What Ails America? I. Complacency


The economist, Tyler Cowen, has just published a very interesting new book, “The Complacent Class,” which makes a strong case that American society has lost much of its dynamism in recent years largely because of our increasing fascination with the world of information.

Here are some of the features of societal complacency:

  • Fewer Americans are moving. There is less rapid job turnover today and a lower rate of entry for new businesses. Large firms are replacing smaller firms and they have less employee turnover. Globalization exports some jobs from the U.S. but leaves the country with a more stable set of jobs overall. The lack of geographic mobility is holding back income mobility.
  • The Reemergence of segregation. In fact there is more segregation by income, by education, by social class and by race. The most heavily segregated cities are the high-tech, knowledge-based metros. This is because the rich and well-educated are keener to live together in tighter bunches and groups. In addition, nationwide the average black student attends a school which is only 8.3% white.
  • Americans have stopped creating. Startups were 13% of the firms in the country in the 1980s but only 7% today. It is harder for new firms to get up and running and successful firms stick around longer. Market concentration is growing in the U.S. There are only two major phone carriers, four major airlines, and major health insurance companies are likely to consolidate from five to three. Nearly 2/3 of publicly traded companies were selling in more concentrated markets in 2013 than in 1996.
  • Matching continues to spread. In the 1930s 1/3 of urban Americans married people who lived within five blocks. For couples who married between 2005 and 2012, 1/3 of them met online. In other words, “assortative mating” has become much more common. Family-connected decisions accounted for 1/3 of the rise in income inequality from 1960 to 2005. Internet matching also helps in job searches. Clearly, matching is disproportionately benefitting better-educated and more productive workers.
  • Calm and safety above all.  Physical disruptions, in the form of riots or protests, are harder to accomplish these days compared to the 1960s and 1970s.  Police departments are more sophisticated and use managerial science, information technology and surveillance to control potential troublemakers.  Antidepressants are now used by tens of millions of Americans.  The heavy use of electronic screens keeps kids calmer and more tranquil.  Our more “feminized” culture is allergic to many forms of conflict.

Conclusion. “Americans are working harder to postpone change or to avoid it altogether. This is true for corporate competition, changing residences or jobs, building things, and social relationships.”  This “complacency” has huge political ramifications.  Stay tuned!

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