Tyler Cowen on economic growth & progress
Cowen sees growth as the product of Hayekian market processes, such as prices carrying information, weak firms being weeded out and businesses innovating, more than of any single lever like population or raw intelligence. After years of arguing for a great stagnation he turned optimistic around 2021, but he expects progress to come from compounding modest rates, often with turbulence, and he warns that slow growth is an invisible crisis and that rising spending is not buying better results. He credits America's balance of bold thinkers and cautious marginal thinkers.
16 points · 5 appearances · 2019–2026
How the view evolved
The great stagnation is ending thanks to computation-driven breakthroughs → The future is about compounding modest growth rates
In 2021 he said a surge of computation-driven breakthroughs had made him much more optimistic that the great stagnation was ending; by 2025 he stresses that the future is about compounding modest rates (around 1.5%) and that even much more IQ won't change that much.
Up next
2019–2026
“I didn't agree with that post. If you look at labor market data, the returns to IQ as it translates into wages, they're amazingly low. They're pretty insignificant. People who are very successful, they're very smart, but they're people who have say eight or nine areas where they're like, on a scale of 1 to 10, there are nine. Like they have one area where they're just like an 11 and a half on a scale of 1 to 10. And then on everything else, they're an eight to a nine and have a lot of determination. And that's what leads to incredible success. And IQ is one of those things, but it's not actually that important. It's the bundle, and the bundles are scarce. And then the bundles interacting with the rest of the world. Like just try going to a mid-tier state university and sit down with the committee designed to develop a plan for using artificial intelligence in the curriculum. And then come back to me and tell me how that went, and then we'll talk about bottlenecks.”
2024–2026 · changed view
“Yeah, that's what I think it will be like again. Great stagnation is over. We'll go back to those earlier rates of change, transform a lot of the world, mostly a big positive. A lot of chaos disrupted institutions along the way. That's my prediction.”
2019–2026 · changed view
“Absolutely. Yeah, and here that is either acceptable or even admired, or to be a loner. And since so many people are outsiders and that we're all immigrants, is selecting for people who left something behind, we're willing to leave behind their families, we're willing to undergo a certain brutality of switch in their lives, makes us a nation of weirdos. And weirdos are creative. Yeah, and Denmark is not a nation of weirdos. It's a wonderful place, you know, great for them. Ideally you want part of the world to be fully weirdos and innovating, and the other part of the world to be a little kind of chicken, risk-averse, and enjoy the benefits of the innovation, and to give people these smooth lives and six weeks off and free ride. And everyone's like, oh, American way versus European way, but basically they're complements.”
2019–2026 · changed view
“My basic rule is to read as much as possible. A lot of books are sent to my house, so I order on Amazon. On a weekday I might get five to ten review copies, and I look at each and every one, and I read some of those. I love to reread classics. The earlier parts of my life, I spent a much higher percentage of my reading reading the kinds of books that would be in the back section of Harold Bloom's The Western Canon. Most of those I've read, say, two to five times. And then I read what my friends write. I spend a great amount of time on Twitter, and I love to print out, say, economics working papers and read those. And then I take books on trips. I'm about to take a trip, and I just keep on reading, basically.”