Book Review — The Complacent Class by Tyler Cowen

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This evening I finished Tyler Cowen’s The Complacent Class: The Self-Defeating Quest for the American Dream. Tyler is an American economics professor at George Mason University.

Reading the first three chapters, I had to ask myself if America is a place I would advise anyone to settle down in. The next few chapters were less grim, still the overall outlook was that of pessimism at the direction of the country.

The book describes the complacent class — the growing number of people in the American society who accept, welcome, or even enforce a resistance to new and challenging things. He basically describes how America has become a complacent country.

This complacency cuts across the political spectrum — republicans, democrats, independents and radicals alike. These people have lost the capacity to imagine or embrace a world where things do change rapidly for most if not all people.

In all honestly, it was difficult to get into the flow of this 9-chapter book published as Barack Obama handed over to Donald Trump until about the fourth chapter owing largely to data overload. Huge data was shared to buttress points about America’s complacency as a society and its attendant costs. Data that became repetitive at a point.

This complacency can be observed in all spheres of the American life. Building of new houses has slowed down due to restrictions and the need to keep things safe and secure. This has made housing more expensive. In the 1950s, rent represented less than 10% of a typical New Yorker’s salary. Today, it’s 84%. But more and more cities are entertaining regulations on building and infrastructure like buses and subways because current arrangements suit the interests of incumbent homeowners, who mostly identify as progressives.

The complacency in mobility is not only caused by housing. The growth of occupational licensure is also to blame. In the 1950s, only about 5% percent of workers required a government-issued license to do their jobs, but by 2008, that figure had risen to about 29 percent. While once only doctors and medical professionals required licenses to practice, now it is barbers, interior decorators, electricians, and yoga trainers. More and more of these licensing restrictions are added on, but few are ever taken away, in part because the already-licensed established professionals lobby for the continuation of the restrictions. In such a world, it is harder to move into new places.

In business, the share of Americans under thirty who own a business has fallen by about 65% since the 1980s. Contrary to common impressions, America is creating start-ups at lower rates each decade, and a smaller percentage of those start-ups is rising to prominence. Start-ups were 12 to 13% of the firms in the economy in the 1980s, but today they are only about 7 to 8 percent. That’s right; for all the talk about Silicon Valley, America is less a start-up nation than before. American rags-to-riches stories are much harder to find these days. You can certainly find riches — look at someone like Mark Zuckerberg. But he hardly grew up in rags.

Places like New York and California are sometimes seen as racist or objectionable states but Tyler argues that segregation is being enforced by incomes, rents, home prices, building codes, how school districts are drawn, and a culture of sorting and matching. He argues that racism does enter as a second-order phenomenon, in that racist feelings do lead some wealthy white elites to keep cheap housing out of their neighborhoods, out of an implicit or maybe explicit dislike of having to mix with lower earners or people with less education or, for that matter, people of color.

When you put all of these indicators together — low productivity growth, a sluggish labor force, fewer start-ups, greater business concentration, and a slower growth in living standards — the narrative about this period as being a time of unparalleled innovation simply doesn’t hold up.

All these is equally reflected in the American government. The government is no longer open to taking risks. To illustrate this, in 1962 only 30% of its spending was locked down before the fiscal year. By 2014, that number had reached 80% and is getting worse. In other words, all sorts of interest groups and entitlements have claimed so much of government spending in advance that it is very hard for the government to do ‘big things’.

But Tyler predicts that the Complacent Class will not have their way forever. The increasing discontent among some segments of the poor and among some ethnic minorities, most of all African Americans as seen in the Ferguson and Baltimore riots, as well as the unlikely election of Donald Trump may just be the beginnings of some deeper fissures in American life, fissures that will in due time rip open American sense of calm and tranquility. As he writes in 2015, Tyler predicts these will happen and won’t be going away anytime soon, and they are heralding the beginning of a new phase in American social life.

How will America respond to these changes? Tyler says it won’t be easy. Because 81% of Americans do not trust the government, responses to threats whether domestic or foreign won’t be so simple. These crises could require higher tax rates and higher government spending than the American economy could sustain or the American people would be willing to support.

Whatever happens and however it does, he believes the complacent class was unwise to believe that they can keep their space and peace, shut out everyone from their world while believing and saying the country is becoming more desegregated.

I won’t say Professor Tyler is a seer but it’s not difficult to see the American world he predicts unravel before our eyes in the years since he wrote the book.

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