Average is Over

Average is Over (2013) by Tyler Cowen is an interesting book about how things are changing in the world economy and that economic inequality will shoot up in the next decades. Cowen is an economist who also writes the popular economics blog Marginal Revolution.

Cowen’s thesis in the book is that the combination of people and computing power will make some people incredibly productive and also remove many middle class sustaining processing jobs. Cowen reaches this conclusion by postulating that just as the best chess playing system in the world is the combination of computing power and certain human talents.

It’s not an implausible thesis nor is it certain. It may well be that productivity is not lifted massively for a small proportion of the population without increasing many people’s productivity. Cowen’s focus is skewed concentrating substantially on the US and assuming quite a few trends will continue. Cowen also concentrates on sectors of the economy that may show more of the effect that he is talking about than others. He makes little mention of the wealth being earned by many not highly educated workers in the burgeoning US fracking industry for instance. Cowen does also mention that the US may be peculiar because of the influx of so many very cheap illegal workers from Latin America, but he doesn’t allow for the possibility that they have substantially depressed wages in the US rather than slightly.

But in this book the journey is well worth it even if the destination is questionable. Cowen writes well and bounds nicely from topic to topic when discussing how he sees the future of the developed world. The section on combination chess computers and people makes the book worth a look alone.

Toward the end of the book Cowen goes over how he sees health care costs as continuing to rise and how government is promising more in entitlements than it can realistically deliver. He doesn’t consider the idea that the public sector could become more efficient and cheaper. Health care systems like Singapore spend a quarter of what the US health care system does for at least comparable outcomes. Cowen doesn’t look at how Singapore and then Australia tamed the pensions monster with compulsory savings.

Average is over is well worth reading. It’s not brilliant but it is thought provoking and the quality of the writing and the breadth of Cowen’s various chapters makes it a crisp, fun read.

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