If, by the second definition above, the economy is stagnating, then why is it and what should be done about it? It is stagnating, claims Cowen, because the United States has already picked three pieces of “low-hanging fruit” that drove the economy for decades, but whose effects are now dissipating. As for what should be done about it, his main proposals are that we respect scientists more and learn to live with stagnation.

His argument about the reasons for stagnation is ultimately unpersuasive and his proposals for dealing with the problem are tepid. Moreover, he misses some major pieces of ripe fruit ripe that are hanging right in front of his nose.

“Stagnation” | First, consider the data he uses to make the case for stagnation. He does not give the usual measure, which is growth of real Gross Domestic Product or of real GDP per capita. Instead, he considers the growth of real median family income. The good news is that even that has grown since 1973, the year he chooses for the break point when stagnation began setting in. The bad news is that it has grown more slowly than it did between 1945 and 1973. Interestingly, in Cowen’s graph of the growth in real median family income over time, he shows that income would have grown much faster had it kept pace with growth in real GDP per capita. He writes, “[I]f median income had continued to grow at its earlier postwar rate, the median family income today would be over $90,000.”

This divergence between the two measures means that whatever explanation Cowen comes up with for the slower growth of median family income since 1973 should be one that is consistent with the relatively healthy growth of per-capita GDP since 1973. Do his explanations do that?

The fruit | Let us consider his three disappearing low-hanging fruit: (1) free land, (2) technological breakthroughs, and (3) smart, uneducated kids who can be educated.

Through the end of the 19th century, argues Cowen, land in the United States was cheap. Now it is relatively expensive. Yet he presents no data on this, either in the chapter or in the end notes. How big a role does the increase in the price of land play? One way to get an idea, which I would expect an economist to use, is to look at the role of rents and imputed rents (imputed rents are rents that land owners could have earned on their land) in national income. If they are a much bigger percent of income than they were a century ago, that would support Cowen’s view; if not, then not.

What do the data show? Between 1899 and 1908, according to data reported in Robert F. Martin’s 1939 book National Income in the United States, 1799–1938, rents were about 6.4 percent of national income. Willford I. King’s 1919 book The Wealth and Income of the People of the United States reports that, between 1900 and 1910, rents were 8.3 percent of national income. The difference between those two numbers raises some question of exactly what is the correct number for the early years of the last century, but it seems certain that rents then were much larger than the 2.2 percent of national income they represented in 2009. In other words, the role of rent, and presumably the importance of land, has dropped substantially.

What about his second bit of low-hanging fruit — technological breakthroughs? Cowen presents Pentagon physicist Jonathan Huebner’s measure of technological change: the number of innovations in a year divided by the population. Huebner shows that this measure peaked in 1873, then fell, and then plummeted further after 1955. Of course, any ratio can fall for two reasons: the numerator falls or the denominator increases. Given that the measure fell by about 60 percent after 1873 but world population quadrupled, the number of innovations per year actually rose by 60 percent. But it is not clear why Cowen’s and Huebner’s measure, innovations per person, should be accepted as the right measure of technological change. If the population quadruples but innovations stay constant, can’t each innovation potentially be used by everyone? So an increase in the number of innovations per year would mean more technological breakthroughs. Moreover, how does Huebner measure the number of innovations? Clearly, a new app for the iPhone would not count, or else the number of innovations would be higher this year by about three orders of magnitude. But some iPhone apps probably should count.

To deal with the arguments of “technological optimists” (my term) who think that the Internet has revolutionized and will further revolutionize the economy, Cowen has a chapter titled, “Does the Internet Change Everything?” Of course his answer is no. That would be any sensible person’s answer — not everything. But Cowen considers only a narrow range of things that the Internet has changed. He views the Internet mainly from the perspective of a direct consumer and hardly at all from the viewpoint of producers who use it as an input. He writes that you do not benefit from the Internet “automatically in the same way you do from a flush toilet or a paved road.” Yes, you do. Virtually everyone in America does every time he pays a bill online, makes airline reservations and compares fares online, or buys goods from online companies that have used the Internet to cut costs in their production process. Cowen might dispute my first two examples on the grounds that people benefit only by choosing to use it — but is that not also the case with paved roads and flush toilets?

Cowen points out that producers on the Internet do not create huge revenues or many jobs. But this simply means, as Cowen seems to recognize, that people receive a large “consumer surplus” from the Internet. This huge consumer surplus also means that the slowing in the growth of median income understates the growth of real income properly measured. But a quick reader can get the misimpression that Cowen regards this absence of revenue and jobs as a bad thing rather than a good one. One statement that adds to this misimpression is that relatively small producer revenue from the Internet makes it “harder to pay our debts.” That is false. By making entertainment and communication cheaper, the Internet helps us avoid, if we wish, getting into debt in the first place. It is also hard to square this large, unmeasured-by-government consumer surplus with the title of Cowen’s book, and even more so the subtitle. “Got Sick”? If that is sick, I want pneumonia. The subtitle makes it sound worse than the Great Stagnation. It makes it sound like the Great Regression.

To buttress his case for technological pessimism, Cowen presents Stanford University economist Charles I. Jones’ finding that 80 percent of the growth from 1950 to 1993 came from previously discovered ideas in a way that “cannot be easily repeated in the future.” But the future is, by definition, unknowable. Cowen could be right, but he could be wrong.

Cowen’s third factor in the disappearance of low-hanging fruit is the high percentage of people who attend college. I found this factor more persuasive. He points out that in 1900, only 6.4 percent of high-school-aged Americans graduated from high school. That number peaked in the late 1960s at 80 percent, he notes, and has fallen to about 74 percent more recently. Also, in 1900, only one quarter of one percent of Americans went to college, whereas 40 percent of people aged 18 to 24 are in college today. In other words, there is not much room for improvement in educational attainment and, as he notes, the marginal college student today “cannot write a clear sentence, perhaps cannot read well, and cannot perform all the functions of basic arithmetic.”

This suggests a huge piece of low-hanging fruit right in front of his nose: the number of people going to college. Cut that number dramatically and many of the “marginal students” would get jobs doing something productive — as plumbers, as electricians, or in any of a number of occupations that do not require a college degree. I say this not as a central planner who wishes to decree who shall attend college and who shall not, but as a defender of people’s right to use their income and wealth as they see fit rather than being forced to subsidize the education of others. Cut that subsidy to zero and cut taxes accordingly, and you would increase the after-tax income of many people, including the median family, and substantially reduce the number of marginal college students. If a marginal student still wants to go to college and he or his family or someone else he persuades wants to pay for it, then let him.

But rather than advocating cutting back on the number of students attending college, Cowen advocates more. “Educating these students is possible, it is desirable, and we should do more of it,” he writes, even though the returns from doing so are “highly uncertain.” When I teach economics, I teach my students that when the marginal cost of something exceeds the marginal benefit, we should cut back on the activity, not increase it. What does Cowen teach?

As I noted earlier, for Cowen to explain why the growth in median incomes fell, he needs to point to factors that would not cause the growth in real GDP per capita to fall. I do not think he has done that. As noted, his first explanation, the disappearance of free land, is not a good one. He could be on firmer ground with his measure of declining innovation, but he does not really make the case. He gives examples of innovations that benefit mainly higher-income people, but gives no aggregate data showing that that is what happened.

More missed fruit | This is not to say that The Great Stagnation lacks insights. One insight is that whatever you think of government, additions to government spending are likely to be less valuable as the government spends more. As I noted, I wish he had applied that to government spending on schools. Another insight is his idea that the reason so many successful economies got that way via exports is that the “external world market provides a real measure of value.” Whoever buys your exports has “no concern for your welfare” and “is spending his or her money to buy your product.” Unfortunately, those insights do not much help him make his overall case.

But what if he had made his case? What if, for example, he had shown that technological progress has slowed? Would it not be natural for Tyler Cowen, who understands and appreciates the power of economic freedom, to argue for more freedom?

Take the industry I am most familiar with: pharmaceuticals. Technological progress really does seem to have slowed in that industry. One of the culprits, which Cowen’s George Mason University colleagues Alex Tabarrok and Daniel Klein have written about, is the Food and Drug Administration. The FDA keeps upping the hurdles drug companies must jump before they are allowed to sell their drugs. We could get a substantial increase in drug innovation by eliminating those hurdles. The way to do so would be to end the FDA’s monopoly power over drugs and allow private certifiers.

Do U.S. governments at various levels prevent similar innovation in other industries? The size of the annual Federal Register makes me suspect that they do. Cowen states that we will have more scientific discoveries and innovations if we respect scientists more. He is probably right. But you show them the ultimate respect when you do not make scientists and other innovators beg government to approve their innovations. Disappointingly, Cowen discusses none of this. He has missed the low-hanging fruit of deregulation.

He misses another piece of low-hanging fruit right in front of his nose: government spending in general. Government consumption spending, health spending, and education spending, he writes, exceed 25 percent of GDP, and all three, he claims correctly, “are sectors where there is massive government distortion of incentives.” It follows that reducing all three of these — I have already discussed education — would improve economic well-being for families. The 25 percent number is so big that a massive reduction is likely to raise median family income. That would be a Great Progression.