– December 12, 2019
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In his 2018 book Stubborn Attachments, Tyler Cowen defends a thesis that is likely to be as unpopular as it is misunderstood: over the long run, differences in growth rates swamp just about everything. Therefore, increased economic growth is a moral imperative. At the very least, more economic growth should be more of a priority for policy makers and concerned observers than it is now. Nothing less than the fate of the future is at stake. Here’s the summary that begins the book, before we even get to the acknowledgments and table of contents:

Growth is good. Through history, economic growth in particular has alleviated human misery, improved human happiness and opportunity, and lengthened human lives. Wealthier societies are more stable, offer better living standards, produce better medicines, and ensure greater autonomy, greater fulfillment, and more sources of fun. If we want to sustain our trends of growth, and the overwhelmingly positive outcomes for societies that come with it, every individual must become more concerned with the welfare of those around us.

Cowen’s claims remind me of these words from Nobel laureate Robert Lucas, who wrote in 2004:

Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. In this very minute, a child is being born to an American family and another child, equally valued by God, is being born to a family in India. The resources of all kinds that will be at the disposal of this new American will be on the order of 15 times the resources available to his Indian brother. This seems to us a terrible wrong, justifying direct corrective action, and perhaps some actions of this kind can and should be taken. But of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the Industrial Revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.

“The apparently limitless potential of increasing production” is Cowen’s subject. It’s an exercise in “becom(ing) more concerned with the welfare of those around us,” and Cowen is specifically trying to get people to think of future generations as being “around us” in a lot of morally important ways. If Cowen is right and the proper social discount rate is zero (or at least very, very, very low), then the way we think about what we owe to one another has to change.

He notes that a lot of observers tend to dismiss the huge effects of seemingly small differences in economic growth rates. The difference between 1 percent growth and 2 percent growth is the difference between having grandchildren who, in 70 years, have twice our incomes and having grandchildren who, in 70 years, have four times our incomes. When I think about a lot of the immediate problems our family faces, a lot of them — the occasional leaking faucet, for example — would basically go away with higher incomes. Even experiences that cultivate the mind and spirit, like the visits to the Van Gogh museum and the Heineken brewery in Amsterdam that are on our bucket lists, would be a lot easier if we had more money. Material wealth cannot buy us inner peace, and it cannot solve our deepest and most fundamental problems,  but it helps.

Cowen, in any case, is unimpressed with the ascetic aesthetic of professional chin-strokers and finger-waggers who are forever prophesying doom and decrying the shallowness of bourgeois modernity. First, he accounts for this by talking not simply in terms of wealth but in terms of what he calls wealth plus, which includes leisure time and environmental amenities. In Cowen’s framework, he wants us all to be able to buy more roses, but he also wants to make sure they are grown and harvested sustainably and that we have time to stop and smell them. Second, Cowen acknowledges that the world has a lot of very serious problems but denies that making people poorer will fix them. As I tell my students, per capita gross domestic product is not all there is to life, but it is very highly correlated with the things we think are important (health, longevity, literacy, and a host of other things). As Deirdre McCloskey and I argue, good societies get rich, and rich societies can be good.

Cowen imports a mental device, the Crusonia plant, from Frank Knight’s discussions of capital and investment. The Crusonia plant grows and bears fruit, which germinates and bears fruit, which germinates and bears even more fruit. An innovation or change that raises the economic growth rate is akin to a Crusonia plant. If we aren’t discounting the future, finding Crusonia plants dominates pretty much everything.

Cowen describes himself (with tongue in cheek) as a “two-thirds utilitarian,” where Crusonia plants and the prospect thereof resolve a lot of otherwise-sticky moral questions. Rights and rules are nonetheless of paramount importance, and they are especially important as we try to navigate a future of radical uncertainty filled with “unknown unknowns.” In light of the incomprehensible “froth” confronting us as we try to look into the future, a lot of small changes to the moral calculus are not decisive. In this paper, which was published in Utilitas in 2006 and which forms part of the basis for his argument, Cowen defines what he calls “The Principle of Roughness”:

Some of our choice options will differ in complex ways. We might nonetheless, ex ante, make a reasoned judgment that they are roughly equal in value, and that we should be roughly indifferent across the two options. After making a small improvement to one of these choices, we still might be roughly indifferent to which option is better.

Eventually, an accretion of small changes will be decisive, but the addition of a tiny bit of information to an otherwise radically uncertain process need not be sufficient to cause us to depart from conventionally understood rules and conventionally understood ideas of rights. 

People nonetheless decry “economic growth” and say that the notion of endless economic growth is preposterous. I think this stems from a misunderstanding. A lot of these criticisms, it seems, think of economic growth as the piling up of stuff for stuff’s sake. Growth is synonymous with more, measured materially. However,  I think we would do better to follow the lead of Florida State University economist Randall Holcombe, who in his 2006 book Entrepreneurship and Economic Progress distinguished “economic progress” from “economic growth” by defining the former as better stuff whereas economic growth is simply more stuff. As I’ve argued a couple of times, economic progress is unlimited. I think we could resolve at least a few sources of confusion by changing our terminology slightly.

Stubborn Attachments is Cowen at his best, and he makes a brief but tight argument that reinforces my conviction that “Why are people in some places very rich while people in other places are very poor?” is the most important question in the social sciences. Cowen works to bring economic growth back to the front and center of the conversation. He does so in a book that, in my opinion, deserves your careful, thoughtful attention. 

Cowen recently explained his argument while giving the Kenneth Arrow Lecture at Stanford University. It is a good place to start:

Art Carden

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Art Carden is a Senior Fellow at the American Institute for Economic Research. He is also an Associate Professor of Economics at Samford University in Birmingham, Alabama.
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