Cowen On Complacency

A week ago I summarized and critiqued five books wherein Peter Turchin tries to document and explain two key historical cycles: a several century cycle of empires rising and falling, and a fifty year alternating-generations cycle of instability during empire low points. In his latest book, Turchin tentatively tries to apply his theories to predict the U.S. near future.

In his new book The Complacent Class, Tyler Cowen also takes a bigger-than-usual historical perspective, invokes cycles, and predicts the U.S. near future. But instead of applying a theory abstracted from thousands of years of data, Cowen mainly just details many particular trends in the U.S. over the last half century. David Brooks summarizes:

Cowen shows that in sphere after sphere, Americans have become less adventurous and more static.

The book page summarizes:

Our willingness to move, take risks, and adapt to change have produced a dynamic economy. .. [But] Americans today .. are working harder than ever to avoid change. We’re moving residences less, marrying people more like ourselves and choosing our music and our mates based on algorithms. .. This cannot go on forever. We are postponing change,.. but ultimately this will make change, when it comes, harder. .. eventually lead to a major fiscal and budgetary crisis.

In each particular area, Cowen documents specific trends, and he often offers specific local theories that could have led one to expect such trends. For example, he says fewer geographic moves are predicted from fewer job moves, and fewer job moves are predicted by workers being older. But when it comes to the question of why all these particular trends with their particular causes happen to create a consistent overall trend toward complacency, Cowen seems to me coy. Let me discuss three passages where I find that he at least touches on general accounts.

In the first chapter, Cowen seems to identify a core theory:

The forces behind the rise of the complacent class are quite general. For better or worse, the truth is that peace and high incomes tend to drain the restlessness out of people (p.6). .. These more complacent dynamics in American life started, in their most general terms, in the early to mid-1980s. .. This added social stasis came roughly at the same time as a slowdown in the rate of technological progress, starting in the 1970s. .. You can think of this book as detailing the social roots of the resulting slow growth outcome and explaining why that economic and technological stagnation has lasted so long. (pp.11-12).

The problem here is that the phenomena Cowen seeks to explain, complacency in the US since the mid 1980s, is much more specific than his explanation, peace and high incomes. For the last few centuries incomes have been rising world wide, and most places are at peace most of the time. (And people are older everywhere.) Yet even though in this period most times and places have had peace and rising income (and older ages), most have not suffered the increasing complacency that Cowen documents in the U.S. lately.

The second general account is found in the last chapter, in a section on “The Return of Instability At Every Level, Including the Global”.

We’ve learned about the business cycle, but only now is it starting to sink in that such patterns have a lot of power to explain cycles in other realms as well. .. The biggest domestic and social question of the next few decades will be this: When it comes to ordinary, everyday American life, how quickly will matters turn chaotic or disorderly again, and what forms will that implosion take? .. The biggest story of the last fifteen years, both nationally and globally, is the growing likelihood that a cyclical model of history will be a better predictor then a model of ongoing progress. .. All of this can happen even if you think the majority response will be a great and greater love of peace. (pp.199-200.)

As these are the only boldface sentences in the entire book, Cowen is clear that we should take cycles seriously. Except he doesn’t favor any particular theory of cycles, identifying neither key timescales nor key driving parameters, nor offering specific historical cases he considers analogous. Instead he’s more like the creepy older man in The Graduate, who said just one word, “plastics.” Cowen’s one word: “cycles.”

The third passage that touches on a general account is in the chapter on politics:

While the dynamism, egalitarianism, and democratic spirit of America provided the foundations of Tocqueville’s book, .. he understood that current historical trends were by no means guaranteed to be permanent, and America’s restlessness might contain the seeds of its own demise. 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 American might be too complacent, too self-satisfied, and above all too unwilling to regenerate the energies that once made it great, and thereby fall into mediocrity. (p.168)

This talk of a fall from greatness to mediocrity sounds to me like regression to the mean, the theory I favored over Turchin’s inequality account to explain falling cohesion in empire cycles. A society that finds itself at an extreme along some parameter should expect, all else equal, to soon slowly drift back to the middle of the distribution. Yet, when I asked him in front of large group recently, Cowen explicitly rejected both this mean-regression story, and also Turchin’s fifty year instability cycle, as accounts of the changes he sees. Cowen insisted that the U.S. will retake its role as the world’s top innovator.

So, bottom line: compared to most times and places, the U.S. has been especially complacent lately in many areas, for many specific reasons but for no identifiable general reason, except maybe in part for peace, wealth, aging, and Tocquevillian satisfaction (whatever that is). But these changes will soon revert, because “cycles.”

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  • Proper Dave

    Yes the “Cycles” thing is to be honest, BS.
    Apparently the “Cycle” theory by Strauss is very popular with some conservatives.

  • Lord

    So I guess the difference between reversion to the mean and cycles is the reversion is beyond the mean, that stability is unstable?

    • Reversion to the mean can be part of a cycle, when there is another process that pushes away from the mean. That was true in Turchin’s empire cycle theory.

  • David Condon

    “Yet, when I asked him in front of large group recently, Cowen explicitly rejected both this mean-regression story, and also Turchin’s fifty year instability cycle, as accounts of the changes he sees. Cowen insisted that the U.S. will retake its role as the world’s top innovator.”

    I would like some clarification on this. Who is the top innovator? Regression to the mean and innovation dominance are not necessarily in conflict. I would agree with a regression to the mean account, but that’s because what is occurring is not unique to the US, but occurring generally in rich countries; that doesn’t lead to a prediction about who will innovate most.

    My general explanation would be that previous innovation depended on areas which could readily be converted into some form of monetary exchange, and therefore improved via a combination of free markets and capital investment. Future innovation will be dependent on areas that cannot be easily tied into a system of monetary exchange, and so either new systems of exchange or new systems of conversion will need to be developed to improve them. This would particularly apply to education, health care, relationships, and governance.

    I would also predict a general level of gdp improvement above historical subsistence level increases solely from a monetary exchange system even if new systems aren’t developed, but the observational evidence suggests innovation is continuing to fall.

    • Future innovation will be dependent on areas that cannot be easily tied into a system of monetary exchange

      Could you elaborate on why that’s the case?

      • David Condon

        Well, I’ve already named education, health care, relationships, and governance. Education and health care have sort of been tied into the market, but it’s not clear how much that has lead to improvement even though it has lead to a whole lot of spending. If those two are removed from gdp figures, things get real grim, real quick. Markets work best when goods are simple, tangible, and quickly and easily exchanged. If I make the rough comparison of education and health care to relationships and governance (although this is a guess based on apples and oranges), then there does appear to be some advantage to markets in these areas, but it’s small and expensive.

        New systems of conversion would include prediction markets and bitcoins. The best alternative existing system would probably be academic publishing which primarily trades in prestige, but alternative ideas I think could lead to something useful include wikis and the good judgment project.

    • consider

      “I would like some clarification on this. Who is the top innovator? ”

      It depends on the survey. Bloomberg ranks:

      1. South Korea
      2. Japan
      3. Germany
      4. Finland
      5. Israel
      6. United States
      7. Sweden
      8. Singapore
      9. France
      10. United Kingdom
      11. Denmark
      12. Canada
      13. Australia
      14. Russia

      22. China

  • Sid

    I must say, I applaud Tyler for remaining close friends with you in spite of—and probably because of—your cutting criticism of some of his work.

    • I am honored to have Tyler as my colleague and friend.

    • Vítor Margato

      I too find it amazing how all those people, including e.g. Bryan Caplan, manage to be so blunt in their criticism to each other’s work and remain such close friends. The kind of people able to do that is rare and admirable.

      • Robin was very diplomatic. Were I to have reached Robin’s conclusions about the book, I would express it as “Tyler published his book prematurely.” There’s just not enough there to constitute a book.

  • Sondre R.

    A strong point, but aren’t these two perspectives better together than apart?

    -> Reversion to the mean usually happen
    -> But what is the driver?
    -> In this case it may be peace, wealth, satisfaction.
    (I have a sensethat globalisation of culture is also a driver)

    Without guessing the driver of the reversion, one cannot hope to draw anything normative from the analysis. Wouldn’t you agree?

    Reversion to mean seems to be a big and general problem. Any successful people, organisations, countries will want to avoid reverting to the mean on what make them successful in the first place. While on “bad” things, it might be useful.

    How can we avoid reverting to the mean on our “good traits”, when we are good and the average is bad.

    • Sondre R.

      I do think any system that exists over time must have self-reinforcing mechanisms built in to survive over time. The seeds of its future creation.

      In government we have constitutions and the supreme court as such a check to prevent reversion to mean on “key principles”. Though I suppose we don’t really have such a built-in system for regular check-ins and clearly defined principles in culture, so it will just mix with global culture, as it has.

    • Noumenon72

      You don’t understand reversion to the mean exactly. It doesn’t need a driver, it happens even if you assume the next generation is exactly the same as this generation, just because those who were above the mean were lucky and luck isn’t likely twice.

      • Sondre R.

        Yes, thanks, that is fair.

        But still, unless Hanson thinks it’s all random in culture and nothing matters except luck from one period to the next, then it is still a relevant question to ask.

        But now that you say it, I have a sense that reversion to mean isn’t the right model, but that just mixing or entropy is. As culture is becoming globalized and the internet came, one would expect the US culture to be mixed with that of everyone else. Which would yield the same observations as reversion to the mean, but instead because there weren’t strong enough containing or self-reinforcing mechanisms to the US culture or systems to maintain it’s system.

      • Candide III

        No, actually Sondre is right. Reversion to the mean is an observation, not an explanation. It is just as incorrect to use it as an explanation as to attribute soporific qualities of opium to its dormitive virtue. The actual explanation of the underlying mechanism may be as simple as “luck isn’t likely twice” (reversion to the mean in a sequence of coin tosses) but it is necessary and distinct from the observation of the reversion to the mean. Also, I find “luck” an unsatisfying explanation of almost anything more complicated than shooting dice. Using it to explain cultural patterns is the acme of superficiality.

      • I take this point to obliterate Robin’s “explanation.”

  • notlars

    “Aging” gets mentioned in passing, but it strikes me that the baby boom explains a lot more of American culture (writ large) than it’s usually given credit for. Such a numerically and thus culturally dominant demographic bulge has ossified American notions of what is “right,” to the the detriment of the mobility that preceded it. (It doesn’t help that the bulge coincided with the spread of technology enabling a more national culture, like TV.) Only today did the idea of the “American dream” as owning a house in the suburbs get superseded by milennials who are happy in walkable inner cities; the words “anti-war” still conjure up hippies, not rational adults opposed to destruction; the Trump election is plausibly seen as enabled by those seeking an economy (and society?) more akin to that of the 1950s and 60s; etc etc. There are surely other trends, but let’s not forget that the boomers have dominated American culture for decades in a way no other generation had.

    • Vítor Margato

      About this: “Only today did the idea of the “American dream” as owning a house in the suburbs get superseded by milennials who are happy in walkable inner cities”.
      They may be happier than boomers in walkable inner cities (I sure think they are), but “millenials are less urban than you think” (https://fivethirtyeight.com/features/why-millennials-are-less-urban-than-you-think/).

      • notlars

        Thanks. This is speculation, but I wonder how much of that is because the cities haven’t yet caught up to the demand. Flight from urban areas took a few decades (and started with boomers’ families taking to the suburbs), and I bet re-urbanization will take a while, too. If/once the primacy of the car is reduced a little, I think the shift will begin in earnest.
        But now I’m drifting from the post topic…

  • bcg

    Was your question to Tyler Cowen in a video or a presentation or part of a larger discussion in that manner, and if so is that publicly available or will it be?

  • JW Ogden

    I generally reject theories of cycles. To me it seems that to be a cycle the time period needs to be the same each cycle and the up must logically lead to the down.