[P2P-F] interesting book review ...

[Michel Bauwens]

thanks, sharing with our list as well,

Michel

On Mon, Apr 4, 2011 at 10:07 PM, James Quilligan <jbquilligan at comcast.net>wrote:

>
> ... looks like an interesting book
> The spectre of a jobless online world
>
> Review by James Crabtree
>
> Published: April 4 2011 02:56 | Last updated: April 4 2011 02:56
>
> The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern
> History, Got Sick, and Will (Eventually) Feel Better, by Tyler Cowen, *Penguin
> eSpecial, RRP £2.30/$3.99*
>
> Battered by recession and menaced by China, the US hungers for explanations
> of its relative economic decline. Tyler Cowen, an economist and blogger, has
> provided one: that the country has run out of technological juice.
>
> Where many believe innovation keeps growth ticking along, Cowen posits a
> world of “periodic technological plateaus, and right now we are sitting on
> top of one”. As a result, America increasingly resembles Japan: ageing,
> stagnant, overgoverned and waiting for a technological burst to get the
> motor going again.
>
> This provocative thesis is one reason *The Great Stagnation<http://us.penguingroup.com/nf/Book/BookDisplay/0,,9781101502242,00.html>
> *is the most discussed economics book of the year. Another stems from its
> format. Inspired by Marginal Revolution, the must-bookmark blog for
> economics nerds that he publishes, Cowen released the book only in
> electronic form. This ensured a timely arrival just as the US was emerging
> from financial meltdown and looking for answers.
>
> Cheap to download and quick to read, its brevity also has much to recommend
> it. “Big idea” books too often spread an article’s worth of insight over
> hundreds of pages of padded-out prose. Cowen cannot be accused of the same
> mistake. Instead, *The Great Stagnation* is a true pamphlet for the modern
> age: more insightful, urgent and challenging than most publications many
> times its length.
>
> That said, there are problems with the story it tells. The first concerns
> the route by which one might expect the internet to filter into higher
> productivity and growth. Cowen’s contention is that the “low-hanging fruit”
> of land, education and technology that once powered US growth have all been
> picked. Cheap land has been used up. There are fewer “smart, uneducated
> kids” to send to school. And the internet, in particular, has disappointed
> relative to innovations such as electricity and the railways.
>
> Cowen is no Luddite: as one might expect of a blogger, he thinks life is
> more fun and interesting with the internet around. But he worries that
> today’s “web activities do not generate jobs and revenues at the rate of
> past technological innovations”.
>
> This may well be correct. Facebook and Twitter are not obviously
> productivity-enhancing tools – as their users can all too easily attest. But
> this is the reason few economists look to them in particular, and consumer
> technology in general, as a main explanation of how technology alters
> patterns of growth.
>
> Instead, most growth theorists look instead at how the internet diffuses
> through organisations. At first this effect was seen only in a few sectors,
> most obviously among super-efficient retailers such as *Wal-Mart<http://markets.ft.com/tearsheets/performance.asp?s=us:WMT>
> * and *Tesco <http://markets.ft.com/tearsheets/performance.asp?s=uk:TSCO>*,
> which used the web to reshape their logistics systems. But now other
> industries have reworked themselves too, and the evidence suggests they have
> also become more productive, boosting economic growth overall.
>
> But this process takes time, rather than arriving in one big bang as Cowen
> seems to expect. The coming of electricity did not boost growth by giving
> workers light. Rather, it did so in much the same way as the internet today:
> by allowing production to be arranged in new ways. Indeed, economist Paul
> David has shown that productivity took close to a generation to rise after
> electricity’s arrival, when most of the machines in US manufacturing began
> to use it. Much the same is likely to be true of the internet.
>
> The real problem, however, comes when Cowen links his argument about a
> technological plateau to the predicament of the US labour market. Here, his
> analysis is unarguable: wages are stagnant, job growth is anaemic and the
> very wealthy have won the largest share of recent economic gains. But to
> blame this on too little technological innovation, rather than too much,
> seems to get the problem the wrong way round.
>
> What ails the US job market is not the result of technological churn alone,
> though that is a big contributor. Automation, the reconfiguration of
> industries, and technologies that allow jobs to be moved overseas: all have
> contributed to an “hourglass” labour market with a prosperous top, pinched
> middle and struggling bottom. In short, the structure of the US economy
> changed hugely in the past 20 years: the problem is too little has been done
> to help those left behind.
>
> At one point, Cowen quotes Peter Thiel, a co-founder of Ebay, as saying
> that “people don’t want to believe technology is broken”. In fact, the more
> likely problem is that technology works too well. America may be suffering
> from a great stagnation, but but in spite of his stimulating and engaging
> analysis, it seems unlikely that it is happening for the reasons Mr Cowen
> suggests.
>



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