

When reading the book, on page after page, I simply became amazed at the sloppy thinking. In that sense, it ultimately became a page turner, the big question being would the entire book be poorly argued? The answer turned out to be, for the most part, yes.

I am simply stunned at the positive reviews this book has received. In the book, written by George Mason University Professor Tyler Cowen, Cowen argues that as far as the economy is concerned we have "eaten all the low lying fruit."
In that book, published in 2011, Cowen argued that all the great inventions had been discovered and that thus we were headed into a period of a great stagnation. He wrote:
We have failed to recognize that we are at a technological plateau and the trees are more bare than we would like to think. That's it. That is what has gone wrong.
Now, just two years later in his new book, Average Is Over, Cowen tells us that there are all kinds of new technological advances:
What lies ahead of us will be a very surprising time, and it is likely that new technologies already emerging will lead us out what I called in a previous book "the great stagnation."
Cowen spends much of the remainder of the book discussing various new intelligent machines, including computer chess programs. It is simply bizarre that he didn't recognize these in his last book. But Cowen hasn't landed completely on sound ground in this new book. He believes that a superior class is emerging that understands computers, programming etc. but that everyone else will fall by the wayside.

This, incredibly, is his thinking:
Compare it to one of those same billionaires riding in a limousine, with open windows, through the streets of Calcutta. A lot of beggars will be competing for the attention of the billionaire, and yet probably the billionaire won't much need the attention of that billionaire won't need much the attention of the beggars. The billionaire may feel overwhelmed by all these demands, and yet each of these beggars will be trying to find some way to breakthrough and capture but a moment of the billionaire's attention.

This in short is what the contemporary world is like, except the billionaire is the broader class of [computer skilled] high earners, and the beggars are wealthier than in India. [...]

Below the mega-achievers and billionaires, job growth for ordinary workers is consistent with this story of a bifurcated job market.[...] We have been seeing what is called "labor market polarization." [...] Labor market polarization means that workers are, to an increasing degree, falling into two camps. They either do very well in labor markets or they don't do well at all.

To be sure, there is a growing class of haves in the US matched off by a greater number of have nots,but this class split is largely the result of government regulations that make it difficult for many to get over the barrier into the haves----not because of advancing technology.

If it is one thing that economics teaches, it is that increased technological advancement and capital investment raises the marginal productivity of all workers. Cowen seems to ignore this fundamental insight.He holds thea bizarre view that the rich get richer and the rest get crushed.

It is an absurd theory. Even more absurd than the premise of his Great Stagnation book that all the great technological advances have already been made.

1 comment:

  1. I was recently in former East Berlin, a place where until recently there wasn't wealth inequality - engineers earned the same as bricklayers. Also, they had to build walls and machine gun towers to keep people from escaping.