The Complacent Class

Something’s gotta give.

That’s the slightly stark message from Tyler Cowen in his recently published book The Complacent Class. The economist and blogger explains in myriad ways how American dynamism is in decline and a complacent comfortable status quo bias is on the rise. The problem with this, at least according to Cowen, is that complacency cannot hold. And postponing change increases the risk that when that change does finally come, the system over corrects. That could be a problem not just for individual Americans realising they have missed something in their lives but the broader culture as a whole and those who interact with the United States (ie the rest of us).

But I get ahead of myself. Who are the complacent class? And how does their complacency manifest itself?

Cowen  indentifies three subsets:

1. The Privileged Class:

The wealthy top 3-5 percent.

2. Those who dig in:

The middle class leading a good existence with a good job, house and mortgage.

3. Those who get stuck:

People at the bottom who, Cowen says, “never really had a fair chance”. Many of them, resigned to their position, aspire to disability payments.

These experiences are strikingly different but, according to Cowen, they are bound by the expectation of slower change. There is resistance to new development (the so-called not in my backyard mentality), those who dig in try to hold on to what they have and the bleak picture Cowen paints of “those who get stuck” suggests some of these people, admittedly facing difficult circumstances, have given up.

American complacency, he says, has manifested itself in the following ways:

• Fewer Americans move across state lines.
• The proportion of firms five years or younger in the American economy has fallen.
• Workers stay in jobs longer.
• 80 percent of federal government spending is now “locked in” and cannot be allocated freely.
• The rise of “matching” culture leads people to cocoon into their own groups and indirectly causes social  segregation.
• Extreme social unrest is in decline. Cowen notes the following remarkable fact that “[d]uring an eighteen month period in 1971-1972, there were more than 2,500 domestic bombings reported, averaging out to more than five a day.”
• Protests have become bureaucratised.

The static picture Cowen paints runs counter to the popular American narrative of economic (but also political and social) “disruption”. As the author notes, “disruption” is very much the buzzword of our times. Yet the Ubers and AirBnBs of the world do not appear to represent the whole, or even much, of the picture.

Some complacency seems built into the fabric of the rich country that the United States has become. Alibaba founder Jack Ma rose up from poverty to become a billionaire but there aren’t any genuine “rags to riches” stories in the United States any more. That comfortable standard of living probably engenders much complacency. Of course, the US is a very much richer country than China so maybe some complacency is inevitable. Some but probably not all.

Cowen thinks there are already signs of an over correction.

The election of Donald Trump was an early warning sign, he suggests. In a Marginal Revolution University video entitled “The Great Reset”, Cowen called Trump the canary in the coal mine. That phrase refers to the practice by miners of keeping canaries in coal mines as a warning signal when methane or carbon monoxide reached dangerous levels.

Towards the end of the book, Cowen quotes the French political theorist Alexis de Tocqueville rather liberally. Cowen calls him “the prophet of our times”. The counter intuitive insight Tocqueville had was that the very restlessness of Americans was the quality which helped stabilise the project of American democracy.

Here’s how Cowen explains Tocqueville as the first real diagnostician of the potential for American complacency and its risks.

He argued that the new kind of “tyranny” will not resemble the despotisms of antiquity but rather will be based on the conformism and mediocrities of Americans of the future: “[I]t would degrade men rather than torment them”. That’s Tocqueville describing his version of the complacent class.

Cowen continues by quoting Tocqueville giving this very bleak analysis of how democracy itself could lead people to relenquish their individual sovereignty.

Centralization is combined with the sovereignty of the people. That gives them a chance to relax. They console themselves for being under schoolmasters by thinking that they have chosen them themselves. Each individual lets them put the collar on, for he sees that it is not a person, or a class of persons, but society itself which holds the end of the chain. Under this system the citizens quit their state of dependence just long enough to choose their masters and then fall back into it.

Consulting my abridged version of Democracy in America, I was struck to re-read Tocqueville’s comparisons of Europe and America. The following passage, in particular, stood out:

In Europe, we are wont to look upon a restless disposition, an unbounded desire of riches, and an excessive love of independence, as propensities very dangerous to society. Yet these are the elements which insure a long and peaceful future to the republics of America. Without these unquiet passions, the population would collect in certain spots, and would soon experience wants like those of the Old World, which it is difficult to satisfy; for such is the present good fortune of the New World, that the vices of its inhabitants are scarcely less favourable to society than their virtues.

I think Tocqueville’s point here is that America’s strength was its people’s ability to reinvent themselves. That restlessness made for a vigorous diversity and contest of ideas and the ability for the body politic to adapt itself. Remember that when Tocqueville wrote, the institution of slavery was still in place and women could not vote. Cowen is concerned about that lack of restlessness, both at the business level in terms of a drive toward dynamic innovation but also the ability for society to adapt politically. The expansion of “safe spaces” as ideological enclaves to the detriment of open discourse on University campuses and overall safety culture fits into this diminished risk taking narrative.

Much of Cowen’s analysis reminded me of Peter Thiel who is mentioned just once in the book. The tech billionaire famously remarked that ““We wanted flying cars, instead we got 140 characters.” Thiel’s point was that social media, pleasant though it can be as a means of connecting with people, is not transformative. And the innovations we have today, think Uber or AirBnB, do not change our lives or inspire us in the same way that earlier iterations did. Perhaps that is just diminishing returns or perhaps there is something more at play. Nonetheless, the US remains a powerful force both as a source of business and political change.You will be familiar with the trope that when “the US sneezes, the rest of the world catches a cold”. While that cliche is more usually deployed within a financial context, it resonates for me within the social, cultural and political spheres. The underlying truth of that cliche is reason enough for non Americans to read The Complacent Class.

PS:

Arnold Kling reviewed The Complacent Class here.

Russ Roberts spoke to Tyler Cowen for an Econtalk episode here.