Tuesday, October 8, 2013

Average Is Over



Lexington, of The Economist, has a tantalizing review of Tyler Cowen's new book, Average Is Over.

"It describes a future largely stripped of middling jobs and broad prosperity. An elite 10-15% of Americans will have the brains and self-discipline to master tomorrow’s technology and extract profit from it, he speculates. They will enjoy great wealth and stimulating lives. Others will endure stagnant or even falling wages, as employers measure their output with “oppressive precision”. Some will thrive as service-providers to the rich. A few will claw their way into the elite (cheap online education will be a great leveller), bolstering the idea of a “hyper-meritocracy” at work: this “will make it easier to ignore those left behind”.

Mr. Cowens's vision is neither warm nor fuzzy. In his future, mistakes and even mediocrity will be hard to hide: eg, an ever-expanding array of ratings will expose so-so doctors and also patients who do not take their medicines or otherwise spell trouble. Young men will struggle in a labour market that rewards conscientiousness over muscle. With incomes squeezed, many Americans will head to the sort of cheap, sun-baked sprawling exurbs that give the farmers'-market-and-bike-lanes set heartburn. Many will accept rotten public services in exchange for low taxes. This may sound a bit grim, but it reflects real-world trends: 60% of employers already check the credit ratings of job applicants; young male unemployment is high and migrants have been flooding to low-tax, low-service Texas for years."

I like a cozy, semi-dystopic read more than the average bear, and I wonder if, even though it is written by a popular economist, it could be categorized under the speculative fiction category Synova recently spoke of. I tend to agree with Cowen's predictions, due to my Technium influenced worldview. Matthew Yglesias of Slate takes a less sanguine view of this future, and feels that we should not go gently into that good night.

"So I would take the message [of Cowen's conclusions] 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."

Still, it seems a somewhat acceptable future. People will receive healthcare and have a fairly large degree of freedom. There are worse things than a semi-benevolent elite ruling a semi-happy world. It would be up to the people, both the rich and not rich, to come to terms with themselves and how they will live their lives.   

The Economist

Slate

h/t rhhardin

52 comments:

Beloved Commenter AReasonableMan said...

Funny, I also read both these book reviews. My first thought was to send the book to my sons, both of whom are somewhat complacent about the future.

Sadly the US seems ill equipped to deal with this future.

Chip Ahoy said...

It sounded like Eloi and Morlocks and a third race of people doing really well for themselves. The view from 30,000 feet is divine.

On the other hand I've not seen so much income division resentment as the Occupy episode showed. That's new. The Eloi and Morlocks just might rise up and take things.

Ignorance is Bliss said...

Many will accept rotten public services in exchange for low taxes.

I hate to break this to him, but the public services ain't all that great in the high-tax areas either.

One morning in my first week at my new house in small-town New Hampshire I noticed that all the neighbors put their trash cans out at the street. Trash day, i thought, so I put mine out too. When I got home at night I found that, while the neighbor's trash had been removed, mine stood their untouched. It turns out our town does not have municipal trash pick-up, if you want your trash picked up, you have to pay someone to do it. So I made arrangements with the same company who handled the neighbor's trash, and next week put my trash cans out neatly by the side of the road.

When I got home at night, there they were, still standing neatly by the curb. After parking in the garage, I walked out to get them, wondering what went wrong and vowing to try harder next week. Much to my surprise, they were empty. Unlike the municipal trashmen, who just toss the cans by the side of the road, the private service puts them back neatly.

bagoh20 said...

I don't see the future that way at all.

Free markets are self-correcting. If you don't have enough well off consumers, you can't sell much.

Dystopia will come from the lack of free markets, and the main protection against dystopia is revolution, which is always an option. Protect that Second Amendment, friends.

test said...

Ignorance is Bliss said...
I hate to break this to him, but the public services ain't all that great in the high-tax areas either.


This is the key that so few understand or care about. Beyond certain core functions most of the benefit from taxation accrues to the workers, not the supposed beneficiaries of whatever programs they work on.

Further the biggest obstacle to reducing spending isn't that people support the spending levels for the sliver of functions they care about. The obstacle is exactly what we're seeing today with the shut down: all funding is prioritized first to benefit government. So even though the FMCS contributes next to no benefit for the $50 million we pay, somehow cutting $50,000 from its budget results in closing open air monuments rather than consolidating administrative positions.

bagoh20 said...

"I hate to break this to him, but the public services ain't all that great in the high-tax areas either"

This is the sad truth, and high tax areas often have worse services, because the generally force citizens to use public vendors who are always worse service providers, because they are union monopolies.

Here in L.A. we have extremely high taxes and crappy roads, schools, and nearly everything else. High cost - low quality. That's the inevitability of monopolies. It is, in fact, the very reason monopolies form, so they can charge more than you would pay, and give you less than you would settle for if you had a choice.

ricpic said...

Many will accept rotten public services in exchange for low taxes.

As opposed to our present predicament: rotten public services for high taxes.

I'm gonna let that stand even though I is B beat me to it. ;^)

The triumph of the radical egalitarians (who are in truth committed elitists) with the election of Obama is a temporary triumph, not because the great majority of Americans will rebel for ideological reasons, they'll rebel (peaceably I may add, by voting the radicals out of office) because everything the radical egalitarians enact DOESN'T WORK. That's what will turn the great majority off. That's America's salvation. Americans are a pragmatic, not a utopian people.

test said...

bagoh20 said...
I don't see the future that way at all.

Free markets are self-correcting. If you don't have enough well off consumers, you can't sell much.


This is exactly right. We'll develop a whole new layer of personal services and luxury good industries which funnel that income outward.

Or we'll decide we already have "enough" and it's more important to redistribute what we have, in which case we'll enter a steady economic decline.

Consider what choice the apocryphal patent clerk would have made because he thought everything worth inventing already was. Now instead of a tale of naivete it's a governing philosophy.

bagoh20 said...

Myself and others on the right often are portrayed and even imagine ourselves as anti-government, but what we really are is anti-monopoly / pro-choice.

Government always insists on a monopoly. That's the primary problem with it. They always get that monopoly, and that's where all the rest of the bad shit comes from: the high cost, low quality, fraud, theft, usurpage, intimidation, lack of innovation, lousy customer service, etc. It's just monopoly 101.

bagoh20 said...

The reason adults are so poorly skilled today is that they don't have to be skilled. With all our safety nets, you can survive without being capable of supporting yourself or contributing to the general good.

Safety nets are great when they catch those who are deficient beyond their own control, but when the net is indiscriminate, and catches those who merely choose to not try, sacrifice, or who repeatedly make bad decisions, then it creates what it's design to catch. A safety net that creates bad trapeze artists is soon over loaded, and eventually saves nobody. Not to mention the circus as a whole will start to suck.

Palladian said...

I hope it all comes crashing down in the most hideous way possible.

Palladian said...

Is this future how you want to live your life?

I'm Full of Soup said...

Controversial yet plausible theory from Cowen and very interesting post from Rrhardin.

Good job!

bagoh20 said...

We won't choose a crappy future as long as we have a choice. We might give up our right to choose though.

Freedom is the only protection we need.

I'm Full of Soup said...

I predict very low cost [perhaps almost free] for energy due to tech breakthroughs, lower costs of construction again due to tech improveements will mean home costs will not skyrocket except in major demo areas, and .....some other unforeseen events will help to offer work opportnity to those that want it.

rhhardin said...

The best econtalks are early Mike Munger, early Arnold Kling, and Richard Epstein (who is a thousand times better in audio than in print).

The first two ran out of material, hence early in the recommendation.

Epstein on rule of law is the most useful.

test said...

bagoh20 said...
We won't choose a crappy future as long as we have a choice.


I think this is wrong. Too many people don't understand what they're voting for, and their distance from reality is increasing.

bagoh20 said...

Like AJ Lynch, I see very low cost energy in the future, which will be a major game changer like harnessing steam and then electricity was in the industrial revolution. There is enormous energy locked in the Earth, it's atoms and coming in every day from outside.

Once energy is very cheap we will discover ways of converting materials into nearly anything we need through application of energy alone. We will eventually be a race of alchemists.

bagoh20 said...

Marshal, we will choose correctly once the choice is clear, and by choose I mean overpower those trying to steal what they want.

bagoh20 said...

I guess there is a future possible where the bootstrappers and the bleeding hearts can live in harmony.

When we can produce what we need so easily that we can both support the slackers in the fashion they see fit and let the ambitious run with the bulls, then maybe we can live together in harmony.

Who am I kidding? That would have to be a different species.

test said...

bagoh20 said...
Marshal, we will choose correctly once the choice is clear, and by choose I mean overpower those trying to steal what they want.


That's why the left decided on incrementalism. By the time people reach the boiling point they're about dead. And the youths accept the new normal because they have no frame of reference.

Paco Wové said...

Yglesias' faith in "good public policy" is touching. Such a good little technocrat.

Dear corrupt left, go F yourselves said...

Many will accept rotten public services in exchange for low taxes.

No.
We will have rotten public service and HIGH taxes. Like what we have now - only worse.

Dear corrupt left, go F yourselves said...

What Bagoh said...


and Paco--
Yglesias' faith in "good public policy" is touching. Such a good little technocrat.

Heh. Quite.

Dear corrupt left, go F yourselves said...

We could tax everyone at 100% and the left would say taxes are too low.

Revenant said...

"Many will accept rotten public services in exchange for low taxes"

I hate to break this to him, but the public services ain't all that great in the high-tax areas either.

Seriously. The only things governments do well are "kill people" and "destroy things". Outside of those two areas of expertise you'll be seeing second-rate results at best, so it is worth asking how much you'll pay for second-rate.

Revenant said...

Sadly the US seems ill equipped to deal with this future.

The article's insistence that Americans need to know math to succeed in the high-tech economy seems wrong to me. I do think everyone's better off knowing math, but the reality is that knowing how to use tools that will do the "heavy math lifting" FOR you is far more important for most people than actually knowing math is.

There's something to be said for being able to personally calculate the average of a thousand numbers and plot them on a graph. But Excel can do that in two seconds, so if you're doing it by hand you are *probably* wasting your employer's time and money.

deborah said...

bago:
"Dystopia will come from the lack of free markets, and the main protection against dystopia is revolution, which is always an option. Protect that Second Amendment, friends."

I wonder if Cowen addresses the future of gun rights and government readiness to quell uprisings.

bagoh20 said...

Dystopia is a state when revolution is beyond hope.

William said...

The history of the future is that great thinkers always believe that tomorrow will be like today only more so.....Marx, with great confidence, predicted the increasing impoverishment of the working class and, then, a revolution. That's not how it worked out, but lots of people thought those were the dynamics, the physical laws, of history........At the end of WWII, nearly everyone thought that nuclear physics would change the world. Some predicted atomic powered cars and others Armaggedon. Everyone believed that the big invention of WWII was the atomic bomb and that it would change life in fundamental ways for everyone. The first computer was disassembled and crated without notice. As it turns out, the computer was the big, life transforming invention of WWII.........I predict that nearly all the predictions you are now reading will be considered balderdash in fifty years.

I'm Full of Soup said...

Some anecdotal evidence that energy costs could get less expensive.

In 2010, our monthly budget bill for electricity was $136 per month and it is only $7 more three years later in 2013. Our electric is for lights and central a/c [you'd think too with global warming my electric would skyrocket due to my a/c use].

I'm Full of Soup said...

William - I like to say, when faced with a problem, that fifty years from now, none of us will give a damn. :)

bagoh20 said...

"As few as 1 in 100 applications on the federal exchange contains enough information to enroll the applicant in a plan, several insurance industry sources told CNBC on Friday. Some of the problems involve how the exchange's software collects and verifies an applicant's data.
"It is extraordinary that these systems weren't ready," said Sumit Nijhawan, CEO of Infogix, which handles data integrity issues for major insurers including WellPoint and Cigna, as well as multiple Blue Cross Blue Shield affiliates.
Experts said that if Healthcare.gov's success rate doesn't improve within the next month or so, federal officials could face a situation in January in which relatively large numbers of people believe they have coverage starting that month, but whose enrollment applications are have not been processed."


These are people that don't have insurance and thus are well adjusted to not having it.

Imagine the reaction next year when all the people who currently have insurance through their employer (most people) find out that they need to go to the exchange, or their rates have risen dramatically because of the new requirements, or that they will be fined 1% of their household income and rising.

That's when the real shit will hit the fan. 2014 is gonna be huge.

Someday your grandchildren will look back and ask: "What was it like under the worse President in history? Why didn't you guys do something to stop him?"

You may want to consider getting your tombstone to say "I voted for the other guy." Just to avoid vandalism.

bagoh20 said...

Oops, here's the link for that quote from CNBC:

http://www.cnbc.com/id/101087965#_gus

deborah said...

Bago, I saw that quote two days ago via Ed's link. Amazing. You'd think they'd at least decide to register over time, in groups, alphabetically or a draft system, to get people logged in. Yes, '14 will be a doozy. I think you should run for mayor of LA.

I'm Full of Soup said...

I employ two people and the non-Obamacare insurance aplication process is such a pain.

I can only imagine that this Obamacare sysatem is many many times more onerous and circuitous for an average American especially if they are not well informed nor familiar with insurance terms and caveats.

They should have had insurance brokers and agents involved- let them make a commission and they help people get enrolled but NO Obama does not want people to make money unless it is his people like Mark Zuckerberg or Apple's Steve Schmidt. You know people who donate big bucks to Dems and think like Obama.

Known Unknown said...

Our school district receives only 5% of our income taxes back in some sort of funding statewide. Other districts in the area get back up to 70%.

That's okay, though, because we are apparently rich beyond our wildest dreams and can afford anything we want.

Known Unknown said...

"A safety net that creates bad trapeze artists is soon over loaded, and eventually saves nobody. Not to mention the circus as a whole will start to suck."

I'm stealing this.

deborah said...

AJ, will you please give a little overview of your experience filling out the forms?

bagoh20 said...

Here is the process under the old system to get a hundred people insurance. Your insurance broker goes out and gets quotes from a few different companies and presents a couple options for coverage and cost from each one, maybe three companies and six options. You pick the best one. The brokers come in one day explain the program to the people, and signs them up if they want it. You set up your payroll program to deduct the right amount from checks, and you cut the insurance company a single check every payday for the employees' and employer's total contribution for the whole company. One check.

Occasionally, people have questions and you get them answers or contacts to call.

That's it for 10 people or a hundred or 1000. The employee gets a choice from hundreds of doctors and medical groups in the area, who they work with directly. Call, make an appointment, pay a $10 copay, another $10 for prescriptions. That's all there is to it. Everything else is paid for 100%, no maximum. Recent costs averaged about $3000 yearly per person before Obamacare appeared. Most companies typically pay about 70% of that.

I don't think employers should be involved at all, but it's not difficult for the average person. They sign a form once year, and visit the doctor when they need to. That's it.

bagoh20 said...

I should say that WAS all there was to it. Under Obamacare, it's much more complicated for companies and individuals.

deborah said...

Under your scenario it does seem like infatilization of the individual, or is it more or a bonus or courtesty from you to do the legwork?

Will you please outline how it is different now. How in danger are you of being unable to give 'supplemented' insurance? I use quotes because I assume that it is all factored into their pay.

bagoh20 said...

For the company there is a lot more paperwork, requiring providing much more private information, especially for the individual.

As far as choice, the company does make the decision what plan to provide, and they have to consider how employees will feel about that. There are requirements here that 70% of employees sign up, or the best insurance deals will decline your business meaning much higher cost, so the employer has to balance what the employees need to sign up versus cost.

Company costs will go up in three ways: 1) Where some people now decline the insurance, the company cost is zero for that employee, that will now be a few thousand in fines each. 2) For the employees taking the insurance, the plans are much more costly because now they need to cover things few people want insurance for. 3) Cost of additional paperwork and compliance by the company the insurance provider, the doctors, the individuals, and all the bureaucracy that handles it. These costs raise premiums, and direct costs to companies and individuals.

A big problem I'm seeing beyond cost alone is the amount of time doctors will have to spend with a patient. More patients, more visits because they can, and greatly increased paperwork all for a quickly shrinking supply of doctors who want to do this at all.

In addition to the cost, which we expect to nearly triple at our company, I expect to be very disappointing with the service which was previously excellent.

I don't know yet if we will drop insurance completely and send everyone to the exchanges or not. I hope not, but we have to stay solvent and competitive or we lose it all anyway.

deborah said...

Thanks. You are definitely be made to run out of choices.

"In addition to the cost, which we expect to nearly triple at our company, I expect to be very disappointing with the service which was previously excellent."

Will your brokers be going to the exchanges to arrange their proposals to you? If so, will they be able to get a group rate, or something that makes it attractive to the employer?

bagoh20 said...

Nope. At the exchange the employees is on their own. Previously, we did everything for them, shopping, negotiating, even filling out the paperwork. They just had to sign. They are not gonna be happy.

deborah said...

Thx :)

I'm Full of Soup said...

Deborah- I have not filled out any forms for Obamacare.

But I did switch from no employees to two in the last 24 months and I had to interact with an insurance broker and help select the insurance policies for the employees and balance against the cost [I pay 100% of the employee's cost]. The paperwork was pretty extensive - prove that I was a real business -send in business tax returns -prove that they were really employees - get the employee to fill out applications and forward to the agent/ broker.

I can't imagine the average citizen doing all that and more to get covered under Obamacare. In fact, the current system [Bago's description is an example] has, in effect, generally sheltered the average citizen from all the BS paperwork involved.

I'm Full of Soup said...

And I should limit the use of the term "BS paperwork" because much of the info they ask for is truly relevant and is needed to protect against fraudsters.

deborah said...

Thanks, AJ. So your insurance broker is responsible for making sure what he finds for you and your employees is compliant with ACA?

I'm Full of Soup said...

That is a good question- it is possible she can't even sell policies that are non-compliant.

Revenant said...

Someday your grandchildren will look back and ask: "What was it like under the worse President in history? Why didn't you guys do something to stop him?"

I'll say "because he died a couple of decades before I was born".

Seriously, Obama is terrible, and possibly the worst President of my lifetime -- but FDR did more lasting harm to this country than any other three Presidents combined.

bagoh20 said...

Give Obama's work some time to fester. FDR had a big head start. I'm also not just talking about policy. I'm talking even more about the nature of the man, his disdain for everything that has made this nation special, his petulance, his divisiveness, his dishonesty, and his smallness as a leader. FDR wasn't such an asshole, he was just very effective at delivering bad policy.