Eli Dourado

The Great Stagnation, a Straussian reading

Tyler Cowen’s new eBooklet, The Great Stagnation, is a sober, moderate take on our current economic troubles. Except that it’s not. Straight out of Persecution and the Art of Writing, it is a book designed to appeal to the “sane, honest middle” of American politics, but for the careful, enlightened reader, there is a hidden and radical message: the time is ripe for an anarchist revolution. Be ready.

The first hint that there is much more to Tyler’s meaning than shows up on the page comes before the book even begins, in the dedication. The book is dedicated to Peter Thiel, a known anarchist sympathizer. Thiel is well-known as the billionaire co-founder of PayPal and early Facebook investor. But he is also the chief patron of the Seasteading Institute, which aims to avoid government rule by colonizing the surface of the ocean. Thiel is someone who understands that getting out from under the boot of government is necessary for the continued flourishing of mankind. Perhaps this is what Cowen has in mind when he writes on location 447 that Thiel is “an acute observer of our modern economy.”

Cowen’s ostensible thesis is that “the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century, whether it be free land, lots of immigrant labor, or powerful new technologies” (63). That low-hanging fruit is now gone and we have to brace ourselves for lower growth for a time. But at the same time, he seems to be offering the reader an alternative. “Recent and current innovation is more geared to private goods than to public goods” (225). How can we change this? What is the new low-hanging fruit?

Cowen offers the answer in chapter 2, the occult thesis of which is that collectivism is a cancer on the modern economy. On multiple occasions, Tyler protests that he is not trying to make an anti-government point. “The proper role of government is beyond the scope of this discussion” (266). In all his denials, Cowen is trying to draw the intelligent reader’s attention to the fact that the government is the problem. He shows how valuing government contributions to GDP at cost is problematic. There is no market test faced by government expenditures. Similarly healthcare and educational expenses are shielded from the market test by government subsidies and regulations. This is the new low-hanging fruit. If we can eliminate the coercive sectors of the economy, those that are shielded from the market test, we can pave the way for growth for the next generation or more.

Chapter 3 is an invitation for us to join Tyler in Techno-Utopia, a place where consumer and producer surplus is massive. For the simple reader, the thesis of Chapter 3 is that the internet is great, but it cannot save us from our problems because we are overburdened with debt and need revenue-generation in order to make ends meet. The esoteric meaning, though, is clear: the parts of the economy—the internet and our interiority—that are most free from government intervention are awesome. We can expand these sectors, and indeed liberate others, but it will require repudiating the debt and the status quo.

Chapter 4 laments the broken political system. Both sides want to undertake policies that immediately increase real incomes at the expense of future growth. Republicans want tax cuts without spending cuts and Democrats want more redistribution. What about the “honest middle?” Cowen uses this phrase three times in the book. It’s a clear attempt to flatter the unenlightened reader, who likely identifies with this group. At one point, Tyler even calls it the “sane, honest middle.” The subtext, however, is that the middle is neither sane nor honest. The middle wants both tax cuts and more redistribution. It’s clear that Cowen despises this group. These are the ZMP workers he keeps talking about, and not the good kind, either. The point is that working within the system is futile. “It is hard to win elections in the United States by announcing that the low-hanging fruit is gone, that real incomes will grow only slowly for some time, and that we cannot keep borrowing at our current pace” (578). Translation: the current political system is useless. Smash it.

From chapter 5, we can glean that Cowen expects the coming anarchist revolution to be sudden. The plain meaning of the text talks about how we as a society were too optimistic, took too many risks, were too leveraged, and this caused a sudden financial crisis. In the same way, we won’t recognize the new order until it is upon us. The metaphor here is Bernie Madoff standing in for the government. “For years, Madoff had been a well-respected figure in the investment community. Madoff’s fraud was possible only because so many people trusted him. The more people trusted him, the easier it was for Madoff to gain the trust of yet others” (746). This process is inherently fragile. When people realize that the emperor has no clothes, it is already too late to save the current system.

In the conclusion, Cowen warns us to “be ready for when more low-hanging fruit arrives”  (860). “New technologies can upset old balances of power” (870). “There will be big and unexpected bumps along the way, and many people will look back to the current era with a gloss of nostalgia” (871). This is both a stirring call to revolution and a warning to the faithful that it won’t be easy. Be prepared both for the change ahead and to resist those who would attempt to stop it.

It’s clear that in this book Tyler Cowen has reverted to his roots as a radical anarchist theorist and agitator. This is the Tyler from before Cowen (1992) peeking out his head and letting the rest of us know that he’s still here. Waiting for the right time.