Notes on ‘The Complacent Class’

Tyler Cowen’s “The Complacent Class” isn’t a big book, but it is spawling, touching on a thousand different angles on the same idea. Subtitled “The Self-Defeating Quest for the American Dream”, it’s easy to draw a clear line from Cowen’s previous book, The Great Stagnation. 

You can think of this book as detailing the social roots for the resulting slow growth outcome and explaining why that economic and technological stagnation has lasted so long and why, for the most part, it has failed to reverse itself.

Cowen’s succinct self-summary of The Complacent Class [brackets mine]:

I’ve discussed a number of main elements driving the trend toward a more static, less risk-taking America. These include the collapse of fiscal freedom [e.g. the growing share of government expenses that are non-negotiably directed towards entitlements programs, reducing overall flexibility of the government to deploy resources] and democratic process, lower residential mobility, less building in America’s most productive cities, more segregation by income and status, a much greater concern with safety and risk, the coddling of our children, and fewer start-ups and slower growth in living standards, among others. These forces have led to an America that is calmer, safer, and more peaceful, at least in the short run. But it is also an America that is losing the ability to regenerate itself, reinvent itself, and create new sources of dynamism. And as the years pass, it seems increasingly obvious that the social and economic stagnation of our times is more than just a temporary blip; instead, that stagnation reflects deeply rooted structural forces that will not be easy to undo by mere marginal reforms.

The first section below is more about something a couple of asides that Cowen made that connected to some of the ideas already recorded in this blog. The second section are more direct notes from the text, detailing who the Complacent Class is and why they may have become complacent.

1. Liberalism, Landscapes, and Linear History

 

1.1 The Intuitive Logic of Cyclical Histories

I’ve recently been skimming my old notes on Oswald Spengler after listening to the news- partially to recall the Spengler content, and partially to try to recapture the headspace that produced it. These days, there seems to be a new pertinence to it. There’s probably value in revisiting Spengler (or someone Spengler-adjacent) sometime soon.

I suspect that for most of human existence (until relatively very recently) the landscape of possible human political arrangements was somewhat static, with occasional shifts resulting from new limits that the environment can tolerate, new technologies and new capital (including intellectual). (I ran the farthest with this political landscape metaphor in Part IV of this 2014 post). People have always been pretty smart, and it is no surprise that so many old historical theorists ascribe to a cyclical view of history, with some level of detail of the political landscape mapped out, and paths that they’ve seen taken by their own culture and their neighbors’. As soon as you’re able to collect stories, it’s not so hard to pattern-match.

We know that the ancient Greek historian Polybius described a cyclical movement of civilization through phases, driven by the fragility that underlies all benign government (turning them corrupt and malignant) and the wariness of the ‘selectorate’ [not his word] who ultimately push for change when their interests are ignored (transforming forms of government to begin a new, temporarily benign replacement): Disciplined Monarchy becomes sloppy Tyranny over the generations, which becomes restorative Aristocracy, which becomes degenerate Oligarchy, which becomes egalitarian Democracy, which becomes corrupt Ochlocracy [mob rule… curiously a missing word in our vocabulary compared to the others]. Ultimately, a demagogue rises through the mob chaos, and we cycle back to something monarchical.

Until the other day, in every human settlement, famine and war and plague were constant threats. Ancient civilizations could see the remains of even more ancient civilizations. It might have seemed quite clear that was no hope of escaping history. Really, a cyclical history sounds like a best-case narrative structure. There were also your Golden Age narrative structures, where there was once an age of brave heroes and wise, improbably aged kings – I mean, look at the giant old statues! – and something happened, and we’ve fallen from grace, so perhaps this is a linear history after all but the slope is negative. Some cultures maybe shoot for the moon and argue that after all of the suffering, the line will discontinue and the apocalypse will be a relief for the right people.

1.2 The Enlightenment, and the Triumph of (Positive Slope) Linear Histories

I think it is plausible that Liberalism is a relatively new possibility in political landscape- available only really within the past couple of centuries, due to a confluence of Enlightenment ideas and economic possibilities. The Industrial Revolution(s) have likewise disrupted the landscape in sudden shocks, allowing for new, unique political forms. Some theorists felt these shifts and believed that the current ground was unsustainable. Some believed that there existed new mountains on the landscape, many utils high, that were worth the strife to summit. Many of them appeared to be wrong about the position of these mountains or the survivability of those hikes.

As a result of the Enlightenment and the Industrial Revolution, Cowen argues that “the dominant [historical] narrative became one of extreme and enduring progress, for reasons that corresponded to some pretty splendid evolving events on the ground.”

Even most of the dissidents believed in some form of ongoing progress, at least once the right social switches were flipped. For Karl Marx, for instance, communism would bring a final, utopian, and fully peaceful state of affairs. The classical economists viewed commercial society as the end product of a long period of historical development, and Georg Friedrich Hegel portrayed history as marching toward civil society, commercialism, and the modern state as he saw it embodied in Prussian bureaucracy. Cyclical theories lived on in a kind of intellectual underground, such as in the writings of the eighteenth-century Italian philosopher Giambattista Vico.

[…]

The two world wars threw these progress-based views for a considerable loop, and for a while, cyclical views of history returned, especially to Europe, as exemplified by some of the writings of historians Arnold Toynbee and Oswald Spengler.
But post-war, happy times returned and so too did the narrative of the inexorable march of moral, technological, and economic progress forever. It was the well-phrased apostasy against this civil religion that made Ta-Nehisi Coates’ “Atheistic History” so refreshing to me.
God does not care about history, and history does not care about humans.
Discomfort aside, there’s nothing truly that shocking or new about the Coatesian view. Our constant global improvement over the past century have been the result of human effort and fortune, not natural law.

1.3 Complacency and Dynamism

There is a reasonable ‘systems logic’ to the cyclical view that is also very satisfying. Every state of affairs produces the seeds of its opposite. We see this in our age-old adages about achieving peace by being prepared for war. We may see it in that meme that is passed around in some alt-right community forums, “Hard times create strong men. Strong men create good times. Good times create weak men. Weak men create hard times.” This is also a crass refashioning of the Fourth Turning thesis, which recently got some media play as a possible influence on the thoughts of one Steve Bannon. Different generations respond to the environment that they grew up in, which is in turn the result of the reaction of previous generations’ response to the environment that they grew up in, resulting in the building up and tearing down of social institutions in a cycle.

Cowen argues that Alexis de Tocqueville, who spoke of 1830’s America’s dynamism in such glowing terms, believed that instead of reaching an extreme of independence by dissolving into anarchy (as many critics of American democracy proposed), American society would instead tip the other way. As Cowen portrays him, de Tocqueville feared that American hustle would bring riches and satisfaction that would drain them of their vital energies.

In his view, “[Americans] never stop thinking of the good things they have not got. It is odd to watch with what feverish ardor the Americans pursue prosperity and how they are ever tormented by the shadowy suspicion that they may not have chosen the shortest route to get it.” […] Among other forms of restlessness, Tocqueville was struck by the degree of geographic mobility in America, most of all in the westward direction.

[…]

Tocqueville feared that human beings, including Americans, would, precisely through the process of their sluggish satisfaction, fall “into a complete and brutish indifference about the future.” Rather than being too restless, a future America might be too complacent, too self-satisfied, and above all too unwilling to regenerate the energies that once made it great, and thereby might fall into mediocrity.

It is with this framing in mind that Cowen writes of growing American complacency, as de Tocqueville feared. Contra this reading of de Tocqueville, I don’t believe that Cowen argues that complacency is necessarily a negative. Dynamism is growth, but also chaos. Complacency is stasis, but also stability. We don’t want to drown or die of thirst, the healthiest state of being is between the two. Cowen reads innovation into Dynamism, but also crime, terrorism, and social unrest.

While de Tocqueville sees dynamism as the father of complacency, the final third of Cowen’s book reads into complacency as the father of a future dynamism:

[…] the most disturbing idea to have reattained prominence in the last ten to fifteen years is the notion that history may be cyclical rather than involving monotonic, ongoing progress. That is, the very logic of good times may tend to bring some bad consequences upon us, no matter how hard we try to hold such problems at bay.

Consider recent world history. During the 1990s, the degree of optimism in the United States and around the world was extreme. Productivity growth was high, information technology seemed to hold all kinds of promise, and in some years real wages grew by 3 percent or more, including for the middle class. Everything seemed to be moving in the right direction. The attacks of 9/11 had not yet happened, and terror attacks did not dominate the news. Just about every country seemed to be embracing good liberalizing reforms, including India and Russia and China; there was even talk that Russia might join the European Union in due time, and it seemed Russia was now a democracy, albeit an imperfect one. The Middle East was hardly ideal, but it was nothing like its current conflagration. Overall, it was an age of reform, democratization, and rapid economic growth. And, in the United States in particular, life was stable too, unless you happened to be one of the many black people ensnared by our criminal justice system.

It was as if we had the best of all possible worlds, dynamic growth and stability all rolled into one happy picture.”

[…]

As we look to the global arena now, more than fifteen years into the new millennium, a lot of the optimism from the 1990s has vanished. Much of the Middle East has been destroyed, Russia has invaded Ukraine and broken down the old international order, China is newly assertive in the South China Sea, and terrorism is a major news theme in many parts of the world. Europe seems unable to deal with its refugee problem in comparison to the rather smoothly handled Yugoslavian refugee crisis of the 1990s. Both Russia and China seem to be less free, and to be resorting to more censorship, than ten or fifteen years ago. In Turkey, democracy seems to be collapsing altogether. European growth remains sluggish, and it is far from obvious that European Union governance mechanisms can meet current challenges, including problems with the eurozone and the need for a more coherent refugee policy in light of an inflow of millions of North Africans, with more likely to come. The United Kingdom voted to leave the European Union altogether, even though this appears contrary to their economic self-interest.

(Note: Cowen does still note that the fundamentals – e.g. extreme poverty or infant survival metrics – are still improving quite well, and this is nothing to take flippantly at all.)

The seeds of the volatile 2010’s were sown into the stability of the very pleasant-sounding 1990’s.

 

Again, it is like how macroeconomic stability eventually gives rise to excess risk-taking, thereby dissolving the previous stasis. In a general atmosphere of safety, risk builds up nonetheless, like simmering pressure under a volcano.
It was the safe economic situation of the 1990’s that empowered the finance industries to take ever-bigger risks. The idea of business cycles themselves began to be disputed. The fall of the Soviet Union left the United States alone as the sole hyperpower of the world. Some political elites began dreaming about continuing American hegemony into a new American Century. The promising technology scene of the late 90’s promised to make millionaires out of anyone willing to put up the money. All of these situations turned out to birth new crises in the new millennium.

2. The Complacent Classes

In the first two thirds of the book, Cowen attempts to provide an analysis of who he is talking about when he discusses “the Complacent Class”, why he considers them/us complacent, and what exactly it might mean. for our near-future.

2.1 Who are the Complacent Class?

Well, aside from immigrant groups, it sounds like nearly everybody. This book is better phrased as the Complacent Classes, plural, and Cowen identifies three:

(1) The Privileged Class: the wealthiest and best-educated 3-5% of America: cosmopolitan, generous, and “sufficiently insulated from hardship and painful change that they are provincial in their own way”. High incomes and peacetime will do that to you. Their main mode of complacency: segregation. These people are especially selective in the culture they consume, the neighborhoods they inhabit, they algorithmically match with each other for marriage pretty much exclusively. Their social segregation causes indirect harm to communities outside and also turns them into political targets. They are also chief NIMBYites in large desirable cities.

The middle class is contracting, but many of those individuals are actually graduating into the ‘upper class’ in income and social terms. Still, this break-apart has implications in terms of  mobility for the lower classes going forward.

(2) “Those Who Dig In”: Middling income and education, more insecurities around wealth, retirement, healthcare, longterm employment. These people have most of their wealth in their house and are not sure what their situation is going to be like in a decade, but they will fight to keep their standards of living from slipping. NIMBY tendencies. This is a group that historically have the resources and the will to relocate to improve their living conditions, but that is becoming less and less the case because of restricted housing supply in the places that might provide better earning opportunities. Shocking amounts of wealth and standard-of-living metrics are being left “on the table” because of the lower risk profile of this group. They are also increasingly dissatisfied with the lack of vision from elites, which is why Cowen suspects Trump got more votes than expected- it wasn’t a fight against inequality per se, as the average Trump voter was wealthier than the average American ($70k income).

(3) “Those Who Get Stuck”: The group that requires the most explanation, as I see it. These folks are having a hard time, so it doesn’t make immediate sense that they might want things to slow down around them. Examples of this class might include a single mom working in entry-level retail, or an ex-con struggling to find a job who may instead give up and settle for some disability money. Some discussion here about opioids and alcohol as common indicators as well. Cowen spends some time in the intro demonstrating that this is a group we expect historically to embrace radical political ideologies, to commit more crime- but lately they have not been. If anything, the evidence points to them being checked out (or perhaps burned out).

All three classes above, Cowen argues, are acting in much sleepier ways than they did in the dangerous and dynamic late 60s. Cowen points to Ferguson and Trump as evidence of a possible return to activism, but the question still remains why there was a lull at all. Bombings and riots in the 1960s and ’70s were far more common than they are today [averaging out to more than five domestic bombings per day in an 18-month period in ’71-’72], and what’s more, groups of intellectuals and elites endorsed them.

Today the critique is penned, and the enemies of reason and progress are condemned, but then the page is turned and the complacent class turns its attention back to the very appealing comforts of everyday life.

Peace and high incomes have probably bred complacency (even though across groups, this was also the case in the late 60s…). We are less likely to switch jobs, move around the country, or go outside than we were in past decades of the 20th century.  We self-segregate and pair like-with-like more often, in marriage, in association membership, and by income. We have come to value safety more and, say, civil disobedience less.

NIMBYism is a clear manifestation of complacency in American life. According to Cowen, there is also:

  • NIMEY – Not In My Election Year
  • NIMTOO – Not In My Term Of Office
  • LULU – Locally Undesirable Land Use
  • NOPE – Not On Planet Earth
  • CAVE – Citizens Against Virtually Everything
  • BANANA – Build Absolutely Noting Anywhere Near Anything

Ultimately, “In all systems [links mine], pressures build for change, and the more we shunt aside or postpone those pressures, whether through segregation, poor mobility, political dysfunctionality, sluggish productivity and debt-financed economic growth, or a general disengagement and miasma of spirit, the stronger they become.”

This coming release is referred to as The Great Reset [borrowing from Richard Florida], which is a rush of change- government failure (in responding to crisis or in basic fiscal activity), social unrest due to crime, expensive apartment rentals, ‘a rebellion of many less-skilled men’. More on this in Section 2.3.

 

2.2 How Do We Know They’re Complacent?

This is where Cowen spends most of his effort, and where different reviews put their stamp by drawing constellations that fit their worldview already. Broadly speaking:

  • We move drastically less than we used to, as a nation
    • Major cities refuse to build more, and so the incentives to move to high-productivity cities are stifled. Hsieh and Moretti (2015): “Lowering regulatory constraints in these [high productivity] cities to the level of the median city would expand their work force and increase US GDP by 9.5%” – $1.7 trillion dollars.
  • Economic forces have actually re-segregated much of the country since the 1980s, by income and by race. “One implication of these measures is that the affluent and well educated in America may be especially out of touch, no matter how ostensibly progressive their politics.”
    • “Again, the claim is not that New York and California are somehow especially racist or objectionable states but rather that segregation is being enforced by incomes, rents, home prices, building codes, how school districts are drawn, and a culture of sorting and matching.”
  • The War on Drugs and the resulting incarceration state
  • Economic Stagnancy Causing Social Stagnancy
    • “I think of the oil price shock of 1973 as the first negative shock in this broader sequence, and in that regard the economic changes provided the first link in the chain of events, even if they were not the most fundamental cause. In that year the era of cheap energy ended and the American economy slowed, and more generally the culture moved away from the idea of immediate and rapid transportation. Mentally, Americans moved from a world of moon shots to waiting in line to buy gasoline.”
    • “If we are looking for ultimate causes of the succeeding stagnation, the most likely culprit, if that is the right word to use, is the dynamism and rebellion of the 1960s and early 1970s. Cultural energies eventually exhaust themselves or run down, people seek calmer times, and many Americans tired of the riots, the clashes with the police, the high crime, and the numerous social disruptions that attended this extraordinarily creative period of American history.”
    • “By most metrics […] economic opportunity is down and living standards, although they have advanced, are growing more slowly than in the past.”
    • “Available studies do not support the view that mismeasured information technology can make up for the lost productivity in the American economy.”
  • Monopolies and Corporatization
    • Massive concentration of companies across industries, and a failure to break them up via anti-trust action
    • “By one estimate, start-ups were 12 to 13 percent of the firms in the economy in the 1980s, but today they are only about 7 to 8 percent. […] This overall decline in start-up frequency is true for virtually every sector and every American city, and that includes San Francisco and even the legendary tech sector.
      In absolute terms, the number of new tech firms (younger than five years) peaked just after 2000, and in percentage terms, new firms in the tech sector have been declining since the 1980s.”
    • “In the late 1980s, 18.9 percent of the employment in the American economy was at firms five years or younger. This average had fallen to 13.5 percent right before the Great Recession; in numerical terms, that is a 29 percent decline over only seventeen years, a significant and rapid drop.”
    • “A big chunk of our economic gains have been driven by women getting better educations and working longer hours. That is good news for many women, but if the American economy were more dynamic, we would expect the males to have rising real wages just because so many technological advances have been dumped in their laps. […] The median male wage was higher in 1969 than it is today.”
  • The internet allows for even better matching (people-to-people, people-to-interests), that super-powers ‘segregation’
    • With apps, we can consume music and food that have been pre-ordained by our cohort and by our own prior behaviors. This is extremely satisfying, of course.
    • Reminds me of this article, which I shared in 2013: “The suburbanization of American Christianity has had a huge impact on institutional and denominational structures. Automobile-shaped development has produced an automobile-shaped ecclesiology. The car has abolished the possibility of the parish. And that, in turn, has helped to redefine “neighbor” as a matter of preference more than of proximity — as optional rather than obligatory. That redefinition is rather significant, since “Who is my neighbor?” is kind of an important question for Christians.
  • The Will of the People
    • We have pushed, over time, for more protection embedded in our laws, including protection from things that are unpleasant such as protestors blocking our streets.
    • The US government now devotes 49% of the federal budget to three programs: Social Security, Medicaid, and Medicare. These are politically untouchable, their funds are inflexible, and they may hamstring the government’s capabilities in the future
    • Public trust in government is way, way down. (Lower for their own party, and much much lower for the opposing party).
  • Missing information
    • We don’t really understand the causes of crime, and there’s actually no clean consensus on why it declined by the intense amount that it did in the 90’s, seemingly everywhere, regardless of policy.
    • Cowen thinks that crime is likely underreported by the virtue of cybercrime not being properly quantified and published. He suspects that the open internet could die out at the hands of barbarian trolls, while we the privileged hide behind our walled-garden apps.

 

2.3 What’s Next?

The “Return of Chaos”. The marginalized will feel the tremors first.

Was it the case that the subprime borrowers caused the Great Recession? Absolutely not. Rather, they were (again) playing the canary-in-the-coal-mine role, and if you look at the numbers, you will see that the losses in subprime were just one small part of a bigger story of broader economic overextension.
[…]
Consistent with this framing, the economic downturn came absolutely last to the contemporary art market, where it takes the longest time for the buyers and potential buyers to feel the pinch because they are so well off and so flush with cash. Even right after the Lehman Brothers failure in 2008, which was a grave event for the global economy, there was still a mostly successful major auction of numerous works by British artist Damien Hirst, most famous for his dead animals preserved in formaldehyde and displayed in boxy glass structures. The proceeds exceeded $200 million, even while a lot of the world’s financial infrastructure was falling apart.
[…]
Whether or not you agree with all of their complaints and grievances, the protesting groups of African Americans are among the most vulnerable elements of American society. They respond first and complain first and exhibit signs of dissent from the complacent class. They are, in varying ways, trying to renegotiate or secede from the current deal, and that is a sign that something is deeply wrong beneath the surface.
[…]
Arguably, the events themselves show that the discontent never really went away, but at least for mainstream media coverage, it had not been a focal topic for most white Americans, including well-educated, well-informed white Americans.

He discusses current events in race, campus politics, and Trump as the early foreshocks for the crumbling of the Complacent era in favor of a new era of dynamism.

Cowen spends ages hedging, but then finally decides to openly get speculative about his image of a near-future America:

 

[…] But imagine this picture of an America say ten, fifteen, or twenty years hence.

• Antidepressants as we know them have fallen out of favor; they have been replaced by alternative medical processes that address problems of depression without “tranquilizing” Americans so much.

• The differences between America’s wealthy and less well-developed cities and suburbs have become big enough to resurrect economic motives as a reason to relocate, so rates of residential mobility rise again, leading to a new pioneer class. Driverless vehicles and better transit systems make these new commutes bearable.

• Artificial intelligence, smart software, robotics, and the “internet of things” have come together to bring significant productivity gains and lots of disruptive change. You walk around your house, or the store, and ask for things to happen, and they do. You can ask any question just by talking to yourself, and a good answer comes immediately.

• Cheap, clean energy has become a reality, enabling a lot more ambitious physical projects in physical space. Americans become interested in exploring outer space again, if only through robots, and a new generation of robot-manned probes will help us map and understand the entire solar system, possibly finding life in the oceans of the moons of Saturn.

• Ongoing world crises, and a continuing uptick of domestic terror attacks, convince Americans that “living for the moment” deserves a lot more attention. Life won’t feel so calm any more.

• Growing wealth, automation and automated home chores, combined with changing customs, mean that families of three or four children will return to favor. That is already the case among the very wealthy, who can afford it, and America is already at the point where better-educated women do not choose to have fewer children. Over time, American society becomes much younger again, and in the meantime, the adults start thinking more about the dynamism of the future.

• Spurred by the growing prominence of racial incidents in the headlines, the ongoing cultural marginalization of African Americans turns around, and African Americans play a greater role in many parts of the national scene, including American intellectual life. Furthermore, a new wave of African immigrants revolutionizes the prevailing racial dynamic, and for the better, but with a lot of change and remixing of core categories along the way. Those African immigrants also help the country feel young again, because Africa has a very young skew to its population and also older people are less likely to leave.

 

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