Is This the End of the American Dream?

Prosperity for all Americans is no longer the order of the day: The income of a typical American family reached its peak in 1999 and has only declined since then. In a thought-provoking book, “Average Is Over,” the economist and blogger Tyler Cowen predicts that the circumstances of the American middle class will continue to get worse. During the recent crisis, the U.S. economy lost many traditionally middle-class jobs. Cowen explains that the middle class is destined to disappear and that the job market gap will continue to grow. On one side, a minority of Americans will become more and more prosperous, thanks to the accrued importance of employment in tandem with artificial intelligence. The members of this new elite are not necessarily computer science experts, but they know how to creatively and innovatively use artificial intelligence to solve practical problems.

The rest will have to be satisfied with relatively poorly paid positions in the service industry. The ones who are better off will have positions that deal with improving the “client experience” of the new elite, helping its members to feel as best as possible. This trend toward a widening gap in the American job market is well known among American labor economists. Cowen adds to this knowledge a more detailed outlook for the future.

In this new polarized world, the capacity of the individual to be self-motivated will become more and more important.

Information will become more and more easily accessible, notably through online coursework. So, it will be easier for any student who is talented and motivated to learn to work with artificial intelligence and so rise to the level of the new upper social class. The best students of developing countries, from Ethiopia to China, will have greater chances of rising to the [status of] global elites. On the other hand, those who are not motivated enough will trail behind and find it more and more difficult to find work. Even for the least well-paid service jobs, a good amount of motivation is required to wholly satisfy the demands of the new elite.

Cowen has called this new job market situation a “hypermeritocracy.” In one sense, it represents the triumph of the American dream since it is easier and easier for talented and motivated individuals to rise to the [status of the] elite. At the same time, from the point of view of the average American, Cowen’s portrait of America in the future looks more like a dystopian nightmare. In fact, the average American’s circumstances will be worse compared to what past generations experienced: Cowen predicts that not only will the average American be unable to rise to the level of the elite, but the government will allow the average American to fall by limiting public services and social security.

While Cowen’s predictions are not completely unlikely, I do not necessarily believe them, and that’s for two reasons. First of all, I have noted several mistakes in the book in my area of expertise, labor economics. Therefore, I have less confidence in the author’s predictions: If he is making mistakes in my field, then why would I think he is not making them in others as well? The second reason is the author’s right-leaning politics — to which he admits, by the way. This bias leads Cowen to describe the government’s retreat as inevitable. In particular, he thinks that taxes could only rise to “confiscatory” levels in order to maintain public services. But this description is politically biased because income taxes have only significantly decreased in the U.S. since the glorious 1930s. There must be some room to increase them, then.

Cowen gently pokes fun at those on the left who think that inequalities will lead to revolution. According to him, an aging society at the top of the global economy is less conducive to revolutions. It seems to me that this speculation ignores important historical examples, especially the example of France, which has experienced many revolutions despite being a world power. It would be interesting, by the way, to ask ourselves to what extent Cowen’s dystopian predictions apply to French society.