U.S. Economy

Debating American Complacency

Dynamic U.S. traditions are giving way to the comforts of a stagnant status quo. At least that's how one of our columnists sees it.

Nice work if you can get it.

Photographer: CARL COURT/AFP/Getty Images

In his new book, "The Complacent Class," Bloomberg View columnist Tyler Cowen argues that Americans have abandoned their dynamic traditions for a comfortable status quo. As they move less, start fewer businesses, marry people more like themselves and make lifestyle choices based on algorithms that wall them off from the unfamiliar, Cowen says Americans are creating a nation that is segregated, unequal and stagnant. Cowen's Bloomberg View colleague Noah Smith has some reservations. They discussed the book by email.

QuickTake Secular Stagnation

Noah Smith: “The Complacent Class” did an excellent job weaving together a large number of seemingly unrelated threads in our economy and society, and that’s hard to do. But despite really liking it, I’m going to play devil’s advocate. First, I noticed that the book isn’t really about a class at all -- it’s about a generation, the Millennials. And it mostly isn’t really about complacency either -- it’s about people seeking safety and security. “Complacency” seems more like blithe optimism, which I think we’d agree most Americans now lack. Why didn’t you call the book “The Stagnation Generation”?

Tyler Cowen: The core trends outlined in my book start at different times. The productivity slowdown begins in 1973. Declines in interstate mobility start in the 1980s. The bureaucratization of protest begins late in the 1970s. Some of the bad segregation trends start turning the wrong way in the 1980s and 1990s. Some of the other trends are more gradual, such as coddled upbringings for our children, and do not have a distinct start date.

Sometimes Millennials are defined as the generation born between 1982 and 2000. They are experiencing these trends, but they are not the main culprit, and thus I do not wish to implicate them in the title.

I think of complacency in terms of a lack of sense of urgency about our nation’s problems, not happiness per se. Many people are afraid, but they do not respond with urgency, immigrants often being one exception to this.

Smith: Putting aside timing, I want to keep focusing on whether it’s really complacency that we’re dealing with. In his book “The Great Risk Shift,” Jacob Hacker showed several ways that our society has transferred risk from organizations to individuals. Nowadays, getting sick can be financially ruinous. Pensions have been replaced by 401(k)s. Corporations have little sense of loyalty to their employees, so everyone knows they could be laid off at any time. Americans have also been encouraged to take out huge amounts of personal debt, especially student loans and mortgages, which means that any income drop can kill their credit rating. Is it any wonder that Americans are afraid to quit their jobs, move to new cities, and start businesses? And is it right to call that fear “complacency”?

Cowen: For one thing, it is not clear that, the Great Recession aside, real income volatility has gone up over time in the U.S.

But the more general point is that, while not everyone is happy with how the American economy has been evolving in this new arrangement, individuals seem to be more complacent in their reactions to it. Consider the lower-income groups in America. They’re not willing to take the same jobs that immigrants do, in part because those jobs are tough. They live for longer with their parents, they play more video games as a substitute for employment and they seem to consume more leisure time. They try harder to get on disability. And they seem increasingly disengaged from politics.

I see those as the reactions of complacency, rather than urgency, and they are more pronounced in recent times.

Smith: I’m not quite convinced. Income volatility might be the same precisely because people are taking more steps to limit it -- not switching jobs or starting businesses. As for poor people, I see many taking big risks in the drug trade -- the risk of death and injury from getting involved in that business is much higher than from moving across the country.

OK, but suppose you’re right, and Americans have become more complacent. You suggest that this might partly be a natural reaction to wealth -- in a poor or war-torn county you have to take risks to survive, but in the U.S. or Europe or Japan you can live a decent life for very little risk. I’ve certainly seen this dynamic at work in Japan. Isn’t this a good thing? Didn’t our ancestors work and sacrifice and take risks precisely so that we could enjoy the luxury of complacency?

Cowen: Poor people taking risks in the drug trade seems to have peaked in the late 1980s, when the stimulant cocaine was a major influence. Today we are safer with our choice of illegal drugs, for the better I would say, but nonetheless that reflects a broader social change which is not in every way positive. 

I agree that complacency is very often individually rational.  But there is a negative social consequence, as dynamism fades and innovation slows down and mobility stalls. We’re living with the consequences of all that right now.

Think of it as like a well-known argument from macroeconomics. Keynes suggested that if all investors try to be in the safe, liquid assets, the economy actually will end up as less safe, as investment declines. The same kind of paradoxical result is possible at the level of individual risk-taking with life and career decisions, albeit over a longer time horizon.

Smith: OK. I wanted to press you on a couple more things. First, you discuss how productivity growth has slowed down, but you also mention that people might be slacking off a lot more at work. Don’t those two contradict each other? If people are producing the same amount as before in half the time and spending the other half of their day surfing the net, doesn’t that mean true productivity has risen rapidly?

Second, you discuss how matching leads to complacency -- how the Internet allows us to find jobs, mates, and consumption goods that are perfectly suited to us, and how this can make us lazy and over-satisfied. But you also talk about how people, especially working-class people, are getting stuck in high-unemployment places. Isn’t better matching part of the solution to the mobility problem?

Cowen: People slacking off at work is a possible contributor to our productivity problems, but it is not the main factor I cite. Overregulation, having reached various technological plateaus, more expensive energy, higher start-up costs, and general malaise and risk-aversion, among other factors, are probably more important. That said, on-work slacking is a useful rejoinder to the view that the internet is a pure positive for output growth – it isn’t.

I don’t think better matching will help solve our regional development problems very much. In our current “Linked In” world, labor-market adjustments seem slower than they used to be, in response to economic downturns. I agree that this is somewhat paradoxical, and I don’t think I have close to a full explanation. It could be that people get matched to better jobs elsewhere, but are simply unwilling to move and take them – on this further study is required!

Smith: Thanks, Tyler! I think that covers my biggest reservations about your thesis. Doubts aside, you’ve identified a real and problematic trend that runs through many elements of modern American society.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the authors of this story:
    Tyler Cowen at tcowen2@bloomberg.net
    Noah Smith at nsmith150@bloomberg.net

    To contact the editor responsible for this story:
    Jonathan Landman at jlandman4@bloomberg.net

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