A Wall Street Journal and Washington Post Bestseller
"Tyler Cowen's blog, Marginal Revolution, is the first thing I read every morning. And his brilliant new book, The Complacent Class, has been on my nightstand after I devoured it in one sitting. I am at round-the-clock Cowen saturation right now."--Malcolm Gladwell
Since Alexis de Tocqueville, restlessness has been accepted as a signature American trait. Our willingness to move, take risks, and adapt to change have produced a dynamic economy and a tradition of innovation from Ben Franklin to Steve Jobs.
The problem, according to legendary blogger, economist and best selling author Tyler Cowen, is that Americans today have broken from this tradition—we’re working harder than ever to avoid change. We're moving residences less, marrying people more like ourselves and choosing our music and our mates based on algorithms that wall us off from anything that might be too new or too different. Match.com matches us in love. Spotify and Pandora match us in music. Facebook matches us to just about everything else.
Of course, this “matching culture” brings tremendous positives: music we like, partners who make us happy, neighbors who want the same things. We’re more comfortable. But, according to Cowen, there are significant collateral downsides attending this comfort, among them heightened inequality and segregation and decreased incentives to innovate and create.
The Complacent Class argues that this cannot go on forever. We are postponing change, due to our near-sightedness and extreme desire for comfort, but ultimately this will make change, when it comes, harder. The forces unleashed by the Great Stagnation will eventually lead to a major fiscal and budgetary crisis: impossibly expensive rentals for our most attractive cities, worsening of residential segregation, and a decline in our work ethic. The only way to avoid this difficult future is for Americans to force themselves out of their comfortable slumber—to embrace their restless tradition again.
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About the Author
Tyler Cowen (Ph.D.) holds the Holbert C. Harris chair in economics at George Mason University. He is the author of Discover Your Inner Economist (2007), Create Your Own Economy (2009), NYT bestseller The Great Stagnation (2011), An Economist Get Lunch (2012), Average is Over (2013), and a number of academic books. He writes the most read economics blog worldwide, marginalrevolution.com. He has written regularly for The New York Times and contributes to a wide number of newspapers and periodicals.
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The Complacent Class
The Self-Defeating Quest for the American Dream
By Tyler Cowen
St. Martin's PressCopyright © 2017 Tyler Cowen
All rights reserved.
THE COMPLACENT CLASS AND ITS DANGERS
Disruption has been the buzzword of the decade. And it's true that there have been some significant changes afoot, from the wiring of the whole world to the coming of unprecedented levels of multiculturalism and tolerance. But as important and yet neglected is a story that's happening alongside and to some degree in reaction to all of that change. It involves people making decisions that are at first glance in their best interests — that is, they are economically and indeed socially rational decisions. But the effects of these decisions at the societal level are significant, unintended, and not always good. They have made us more risk averse and more set in our ways, more segregated, and they have sapped us of the pioneer spirit that made America the world's most productive and innovative economy. Furthermore, all this has happened at a time when we may need American dynamism more than ever before.
Americans are in fact working much harder than before to postpone change, or to avoid it altogether, and that is true whether we're talking about corporate competition, changing residences or jobs, or building things. In an age when it is easier than ever before to dig in, the psychological resistance to change has become progressively stronger. On top of that, information technology, for all the disruption it has wrought, allows us to organize more effectively to confront things that are new or different, in a manageable and comfortable way, and sometimes to keep them at bay altogether.
Given the growing success of the forces for stasis, I see complacency — a general sense of satisfaction with the status quo — as an increasingly prominent phenomenon in American life. And I've coined the phrase the complacent class to describe the growing number of people in our society who accept, welcome, or even enforce a resistance to things new, different, or challenging. These people might in the abstract like some things to change, they might even consider themselves progressive or even radical politically, but in fact they have lost the capacity to imagine or embrace a world where things do change rapidly for most if not all people.
This movement and this Zeitgeist have now become so pervasive that we could even speak of the complacent classes, but when I stick with the singular form, it will be to emphasize the underlying unities behind differing situations. Consider, for instance, three tiers of the complacent class, differing in terms of income and education and opportunity.
1. The Privileged Class.
Members of the privileged class are usually well educated, often influential, and typically stand among the country's higher earners, though not always in the top 1 percent (which starts at around $400,000 a year). They correctly believe their lives are very good, and they want things to stay that way awhile, of course wishing to elevate as many others as possible. These individuals tend to be tolerant, liberal in the broad sense of that word, and often quite munificent and generous. They fit the standard description of cosmopolitan and usually take an interest in the cultures of other countries, though, ironically, many of them have become sufficiently insulated from hardship and painful change that they are provincial in their own way and have become somewhat of a political target (from both Donald Trump and Bernie Sanders in the recent campaigns). Because they are intelligent, articulate, and often socially graceful, they usually seem like very nice people, and often they are. Think of a financier or lawyer who vacations in France or Italy, has wonderful kids, and donates generously to his or her alma mater. I think of these people as the wealthiest and best educated 3 to 5 percent of the American population.
2. Those Who Dig In.
The individuals who dig in are more likely to be of middling station when it comes to income and education. They are not at the top of their professions for the most part, and they may have professional jobs, such as being dentists, or nonprofessional jobs, such as owning small businesses. Still, by either global or historical standards their lives are nonetheless remarkably good, and full of "first-world problems." Many of them are doing better than what we think of as a typical middle-class existence. But because they hold a lot of their wealth in the form of their homes, and in some cases have legitimate worries about their long-term employment, they do not have the luxury of not worrying about money. Further, pressures from the costs of housing, health care, and education intensify the money issue for them, and they do have to worry about financing retirement. They hope to hang on to what is a pretty decent life, whatever its stresses and imperfections may be. Think of a midlevel teacher or health care worker who is trying to keep the neighborhood in good shape, get the kids into a better college, and save something for a still-uncertain future, all contemporary methods of trying to dig in.
3. Those Who Get Stuck.
Those who get stuck are the individuals who, among other combinations of possibilities, may have grown up in highly segregated neighborhoods, received a subpar education, were exposed to significant environmental toxins like lead paint, have parents who drank in excess or abused opiates, were abused as children, became alcoholics or drug abusers themselves, or perhaps ended up in jail. Their pasts, presents, and futures are pretty bad, and they are not happy about their situations. A lot of these people never really had a fair chance. Think of a single mom with a poorly paid retail job and no college degree, or the ex-con who has dropped out of the labor force because he can't find a decent job and is now trying to get on disability.
Despite the divergences in their situations, what these groups have in common is a certain level of social and emotional and indeed ideological acceptance — a presupposition — of slower change. More and more, America consists of people who belong to one of these three groups and are more or less OK with this division of the spoils.
You might think the group at the bottom cannot possibly be complacent about their situation, but by standards of recent history, indeed they have been when it comes to their actual behavior. As we'll see later, the numbers show this pretty clearly. They have been committing much less crime, engaging in much less social unrest, and embracing extreme ideologies such as communism to a smaller degree; if anything, they have been more disillusioned than politically engaged. I'll consider later in the book whether the Ferguson riots and the election of Donald Trump and other unusual current events might be signaling an end to this trend, but the point is that we have been building toward stasis for about the last forty years. Whether or not you think the break point has come just now, to understand why the stasis eventually must fall apart, first we must see how and why it has evolved.
The good news is that more and more Americans are entering the upper tier than ever before — it's nice to have something to be complacent about. Recent income data indicates that a core of about 15 to 20 percent of the American population is doing extraordinarily well, in terms of both income and also social indicators, such as happiness and health outcomes. There is an ongoing collapse of the middle class, as is often reported in the media, but the underreported upside is that some of the middle class is graduating into the upper class. The bad news, however, is that the accompanying structures are not ultimately sustainable for the broader majority of the population. As overall social and economic dynamism declines and various forms of lock-in increase, it becomes harder to finance and maintain the superstructure that keeps stability and all of its comforts in place. The most talented of the middle rise to the top, while a lot of other forms of mobility slow down and congeal, thereby heralding the loss of dynamism and, eventually, control. And so the complacent class is but a phase in American life, rather than Francis Fukuyama's much-heralded "End of History." Still, for whatever cracks may be showing in the edifice, the complacent class defines our current day, even though we are starting to see parts of it crumble before our eyes.
One of the great ironies of the situation is that those most likely to complain about the complacent class are themselves the prime and often most influential members of that class themselves, namely what I call the privileged class. When we hear Progressives criticizing high income inequality or conservatives bemoaning America's fall in global stature, you might wonder, If they are complaining, what makes them so complacent?
The defining feature of these groups of people is, most of all, the lack of a sense of urgency. Our current decade can be understood by comparing it to the 1960s and early 1970s. The Watts riots of 1965 put 4,000 people in jail and led to thirty-four killed and hundreds injured; during an eighteen-month period in 1971–1972, there were more than 2,500 domestic bombings reported, averaging out to more than five a day. I'm not advocating these tactics, of course. My point is that, today, there is an entirely different mentality, a far more complacent one, and one that finds it hard to grasp that change might proceed on such a basis. Yet in the 1960s and 1970s, not only did riots and bombings happen, but large numbers of influential intellectuals endorsed them, defended them, and maybe led them to some degree. Back then the privileged class was not always so complacent because a large number of those individuals were far more willing to disrupt the social order. Today the critique is penned, and the enemies of reason and progress are condemned, but then the page is turned and the complacent class turns its attention back to the very appealing comforts of everyday life.
HOW DID SO MANY PEOPLE BECOME SO COMPLACENT?
The forces behind the rise of the complacent class are quite general. For better or worse, the truth is that peace and high incomes tend to drain the restlessness out of people. For all the revolutionary changes in information technology as of late, big parts of our lives are staying the same. These days Americans are less likely to switch jobs, less likely to move around the country, and, on a given day, less likely to go outside the house at all. For instance, the interstate migration rate has fallen 51 percent below its 1948 to 1971 average and has been falling steadily since the mid-1980s. There has been a decline in the number of start-ups, as a percentage of business activity, since the 1990s. There are also fewer unicorn miracle growth firms, there is less corporate churn and turnover of new firms replacing older firms, and there is a higher market concentration in the sectors where we can measure it. The average American is older than ever before, and so is the average U.S. business.
There is also much more pairing of like with like, whether it has to do with marriage, the associations we belong to, or the income levels of the neighborhoods in which we live. In our biggest and most influential cities, segregation by income has become so glaringly obvious that few people think it can be reversed. And many of America's trendiest cities, including cities with quality universities, are among the most extreme for segregation by socioeconomic class. I'll be giving specific numbers throughout the book, but those are some key external metrics by which we can see and measure the growing complacency in American life.
The clearest physical manifestation of these ongoing processes of segregation is NIMBY — Not In My Backyard. Building new construction gets harder and harder in many of our most important cities, and the ratio of rents to median income in those locales has been rising steadily. American life is more segregated by income than ever before, and the new innovations we are creating are cementing rather than overturning this trend, which is backed most of all by city and county laws but also by our own desires for suitably nice living quarters and experiences.
But NIMBY is just one specific physical manifestation of a broader mentality of stasis. There is also:
NIMEY — Not In My Election Year
NIMTOO — Not In My Term Of Office
LULU — Locally Undesirable Land Use
NOPE — Not On Planet Earth
CAVE — Citizens Against Virtually Everything
BANANA — Build Absolutely Nothing Anywhere Near Anything
One upshot of this current Zeitgeist of community-enforced social stasis is that our physical infrastructure won't get much better anytime soon. Every time a community turns down a new apartment complex or retail development, it limits America's economic dynamism by thwarting opportunities for those lower on the socioeconomic ladder. The relative absence of physical construction also makes it harder to put people back to work when bad times roll around, and, at a deep psychological level, it gets people used to the idea of a world that more or less always looks the same, albeit with an ongoing proliferation of trendy restaurants, boutiques, and people walking around with earbuds, texting and staring at their smartphones. I don't mean that as snark; those are nice neighborhoods enjoyed by many Americans, including myself. Still, what has been lost is the ability to imagine an entirely different world and physical setting altogether, and the broader opportunities for social and economic advancement that would entail.
Indeed, in this new world the performance of income and social mobility is rather disappointing. In spite of the people who are doing great, the data indicate that the upward mobility of Americans, in terms of income and education, which increased through about 1980, has since held steady. Partly this is because the economy is more ossified, more controlled, and growing at lower rates. It's also because it is much more expensive to move into a dynamic city, an option that gave many a way of making economic progress in times past. Two researchers, Chang-Tai Hsieh and Enrico Moretti, estimate that if it were cheaper to move into America's higher-productivity cities, the U.S. gross domestic product (GDP) would be 9.5 percent higher due to the gains from better jobs. Yet no one thinks that the building restrictions of, say, San Francisco or New York will be relaxed much anytime soon. Most of the complacent class just doesn't see building restrictions as an urgent issue, and even if they understand the problem intellectually, as many of them do, the selfish incentive to make changing restrictions a priority just isn't there.
We've gone in relatively short order from a time when the physical world and its infrastructure were vital, ever-changing, and all we had, to one in which, at least for younger people, they increasingly play second fiddle. The visions of earlier science fiction were about how different things would look and how much more rapidly we would get around, for instance using the now universally cited flying car. In past generations, people moved through the physical world at ever faster speeds, whereas today traffic gets worse each year and plane travel is, if anything, slower than before. The passenger train network is not growing, and bus lines are being shut down, both reflections of America's decreasing interest in mastering travel and mobility across physical space.
The big practical questions for the postwar generation were about what we might place in the physical world and how that would exert its effects on us, because the physical world was viewed as a major source of inspiration. Would it be cities reaching into the heavens, underwater platforms, or colonies in outer space? All of these possibilities were embedded with futuristic architectures and also utopian ideologies, such as space travel bringing humankind together in cosmopolitan dreams of peace. Those options seemed like logical next steps for a world that had recently been transformed by railroads, automobiles, urbanization, and many other highly visible shifts in what was built, how we got around, and how things looked. But over the last few decades, the interest in those kinds of transportation-based, landscape-transforming projects largely has faded away. Elon Musk's hyperloop plans will remain on the drawing board for the foreseeable future, and the settlement of Mars is yet farther away. Urban progress is less transformational and more a matter of making more neighborhoods look and act like the nicer neighborhoods — namely gentrification. When it comes to transportation, mostly we are hoping to avoid greater suffering, such as worse traffic, cuts in bus service, or the rather dramatic declines in service quality experienced in the Washington, DC, Metro system.
I argue that the physical world matters no less today, but we are in denial about its power and relevance. We seek to control it, to hold it steady, and to marginalize it ideologically by worshipping Silicon Valley and elevating the value and power of information. We're much more comfortable with the world of information, which is more static, can be controlled at our fingertips, and can be set to our own speed. That's very good for some people — most of all the privileged class, which is very much at home in this world — and very bad for others.
Excerpted from The Complacent Class by Tyler Cowen. Copyright © 2017 Tyler Cowen. Excerpted by permission of St. Martin's Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Why Americans have stopped moving, or is your hometown really so special?
The reemergence of segregation
Why Americans stopped creating
The respite of the well-ordered match: love, music, and even your dog
Why Americans stopped rioting and instead legalized marijuana
How a dynamic country looks and feels
Alexis de Tocqueville foresaw our current predicament
The return of chaos, and why everything will boil over yet again
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