Review of Average is Over by Tyler Cowen
Last night I finished Tyler Cowen’s Average is Over – and much like his earlier work, The Great Stagnation – it has changed my thinking a good bit.
The root theory is that most (all?) of the coming economic advancement in the future will come from the pairing of people and smart machines, and that the future will be consumed by either making and enhancing those machines, working with the machines in new ways, or managing/motivating/services the previous two groups. One corollary of this is that our current troubles (income inequality/political polarization, etc) are side effects of the technological shift, not of culture and not of politics (though demographics does play a role).
I either agree with, or was convinced by almost all of the arguments in the book, save the few below.
- Cowen has the theory that the bottom end of the income distribution (which will grow more fixed over time) will compensate for loss of income by moving to lower cost states and areas. I.E. a marginally employable person (i.e. high school dropout with minor criminal record say) will realize that it’s easier to move to Oklahoma or North Dakota and be marginally employed than to stay in New York and be marginally employed. That part I agree with, but there is another force in play – namely that as income drops the social network, family, friends, etc become much more important, prompting more trade and barter. Basically there is a trade off between the measurable wealth/income (paid in dollars) and the non-measurable income/wealth (personal and family connections, favors, barter, etc) See the fascinating Gang Leader For a Day for more info. A drop in measurable income might prompt a surge in investment in personal/social networks, which I imagine are more location dependent; freezing people in place (it’s hard to move everyone you know to the same state).
- Cowen defines technological advancement mostly in terms of machine learning, and seems to underweigh recent hardware developments. The internet of things conceivably gets rid of many more manual labor jobs than I think Cowen might think (go SkyNet!) – see the Adafruit blog for more examples.