In this TEDxEast talk, economist Tyler Cowen argues that the United States has entered a period of technological and economic stagnation that began around 1973. He contrasts the rapid, transformative innovations of the early‑to‑mid‑20th century—electricity, automobiles, airplanes, television, and the space race—with the comparatively modest advances of recent decades, noting that the only sector with truly breakthrough progress is communications and the internet. Cowen presents both anecdotal evidence (his grandmother’s life span, personal observations) and quantitative data, showing that the rate of new ideas and their economic implementation peaked in the 1870s‑1890s and the 1930s respectively, and has fallen to about half a percent today. He highlights sectoral stagnation in aviation, transportation, healthcare, and education, and attributes the slowdown to exhausted low‑hanging technological fruit, a growing share of the economy in sectors that are hard to improve, and increasing specialization that limits broad tinkering. Globalization is dismissed as a primary cause because the slowdown predates it and many stagnant sectors are domestic. Cowen quantifies the economic impact: typical household real earnings have risen only 20‑25% since 1973, far below the $90,000 that would be expected if past growth rates continued. He concludes with a cultural and policy prescription: restore a strong reverence for science and scientists, adopt more prudent fiscal policies, and shift societal attitudes to value scientific achievement, arguing that the Great Stagnation is not inevitable.
Chapters
Today I have an observation, a warning, and perhaps a vision forward. The observation is that we Americans aren't nearly as innovative as we like to think we are. Especially in recent times. There's an anecdotal version of this argument and a statistical version. But let me start with the anecdotal version of the argument. If I think of the life of my grandmother, who was born the very beginning of the 20th century. When she was born, most Americans lived on farms. About 6% of us graduated from high school. Cars were by no means common. Electricity and flush toilets were not to be taken for granted. And in general, the basic building blocks of the modern world were not in place. If we scroll forward about 50 years, say to the 1950s, all of those features have changed. And she saw, she lived all of those changes in about a 50-year time span. Let's take my life I was born in 1962, almost 50 years ago. The other night I was in my hotel room, I was watching a movie from about the early '60s, and it really looked quite familiar. It was striking to me how much what I was seeing on the screen, which was not about wealthy people, was still the basic world I lived in. And the basic point is that in this country, technological progress appears to have slowed down. If you just compare these two 50-year periods, the biggest difference in my life is the internet, and I'll come back to that later. But my grandmother's life, if you count electricity, flush toilets, typewriters, radio, television, automobiles, being able to fly in an airplane, railroads for a while being everywhere, those are much greater changes. You can think of a lot of those changes as having been built on a platform. Really what we did was we combined pretty powerful machines and cheap fossil fuels. And with that combination we did a lot of amazing things. That's a lot of what we built, a lot of what we did in the 20th century. If one looks at the numbers as to when most progress has come, if you try to trace, you know, the number of important new ideas It seems the period where the number of new ideas is strongest is something like 1870 to 1890. If you try to measure economically with numbers, what's the period when the implementation of those new ideas economically was most active? It's actually, believe it or not, the 1930s, during the Great Depression. In a typical year of the 1930s, new ideas, innovations, inventions added about 3% or more value each year. In the last few years, that same number is about a half of a percent. So in terms of the theme of this conference, noodling and obsessing and tinkering, what we see is for the noodling, 1870s, 1880s, 1890s are phenomenal years. We had a tremendous noodling culture. A lot of it was amateurs, not necessarily professionals. And in terms of implementation, the rate of implementation was actually highest in the 1930s, not in our last decade. But again, we like to tell ourselves this myth that innovation is at some kind of all-time high. In some areas, we're not making very rapid progress at all. This, of course, is aviation. The 747 premiered in 1970.. It was designed in the '60s. Planes like that are still around. They're still in common use. The one on the right is the Concorde. In the 1990s, I was living in Northern Virginia. Periodically, it would fly over my house. It would be flying Dulles Airport to Paris, one way or the other, and I would see it. The Concorde doesn't fly anymore. Of course, we first landed on the moon in 1969. At the time, people often thought this would be the beginning of some wonderful new era of— maybe no one was quite sure. But if anything, it turns out it was the kind of close of an era. It was the, like, final capstone achievement of this massive burst of 20th century noodling, tinkering, obsessing, innovating, and implementing. If you go back and you read people in the early part of the 20th century, even the middle of the century, they all have a common prediction that in the future, Transportation will become so much faster. It's one of the most common early predictions about our time. Not just for people who live in Midtown Manhattan, but for most of us, transportation hasn't become faster. The planes we actually fly in are not noticeably faster from when I was a kid. We're not exploring space. And in most parts of this country, traffic jams are becoming worse. We do have a lot of innovations of some kind, and we need to be very careful with this word innovation. We are in some manner incredibly innovative. What we're not doing at a rate comparable to that of the past is coming up with innovations that significantly improve the lives of ordinary Americans. So if you think here, here's two toilets. They both actually do more or less the same thing, as far as I can tell. One of them is an innovation. Someone must have wanted that, right? I don't doubt they got some pleasure from it. But essentially we're moving from a world where what was invented and implemented was the flush toilet to what was implemented is some "advantage" over the flush toilet. In fact, I live in a house which dates from the 1950s. I'm not sure when the bathroom was put in. It looks like it's probably still from the '50s. Maybe it was improved in the '60s. And it actually seems to work. We've been in the house 8 years, it still works. We have a kitchen, most of which is from the 1950s. Our microwave is now more or less broken. I reheat things some other way. Again, I cook in that kitchen just fine. The basics of the modern kitchen have been in place for quite a while. Now here's the wonky economist part of the talk. This is a numerical graph And let me just explain what this graph says. It is to me a pretty startling numerical point. It's showing you pretty rapid economic growth after World War II, and if you went back earlier, you would see the same pattern, pretty rapid economic growth in this country. And then after 1973, for some reason, that growth very much slows down. So if we take the time, since Since 1973, and we look at the earnings of a typical American family adjusted for inflation, since 1973, they have gone up about 20 to 25%. And in the last 10 years, the earnings of the typical household actually have gone down slightly. We are a much wealthier nation. There are some people who are earning much more. But if you ask the basic question, "Are we seeing the same massive improvements in technology which give rise to massive improvements in the life of the ordinary person?" This graph is placing that in doubt. And it's also showing the gap of that loss. So if we had somehow been able to replicate our earlier rates of growth, today the typical household, instead of earning about $50,000 a year, would be earning about $90,000 a year. That's a big gap. It's the difference between $50,000 and $90,000. Now, we can ask a philosophic question. You know, you think about these numbers, like, how pessimistic, how sad should we get? It's a difficult question. I'm actually not a pessimist by nature, although I may sound like one sometimes. There are many things about today's world that are better. There are many ways in which we're more tolerant. If you think about New York, crime rates are lower. So the point is not to say the world is worse, it's not. It's getting somewhat better. But still there is some gap in income. Typical incomes are only going up the slight amount rather than the larger amount. There's also somewhat of a gap in jobs. And we can think of that as a very clear economic problem while recognizing other forms of progress. You also might be wondering, what is it that happened in 1973? Is Richard M. Nixon to blame for that also? I don't think so. A few different things happen around this point in time, and it's hard to trace out exactly how important they each are. One thing that happens is that over time our economy becomes more heavily invested in healthcare and education. Which is natural, but it's usually harder to raise productivity in healthcare and education. When people are very sick, making them better again, it's very difficult. It costs a lot of money. People who don't want to learn, teaching them is very difficult. I won't even say it costs a lot of money. I'm not even sure it's possible. So the more your economy is moving into those sectors, arguably the slower the rate of progress will be. But I think another major factor is simply that at this time we had exhausted a lot of previous technological wondrous ideas, like cars. There is today no flying car. So your car has a better sound system, it has a side airbag, it has GPS, it's all nice, those are real gains, but they're nothing like getting a car compared to not having a car. So we're at this temporary technological plateau, Another possibility, and this is more speculative, but I personally believe it's true, though I cannot show it to you with any numbers, is if we go back to the theme here of tinkering and obsessing and noodling, I think a lot of knowledge has become so specialized that it's very hard to tinker with the whole. People are tinkering with parts. It's very hard to understand the whole, even something simple like a pencil or a toaster. How is it made? How much of that process can one person do or understand? Not that much. It's very specialized. So if people are grasping only things at the margin, we're getting innovations at the margin. We're getting a lot of new ideas, but they tend to be intensive new ideas at the margin, which are small changes. And that's because of the very nature of the creative process where we are at right now. Yesterday someone asked me, you know, do I think globalization has a role to play in this? I don't have a slide for it. If you want, you can stare at the globe here. But I think that's very much an overrated culprit. Keep in mind, the slowdown starts in 1973. It's well before globalization gets started. And it does continue, but you could argue we don't have enough globalization. We're not getting enough ideas from the scientists of other countries. Keep in mind also some of the more stagnant sectors, like education, like healthcare. Those are problems that have little or nothing to do with globalization. So if US education is not progressing as rapidly as we would like, there are no foreigners to blame for that. It's not because of outsourcing or international trade. The problem there really lies with us. So I tend to discount globalization as a force. If anything, globalization in the future will probably help us when China reaches the technological frontier and we are taking new ideas from China. We're not there yet. If you look at healthcare, we also find a slowing down of the rate of progress. So before 1950, you get vaccinations, you get antibiotics, you have big declines in infant mortality. Life expectancy falls at a rate 3 times more rapid than after 1950. And again, that's nothing to do with globalization. Education. When did the high school graduation rate in this country peak? You might like to think it's today, but it's not. It's in the late 1960s. And this is another reason why we've had a partial stagnation in new ideas production, new ideas which are important. I'm pleased to say that TED and TEDx are an exception to the technological stagnation of education. But a lot of what goes on in the classroom Frankly, isn't that different from earlier times? This is a French postcard from 1910. It was the vision of how education would work in the year 2000. The teacher would stuff books into a machine, the machine would process the books and inject them into people's minds. We're not there yet. Internet is not quite that good. But it's interesting to see the predictions and the reality. There's a big gap. Here's a neat book I read. It's called "Toward the Year 2000." 2018. One thing that has gotten better is book covers. But this book, it's written in 1968, it's fascinating to read. What does the headline say on top, if you can read it? It says on top, "More amazing than science fiction." Those predictions are more amazing than science fiction, they're also more wrong than science fiction. A lot of the writers in 1968 are telling us how fast transportation will be. They are telling us that we will be able to control the weather. Which actually we can do only by wrecking it somewhat, it seems. People are pretty good at grasping the importance of computers, so basically they get computers right, the prediction, and they predict a lot of other advances that simply haven't come to pass. It's a very sobering experience to read that book. Here we have the Jetsons. George Jetson was to work 9 hours a week. No one's predicting that anymore for the future. We have the proverbial flying car. And again, "The Jetsons" was an early 1960s vision of what the future would look like. And again, other than the Internet and to some extent the computer, we've pretty much fallen short on that. Here's something that was not predicted. It's a recent innovation. It's called insect sushi. Our modern world is fantastic for styles, inspirations, clever tricks. Here's another one. This is called Elfoid Homunculus Cell Phone. What you do is you hook it up to your cell phone and it creates like a conference call. It makes the facial expressions that the person you're talking to is making. So you can watch the doll. When the person you're talking to smiles, the doll smiles. Clever stuff. This is actually the one sector, communications, internet, cell phone related ideas, that really has blossomed. It has been phenomenal. It has been extremely innovative. It's not just that we have Elfoyd homunculus cell phone. This is from Japan, by the way. But we really do have a lot of stuff that's important. But when you add up the economic value of what we have, it turns out it's really not close to closing that gap I mentioned before between the $50,000 a year income for the typical household and the $90,000 a year income that we would have had with previous rates of progress had they continued. Now, what can we do, or what's the takeaway lesson, or what's the vision moving forward? I would say a few things. First, in part, we have a problem of expectations. We think we're remarkably innovative, and we would do better in some ways with our spending and borrowing decisions to have more modest expectations of how creative we really are. That's one point I would make. In terms of fiscal policy, we need to be very worried about our budgets. Public sector and private sector. What can we do to change this? I think in the short run there's not a silver bullet. If there was, we would be doing it. But what I see in earlier periods of time, but not so much today, is that this notion of an extreme reverence for science and scientists is weaker in the United States than I would like. And respect and reverence for people who teach science and scientists is weaker than I would like. There was much more respect for scientists in the 1960s than there is today. A few years ago, when Norman Borlaug died, one of the greatest scientists of our time, he led the Green Revolution, which saved millions of lives by breeding better crops for India, Pakistan, Mexico. It was on the front page of the New York Times, and then the public forgot about it. That was it. Norman Borlaug's day was gone. People should have been weeping and wailing in the streets, a New Orleans-style funeral with millions when Norman Borlaug died, and that wasn't the case. So in my view, we as a society, we need to be a little more like Caltech. We need to be a little more like Singapore. And no, I don't mean the caning. But in Singapore, there's a lot of respect for science. A lot of German culture still has the same respect for production, engineering, scientific values. And you might think we can't do this, but we can. It's a free lunch. People who teach scientists and scientists should and can be more like rock stars. We have changed our social attitudes On many issues in the past, just take for instance greater tolerance for gay individuals, there's been a massive change in American attitudes. Can we do it for science? I think we can. We can end on a note of optimism. We have been living in the Great Stagnation, but there's no reason why it has to continue forever. Thank you all.
