Can the American Dream Survive the End of Average?
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  • Anthony

    If Cowen is correct, then the technology that we desperately need is genetic engineering – stat – in order democratize access to the high iq that is required to succeed in an information economy. Sometimes I think about how much I’d be able to accomplish with a higher IQ. I’m sure I’m not alone.

  • Anthony

    The ability to understand data would be the most powerful skill in the 21st century (Elliot Schrage). Equally, the interplay between new technology and education is shaping income distribution.

    Now, what has above got to do with Andrew’s review and average American going forward? It brings to mind the rise of the Alpha Geeks and the culture and economic engine they created in some sectors. Moreover, their example illustrate thrust of review. That is, equity differential comparatively speaking is proportionately smaller as measured by material and life style acquisitions for average people (whatever that means) but the income premium from top flight education has grown immeasurably. So, opportunity beckons Americans of average societal standing via a 21st century “new thing” (insight, algorithm, technology) that give equal opportunity to the merited. However, problem of societal adjustment to effects of new forms of capitalism’s corollary creative destruction still require public engagement.

  • Fred

    Cowan seems a bit overoptimistic to me. It seems that any meritocracy will eventually become an aristocracy as the ones who initially get the stuff on their merit use the stuff to create conditions that allow them to keep the stuff in their families and social class.

  • Mark Michael

    The idea of measuring how many labor minutes it takes to buy the various items in the “basket” of consumer items that represent the average person seems like a useful alternative way to look at how well people live across the income range. Another way that some economists use is to take each of the 5 income quintiles and measure what that quintile had in the way of possessions 40 years ago and compare it with today. Many items, such as cars, have not only improved a lot in quality, but the bottom quintile owns more cars of a newer age. Same is true of TVs, phones, size of apartments/houses. Better food, clothing.

    Warren Meyer on his Coyote blog noted that we have just one CPI for the entire nation and one official poverty line based on one average income scale and that one CPI. This applies to someone living in high-cost Manhattan and low-cost Texas! A better way to compare would be to use a “Purchasing Power Parity” Index that adjusts for these variations. (The CIA World Fact Book uses the PPP Index.)

    Further, Americans have been migrating from those “blue” high-cost states such as NY, CA, MA, NJ, MD, CT, RI to “red” low-cost states such as TX, Ala., NV, AZ, NM, OK, FL, GA, LA. They can live more comfortably with more material goods bought on a lower income in those states. BUT, in the official statistics, their average income has fallen, depressing the national statistics for income annual growth! How big an effect is this? Meyer was not aware of any rigorous studies that try to measure it.

    The motivations of those who want to use income inequality to justify more interventions in the economy by the federal government have no interest in pursuing this avenue of research, I’d assume….Which brings one to the psychological question of what really motivates the human to participate in society, the culture, etc.? How strong is the “alpha male” instinct to organize society in an authoritarian, command-style hierarchical arrangement? Sort of like the old Indian caste society or the old Chinese Middle Kingdom with its caste layers. Or Western feudal societies with a king, aristocracy, merchant class, university elite, and peasants at the bottom.

  • Dan King

    I’ve posted my own review of Average Is Over here:

  • korby

    I’d argue that you have it backwards. Income equality “largely driven by differences in social status” is actually preferable to income equality resulting from a perfectly meritocratic sorting. In the former case, everyone knows that many of the wealthy owe their success to connections or family. So it’s pretty well understood by fair minded people that the elite don’t really “deserve” their wealth or status, or at least that as a class they don’t have any real claim to be superior–in intellect, morals, genetically, or by any other important standard–to the lower classes. And that is very important to the social fabric. It means that people can sincerely espouse ideals like the notion that all citizens should be equal before the law, on the grounds that a rich man and a poor man aren’t inherently different. That is, we might recognize that all men are not actually created equal, and that some people are superior (in abilities, morals, or whatever) and others inferior. But we have no reason to expect that a person’s position on the spectrum of human excellence is correlated to the size of his savings account.
    A meritocratic elite, by contrast, will see its wealth as the evidence of its inherent superority–they worked harder, they resisted temptations better, they simply have sharper minds, and so they came out on top. It will be perfectly plausible for the wealthy to regard themselves as the moral or genetic superiors of the lower classes.
    So, the point is this: you suggest that “income equality is not the best gauge of societal equality. Perhaps opportunity equality should be what we strive for.” I guess a meritocracy is probably where we are headed, and on balance I guess that’s good. But I don’t see why you are so confident that the losers won’t feel “slighted by the system.” More likely, whether or not they realize that they lost fair and square, they’re going to hate it. As for the winners, I think an elite that really deserves their position, and knows that they do, will be do more damage to the social fabric than anything that came before.

  • qet

    I haven’t read Cowen’s book yet, but based on Lewis’ excerpts and summaries, I’d say Cowen has missed the mark, which is not untypical for an economist. His notion of equality of opportunity is strange. I can only assume that the reason he believes this is something that [i]will[/i] occur rather than something already existing is that he imagines that in the future machines will take over the judgment function as well,and therefore will judge people free of all of the prejudices and bigotries that presumably operate today in human judging to deny merit its due. But where I really think Cowen goes wrong is in his emphasis on economic measures of equality. There is no sound economic reason why growing economic inequality should have any negative social effects if those in the lower echelons are, as indeed in the 2013 West they are, fed, clothed and housed, free of plagues and wars. It has required 6,000+ years of human history for the overcoming of famine, pestilence and continuous warfare for the supermajority of at least Western societies. For all that time these were the enemies to be defeated and supplied a purpose to human existence, at both the individual and societal levels. Now we have hundreds of millions of adequately fed, clothed and housed people living free of epidemics and constant warfare. What is there for all of these people to do with their lives?
    I think that Charles Hill’s piece in the Sept/Oct edition of TAI is far closer to the truth than Cowen’s prognostications. In a word: boredom. This has been understood as a danger since at least the time of Seneca, when the Roman world had achieved an approximation of the plenty that I allude to above. Even if Cowen’s perfect meritocratic world comes into being, that 85% who don’t rise to the level of the machines are still going to have their basic needs provided for and thus their entire lifetimes in which to be bored. Boredom can lead to social upheavals. The Jasmine Revolution is termed the Dignity revolution by Tunisians. As I understand it, Tunisians were largely provided for in their material needs by the State, but there were no suitable jobs for the masses of young educated people. The man who immolated himself and started the whole thing was a university graduate who was reduced to pushing a vegetable cart because there was nothing else for him to do, but he wasn’t starving (at least I don’t believe that he was).
    Lewis cites Adams’ definition of the American Dream, that life is to be “better and richer and fuller.” Cowen and other economists can only understand such terms as economic variables, but Hill is closer to the mark when he suggests that it is the prevalence of boredom among the masses that is what is interfering with their achievement of Adams’ criteria.

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