Finance:Average is Over

Average is Over: Powering America Beyond the Age of the Great Stagnation is a 2013 book (release date: September 12, 2013) by economist Tyler Cowen laying out his vision for the future trajectory of the global economy. It is a sequel to Cowen's 2011 book The Great Stagnation that argued that United States had exhausted many of the low-hanging fruit (such as cheap land and easily achievable improvements in education) that had powered its growth in the 19th century and early 20th century.

Themes

Cowen forecasts that modern economies are delaminating into two groups: a small minority of highly educated and capable of working collaboratively with automated systems will become a wealthy aristocracy; the vast majority will earn little or nothing, surviving on low-priced goods created by the first group, living in shantytowns working with highly automated production systems.

Cowen claims that this future is foreshadowed by the recent evolution of chess from a game played by brilliant iconoclasts into freestyle chess, a team sport that relies on the creative use of advanced chess-playing software.

Cowen celebrates the arrival of functional online education, mostly because it allows a much broader audience to keep up with rapid change at a price that everyone can afford and leverages the same sort of self-teaching that drives video game players to ever-greater achievements.

He sees the future role of educators as motivators rather than professors, closer to a gym membership, with (online) personal trainers. He cites Williamsburg, Brooklyn, as a place full of young threshold earners, members of the second group.

In his final chapter, "A New Social Contract?," Cowen writes, "We will move from a society based on the pretense that everyone is given an okay standard of living to a society in which people are expected to fend for themselves much more than they do now."

Reception

Interviews and discussions

Technology writer and critic Andrew Keen interviewed Cowen for his Keen On series for TechCrunch in September 2013.

Cowen appeared on a Financial Times podcast. Diane Coyle also participated to discuss her own book and the authors talked about each other's books as well. The host was Cardiff Garcia.

Cowen appeared on National Public Radio in September 2013 to discuss the book.

Cowen discussed the themes of the book in a video interview by Nia-Malika Henderson for the On Background series of the Washington Post.

99u published some advice from Cowen for its readers that was based on the insights in the book.

Reviews

The book was reviewed favorably by Philip Delves Broughton in the Wall Street Journal. Broughton noted that Cowen had not investigated high finance in his book and could have done so, but was otherwise favorably impressed by Cowen's themes.

Matthew Yglesias gave the book a mixed but largely positive review on his Slate blog, Moneybox. On the one hand, he writes, he expects that the book "will set the intellectual agenda in much the way that its predecessor [The Great Stagnation] did not," but on the other says that its "somewhat cryptic tone" requires "explication." He writes that Average Is Over apparently contradicts Cowen's previous book, The Great Stagnation – whereas that book argued (to quote Yglesias) "that the median household in rich countries had suffered stagnant living standards thanks to a slowdown in technological progress," Average Is Over argues that "the median household in rich countries will suffer stagnant living standards thanks to a speedup in technological progress." Yglesias proposes that the contradiction is resolved because "read in conjunction it's clear that in neither period was the stagnation actually caused by the pace of technological change ... 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." Yglesias then says that the policy reforms favored by Cowen constitute "in general a very solid forward-thinking 21st century egalitarian agenda." But he explains why Cowen "doubts the political system will deliver any of these solutions," and also notes that Cowen argues that "these somewhat bleak trends he forecasts aren't really all that bad if you look at them in the right light." He concludes by explaining why he disagrees with Cowen on both of these points.

Robert Heritt reviewed the book for The Daily Beast, calling it a "lively and worryingly prophetic read."

The book also received a (gated) review from Brenda Jubin on Seeking Alpha. Jubin wrote: "The future Cowen paints is pretty bleak for the majority of Americans." She concluded by writing: "This is not a future I want to see. We can only hope that, as often happens, trends are disrupted."

The Economist gave the book a mixed review, observing that Cowen's predictions about the use of technology for surveillance, rising unemployment and demands for lower taxes were in line with current trends, but arguing that Cowen was too sanguine about the potential for inter-generational conflict or the appeal of demagogues in a democracy where the majority will become poorer.

Other reviewers of the book included Teresa Hartnett for Publishers Weekly (a negative review), Michael Barone for the Washington Examiner, and others.

See also

• Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, a book by Andrew McAfee and Erik Brynjolfsson that Cowen references and claims that his book builds upon. McAfee described the relation between his books (with Brynjolfsson) and Cowen's books in a blog post on his website.
• The Singularity is Near, a book by innovator and technology trend analyst Ray Kurzweil that Cowen references and claims to build upon. Cowen also critiques Kurzweil's claims that humans and machines will become physically integrated.
• The End of Men