BROOKS: The wide ripples of the experience economy

Tyler Cowen’s e-book, “The Great Stagnation,” has become the most debated nonfiction book this year. Cowen’s core point is that up until sometime around 1974, the American economy experienced awesome growth by harvesting cheap land, the tremendous increase in postwar education levels and technological revolutions occasioned by the spread of electricity, plastics and the car.

But that low-hanging fruit is exhausted, Cowen continues, and since 1974, the U.S. has experienced slower growth, slower increases in median income, slower job creation, slower productivity gains, slower life-expectancy improvements and slower rates of technological change.

Cowen’s data on these slowdowns is compelling and has withstood the scrutiny of the online reviewers. He argues that our society, for the moment, has hit a technological plateau.

But his evidence can be used to tell a related story. It could be that the nature of technological change isn’t causing the slowdown but a shift in values. It could be that in an industrial economy people develop a materialist mindset and believe that improving their income is the same thing as improving their quality of life. But in an affluent information-driven world, people embrace post-materialist mindset. They realize they can improve their quality of life without actually producing more wealth.

For example, imagine a man we’ll call Sam, who was born in 1900 and died in 1974. Sam entered a world of iceboxes, horse-drawn buggies and, commonly, outhouses. He died in a world of air-conditioning, Chevy Camaros and moon landings. His life was defined by dramatic material changes, and Sam worked feverishly hard to build a company that sold brake systems. Sam wasn’t the most refined person, but he understood that if he wanted to create a secure life for his family he had to create wealth.

Sam’s grandson, Jared, was born in 1978. Jared works at a company that organizes conferences. He brings together fascinating speakers for lifelong learning. He writes a blog on modern art and takes his family on vacations that are more daring and exciting than any Sam experienced.

Jared lives a much more intellectually diverse life than Sam. He loves Facebook, YouTube, Wikipedia and his iPhone apps. But many of these things are produced outside the conventional monetized economy. Most of the products are produced by people working for free. They cost nothing to consume.

They don’t even create many jobs. In other words, as Cowen makes clear in his book, many of this era’s technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity.

Jared’s other priorities also produce high quality-of-life gains without huge material and productivity improvements. He practically defines himself by what university he went to. Universities now have nicer dorms, gyms and dining facilities. These improvements have not led to huge increases in educational output.

For Sam, income and living standards were synonymous, but for Jared, wealth and living standards have diverged. This means that Jared has some rich and meaningful experiences, but it has also led to problems. Because he doesn’t fully grasp the increasingly important distinction between wealth and standard of living, he has the impression that he is also getting richer. As a result, he lives beyond his means. As Cowen notes, many of our recent difficulties stem from the fact that many Americans think they are richer than they are.

Jared is also providing much less opportunity for those down the income scale than his grandfather did. Sam was more hardhearted, yet his feverish materialism created more jobs.

Jared worries about that. He also worries that the Chinese and others have a material drive that he and his cohort lack. But he’s not changing. For the past few decades, Americans have devoted more of their energies to post-material arenas and less and less, for better and worse, to the sheer production of wealth.

During these years, commencement speakers have urged students to seek meaning and not money. Many people, it turns out, were listening.•

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Brooks is a New York Times columnist. Send comments on this column to ibjedit@ibj.com.