America’s Complacency Problem: A Long-read Q&A with Tyler Cowen

Some have argued that we are at Peak America – as in, we’ve hit a plateau economically. What kinds of repercussions does that have for culture and American society more generally? And has postwar American culture itself contributed to decreasing economic dynamism? Tyler Cowen addresses these questions in his new book, “The Complacent Class: The Self-defeating Quest for the American Dream.

I recently spoke to Tyler about this, which you can listen to in full over at Ricochet. Also check out the short version of this post here.

Tyler Cowen is the Holbert L. Harris Chair of Economics at George Mason University, and serves as chairman and general director of the Mercatus Center at George Mason University. With colleague Alex Tabarrok, Cowen is coauthor of the popular economics blog Marginal Revolution and cofounder of the online educational platform Marginal Revolution University. Cowen graduated from George Mason University with a BS in economics and received his PhD in economics from Harvard University.

PETHOKOUKIS: Now, in the past you’ve written about America’s economic stagnation, and the great stagnation, and averages over, and I guess this book broadens the thesis. Instead of calling it “The Complacent Class” you could have titled it “The Stagnant Society.” I think your thesis is, since the 1980s, American society has become less dynamic, more risk averse. We’re not starting businesses, we’re not moving, and this is a bad thing. Is that about right?

COWEN: Yes, it’s a bad thing but it’s quite tricky. Mostly, we’re doing this because it makes us happier. Life is safer, more convenient and more comfortable – no one wants to say those are bad things. But, at the margin, if you don’t take enough risk, there does come a time where you start moving backwards, can’t pay the bills, or have decent governance. So over the longer run it’s a bad thing.

I was thinking of the movie “Network” from the 1970s. A famous speech in that is the “mad as hell, I won’t take it anymore” speech. But that’s actually part of a longer dialogue: “We know things are bad – worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is, ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’”

There’s also a little bit of the world just seems like its going crazy: we have automation, we had a great recession, a financial shock, the Iraq War. Some of that [reaction] is withdraw from society.

Yes, some of that is fear and protection. But I see the ’60s, the ’70s as very volatile, dynamic, but also chaotic decades. Crime was high and Americans reacted against this, starting around 1980. And mostly they made this a better country. The ’80s and ’90s are, for the most part, a remarkably pleasant, and calming, and crime-reducing time. And now there are so many Americans who had these decades as their formative experiences. When they see 9/11 and the financial crisis as their first warning shocks of these decades unraveling and, I think now, the dysfunctionality of our governance is the third warning shock. We’re going to have those periodic, shock events that will appear stranger, shocking, or surprising. Goodness, who expected 9/11 or Donald Trump as president.

But they’re going to accumulate into this broader pattern, revealing into much of our social capital in a particular way. That’s how I see where we’re at right now.

What are the key data points you think which would support the idea? First, that we’re a complacent society.

Most of the book looks at different ways in which change in the United States has slowed down. So, for instance, we move across state lines at much lower rates, about 50% lower, that we used to, we Medicaid ourselves much more frequently, we’re not so willing to let our children even play outside, there are schools that have banned the game of tag because it’s too violent, startups are a percentage of overall businesses activity, our DOW, rates of productivity growth, innovation, as we best can measure them – they too are down, our physical infrastructure has barely progressed in many parts of the country, it’s gotten worse, travelling is harder than it used to be.

So we’re in this world where there’s one wonderful, souped up sector – information technology — but we’re using those games to just slow down change in so many other parts of our world. Segregation by income and sometimes even race – that’s gone up in this country. Not what we would have expected a few decades ago.

I think about a family drive we took up the coast of California. We drove from LA to San Francisco and Half Moon Bay. We got hungry, we were looking for a place to eat, and I guarantee you five years we would have eaten in McDonald’s. But instead we Yelped and we found this amazing sandwich place that had a live, small band. We still talk about it. But you would say that we shouldn’t be doing that? We should just be taking more chances and maybe be going to the lousy restaurant that we just happened to stumble upon?

Well I think it’s very important to resist the temptation to call this either “good” or “bad.” It’s good and bad. We need to recognize the main reason it sticks is because it improves our individual lives. Correct? But, at the same time, if it has some negative collective effects, such as the rate of economic growth slowing down, we need to think of a way to counter those effects.

What I see is a country that has so deeply built itself into lower levels of risk taking, self protection, not letting other people move in, safeguarding your community, your children, that there actually isn’t a way out of that box anymore. We don’t have much control over the budget of the federal government anymore. Those decisions have been made, there won’t ever be changes.

So I think we’re at this point. We have this wonderful pleasure machine, it’s made us very comfortable, but it’s also hurdling us to our doom. It’s both good and bad.

Do you think this is just what happens in an advanced, post-industrial society?

Now, was it possible a time, say in the ’70s or ’80s, when we said we were going to make America safer, but keep it more dynamic. You know, probably there was if we had done everything right. Not regulated the economy so much, made the number of very particular decisions go the right way. But, practically speaking, once people are feeling more comfortable, it’s very difficult to budge them off that pass. I call this the cyclical theory of history.

It’s become an old fashioned way of looking at history.

Look, 1910 was a wonderful year from the point of view of much of the world and that didn’t exactly end well. I’m not predicting the exact same sequence of events, but that ought to sober us up and make us realize that everything going quite well for some number of years does not guarantee some magical happy ending.

But what will change? Is it really that we’ll all read your book, recognize that maybe we need to finally shake ourselves up and take more risk – is that how this changes? Or, does this change come at us because we’re not dealing with problems?

It would be wonderful if everyone just woke up and decided to change, but I think that’s quite unlikely. So the book really is predicting that we will go off that cliff, I think we will find a recovery or rejuvenation on the other end, but there will be some very, very serious bumps coming up in our history. This book is trying to create a framework in which we can understand them. Because if we could reverse it now, we might have done that ten years ago. So I’m betting on America staying on it’s third course for some time.

But sooner or later you can’t pay the bills anymore, or your governance gets too bad and you’re not flexible enough. I think we’re seeing early signs of that.

Looking at what’s happening in Washington I don’t sense that policy-makers are looking at the world the way that you’re looking at it right now.

Washington is a mix of the most foolish place in our country, but actually the part with the deepest understanding. It’s the one part of America that gets why it’s so hard to change things. I agree the campaigns were very backward looking. When Trump talked about infrastructure it was repairing roads, tunnels, and bridges – an idea I’m not against by the way – but when that’s the entirety of your positive vision I think that’s quite sad.

And now we see the Republicans controlling the major branches of government and not actually being able to do much with that. And I think that too is reflecting just how deep and far reaching the stasis is. The government is often where some problems show up first.

Ronald Reagan once said that it’s almost like we need an alien invasion so the Soviets and us could work together, because we could see that we share, as a civilization, a common destiny, but we just need some external crisis to force that recognition upon. That idea later showed up in the graphic novel, “The Watchman.”

So we need some sort of external shock. It’s not that we necessarily want it, but it’s just this coming that will shake us up out of places.

Exactly, that’s exactly my view. And I find that very frightening, frankly.

What might that look like? You mentioned debt – any other ideas?

In some parts of Europe – Italy, Greece – it has been debt.

Is Trump that shock?

Trump is the beginning of that shock, but Trump is not the end of the process. My view is not that Trump will bring fascism, but he will be too weak of a president and he will be at another step along an ongoing deterioration of governance in this country. He’s not well informed, he does not know how to work the levers of power, and this country’s not solving its problems under him.

So yes, it seems that Trump has won that race and arrived in first place as the disruptive shock. But it’s also, oddly, a presidency of stasis. The disruption is that you cannot refuse to solve your problems for ever; sooner or later those problems will get their revenge on you.

Thinking about technology for a moment, when I think of disruption and dynamism I think of the tech sector. But the tech sector is also playing a role in creating complacency. How powerful is the force of technology in keeping us stuck in complacency?

Well I think it’s illuminating that you used an example from your own leisure time. So much of tech has improved our leisure time – that’s the big deal. I don’t mean to contradict or gainsay or talk down those gains. What we need for tech to do is to make all the different physical sectors of our economy more productive – give us faster transport, green, safe energy, and more dynamic lives. Driverless cars, for instance. That’s hard to do – to build new energy, infrastructure, get driverless cars up in running. You have the law, you have regulations with a certain amount of custom and risk aversion as barriers. I do think that eventually that will happen and the tech revolution will change everything, not just Facebook. But it’s going to be a lot slower than people think. But that’s why I’m ultimately an optimist about dynamism, even though I titled the book “The Complacent Class.”

Which class are we talking about? Is this just an upper-middle class, rich person’s issue?

Not at all. We’re all the complacent class. You could say complacent classes. You could say that middle-lower income earners, some of the less happy people in this country — they’re more likely to live at home for many years, they’re more likely to try and get on disability, they’re more likely to smoke marijuana, to use pornography rather than having relationships, to have the internet as a pacifier, not to participate so much in protests after the 1960s.

And again, those might be individually rational decisions, but it’s a class that doesn’t seek to much urgency about changing how things are compared to earlier recent times. And they’re relatively unwilling to pick up, move across country, and get a job.

How important is the physical moving? I’ve probably lived, for my job, in 3 or 4 states, multiple homes. For my part, I didn’t enjoy any of the moves — part of me would never want to move again. How important is it that people are willing to take that job if there are no jobs in Kentucky?

You’d have lower unemployment and higher growth, but I’d also stress it is not just the willingness to move. The objective preconditions for the move to make sense also have to be there. So if the most productive cities continue to put up barriers to building new apartments and having affordable rents, it doesn’t make sense to try and move to a lot of California or even Austin, Texas these days or Atlanta — it’s getting harder. New York City.

More and more of the social surplus is being captured by landlords, which was a classical sign for economists of the 19^th century of a stagnation, the Ricardo’s Model, and we are living that in our country. So I wouldn’t just blame the movers, it’s the whole system, we’re all complicit in this.

The more free market part of my personality loves the idea of dynamism, churn, exploring, taking risks, innovation, entrepreneurship, all my favorite words – I love using as many of those words as possible when I write. But then there’s the more conservative, Burkean part of my personality where I think this is okay that people move less and less. We can build and strengthen more in our communities, the little platoons of democracy. People have more stable neighborhoods, more stable families. Part of the stability and the complacency — and a negative version of that is stagnation —  actually sounds very appealing.

Sure, I’m not sure how much more social capital we have in our communities, if at all, but I would say this: There’s an indirect Straussian reading of the book, but it’s also a critique of the people who talk about free market and dynamism. The problem is individual citizens simply don’t like that so much. Most people just want safety, and it may be collectively irrational, but in part the book is just showing how deeply built and human that individual preference for comfort and low risk it is and how hard it is to get out of those traps. So it’s also a critique of those ideas of dynamism.

So is the solution then about nudging people to do something they don’t actually want to do? Or is it reducing barriers and making it more easy for people to do those things, or both?

I think both of those — reducing barriers and nudges. The book is also considering the meta-level question: Why is our country so disinterested in doing either one? We don’t reduce many barriers; I’d say we put more up every year. We nudge people a bit, but actually not that much. The Mormons are the most successful nudgers — maybe that’s more of a nudge — and the rest of us stay pretty complacent.

When we think of nudges, we have Obamacare, the Affordable Care Act – a very forceful nudge. Some people would think it needs to be more forceful to get people to buy health insurance. Other people would say, you know what, we should automatically enroll people not only into healthcare but also into a retirement plan. And both those things, particularly on the right, are very controversial.

So is part of the push-back people saying, “this is my life, this is my freedom, I don’t need anybody nudging me to do anything”? It’s the “leave me alone” strain in American society.

I did not favor Obamacare, but if you’re going to do it, the mandate has to be more than a nudge — it has to be a pretty stiff penalty. The fact that even a democratic, 60 vote majority was unwilling to do that, to me, shows how far our reluctance has spread to make big changes. People hate the idea that they will actually be required and forced to buy health insurance and that Obamacare won’t work, and we’re seeing some results of that.

Are other countries getting this more right? What can we learn from them if those countries exist?

There’s two different directions you can look in. One direction would be, say, Denmark, which is smaller and less diverse. You could say they specialized in complacency for a longer time — they know how to make it work. I think that’s probably true about Denmark, but I don’t think America really has a future just trying to be a very large, 320-400 million person Denmark.

Another example you might look at would be China where life is much less pleasant, but, of course, China is much more dynamic, which is another way of seeing the trade off between dynamism and comfort. Life in China is really very tough and it is because they’re poor, but it’s not just that. Their situations are far, far riskier than ours and that’s connected to their dynamism.

So we need to find some kind of intermediate point between Denmark and China and I think part of what my book is doing is suggesting this intermediate point is not sustainable forever. You can’t just pick your place and sit there. Reality will turn on you and the institutions you set up – they will be gained.

So if you’re right, then the complacency is a moment of time, it cannot last, there will be challenges to shake us out of complacency. So it’s up to us, I guess, to prepare ourselves to take advantage of those changes and then try to manage them in a way that creates a better society?

And to accept we can’t just re-create the past. If people went back and seriously re-read some very simple things from American history, what I’m predicting for the future is what most of our country’s history has been in the past. We’re biased in having lived through through the ’80s and ’90s which were so peaceful a time and crime was always going down. We’ve come to expect that as normal but it’s not, that’s actually just the strange, freakish age.

The end of history.

We got it once, we keep it forever. I’m saying no, I wish! Those were great decades.

How can we instill in ourselves a more risk-taking personality? How do we create that next generation that is going to be more risk-taking? Because you say millennials, in particular, it’s not just that they’re – I’ll let you describe how millennials are different from boomers.

They’re less interested in owning and driving cars, they’re more interested in walking and biking, which, you know, is very pleasant, they seem less interested in starting businesses. I don’t think this is because of them. They grew up in a world of less opportunity and a tougher job market and saw first hand the great recession and the financial crisis – of course that’s effected them. Higher student debt, tuition is higher. So their world is less stable in very many ways. It’s what we gave to them that is the problem, not their own morality.

Recently I was reading about a movement which, I didn’t know of this phrase, but I guess I knew of this mindset — the “de-growth” movement. It’s bigger in Europe where they said, listen, we need to just stop talking about economic growth and stop talking about economic dynamism and we need to just be happy with what we have. We need to share more, it’s better for the environment.

It seems to me that that sort of movement has a little bit of momentum, because what has all the go-go-go growth gotten us? It’s gotten us the financial crisis. Perhaps very slow and steady is just ultimately better for society.

I would rather cast my lot with the non-complacent groups and those tend to be immigrants and Mormons, right? You would not call either of those groups, if you had to generalize, complacent, and they create tremendous value for us. But I think it’s also striking how extreme you need to go. Mormonism is a very comprehensive religion where most of your other friends tend to be Mormons, which is great, but you can’t be, like, 15% Mormon for the most part.

And then immigrants — they come from an entirely different country. They might have a different language, religion. So I think that they are the non-complacent people. I suggest just nudging or talking to people is not going to be very effective. They really need a very different perspective to get to non-complacency.

I would also take that you don’t think much of these measures of happiness. There are these global indexes which a lot of people think of as a replacement for looking at GDP as a measure of whether society headed in the right direction.

They’re useful in a way. So Denmark is often the happiest place and I would not be shocked if Denmark could sustain complacency for a very long time. The mistake is to think the United States can copy them, but in Norway things are going pretty well. They have fossil fuels, they can pay their bills for a very long time.

So I’m not say that complacency can never work, but in a country with a low savings rate, in a country that tends to make decisions now and figure out later how to pay for it, in a country that has a lot of wild moving pieces potentially, I don’t see that as the way forward. I think that we actually have to be dynamic in the United States.

I was looking at Norway, which may have been number one on some happiness survey. They have an upcoming parliamentary election, but their politicians, they were focused on economic growth and how to make their economy more dynamic every bit as much as the United States was.

There’s a bit of a crisis in Denmark too – people realizing, my goodness, if productivity growth stays 1% forever can we really afford all this welfare spending? And probably they can’t. So I’m not saying they don’t face these issues at all, but they can confront with the degree of more consensus than what this country can manage.

What role does population growth and immigration play in making a society complacent? And immigrants – they come here, they take a risk, they come to America, and then do we make them quickly complacent or are they still strivers?

They’re strivers I think most of their lives. It’s their basic personality type. And the move itself, they have to make so many adjustments, which keeps them out of the mindset that everything’s going to be easy. The first 20 years, so many immigrants tend are miserable. We tend not to talk up that part of the experience because we maybe like immigration, or like immigrants as people. But they’re a pretty miserable group in many ways. It’s tough to adjust — you come in from a poor country, maybe especially coming from a poor country.

I get a little worried. Occasionally I see studies that indicate the children of migrants have lost most of that dynamism. I’m not sure if we know the final answer on the numbers there yet. But I do see signs of that, that complacency settles in for the children pretty regularly.

I did take your online quiz – your complacency quiz. I thought I would do – I’m not going to say better or worse – but I feel that I’m a risk taker. I’ve had multiple jobs, I’ve lived in multiple states, yet the quiz has me as complacent. I think that’s because my kids make me go to like, Applebees, versus some kind of high end, niche restaurant. So it’s maybe children are the problem.

As we were making up the quiz, I joked to the others, I said: “There should be an announcement at the end. Anyone who has bothered to finish the quiz counts as complacent.”

I always like to ask a few questions from Twitter. One is, how do you read so many books a year and how do you create time for it? 

Yes. I don’t watch much TV, close to zero; my daughter, Yana, is grown and out of the house, although we still do spend time with her; I don’t waste time much and I think I read non-fiction 5-10 times faster than other people. If you add all that up you’ve got a look books.

Is there a relationship between productivity stagnation and food sophistication?

It’s funny, I just wrote a column on that today for Bloomberg. Music used to be culturally central in this country, and music compels you to dance or act in some way or it makes you angry, or maybe radicalizes you. Now, food is somewhat calming, people want to recline, in the longer run it may make you somewhat overweight. Food is something that is very non-judgmental, you can share it with people, it’s much more gender neutral than some music and certainly sports.

So the fact that food is what people talk about, as much as I love food — I don’t find it an encouraging sign about our nation. I think we’re looking for something too safe, so to speak, and too complement.

You should see dinner at my house – we are very complacent. One more question, and someone asked it because you talk a bit about opioids and depressants, and I think President Trump’s going to create a commission on this. How do we solve our reliance on these drugs that sound like, in many cases, they help us, but they also hurt us as well?

I don’t pretend that I have a solution. Obviously, in so far as the economy becomes more dynamic, fewer people will resort to them. It seems to me that we need to reform how these drugs are prescribed, and how easy it is to forge prescriptions. We could do more electronically and with better monitoring. We need to rethink how these are regulated, and under what conditions they’re handed out and how they’re re-sold.

So I don’t know of any magic bullet there, but the striking thing to me is how little we’ve done, in that during the Obama presidency there was nearly zero talk about this and now its killing more people than aids. It’s done more than enough, but it’s still not a big issue in many, many places. It’s still not really a national issue yet. That, to me, is just stunning.