Review: Fully Grown: Why a Stagnant Economy Is a Sign of Success

Fully Grown: Why a Stagnant Economy Is a Sign of Success by Dietrich Vollrath
My rating: 3 of 5 stars

I really liked the premise and the entire idea, as well as the author's explanation. However, if you have a basic knowledge of economics, you can pretty much start reading at Chapter 8. This discusses the Baumol Effect. What he concentrates on here is the fact that goods can lower labor intensiveness over time (over time fewer people require less time to make the same product) while services can't nearly as much, since labor tends to be the very essence of the offering (a 1 hour doctor's session must last a full hour), and that, as we get richer, we tend to use a greater fraction of our income on services than goods. So over time as the economy grows we consume more of the labor intensive offering, which results in slower growth.

That's essentially the idea. Sandwiched between many chapters explaining variables, and explaining why other ideas don't fit the bill. An example I like is given on page 209:

'As an aside, we know something like this can work because we've seen it before. After World War II, both Germany and Japan had some of the highest growth rates of GDP per capita ever recorded, and that high growth lasted for close to two decades. It was largely because much of their capital and durable-goods stock had been incinerated by firebombing. Is a higher growth rate so important that you'd replicate that level of destruction to achieve it?'

There are many examples of books that would have made excellent articles, but were turned into books for lucre. I believe this is one of them.




View all my reviews