Tyler Cowen: Economic Growth and the Debt We Owe to Our Distant Future

The chief goal of society should be to maximize wealth, according to Tyler Cowen. Pursuing that goal has delivered everything from nutritious and abundant food, to air conditioning and smartphones in the developed world, and those benefits are spreading rapidly to the developing world. The challenge is how societies can embrace and implement that goal. If those challenges are overcome, the benefits to globally diversified equity investors will be substantial.

Like many accomplished people approaching late-middle age, Cowen, one of the most interesting men in the world, has turned his attention to moral philosophy. In the slim volume, Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals, which can be read in a long afternoon, the George Mason University economist and polymath argues that maximizing economic growth is the best thing we can do to enhance human welfare.

A review of Stubborn Attachments penned by Cowen’s young admirer Coleman Hughes, an undergraduate at Columbia University, argues that wealth is the foundation on which almost all of the elements of the good life are built:

If you enjoy living past thirty, not starving to death, not having to wash clothes by hand, talking to loved ones on the phone, [using] air conditioning, and having free time to read articles like this one, then you have the existence of wealth – or rather the people, institutions, and ideas that create it – to thank.1

That’s one of the three principles Cowen sets forth in Stubborn Attachments. The second is the power of compounding or, more to the point, the big difference in long-run results that emerges from small differences in growth rates. If Mexico had achieved an extra percentage point of annual growth for the last 120 years, Cowen writes, it would be as rich as the United States; likewise, if the United States had grown one percentage point more slowly than it did over that same period, it would be as poor as Mexico.

The third principle is “deep concern for the distant future.” I’ll get to that later in some detail because it is important to Cowen’s world view, and because reasonable people can differ profoundly on what it means. Should we make sacrifices (which sacrifices?) today to maximize the utility of our great-grandchildren? Of people who will be born in 1,000 years? In ten million? It’s unlikely humans will be around then, but something will.