For me, however, the more intriguing argument in "The Great Stagnation" is that much of our recent growth may, in fact, have been a mirage. It is no coincidence, he writes, that during the recent decades of slow growth in incomes and productivity, three of the fastest-growing sectors of the economy have been education, financial services and health care. And while government statistics show productivity in those sectors growing at the same pace as the rest of the economy, other data suggest otherwise.
Although the United States spends at least twice as much on health care, per person, as other industrial countries do, Americans do not live any longer and often have measurably worse health.
Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.
Although spending on education has doubled in recent decades, average scores on standardized math and reading tests have remained about the same.
And what does the average American have to show for all that innovation and job growth in financial services over the past 20 years? A series of booms and busts that has left stock prices roughly where they began.
For Cowen, the central economic reality of the past three decades is that median household incomes have barely budged, even after adjusting for inflation and other factors. And his hypothesis is that too much money and talent and effort have gone into sectors where real productivity gains are hard to find. Once Americans became rich enough to satisfy ourselves with the basic necessities of life, it was only natural that we would decide to spend our additional income - our marginal dollars - on health care, education and financial services. We now discover, however, that each of those marginal dollars has generated less than a dollar of real value.
It is unlikely that the movers and shakers in Massachusetts last weekend were aware of Cowen's book or focused on long-term productivity trends. But they understood full well the roots of our current stagnation. When incomes were growing rapidly, it probably didn't matter if the fruits of that growth were sometimes unevenly distributed and unwisely invested. But now that innovation has slowed, and with it income growth, those realities can no longer be ignored.