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I think the modern concern about stagnation is entirely overblown. I am not arguing that it is not real or not happening, just that I think “we” care too much about it. Here is the latest illustration of someone worrying about stagnation and looking for reasons to be optimistic:

Greg and Jill Henderson, founders of Hendo, have developed a real hoverboard. … It’s not exactly ready for, or usable on, concrete but everything has to start somewhere.

… There are different accounts here, with varying degrees of enthusiasm or lack thereof, I found this one useful.  Still, this is more progress than we were seeing a year ago.

At a crass level, you shouldn’t care about stagnation because, well, we’re all pretty darn rich. Concerns about stagnation in America are not about whether there is enough food to eat, but rather about whether our grandchildren will be able to fly their own private cars around. Now, I do exaggerate here. At a less crass level, I think overt worrying about whether we are stagnating or not may actually be self-fulfilling. Do I have a solid causal mechanism of where I go from “thinking about stagnation” leads to real stagnation? For starters, we sure do have a lot of people’s energy tied up in talking about whether we are at some sort of technical plateau, which means of course fewer people actually chopping away at their wood piles. I don’t think this effect is large. However, I DO think humans are a pessimistic lot, and I think talk of stagnation or a slowing of progress may change the culture of ideas back to something like it was prior to our growth explosion 200 years ago. The prevailing wisdom may just be, “well, we had a nice run, it’s over now, I better focus on making sure I preserve my little slice.” I do not think this is healthy. I also don’t think that is the way Cowen should be read or that this is his message, but I do think that this is how the message is going to be received.  Do you need evidence? Talk to any “E”nvironmentalist about the state of the planet today. They can’t possibly think the way they do by doing an objective evaluation of the state of the planet or more importantly our ability to deal with many alternative states of the planet.

Now, the reason I think there are legitimate concerns about stagnation is because of what this implies for poor people around the world. I think they DO need to see continued reductions in the costs of Americans’ lifestyles and an increased opportunity to trade with us and learn from us. So, if you care about global poverty, growth going forward should be an important concern. Another reason you might be concerned has to do with the nature of the political promises and theater in our own country. I don’t quite care for it, but if you believe that everyone is entitled to 26 weeks per year of paid vacation and that the government and enlightened retailers should set wages at very high levels, then man we better be hoping that the Incredible Magic Pixie Dust Machine gets invented, and gets invented fast. I don’t much care.

 

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