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September 13, 2013 / Jake Seliger

Thoughts on Tyler Cowen’s “Average Is Over”

You should read Average Is Over, which makes many subtle and unexpected (to me) points.

* This: “If you and your skills are a complement to the computer, your wage and labor market prospects are likely to be cheery. If your skills do not complement the computer, you may want to address that mismatch” is a useful way of thinking about things, but if you read books (like Average Is Over) you’re more likely to know this and adjust appropriately based on new information. Yet I am fond of citing the fun fact that people watch an average of four to five hours of TV per day, and by some measures Americans are reading fewer books (or were in 2007). Reading skills also don’t appear to be high. That may be the low-hanging fruit for many if not most people, especially since reading skills help develop writing skills.

In How to Win at the Sport of Business: If I Can Do It, You Can Do It, Mark Cuban describes how reading a lot gave him an information advantage: “Everything I read was public. Anyone could buy the same books and magazines. The same information was available to anyone who wanted it. Turns out most people didn’t want it” (though he doesn’t like fiction, which may also speak to the fields in which he works).

* Cowen rites, “Adult males are seceding from the workforce—or being kicked out—in frightening numbers. Few of these individuals are wealthy playboys. It is no surprise that popular culture today has this image of the male slacker, a young man who lives at home, plays video games, is indifferent to holding down a job, and maybe doesn’t run after young women so hard.” That’s probably true, but a lot of guys have probably realized that marriage markets are stacked against them (see also “How DNA Testing Is Changing Fatherhood“), that relatively few women appear to value guys getting mid-level jobs relative to guys who are cool / fun / have game, and there are better alternatives to working for 50 hours a week in a not-that-interesting job. For many guys, learning game and guitar is a more viable route to success with women than getting on a career ladder.

* The point above feeds into the next point: “many of these young earners are threshold earners, meaning earners who are content just to get by and who do not push ambitiously for a higher wage or stronger credentials at every step. Williamsburg, Brooklyn, is full of young threshold earners, although rising rents are starting to push them out into other parts of the city, such as the further reaches of Brooklyn or the Bronx.” This goes back to the question above: what are we being productive for?

I have cited Stumbling on Happiness many times, and one of its key points is that income above about $40,000 appears to do very little for the quality of one’s life. In your 20s, perhaps the best investment in happiness-per-dollar is the condom, which is not at all expensive; condoms + an OKCupid account may be the most efficient use of turning resources into fun for people in their 20s. Making a lot more money also exposes you to higher and higher taxes. For someone making, say, $30,000 or $40,000 a year, it might make more sense to stay at a relatively low income OR try to make a very high income of say $200,000 a year.

In Otherwise Known as the Human Condition, Geoff Dyer says that “I have also been able to live on very little money without any sense of sacrifice (a valuable skill, almost a privilege, for anyone wishing to become a writer). Going without things that most of my contemporaries took for granted never felt like hardship. I spent years living on the dole, more than happy with the trade-off: little money, lots of time.” He notes that the Dole provided a generation of artists with enough money for food. We may be heading towards or already at that sort of thing in the U.S. Being a Brooklyn writer is already a cliché. Some people living artists’s lifestyles are writing software instead of prose. Someone like Notch, creator of Minecraft, falls into this category, as do some open-source software writers.

* In some ways early Facebook resembled an art project more than a business, and until relatively recently a lot of people thought Facebook would never make substantial amounts of money. The same spirit than animated its creation animates the “threshold earners” in Brooklyn.

* I have heard friends discuss the benefits of gray economy living (though they don’t use the term “gray economy”), and they usually cite taxes—for good reason. Paying both sides of the Social Security tax eats 15% of a paycheck. Add in Medicare and Medicaid, and even low-wage earners can end up with 20 – 25% of their paychecks eaten by payroll taxes. Someone earning $10 in hard-to-trace cash babysitting in the gray economy is getting a de facto $12 – $12.50, which is a huge improvement, and I see the trends Cowen discusses pushing more people in that direction. When discussing these jobs, I have increasingly heard people ask, “Cash?” The forecasts Cowen makes on page 236 probably increases the number of threshold earners, since it’s not worth making more if the state is going to take more.

* Learning discipline and conscientiousness are major themes in Average Is Over, and towards that end I expect pre-binding commitment software like Mac Freedom and Anti-Social to proliferate. When I was writing this post I reached a point that I didn’t know how to express, so I wandered over to Hacker News and then to a photography forum, and in doing so I forgot the context, so it took five or ten minutes for me to get re-focused on the sentence—which I still needed to resolve. Those micro problems may be growing for many people. It is easier and more fun to “waste” time on the Internet, and for most of us there are rapidly diminishing returns to random reading and browsing, although those activities may feel work-like.

* Cowen notes that software is becoming increasingly good at grading student essays and other written work, and he says that “These programs still need to work out some bugs (a clever student can game them with coherent-sounding nonsense).” Some humanities journals can also be gamed with coherent sounding nonsense. Many corporate and government bureaucracies produce huge amounts of coherent-sounding nonsense, so gaming the system in this way may actually be a job skill.

* The restaurant industry seems to soak up a lot of low- to mid-skill labor, and I’m struck by the extent to which many chefs treat food as art. In New York, where I live now, there is a de facto infinite variety of interesting food, and even someone who restricts themselves to $10 – $20 meals will find innumerable interesting, tasty options. That being said, I see diminishing returns here for all but the most adventurous and exotic of eaters—how much more interesting chefs can get? (I would be happy to be proven wrong here.) Already a lot of menu items look more like differentiating gimmicks than dishes I really want to eat.

The world’s stock of new foods / consumable substances does not appear to be growing rapidly. Genetic engineering may change that, giving chefs a host of new, interesting ingredients to experiment with.

Food has the advantage in that it’s made and then gone; the chefs of today are not competing against the chefs of twenty years ago in the way that, say, writers or musicians are. At bars and clubs I still routinely hear Michael Jackson, Madonna, and Britney Spears.

* I found the first and third sections of Average Is Over much more interesting and useful than the second, which uses games and especially chess to illustrate larger points about human-machine cooperation and the future of the labor market. It could have been shorter, and one (unstated, I think) takeaway is that it’s better to be the person making the machines than the person using them.

* “The ability to mix technical knowledge with solving real-world problems is the key [to new businesses and employability], not sheer number-crunching or programming for its own sake” sounds like something Paul Graham would say, or at least the first sentence does.

* “[W]hen income and wealth disparities are pronounced, everyone who isn’t at the very top will be scrambling for the attention of those who are” is an outcome I hadn’t considered and yet seems true, especially in light of how service industries cater to the very wealthy. Even something like “Pilates studios” may fit this criteria.

* Many things now considered to be “productive” used to be considered useless (like quantum mechanics when it was first discovered). It is also worth pondering what we are trying to be productive for. The long-run answers may be “for its own sake,” or for various kinds of sexual marketplace signaling or kids. Nonetheless, most people do not seem to be asking, or coherently trying to answer: “What are we being productive for?” Cowen writes that “When economists investigate human rationality, they are often too dependent on arbitrary stipulations about what is rational and what is not, expressed in the form of models.” Economist may also be too dependent on productivity and income as proxies for the quality of life (though I do not think this true of Cowen). For example, Philip Greenspun’s post Danish happiness: bicycle infrastructure notes that bikes don’t contribute nearly as much to measured GDP as cars but for many people are a real improvement in terms of the quality of their life.

* Many people have not listened to labor market signals: “the slacker twenty-two-year old with a BA in English, even from a good school, no longer has such a clear path to an upper-middle-class lifestyle. At the same time, Facebook, Google, and Zynga are now so desperate for talent that they will buy out other companies, not for their products, but rather to keep their employees. It’s easier and cheaper to buy the companies than to try to replicate their recruiting or lure away their best employees.” Thinking about men, however, many of the slacker twenty-year olds with BAs in English do substantially better with women and get laid a lot more. There may be a correlation-is-not-causation issue here, however.

* Wow: “Kaiser Family Foundation estimates that a health insurance premium today for a family of four averages over $15,000 and within ten years’ time could be $32,000 or more. That’s more than a lot of workers are worth. Keep in mind that the 2010 median wage in the United States for an individual (not a household) was about $26,363.”

* “Just as Adam Smith and Friedrich Hayek and Michael Polyani stressed that a market economy evolves to the point where it is very difficult to understand the overall interrelationships of production, so can the same be said for many branches of science.” This leaves space for Houellebecq novels and other works about modern alienation, since we often lack a sense of impact in an important way.

* This: “It will become increasingly apparent how much of current education is driven by human weakness, namely the inability of most students to simply sit down and try to learn something on their own” has long been apparent to me and probably to other teachers, and it is largely missing in a lot of the elite online technical discourse about education found on sites like Slashdot, Reddit, and Hacker News, where atypical, highly self-motivated people tend to congregate.

* I am more skeptical of many conventional consulting firms than Cowen (discussed on page 42 – 44), and I see the proliferation of generic consulting firms employing 22 – 30 year olds with little industry experience as symptomatic of the problems in many very large employers—a symptom that may be cured by startups or other competitive means. Do large, well-run companies like Google hire consultants to present PowerPoints?

* “Some of what is going on in today’s global economy is a reorienting of economic activity toward where most of the people are, and obviously, most people live in Asia.” One way to make the U.S. stronger is to bring more people to the U.S., as Cowen says, but that is made difficult by political resentments, misunderstandings, and fears of the other. We are still a highly tribal species.

* “When it comes to technology, progress is usually good, but gradual progress is usually better.” That’s because gradual progress lets people adjust.

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