Tyler Cowen's new book Average Is Over makes an excellent followup to his previous work The Great Stagnation and I expect it will set the intellectual agenda in much the way that its predecessor did. I want to offer not so much a review as an effort at explication, because I feel like a lot of Cowen's recent work has taken a somewhat cryptic tone for strategic or commercial reasons that are a little bit beyond me.
In Stagnation, Cowen reviewed the previous generation and concluded that despite substantial progress and catch-up in poor countries that the median household in rich countries had suffered stagnant living standards thanks to a slowdown in technological progress. In Average, Cowen looks ahead at the next generation and concludes that despite substantial progress and catch-up in poor countries, the median household in rich countries will suffer stagnant living standards thanks to a speedup in technological progress.
Curious. Which is to say that while each book offers a brilliant exposition of income stagnation and how it intersects with the technological progress of its era, read in conjunction it's clear that in neither period was the stagnation actually caused by the pace of technological change.
And scratch the surface and you'll see that Cowen actually thinks there's a policy reform agenda that, if implemented in a timely fashion, would channel much more of the gains of future automation and computerization to the median household. The agenda is, roughly:
— Liberalization of intellectual property law.
— Liberalization of zoning codes and building restrictions.
— A reformed and somewhat more generous welfare state focused on basic income and wage subsidies.
— Monetary policy that puts greater weight on the labor market fate of young workers and less on the fate of old asset owners.
— A continuation of recent education policy trends that are supportive of greater use of digital technology and outcomes-based meaures.
— Some kind of Sinagporeanization of health care payments, plus supply-side reforms in terms of licensing and so forth.
— Opener borders and freer movement of people.
It's a nice agenda if you ask me. I'm more enthusiastic about monetary policy and less enthusiastic about health care stuff than he is, and I'd also throw in enthusiastic support for preschool stuff that he's skeptical of. But in general a very solid forward-thinking 21st century egalitarian agenda. The reason Cowen focuses more on the somewhat dour outlook for the median household than on these possible solutions to the problem is that he doubts the political system will deliver any of these solutions. He notes that none of them are particularly on the partisan agenda of either political party, that the nature of the U.S. political system makes large changes generally unlikely, that an aging population is less likely to embrace radical changes, and that elites have a lot of ways of reenforcing their control over the political process.
That seems like a reasonable forecast to me. But it's a very different forecast from the forecast that automation and the rise of the machines means that "average is over." The actual forecast is that the political system will be under the control of a relatively narrow elite who will stomp on the interests of the median household.
So I would take the message to be something like "politics is really important just as it always has been and people ought to get more fired up about some ideas that aren't at the current forefront of the congressional agenda." Cowen's actual message seems to be that we ought to make ourselves more complacent, and that these somewhat bleak trends he forecasts aren't really all that bad if you look at them in the right light. But I don't quite see why. If good public policy were easy, there wouldn't be so much poverty and misery in the world. But if good public policy were impossible, there wouldn't be any success stories and "growth miracles" and "trente glorieuses" and so forth.
Why not try? Average is only over if we want it to be over. And I don't!