| March 2, 2017

Personal Development & Philosophy, Podcast

Podcast #283: The Complacent Class

If you grew up in America, you hear a lot of narratives about our country that speak to our shared sense of character — that we’re a nation of restless pioneers always striking out for greener pastures, or that we have a risk-taking, entrepreneurial spirit that spurs innovation and economic growth. 

My guest today argues that while these narratives may have been true at one point in American history, the statistics show that in recent decades Americans have lost that pioneering, entrepreneurial get-up-and-go. Instead, we’ve become pretty complacent. His name is Tyler Cowen, he’s an economist at George Mason University, writer at his blog Marginal Revolution, and the author of several books. His latest is The Complacent Class: The Self-Defeating Quest for the American Dream.

Today on the show, Tyler and I discuss the statistics that indicate Americans are losing their dynamism — that we’re less mobile and starting fewer businesses — as well as the effect this trend is having on our economy and culture. Tyler also provides some insight on what’s causing this complacency, what to do to overcome it, and how it’s likely leading us to an era of severe disruption. 

If you enjoyed my podcast with Neil Howe about the generational theory of history, you’re going to love this episode. Tyler’s ideas dovetail nicely with Howe’s cyclical view of history.

Show Highlights

  • What Tyler means when he says America has lost its dynamism
  • How complacency manifests across different socio-economic levels
  • The factors that led to the rise of the “complacent class”
  • The decline of geographic mobility in America
  • Is that decline necessarily bad?
  • Personal preferences, and the consequences of getting exactly what we want
  • Why segregation is actually on the rise in America (and not just racial segregation)
  • How this segregation has led us to our current political gridlock
  • Other reasons politicians can’t get anything done these days
  • The declining state of entrepreneurship in America, and why Americans are starting fewer businesses
  • How most innovation today is geared towards our leisure time, and why this is a bad thing
  • The benefits of instability
  • Signs that this age of complacency may be coming to an end
  • How individuals can thrive amongst the complacency of America

Resources/People/Articles Mentioned in Podcast

complacent class book cover tyler cowen

The Complacent Class provides a lot of insights on the changing nature of our economy and provides subtle suggestions on what you can do to thrive in it. I highly recommend reading it, along with his book Average Is Over.

Connect With Tyler Cowen

Tyler’s website

Tyler on Twitter

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Read the Transcript

Brett McKay: Welcome to another edition of The Art of Manliness podcast. If you grow up in America, you hear a lot of narratives about our country that speak to our shared sense of character. For example, we’re a nation of restless pioneers always striking out for greener pastures or that we have a risk-taking, entrepreneurial spirit that spurs innovation and economic growth.

Well, my guest today argues that while these narratives may have been true at one point in American history, the statistic show that in recent decades, Americans have lost some of that pioneering, entrepreneurial, get up and go attitude.

Instead, we’ve become pretty complacent. His name is Tyler Cowen, he’s an economist at George Mason University, writer of his blog Marginal Revolution, and the author of several books, his latest is called The Complacent Class: The Self-Defeating Quest for the American Dream.

And today on the show, Tyler and I discuss the statistics that indicate that Americans are losing their dynamism, that we’re moving less, and we’re starting fewer businesses, as well as the effect this trend is having on our economy and culture.

Tyler also provides some insight on what’s causing this complacency, what to do to overcome it, and how it’s likely leading us to an era of severe disruption. If you enjoyed my podcast with Neil Howe about the generational theory of history, you’re gonna love this episode. Tyler’s ideas dovetail nicely with Howe’s cyclical view of history.

After the show’s over, check out our show notes at AOM.is/complacent, where you find links to resources where he delves deeper into this topic …

Tyler Cowen, welcome to the show.

Tyler Cowen: Thank you.

Brett McKay: Long been a fan of your work. You got a new book out, The Complacent Class: The Self-Defeating Quest for the American Dream.

You make the case that America sort of lost its dynamism. We’re not as dynamic as we once were. But before we get into that, what do you mean by dynamism. Oftentimes we hear that word, we think of it in positive terms, like everything’s just fantastic and wonderful.

As I read your book, I kind of got the idea that wasn’t necessarily the case.

Tyler Cowen: Well, our rate of economic growth has been slower. We move across the country at much lower rates than in decades past. We’re much more paranoid with our children. We won’t let them play outside nearly as much. We take more medications to relieve our anxiety.

If you look at each and every different sphere of American life, even until recently, protest much less against politics we don’t like. We see that people are trying to dig in and play it safe and simply take fewer chances.

Brett McKay: Okay, and you argue that we’ve become a complacent class, and this complacent class is composed of different groups. It’s not just middle class people or upper class or just poor, it cuts across the boards.

But I’m curious, how does the complacent class manifest itself differently amongst these different socio-economic groups?

Tyler Cowen: Well, I identify three different groups. There are people who are really quite well-off, the top 1% or 3%, and they, in a sense, have everything in life, and ultimately, their main interest is in preserving the status quo.

And for all their intellectual talk about things being different in America, the actual urgency they feel in that regard has not been very high, perhaps at least until the last election.

There’s then the middle class, which is increasingly uncomfortable, but their main strategy has been to dig themselves in, to make sure that no benefits are taken away from them, to make sure that no one builds a cheaper house next to theirs, just to try to cement in their lives.

And they have a less dynamic perspective than middle class Americans might have had in the 50s or 60s.

And then there are lower income groups, you might think, well how could they possibly be complacent, but if you compare those individuals, say to the 1960s, and how people behaved in terms of protests and simply not putting up with what the system was giving them, again it’s actually much more passive.

This is occurring across different socio-economic classes.

Brett McKay: What are some of the big factors, like big picture factors that have led to the rise of this complacent class that you’ve identified?

Tyler Cowen: I think it’s ultimately a historical story that we had really a great deal of dynamism in the 1960s and the early part of the 1970s. It was a very active America, taking a lot of chances, putting a man on the moon in seven years.

But the funny thing is, people don’t actually like that. People very much want security, so we made a conscious decision as a nation to do anything possible to lower our crime rate, including putting a lot more people in jail.

We made a conscious decision to make our cities nicer over time, even if that would mean they would grow less. We made a conscious decision our children would encounter essentially no risk, even if that means they wouldn’t learn the same number of valuable lessons growing up.

I think it’s a fundamental imperfection in human nature that people, most of all, want security, not liberty or dynamism. There are some exceptions to that, but for the most part, that’s us.

Brett McKay: Sure, so let’s talk about some of these ways that you’ve seen the complacent class manifest itself. One of the more interesting aspects that I liked in your book, you talked about how the decline in America mobility.

America has this sort of idea of itself as being a nation of pioneers, constantly on the move, but you argue that we’re not moving around as much.

Can you give us an idea of how much geographic mobility has declined in the past few decades?

Tyler Cowen: Well, if you look at people crossing state lines and moving, that’s fallen by about 50% since the peak of American mobility in the 1970s and the 1980s, so the old vision was maybe you lived in Mississippi and you would move up to Detroit to take a job in an automobile plant.

Or if that plant closed down, you might move to Houston to work on an oil rig. That’s not the case anymore. We’re much more a service sector economy. Geographically, different parts of this country, they look more alike. And the notion that dentist will say, “Leave Columbus, Ohio for Denver, Colorado ’cause people there, you know, need more of their teeth fixing,” it’s just not a significant reason to move.

People find where they want to live, and then they stay there.

Brett McKay: Why is that such a bad thing? Couldn’t that mean that people are settling down and establishing roots in deeply connected communities?

Tyler Cowen: That’s all true, but here’s a very important point, I think. It’s rational for each and every individual, but when everyone does that at the societal level, our labor markets adjust much more slowly when there’s a recession, and we saw that during the last recession.

It’s harder to start a new business because the influx of new labor to any one area is not that strong. It’s harder for failing regions to adjust and move on, and we saw this in the Rust Belt, right before the last election.

There’s this overall decline of dynamism at the social level that hurts people, but of course for every person, myself included, most of us live somewhere we like and we don’t want to leave, and moving’s a big disruption.

But there’s something socially valuable about having the people who are somewhat more willing to move.

Brett McKay: This kind of connects to that idea of matching that you talked about, too, in the book. That we’ve become better at matching our personal preferences to everything in life, communities as well, but what are some other ways that matching, like this increased ability to match our preferences, how has that decreased dynamism in America?

Tyler Cowen: Well, two areas would be music and then mating.

Look at music, whatever song I want to hear on YouTube or on Spotify, I can hear it right now, in an instant, for free. It sounds wonderful as a listener, it is wonderful, but it also means, for the first time in history, people are paying much more attention to the back catalog of past music than to current music.

In my view, current musical creativity is declining. The audience interest isn’t there. You’re listening to The Beatles or The Rolling Stones or Bon Jovi, or whatever. Again, it’s a kind of behavior that, in the moment, for the individual, is rational, but for society as a whole, has some bad long-run consequences.

If you look at marriage, dating and mating, it’s much easier today to find someone of exactly your interests, your social class, your desired income level, and meet, date, and marry them. And again, that’s led arguably to happier marriages, but it’s also worsened the issue of income inequality.

You now have, say, two law partners marrying each other, the resulting family is extremely wealthy. The children typically do very well, but that’s also a barrier to upward mobility.

Brett McKay: Like in the past, the lawyer might marry his secretary.

Tyler Cowen: Correct. He or she might be a very smart person, but wouldn’t have that same income multiplier effect as what we’re seeing today.

Brett McKay: I think connected to this decreasing mobility, you argue that this decreasing mobility has counter-intuitively helped the re-emergence of segregation in America.

Why is segregation on rise again?

Tyler Cowen: Let’s keep in mind first, there are several different kinds of segregation. The one that’s gone up the most, by far, is what is called income segregation. It used to be that well-off and poor people lived quite close to each other, and that was very good for the mobility of poorer Americans. There’s a lot of evidence toward that conclusion.

Now it’s more likely the case that wealthy people live in Manhattan or San Francisco, and poorer people live much further away, so there’s less mixing. I think it makes us less dynamic and it makes American mobility more static.

Now racial segregation commands a lot of attention. That’s a more complicated story. There are some notable ways in which racial segregation is going down, so suburbs are more mixed-race than before. That’s mostly a good thing.

But if you look at American schools, very often they’re more racially segregated. And if look at the worst off areas, they, too, tend to be more, rather than less, racially segregated.

I would say that on that metric, we’re not seeing this kind of ongoing progress we had hoped for from the civil rights movement. It’s pretty much stuck, or in some ways, even going in reverse.

Brett McKay: Civil rights laws prohibit explicit discrimination and segregation, so how is that happening?

Tyler Cowen: I don’t think it’s explicit for the most part. It’s happening through price and income, so people who have more money match to the more expensive neighborhoods. Those neighborhoods then limit the amount of high-density residential construction, which makes it harder for people to rent cheaper apartments.

And you have the most productive, wealthiest parts of America, such as the Bay Area, just become impossibly expensive and difficult to afford. And other people live further away. They either have terrible commutes, or they’re simply locked out of that economic dynamism.

Brett McKay: Besides income and race, I mean another way that we’re seeing segregation happening on a geographic level is even with politics, right?

Tyler Cowen: Oh, that’s correct. This is why you have Donald Trump losing the popular vote, really by a fair amount, but winning the electoral college, by also, not a landslide as he sometimes claim, but he won the electoral college.

And it’s because Democrats are so clustered, say, in a relatively small number of densely populated states: New York, California, Hilary Clinton wins by large margins.

And then you have less populated states, but a lot of them, that tend to be more conservative or Trumpian, or whatever you would call it, and that’s the result of more political segregation.

I don’t mean this as a comment on any one candidate, but overall, I think it’s unhealthy. It’s a better America when you have more Republicans and Democrats living right next door to each other.

And you see it also across marriage. Democrats and Republicans don’t want to marry each other anymore.

Brett McKay: That kind of segues to your other idea you argue that we become complacent in our politics as well, and perhaps this geographic segregation along political ideologies is contributing to that gridlock that we’ve seen in our government in the past few decades.

Tyler Cowen: Absolutely, so Congress doesn’t got problems solved. Americans, online, they’re nastier to each other than they used to be. The sense of a common purpose is weakened, and the idea that either Hilary Clinton, Donald Trump was somehow a fundamental illegitimate force, to me, those are unhealthy developments, no matter what you think of the particular candidates.

More and more Americans think the people who disagree with them are immoral.

Brett McKay: And how else is our political system become complacent, where we emphasize safety, security over volatility and dynamism?

Tyler Cowen: Well, the most static part of the budget is what we spend on entitlements, social security, Medicare, Medicaid.

And I’m not trying to make an argument that those are necessarily bad expenditures, but over time, they take up a higher and higher percentage of the federal budget because we’re aging and because healthcare costs are going up.

In terms of investing money for research and development or new projects or revitalizing infrastructure, or the current day equivalent of sending a man to the moon, there’s basically no money for those things. And I find it worrying that, in percentage terms, we’re spending more and more on being safe, and less and less on being dynamic. That’s a kind of fiscal lock in.

Brett McKay: Right, right. ‘Cause again, neither Republicans or Democrats will touch social security or Medicaid or those things.

Tyler Cowen: That’s correct. The only question is how much more will we spend, and even under president Obama, the projected budgets for discretionary spending were basically slated to be going down over time.

Brett McKay: Let’s turn our attention to business. In America, we, again, we have this idea that we’re entrepreneurial, businesses are always starting up.

I mean we’re always hearing about these tech disruptors that are coming out of Silicon Valley, so there’s an impression that we still have that entrepreneurial dynamism, but you make the case that we’re not.

What are some of the statistics out there about declining entrepreneurship in America?

Tyler Cowen: Well, I would stress, first, we do have some of the dynamism, and the main place you see it is in Silicon Valley. That has been a very productive sector. It’s changed our lives in some significant ways, and that’s great. The problem is that most of the American economy isn’t like that.

If you look at most of the service sector economy, which is about 80% of GDP, and most of it measured rates of productivity growth are barely above zero.

You look at healthcare, you look at education. You look at the efficiency of our government, those are hard to measure, but it doesn’t seem they’re making big gains. In some regards, they’re going backwards. They’re becoming more and more expensive, and we’re at best getting these modest gains.

Most of life is not like Moore’s Law and the iPhone. That’s America’s dynamic sector. Our long-run hope is that tech seeps into everything and brings back a new glory time of economic growth of 4%, but that’s pretty far away.

Three of our last four decades, we haven’t managed productivity growth of much beyond something like 1% per year.

Brett McKay: Why are Americans starting fewer and fewer businesses? Is it just more expensive or harder to succeed? What’s going on there?

Tyler Cowen: I think it’s a number of reasons all at once.

Start-ups, for all the publicity they receive, as a percentage of overall business, that has been going down in this country since the 1980s, every single decade, going down.

I think some of it, in a lot of sectors, you have a winner take all effect. Where, say in retail, there are fewer small cute little niche businesses and chains are more significant. That’s part of it.

Part of it is the burden of regulation on business is higher, and larger businesses can cope with that better than small businesses.

And then I think another part is this ineffable psychological loss in America that we are more complacent and less dynamic, so all three of those at once, you end up with a business climate that is outside of the Bay Area for the most part, pretty static.

Brett McKay: You also argue that, you know, when people do start businesses in America, they’re not that ambitious with them.

You’ve just seen a lot of app companies or lifestyle companies, you’re not seeing people trying to invent the next light bulb. Why have American entrepreneurs lost that desire to create life-changing businesses?

Tyler Cowen: Well, it’s hard to do of course. And again, we have had some life-changing businesses, but oddly, some of them make us more complacent.

If you look at Silicon Valley, you look at something like Facebook, well we’re better connected to friends, it’s improving how we use our leisure time. I mean, that is something that’s wonderful, but it’s not feeding into the rest of the real economy the way the industrial revolution or the mechanical revolutions of the first part 20th did, where you have just a complete onslaught of everything changing at once.

If you compare American life in, say, 1900 to 1950, everything has changed: electricity, running water, radio, the automobile, everything’s different.

If you compare our last 50 years, which I’ve witnessed personally, other than computers, most of the stuff is the same. My car is a little safer, a little nicer, I’m still driving a car. I’m still cooking, basically, in a 1950s kitchen.

The physical stuff of my personal universe, computers aside, has not changed much in 50 years.

Brett McKay: Right, and going back to the idea that these new Silicon Valley startups, they increase complacency, a lot of the technology that they’re developing is just increasing matching. Like matching preferences better, right?

Talking about Spotify …

Tyler Cowen: That’s right, so I can buy a better antiques collection because of eBay, for instance, or match to my high school friends better because of Facebook.

And again, those are real gains, but it’s mostly about leisure time and not making our whole economy more productive in a broad-based way. Not yet at least.

Brett McKay: Right, so the complacent class, we’re putting a premium on safety, stability and comfort.

But why is that bad in the long run?

Tyler Cowen: Well here’s the thing, in the long run, someone has to pay the bills. Personally, a lot of us has debts. Our government, socially, has significant debt and pension liabilities, unfunded liabilities, and the way we’re gonna pay all that off is by being dynamic, and if we’re not sufficiently dynamic, a crunch will come and there will be a societal crisis, and people will speak up ’cause they’re not seeing enough gains.

They’re not expecting to be better off than their parents, and I think we’re essentially, at this point already where people have realized what we’re doing isn’t working. We’ve maybe made some hasty decisions in terms of how we might try to fix that, but you can’t just stay on a track of no change for your whole life, either individually or socially. It’s asking for trouble.

You’ll end up getting bigger changes that you can’t control at all.

Brett McKay: Right, right.

It’s good to have a bit of instability all the time, instead of a lot of stability, instability all at once due to your trying to control volatility.

Tyler Cowen: That’s right. The greater wisdom is in realizing you cannot control all risk and accepting some, and learning how to manage it, rather than pushing all of it out the door.

Brett McKay: You think that you’re seeing signs of the age of complacency coming to an end. What are some of those signs that you’re seeing?

Tyler Cowen: Well, if you look at the few weeks right after the inauguration of Trump, we saw a level of public protest in this country we basically had not seen since the early 1970s. I think that’s the single biggest indicator.

And again, it’s not a question of whether you’re for or against, simply that the response and the urgency of it was so strong and so immediate. And I think now, in this country, there is a realization we cannot stay on our previous track. The wealth won’t be there forever. Mentally, psychologically, I think in the last two years, people have very much flipped.

And I think we’re in for a new age of turmoil, a bit like parts of the 1960s, it will be painful, we’ll hate it. But ultimately, I think in the longer run, it will regenerate our vitality.

Brett McKay: What’s your hunch?

At the end of the book, you argue for this sort of generational or cyclical idea of history. Go through these bouts of stability, and then there’s instability, what’s your hunch what the next 20 or 30 years are gonna be like?

Tyler Cowen: I think they’ll be, in some ways, quite a bit like the 1960s and early 70s, a lot of turmoil, possibly a foreign war that becomes unpopular, very high amounts of protest and polarization. Racial and segregation issues re-emerging.

Except we’re gonna run that experiment over with information technology, which makes response times much quicker, the news cycle more accelerated, and that to me is dangerous.

‘Cause last time we did this in the 60s and 70s, we came out of it fine. The 80s and 90s are a great era of American revitalization, and I do think we’ll see that again, but we’re running a higher risk.

‘Cause with Twitter and Facebook, fake news is accelerated very quickly. There’s a lot more propaganda, there’s a lot more surveillance, so we’ll see how it goes this time around.

Brett McKay: See how it goes, and do you think we’re doomed to just repeat this cycle over and over?

Say we go through this next crisis, and we get back to a road of stability, are we just gonna sow the seeds for another era of great turmoil?

Tyler Cowen: Absolutely, we’ll dig in again and want to be safe. I would say, today, in terms of age, there are so many Americans who basically as mature adults only saw the 80s, 90s and what came after that.

And they expect things are always gonna be nice. The 80s and 90s were mostly great decades for America, but if look at the longer run of American history, whether it’s the age of Andrew Jackson, or the civil war, or the fights over civil rights, or the problems of the 1930s, or the protests and riots of the 60s, that’s not what this country is.

There are periodic times of calm, and different forms of chaos have always re-emerged, and the people who grew up just seeing 80s and 90s, I don’t think they’ve internalized that. They see it in the history books, they don’t yet get that it’s real, and they’re starting to see it.

And for a lot of them, it’s very scary.

Brett McKay: Definitely, so someone who’s listening to this, they’re thinking, “Okay, America’s becoming more complacent. I don’t want to be complacent,” how can people thrive in the age of complacency?

Tyler Cowen: Well, one thing you can do is just look at your immediate friends, spouse, and neighborhood, and ask yourself, “Who am I surrounding myself with? Are they just people who are like I am? Am I doing something in an environment with truly diverse peers?”

I don’t just mean ethnically or racially diverse, but people who are really different from you, and just ask yourself that hard question, and the answers will vary for different people, and see what you might do to change that. Talk more to people you disagree with. Think more what chances might you take.

I think most of us have a status quo bias in life. There’s one experiment that was run, where people came to the researchers with big decisions, and the researchers flipped a coin for people, and half of them were told to make a change. And actually, most of the people who made the change were happy afterwards, but they might have done it on their own.

Think more like that. Overcome your own status quo bias.

Brett McKay: Right. Were some of your ideas you laid out in Averages Over come in as well?

Tyler Cowen: Yes, you know, my book Averages Over, it talk about automation and the new age of smart machines, and how it’s changing American jobs.

I think that’s showing why it was the older system was slowing down for so many people, but unless you’re really good at working with computers in some way, it’s harder and harder to make a good living and see your wage increase over time.

And unfortunately, I don’t think anymore than 15 or 20% of this country is really good at working with computers, so we’ve seen a lot of real wage stagnation for many groups.

Brett McKay: There’s an article that’s been going around lately about making a push for coding being the new blue collar job. I thought that was interesting.

Tyler Cowen: I mean that’s fine, but not that many people can code, and over time, machines will code on their own. Coding is relatively easily outsourced to foreigners, so the really good jobs are the people who integrate the information world and the physical world and the world of the people they work with, and that requires a lot of different skills.

It’s not that easy.

Brett McKay: Yeah, a lot of different soft skills.

Tyler Cowen: And hard skills. You need to bring them together.

Brett McKay: Well, Tyler, this has been a great conversation. Where can people go to learn more about the book and your work?

Tyler Cowen: Well, they can just Google my name, Tyler Cowen, Complacent Class. They can buy the book at Barnes & Noble and Amazon.

I’m on Twitter. My handle is @TylerCowen. I write a blog called Marginal Revolution, but just start with Google, my name, and the phrase Complacent Class.

Brett McKay: Fantastic, well Tyler Cowen, thank you so much for your time. It’s been a pleasure.

Tyler Cowen: My pleasure. Thank you.

Brett McKay: My guest today was Tyler Cowen. He’s the author of the book The Complacent Class. It’s available on Amazon.com and bookstores everywhere. You can also find out more information about Tyler’s work at MarginalRevolution.com.

Also, check out our show notes at AOM.is/complacent, where you find links to resources where you can delve deeper into this topic …

Well that wraps up another edition of The Art of Manliness podcast, for manly tips and advice, make sure to check out the Art of Manliness website at ArtofManliness.com.

If you enjoyed this show, I’d appreciate if you give us a review on iTunes or Stitcher, that helps us out a lot. As always, I thank you for your continued support, and until next time, this is Brett McKay telling you to stay manly.

Last updated: April 6, 2017

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