Who Dreams of Being Average?Posted: October 28, 2013
Average Is Over—But the American Dream Lives On
Who dreams of being average? Americans define personal success in different ways, but certainly no one strives for mediocrity. The children of Lake Wobegon, after all, were “all above average.”
Perhaps this explains why some reviewers have understood the glum predictions of Tyler Cowen’s Average Is Over—that shifts in the labor market will cause the middle class to dwindle—as heralds of the death of the American Dream. This understanding misses the real thrust of Cowen’s book.
Everyone has their own notions of what constitutes the American Dream, but when writer and historian James Truslow Adams coined the phrase in the 1930s, he wrote that in America “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” Cowen’s vision of our future actually reinforces this idea.
This claim might seem strange at first glance for a book that delves into the perpetually gloomy subject of economic inequality. But the takeaways from Cowen’s work are, at least marginally, more optimistic than most people would expect. While Cowen foresees an America with more polarizing income inequality, the country won’t be entirely in the grip of the forces we have grown used to. In the past, income inequality was largely driven by differences in social status. In the future, Cowen argues, society will become more meritocratic: ability will be to an even greater extent the primary driver of labor market success. For those Americans who currently lack access to elite education or other resources or privileges of status, the book offers many reasons to be optimistic about the future.
Cowen’s arguments hinge on the belief that income inequality will persist. In this hypothesis he is far from alone, and backed up by current trends. In the past decade income inequality has worsened by almost every measure. Wealth is more concentrated at the top, and more people depend on government transfers. There are few reasons to expect that these trends will curtail. But rather than deny or look for ways to avoid this fate, the book extends this vision with a series of insights about our economic and social future.
Cowen’s Freestyle Future
One of Cowen’s most fascinating projections concerns the proliferation of machine intelligence and its effects on labor market conditions. He sees the mechanization of chess as a small-scale version of how many industries will evolve, following this sequence:
- Human is the expert; computer adds little to current product.
- Experts continue programming machine, strengthening its ability.
- Experts supplement computer with minimal input (correcting obvious miscalculations).
- Machine becomes expert; human adds little.
- Computers take place of human (middle-wage jobs); only those who can add value to the computer stay on the job.
Cowen’s analogizing of the progress of chess programs to broader societal trends is worth delving into with a little more detail. For centuries, chess was a game dominated by human art and skill, with Grandmasters as the foremost artists. In 1990, when a team of IBM programmers (and Carnegie Mellon University graduates) set out to create a machine that could beat these human experts, they were largely scoffed at. But in 1996 the resulting program, Deep Blue, won its first game against the reigning world champion Garry Kasparov (but lost the overall match); in 1997, it defeated Kasparov in a traditional six-game match.
Today, Cowen tells us, an average chess-playing program, running on virtually any piece of consumer hardware, is easily capable of outplaying any human. Many people who compete at the highest levels of chess play what is called freestyle chess, where teams include a computer and a human counterpart. Excelling at freestyle does not require profound skill in chess per se, but rather expertise in working with the computer. The best players are the ones who recognize their limitations and are willing to accept the advice of the computer; those who win most are the ones who design or run the best programs. Cowen predicts that this process will be repeated across many different industries and arenas of human endeavor.
If this process holds, it’s not difficult to see why incomes will become increasingly polarized. The top end of the income distribution—which he envisions as the 15 percent, rather than the 1 percent—will be comprised of those who are truly talented or creative in their ability to work with technology. These folks will “win” the most in the new system because of their ability to make computers more productive. The rest of the population will fall into lower paying service jobs.
This idea is sobering, but one major benefit of this future would be the reduction of “opportunity inequality”. These trends will disenfranchise many subpar performers (and their shortcomings, he says, will be increasingly illuminated by an array of public fora for reviews, as well as various automated assessments of value). But they will also reward those who are most deserving—a fact, says Cowen, that “will make it easier to ignore those who are left behind.”
Thus the advance of machine intelligence will cause a surge in income inequality, but will also level the playing field for opportunity. In a recent interview with NPR Cowen predicted that “for a lot of people upward mobility will be a lot easier.” The internet has already provided a new forum for individuals to exhibit their talents on a nearly global stage. Here Cowen returns to chess, where smaller nations like Armenia and Norway, once underrepresented in the chess world, are producing some of the best young players. Before online chess, an Armenian player would have had to move to Moscow to compete at the highest levels. With this barrier now removed, Armenia is a “perennial competitor” for international chess honors.
We have seen this trend accelerate, too, with the growth in online education and massively open online courseware (MOOCs). There are plenty of individuals who have the desire, aptitude and discipline to learn online, and they will do so when classes are affordable and accessible.
Computerization also makes us better at assessing ability, especially among larger, more geographically dispersed populations. As quality education becomes more readily available, more individuals—for whom attending an elite university is not an option—will have the opportunity to showcase their ability and be rewarded for it. “Machine intelligence is the friend of the educational parvenu,” Cowen says.
And Then What?
The question that logically follows from worsening income inequality is how it will affect America’s social fabric. Plenty of doomsayers predict that it will lead to a revolution—that the left-behinds will conspire against the new high-earners. But if everyone has the same opportunity to succeed, then how will they feel slighted by the system? Cowen calls these theories of the revolutionary consequences of income inequality “some of the least thought-out and least well-supported arguments with wide currency.”
This is largely consistent with his view on the history of income inequality in the United States. He recognizes that the trend is deeply disconcerting to many Americans but also believes it is not the best measure of social inequality. Access to food, modern medicine, and the internet are just a few measures one could cite to show that the average person is better off now than ever before. In a 2011 articlefor The American Interest, Cowen wrote, “By broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.” Indeed, the advancements of modern society have allowed more Americans to enjoy higher standards of living than at any other time in our nation’s history.
A report published in 1997 by the Dallas Federal Reserve Bank, Time Well Spent, substantiates this point. While income disparity has grown, the magnitude of the change does not nearly match that of the rising standard of living. The report examines the cost of goods based on the minutes of work needed, on average, to buy them. It finds that in 1919 it took the average American eighty minutes of work in order to buy a dozen eggs. Today it takes him five minutes.
If this is the case—and by the most advanced methodological standards, it is—then income inequality might not be as devastating an issue as many believe. That’s not at all to say that inequality is unimportant, but rather that income inequality is not the best gauge of societal equity. Perhaps opportunity equality should be what we strive for. The book makes a case for this suggestion.
Cowen has another inkling as to why income inequality is not the catalyst of social unrest and outrage that many make it out to be. Envy, he contends, is usually local. “It’s directed at the guy down the street who got a bigger raise. […] Most of us don’t compare ourselves to billionaires.” He doesn’t claim to demonstrate this, of course, but these injections of more personal insights and intuitions add freshness to the book.
Whether or not you agree with its predictions, Average Is Over is worthwhile for any curious reader. Cowen has a rare ability to present fundamental economic questions without all of the complexity and jargon that make many economics books inaccessible to the lay reader. Approachable prose and plainspoken explanations help this cause.
On the whole, the predictions and insights to be found in this book are more exciting than they are dismal. There is virtue to what Cowen says will be a “hyper-meritocracy.” Certainly an important goal of any economic policy should be to ensure that everyone has a fair shot at succeeding in our society. Rewarding individuals for their ability and effort is an idea that rings true with the spirit of James Adams’ vision. The American Dream is alive and well.