Developed economies exhausted the easy gains of free land, cheap mass education, and low-hanging technology, so measured growth slowed.
Cowen's 2011 argument, and he has since argued the stagnation is ending. It replaces the "inequality trade-off" sometimes attributed to him, which is not a claim he named.
In practice
- A household in 1950 gained indoor plumbing, a car and a telephone within one generation; the household of 1990 gained a better telephone.
- The national accounts record a free mapping application at nothing and the paper atlas it replaced at the price of the atlas.
- Possible explanations
- The proposed explanation is exhaustion of one-off gains: free land, the move from farm to factory, and the extension of schooling to most of the population each raised output once and cannot be repeated.
- In its favour
- Measured productivity growth did slow across developed economies from the 1970s, and the low-hanging-fruit account fits the timing.
- Against it
- Critics argue that measurement misses the value of free digital goods, that the slowdown has several competing explanations, and Cowen himself has since argued the stagnation is ending.
- Standing
- Contested, and Cowen has since argued the stagnation is ending. Replaces the "inequality trade-off" sometimes attributed to him, which is not a claim he named.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The theories behind every argument about money