‘Stubborn Attachment’s by Tyler Cowen

I am a long time reader of Tyler Cowen’s Marginal Revolution blog. I started reading because of a smug view that ‘I had to read the other side’. That meant a more free market supporting and ‘markets are rational’ economist and Tyler is prolific in reporting economic studies that challenge my liberal ideologies. It is not always comfortable reading about a study that suggests minimum wage increases results in lower employment when I am proponent of minimum wage increases (I hear those studies might be wrong!). Similarly, I find the analysis that supports lighter environmental regulation to be worrying. But, overall, the blog challenges my assumptions which is positive and helps me see my blind spots. These blind spots are where I am holding on to a concept or theory out of emotional need and not scrutinizing them appropriately.

So Tyler’s blog is a daily read along with Paul Krugman and John Quiggin.

‘Stubborn Attachments’ is Tyler’s most recent book that promotes an interesting economic target – Wealth Plus (GDP + Leisure + Household Production + Environmental Sustainability). Wealth Plus is predicated on the idea that long term sustainable economic growth is the greatest aid to human development in history. So we should focus on increasing the rate of long term growth at any cost (except where we contradict a small set of human rights or environmental sustainability).

I feel that the purpose of the book, in parts, less focused on promoting Wealth Plus and more pushing against two ideas that Tyler has been a long time critic of.

Firstly, major government interventions (like tariffs) create short term spikes in growth but erode trading relationships and international institutions which aid long term economic growth. So the book argues against short time measures that have long term consequences.

The second idea is the rise of redistribution policies such as high marginal tax rates for the wealthy and minimum wage increases.  Redistribution, in his view, is not necessary if you look at how people’s lives have improved across the board even when there were high levels of inequality. He says that redistribution doesn’t matter if the economy is growing fast enough. Finally, Tyler suggests that may be the trickle down economy is the highest growth economy, as a wealthy venture capitalist can generate 8% return while the poor can’t.

It is timely that Tyler has launched his own venture capital group so he can maximize return.

Tyler doesn’t speak at length about the environmental sustainability except to say that climate change is an important issue and that certain climate impacts, such as regular high impact storms, are going to be more costly than once-off movement of cities.

Overall, I see the merit in driving up the rate of long term sustainable economic growth and applaud the attempt to push back on short term economic spike policies. I think the discussion on redistribution shouldn’t be between giving money to the poor or to the rich based on their likely rate of return. It is about the tone and cohesion of our society which, in its self, is a key factor in long term economic growth.

Finally, I appreciate the cosmopolitan element of Tyler’s work in that he believes that people should have choice about how they live their lives and that strong economic growth is a foundation for that choice. I also see the success of our economy in the ability for people to have greater and greater choice about how they live their lives. It is one of the great pleasures to be able to live a life that you want to live.