Think Pinball, Not Roulette

As for the past few rollercoaster years, you wouldn’t be human if you didn’t also feel some sense of dread, given the relentless stream of changes, shocks, and crises affecting everything from your retirement nest egg to your children’s career options. By dread, I mean the kind of apprehension that is nasty and visceral (right to the gut), and makes you feel like a bystander with little or no control over the forces shaping your life. Oscar Wilde said more than a century ago, “To expect the unexpected shows a thoroughly modern intellect,” but he surely meant that as a bit of a joke. Since the sudden decompression of the world economy in 2007—no joke to us—analysts and pundits have been working (and talking) overtime to make sense of it all. Some blame too much leverage and easy credit, others too little regulation, and still others the proliferation of exotic financial instruments that few had heard of and even fewer understood. Some finger the role of terrorism and the trillion-dollar wars that it sparked, others the gravity-defying structural problems of the Eurozone. Many cite the excesses of the hype-driven, U.S.-centric “exaggeration economy” of recent years, where too many did the unforgivable: They actually came to believe their own press releases.

Respected economist Tyler Cowen, however, points to other, deeper patterns of change: In his view, by the turn of the twenty-first century, the United States had already gobbled up all the low-hanging ...

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