Why is Growth Clumpy, and Should we Attempt to Change Its Clumpy Nature?

In last Wednesday’s post, I ended by saying this, in the context of recent scientific advancements:

But on a personal level, the past year has also taught me this, and I have Morgan Housel to thank for the central insight: the seeds of calm are planted by crazy.3
So when things are really bad and grim (and again, this is not over yet), look to the bright side. And not just because it’s a good thing to do! But also because the bright side is likely to be brighter precisely because of everything else being so goddamn dark.
Tomorrow, I’ll attempt to answer a question I have, and I am sure you do as well: why?

https://econforeverybody.com/2021/03/24/whats-up-with-the-world-outside-of-covid-19/

I didn’t write the follow-up post, not because I forgot to, but because I couldn’t figure out how to think through what to write about. It turns out that I am still not sure! But in this post I’ll try and tell you why I’m not sure, what I’ve been thinking about, and what I’ve started reading to help me think through aspects of growth.

First, I think I’ve understood the central message of Tyler Cowen’s Stubborn Attachments, and agree with it: growth matters.1

Which then begs the question: how should we promote more growth, and more learning?

More learning, for me, means dramatically changing (or perhaps entirely discarding) the way higher education is currently handled, and that’s something to think about for years to come.

More growth, for me, means trying to understand the nature of growth, why it occurs at all, how it occurs, and what factors contribute to and hamper growth. And this topic is, well, a rather large one. It is large in terms of building out an edifice around which I can attempt to learn more about the subject, let alone the actual learning itself.

Here is what I mean by that: when I think about growth, and find myself wanting to learn more about growth, I want to be systematic about the process. If I say I want to learn mathematics, for example, I’ll want to divide, in my head, different branches of the subject. Then learn about the topics, and the mathematicians associated with those topics, and drill down accordingly.

How to do that with growth?

Should we begin by analyzing all of human growth over all of its (available) history? Watch videos like this Ted Talk, go through courses such as this one, and read books such as this one? Or focus on one country/civilization and examine it’s growth over time? Say, the Indian civilization over time? Or modern India, since 1947? Or focus on a group of countries over a period of time, such as say Joe Studwell’s How Asia Works? Or all of the above?

The answer is, obviously, all of the above, but then in that case where to begin?


Hopefully you have been through the same process for different things/projects/concepts in your own life – that feeling of where to start, even?2

Here is how Robert Pirsig helped me understand the answer to that question:

A memory came back of his own dismissal from the University for having too much to say. For every fact there is an infinity of hypotheses. The more you look the more you see.

She really wasn’t looking and yet somehow didn’t understand this.

He told her angrily, “Narrow it down to the front of one building on the main street of Bozeman. The Opera House. Start with the upper left-hand brick.”

Her eyes, behind the thick-lensed glasses, opened wide. She came in the next class with a puzzled look and handed him a five-thousand-word essay on the front of the Opera House on the main street of Bozeman, Montana. “I sat in the hamburger stand across the street,” she said, “and started writing about the first brick, and the second brick, and then by the third brick it all started to come and I couldn’t stop. They thought I was crazy, and they kept kidding me, but here it all is. I don’t understand it.”

Pirsig, Robert M.. Zen and the Art of Motorcycle Maintenance (p. 171). HarperCollins e-books. Kindle Edition.

The brick that I have chosen to begin with is Robert Gordon’s book, The Rise and Fall of American Growth. It is a rather large brick, at 784 pages, and I am only one chapter in, but it is already worthy of a blogpost.

Consider this chart, for example:

Gordon, R. J. (2017). The rise and fall of American growth: The US standard of living since the civil war. Princeton University Press.

The book focusses on the period 1870 through until 2014, and attempts to explain the cause, the nature and the effect of growth on the United States of America for that period. As I said, a rather large brick. And the chart above shows that most of the growth during this period occurs in fact between the period 1920-1970, when measured in terms of output per hour and output per person. Growth went up, in other words, the most in this period.

And what caused this growth?

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Gordon, R. J. (2017). The rise and fall of American growth: The US standard of living since the civil war. Princeton University Press

It wasn’t education-augmented labor, or more machinery, but rather, Total Factor Productivity. Here’s a previous post about the Solow Model, if you want to learn more about TFP.


This, of course, begs the obvious question: why?

Why was growth so very impressive in that period? As a prospective answer, at least in that first chapter, Gordon supplies a hypothesis that we are familiar with here on EFE: Paul David’s essay about the dynamo and the computer.

So quite simply, it takes time for us as a society to accept, internalize and then optimize for a new technology. The invention of a new technology doesn’t necessarily imply its adoption. For example, and this is a true story, we still get invites for faculty meetings at my Institute by hand, not online calendar invites.

And so growth is clumpy for at least the following reasons:

  1. The discovery of a new technology doesn’t necessarily mean it’s immediate wholesale adoption
  2. This is partly because of inertia, resistance to change and the sunk cost fallacy
  3. And it is partly because we as a society simply take time to try and figure out how to make best use of the new technology.

This involves job losses, restructuring, adjustments – and not all of these processes are smooth or even remotely pleasant. The long run consequences of adopting new technology are beneficial, while the short run adjustments are anything but. Focusing on reducing short term pain might well induce more long term pain, but focusing on long term gain is an impractical solution for politicians and policy-makers on the ground, unless a crisis makes it imperative and (at least somewhat) acceptable.

Think driverless cars today (per the link above), or think 1991 economic reforms. Selling either of these things without the crisis of that particular time would have been harder than it already was. As Morgan Housel says, crazy plants the seed of calm.

Leading me to ask myself the question: is growth necessarily lumpy? Might we be worse off for attempting to change it’s lumpy nature? I don’t know the answer to these questions, but they are questions worth keeping in mind as I proceed with Gordon’s book.

  1. As I wrote towards the end of that post, the spread of learning is what I would want to maximize, but that learning contributes towards growth, and more growth leads to more learning, so we’re on the same page for the most part[]
  2. I was tempted to use the excavator/Ever Given meme here. Please congratulate me for resisting the temptation.[]

A Review of Stubborn Attachments

I’d written a post last week, the title of which was “Growth. Just, only, simply growth.

There’s two books that I’d recommend you read to get a fuller understanding of the importance of growth. One is a book about the need for growth in an Indian context. It is authored by Vijay Joshi, and the title is India’s Long Road: The Search for Prosperity.1

There are many reasons why India’s Long Road is an excellent read. The one that is directly relevant here is his succinct summary of why growth in India over the long run is such a challenge:

India should strive for rapid, inclusive, stable and sustainable growth within the parameters of a political democracy.

In the book, Joshi explains why he chooses these aspects as being worthy of his analysis, covers how well India has done along these parameters thus far and what needs to be done from here on in. But the reason I am beginning my review of Stubborn Attachments by speaking about Joshi’s book is because Joshi speaks about growth as being more than just an increase in GDP over the long run.

Rapid growth as measured by GDP, yes, but not at the cost of the environment – therefore sustainable. Rapid growth, yes, but also stable. Rapid growth, yes, but also inclusive. And growth, yes, but not by sacrificing democracy.

You might say that Vijay Joshi is stubbornly attached to growth, but with qualifications.


Here is one way to think about Tyler Cowen’s book, Stubborn Attachments. It is as if he takes Vijay Joshi’s statement above and distils it down to its barest minimum. And in his distillation, he leaves us with the following:

Growth at all costs, except at the cost of human rights and concern for the environment.

It’s not just his own philosophy, but as he puts it, it is his recommendation that this be your philosophy too:

No punches are pulled, this is my account of what I strongly believe you should believe too. My bottom lines, so to speak.

https://marginalrevolution.com/marginalrevolution/2018/08/preface-stubborn-attachments-book-especially-important.html

How does he arrive at his stubborn attachment to prioritizing growth above all else, subject to only two constraints?

Before we begin our journey in terms of answering this question, a couple of things to note.

He is trying to answer the question of what is best for “our civilization”. And as the book makes clear, that’s all of us – every single person on this planet is his implicit definition of “our civilization”.

Second, a useful way of reading the book is to think of this book as his answer to the Ultimate Big Picture Question: “But what is the point of all this?”

I think of his answer as a sort of Pascal’s wager: we don’t know yet if there is a point or not. But if and when we discover what the point is, it is better to be prepared to deal with that point, whatever that point may be. And better prepared is, in his view, more growth.

So how does he arrive at his stubborn attachment? He begins by laying out his philosophical starting points:

1. “Right” and “wrong” are very real concepts which should possess great force.
2. We should be skeptical about the powers of the individual human mind.
3. Human life is complex and offers many different goods, not just one value that trumps all others.

Cowen, Tyler. Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals (p. 19). Stripe Press. Kindle Edition.

I have not the slightest objection to any of these points – they’re all but axiomatic to me.

So far, so good.

Next, how to choose which thing to get stubbornly attached to, given the points above? To arrive at that decision, there are, in his view, six things to consider:

  1. Time: Take the very, very, very long view when making a choice. This is not about dessert after lunch today and the implications of that for my future self. This is about dessert after lunch today and the implications for my daughter near the end of her life. More! It is about the implications for my daughter’s grand-daughter – and her grand-daughter, and ad infinitum. Make decisions about which things to get stubbornly attached to with the longest possible view in mind.

    Why, you ask? Well, think of it this way: would you expect your parents to take decisions that will benefit you tomorrow? Will you take decisions that will positively impact your children’s lives? Apply the principle of induction, and well, how could you not take the long view? (That is my argument, to be clear, not Professor Cowen’s. But I don’t think he’d disagree.)
  2. Aggregation: What if I want to go out for a nice dinner, but my wife prefers a nice light salad at home instead? My preference over hers or vice versa? Tyler Cowen has an easy way to resolve this: pick the option that maximizes long term growth, not short run pleasure. Nice light salad at home it is then, unfortunately for me. (He has a nice explanation later on in the book for why this makes sense, on pg. 52 of the Kindle edition.)
  3. Rules: I was telling some close friends about how I was not in favor of piercing my daughter’s ears while she was a baby. My logic was that she should choose for herself when she is old enough to do so. One of my friends asked if the same rule was applicable when it came to vaccination. Now, obviously, no: my daughter has had all her vaccinations. So really, the rule is she should choose when she is old enough to, except when it comes to issues of her health. Which, of course, has been the rule all along – I just didn’t state it well enough. The point, though is this: you have to be consistent with the rules you set for yourself, and for the game. Calvinball is fun to read about, but it is a poor way to live life.
  4. Radical Uncertainty: How can we know anything for sure? What if we are wrong? What if our actions have enormously negative unintended consequences centuries down the line? It is interesting (instructive?) to me that this is the one point among the six where Tyler Cowen doesn’t definitively say what his opinion/conclusion is when he ontroduces these concepts for the first time. It is almost as he if he is conceding the point that you can’t ever know for sure. But even so – or perhaps therefore – he is stubbornly attached to the idea of growth. What else is there, eh?
  5. How Can we Believe in Rights?: Professor Cowen says that this is undecided territory in philosophy – I don’t know enough to argue either way. But he also says that “some key elements of ethical reasoning do support the notion of objectively valid human rights, and, indeed, of their nearly sacred character.”
    As I said, I don’t know enough to comment authoritatively, but in my worldview, rights are axiomatic. How can you not believe in rights? There’s not much of a civilization left if there are no human rights. No?
  6. Common Sense Morality: Here is his definition of common sense morality – “Common sense morality holds that we should work hard, take care of our families, and live virtuous but self-centered lives, while giving to charity as we are able and helping out others on a periodic basis.” I’m more than ok with that description, but reconciling this with the more extreme utilitarianism view has, it seems, proven to be problematic. But he comes down on the side of common sense morality, and I’m happy to go along.

All right, so three basic points, and six things to consider. To which he adds two “moves”.

First, whatever it is that our civilization has been able to achieve so far is because of the productive power of our economy. Had our economy not been productive enough, Beethoven may have ended up being a farm laborer. Adam Smith could write about the division of labor precisely because society had been making use of the concept for thousands of years. We are where we are today precisely because of the productive power of our economy. Why not do more of it, then?

The second move is really a restatement of the first of the six things to consider. When in doubt, take the long term view, and whatever your long term view, make it longer.2


From these ingredients then – the three basic points, the six things to consider and the two moves – he reaches the conclusion that growth is a moral imperative. He makes use of a concept called a Crusonia Plant3 to arrive at this conclusion.

Growth, however, measured not by wealth, but by “Wealth Plus”:

Wealth Plus: The total amount of value produced over a certain time period. This includes the traditional measures of economic value found in GDP statistics, but also includes measures of leisure time, household production, and environmental amenities, as summed up in a relevant measure of wealth.

Cowen, Tyler. Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals (p. 30). Stripe Press. Kindle Edition.

And that, of course, is why I began with Vijay Joshi’s book. As I said, a maximizing Wealth Plus is essentially Vijay Joshi’s statement distilled.

And to do this – to maximize Wealth Plus – there are three questions we need to continually ask ourselves:

What can we do to boost the rate of economic growth?

What can we do to make our civilization more stable?

How should we deal with environmental problems?

Cowen, Tyler. Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals (pp. 32-33). Stripe Press. Kindle Edition.

Or, put another way, maximize growth subject to human rights not being violated, and subject to the environment not being ignored.

That is his stubborn attachment, and it is what he would like ours to be as well, all of us.

Please, do read the book to understand his defense of his view. The book is only 150 odd pages long, and written in an easy, conversational style.


I’ve been reading some of the reviews of the book in order to prepare for writing my own. Of the ones I have read, I am in complete agreement with the one that says that Tyler Cowen is basically saying let’s worship a community called humanity. And the one that I found most interesting was the one that put the argument in terms of optionality. I think that is another of way saying “Pascal’s Wager”.


Finally, what would my stubborn attachment be?

There are three reasons I have spent a large part of my review focusing on writing about Tyler Cowen’s assumptions, axioms and approach, rather than his conclusions.

  1. One of Ayn Rand’s unfortunate caricatures is fond of saying “Check your premises.” I have, for years, found that to be useful advice. And if you, like me, find yourself in agreement with Cowen’s premises, you should either reach exactly the same conclusion, or a closely related one (mine is closely related).
  2. Most of the reviews that I have read focus on the conclusions, or take issue with ways to implement the conclusions. See this review, for example. I found it enjoyable and instructive to think through Cowen’s premises, and they helped me make my own clearer. For the record, they are mostly the same, save for one, which leads me to my third point.
  3. Knowing is always and everywhere better than not knowing. I’d personally add this as a fourth axiom, in addition to the three he has listed out.

And so my own stubborn attachment: to know more, and to help other people know more. Ideas are the ultimate good. Not only can I share my ideas, I ought to share my ideas. You ought to share yours. Ideas should have sex! That, as Matt Ridley says, is what has built civilization – growth comes from “ideas meeting, and indeed mating.”

Wealth Plus, in other words, is an outcome of more people knowing more. What you really want to maximize is the spread of ideas. A civilization devoted to learning more, and helping everybody learn more, cannot help but accrue more Wealth Plus – it is an inevitable outcome. More, it is a guarantee of maximizing your chances of perpetuating this progress.

Or put another way, what provides nourishment to the Crusonia plant is the spread of knowledge, and without it, the plant may well wither.

And so my own personal stubborn attachment is to the accrual and spread of knowledge. Wealth Plus is a guaranteed, and welcome, consequence.

  1. The book started off as a collaboration between Vijay Joshi and TN Ninan. Things didn’t work out, for whatever reason, but that had a positive spillover for us readers, for now there’s two books to read. TN Ninan’s book is called The Turn of the Tortoise, and it is also worth a read.

    Joshi’s book is an excellent read in it’s own right, and it provides a pretty good summary of the Indian story since independence. That’s hardly surprising if you are a student of the Indian economy, for Vijay Joshi has authored two excellent books on this already, with his co-author IMD Little. One covers the Indian economy from 1964 until 1991, and the other discusses India’s economic reforms post 1991.[]

  2. Or that is how I understand it, at any rate[]
  3. read the first three paragraphs of this review for a short description[]

The Positive Externalities of Writing a Blog Post

If I ever meet Zeynep Tufekci, a beverage of her choice is due to her from me.

Last week’s post about her take on metaepistomology bought forth two very pleasant consequences. Whether they were intended or not is a question I myself have been grappling with, but I shall deal with that question (and that story) later on this week.

About those consequences:

  1. A student from the BSc program at the Gokhale Institute wrote in asking if we could have a discussion about metaepistomology – and you’ll permit me a self-congratulatory pat on the back for getting folks interested in a word as daunting as that. This of course means that I will have to spend a fair chunk of my time today reading up about metaepistomology myself, but I know that can only be a good thing.

    (Or do I?)
  2. Another student from the same program asked why a course on philosophy wasn’t a part of the program in a formal sense. To which I had no good answer, beyond saying that the course constraints were such that it could not be fit in.

Which, let’s be upfront and honest, is no answer at all. So, the topic of today’s blogpost: if there were to be a summer school, or a workshop, or a weekend course – whatever – on philosophy at the undergrad level, what all should it contain?

I don’t have a formal training in philosophy, having never taken the subject in my own undergrad days. It wasn’t on offer, I am sad to report, when I was doing my Masters. But I have tried to read a little bit here, and a little bit there, and have jotted down the list below as a starting point. Note that I have tried to ask what should be included in a summer school for students of economics who are studying philosophy for the first time, rather than first time students of philosophy. Also not that I am a complete amateur: please, point out obvious omissions!

That, I’m guessing should be more than enough for a 30 hour introduction, and the reading list is already monstrous.

So when I ask of you, what am I missing, I’m really asking the following: who/what would you include (and why) and who/what would you remove (and why). If there is anybody reading this who could help, please do write in.

Thank you!