How did we become such bumps on a log?
The Complacent Class: The Self-Defeating Quest for the American Dream
(St. Martin’s Press, 241 pages, $28.99)
Tyler Cowen’s social and economic insights are artfully revealed in The Complacent Class. We often think of America as a nation of risk-takers and innovators, but Cowen provides a sobering, incisive look at why our economy is growing at its slowest pace since World War II.
Cowen has studied the course of American life over recent decades, concluding, “So many features of the country became nicer, safer, and more peaceful, but the side effect, a lot of barriers to advancement and innovation were raised.”
He argues that the major exception is “the tech sector, which is truly dynamic.” I remind readers that the tech sector is the most unregulated industry in the America today, which allows this dynamism to continue.
Cowen is exactly correct. But why? Most, if not all, government interventions have unintended consequences which are rarely considered by policy wonks. I witness this every day, which leads me to believe that government interventions are the major obstacle to innovation. State licensing of most every profession restricts access and creativity.
Think of Uber. Many state and local governments are in full “blocking mode” against it, but they are largely unsuccessful because citizens demand access to the sharing economy.
In many industries, change is slow and leaders fail to be bold. Staid industry thinking is accepted as the norm — a norm not to be disturbed. Bold transformative leaders are desperately needed in every aspect of American life, but they are rare. Creativity, innovations, and thinking “outside the box” are fashionable themes, but they are also greatly misunderstood and rarely pursued.
Cowen argues that the “evolutional zeal of the sixties has calmed to complacency, which manifests itself in a reversion to a basic human tendency of avoiding change and hard things.” He cites several tiers of affected parties, including “The Privileged Class,” “Those Who Dig In,” and “Those Who Got Stuck.” These groups are growing, including the group at the bottom.
Government largely controls the education establishment, which breeds compliant citizens rather than thinkers and risk-takers. We honor entrepreneurs and innovators, but create a mentality of risk aversion. Cowen aptly describes this as “Calm and Safety above all.”
He cites compelling data. For example, business owners under 30 have dropped by 65% since the eighties. College debt may be a major factor in this dramatic reduction of start-ups.
We have observed the unwillingness of individuals to relocate for improved economic opportunities or a better job. He cites this lack of mobility as another major factor in slow growth. “Millennials are on track to be the least entrepreneurial generation in recent history.” The politically correct culture is another suppressing factor.
These and other factors lead to monopolies in many industries, which, as Cowen notes, causes “Social Stasis, which is sometimes called the investment drought.” The results are clear to most Americans, as slow growth leads to stagnation of income growth and discontent. Financial engineering often depletes research and development, the engine of new products and technologies.
Cowen cites China as an example of “what a dynamic society looks and feels.” On his many trips to that country, Cowen has observed that
China, even though it is in the midst of some rather serious economic troubles, makes today’s America seem staid and static.
For all of its flaws, China is a country where every time you return, you find a different and mostly better version of what you had left behind the time before.
Compare this rapid growth to the United States, where most municipalities and voters slow growth to a crawl with zoning restrictions, building codes, approvals, and protests against growth. Cowen’s catch-all term is “Citizens against Virtually Everything.”
“Stasis has been the defining characteristic of our government for some time. Untouchable programs such as Medicare, Social Security and Medicaid cut discretionary spending.” The complacent class is often “the most vociferous advocates for greater discretionary spending from government.”
Cowen allows for a “snap back” as we’ve seen with the Brexit vote in the United Kingdom. A good outcome from the most recent presidential election is “an increasing number of Americans no longer extend unconditional trust to the ‘expert’ technocrats running the county.” Trust in government has waned since the fifties.
He also sees various opportunities for change, from antidepressants falling out of favor to relocation, driverless cars, artificial intelligence, smart software, cheap clean energy, ongoing world crises, automation, and a turnaround in the marginalization of African Americans.
Cowen concludes that the future may be more cyclical, as viewed by the ancient Greeks. “There is a distinct possibility that, in the next twenty years, we are going to find out far more about how the world really works than we ever wanted to know.”
The Complacent Class defines the daunting challenges of our times. It is a compelling read for those who are thinking about solutions to the bifurcated earnings of our citizens and low growth economy.
Tyler Cowen (C-Span)