Tyler Cowen - Average is Over
In Average Is Over, George Mason University economist Tyler Cowen delivers good news and bad news with nearly equal enthusiasm. Joseph R. Stromberg
Tyler Cowen is an economist, writer and academic at George Mason University, and has been named one of the most influential economists of the past decade.
"There has never before more opportunity. The best education had never been better. The highest earners have never earned more," he begins. But for most Americans, wages have become lower over the past decade. There has been no net job growth in that period of time.
Average is over.
In a world of data, of measurement and information technology, people and organizations either do very well or not well at all. "The middle is becoming thinner. The tails are thicker," he explains, referencing the statistics. The share of national wealth taken home by labor is falling. Cowen runs through a series of slides to drive home the point that wealth no longer naturally accrues to the middle class. Thanks to public support, the poor, he says, are "somewhat" better off, the middle class are worse off, and the wealthy, much wealthier than before.
Two trends are driving economic developments today: "information technology and automation." It's hard to compete with computers, and mid- or low-level white collar jobs are rapidly disappearing.
For many technological sectors outside of consumer information technology, the pace of changes has slowed dramatically. The designs for general aviation planes, Cowen points out, date to the 1960s and earlier. The Concorde that flew over his Northern Virginia home when he was a younger man did not, as it turns out, point to an inviolable future of widespread progress. His home, built in the 1950s, functions well but has not as a technology been dramatically improved upon. Technological change outside of information technology is happening at the margins.
History will record that the post World War II era of expansion was a special period, the exception, not the rule. The future will be unevenly distributed, with middle class missing out on the country's relative wealth. Cowen believes that 20 percent of the population in the next decade will have incomes equivalent to today's millionaires.
"That's nice, but also troubling." Male earners ages 18 - 40 have been by far the biggest losers. Women, who increasingly are better educated, are doing correspondingly better. Home ownership is down. The savings rate among the young will be a problem for the country in future years, Cowen says.
Even though there is more access to information than at any time in history, "it's hard to be a flat out optimist." But from there, he pivots to the good news. He believes the economically prosperous people in the future will be those who "love ideas," those who can "intelligently apply the humanities." That sounds good to us.
Hearing Cowen talk, I was reminded of Daniel Pink's well-known 2005 Wired article, "Revenge of the Right Brain," which described how future individual success would be tied to value-added activities. Given widespread access to knowledge, the "meaning makers" would prosper.
For Cowen, the individuals with "thick skins" who generally understand technology (but are not necessarily technologists), those who exercise intuition and conscientiousness will succeed.
In the concluding question and answer session, Cowen says he believes an "obsessive" focus on science, technology, engineering and math, the so-called STEM degrees, is a mistake. "Remember that [Facebook founder] Mark Zuckerberg was majoring in psychology."
Cowen asks, rather, will those STEM graduate in what will undoubtedly be a technology-driven and automated world also understand people?
His advice: cultivate "the universals that cannot be outsourced." That will be the differentiator.