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A New World of Work

by Michael R. Strain

Average Is Over: Powering America Beyond the Age of the Great Stagnation, by Tyler Cowen (Dutton, 305 pp., $26.95)

While I was driving through Washington, D.C., recently, a maddeningly familiar scene was unfolding. The GPS seemed determined to ensure that we were never on the same road for more than 1,000 feet, didn’t understand how to navigate a roundabout, instructed me to turn the wrong way down a one-way street — and I was growing so irritated that my wife was threatening me with divorce. Fortunately, at that point, I remembered something I had read that afternoon in the excellent new book of George Mason University economics professor Tyler Cowen, the memory of which sparked a directive: Work with the GPS; don’t follow it like you’re a robot, and don’t work against it.

The key to success in the world of tomorrow, forecasts Cowen in Average Is Over, is no more complicated than that: Work with the machine.

The basic story has been unfolding for the past few decades. As computers grow in importance in the production process, the labor market will reward those whose productivity is enhanced by working with computers. And those who are competing against computers will be in trouble.

Think of three occupations: engineer, bank teller, and janitor. Computers come along. The engineer is now much more productive because she can make calculations and work through designs on her computer, and so her wages go way up. The janitor is basically left alone: Robots can’t clean up an office building at the end of each day. The bank teller is in the most unfortunate position. The computer — in this case, an ATM — can do what the bank teller does, at much less expense to the bank.

In this scenario, the economy keeps the high-skill job (engineer) and the low-skill job (janitor), while the middle-skill occupation (bank teller) vanishes. People who would have been bank tellers now have to find something else to do. Either they will become significantly wealthier by becoming engineers, or they will become significantly less wealthy by becoming janitors.

To say it with Professor Cowen’s pith: Average is over.

Economists refer to the disappearance of middle-skill, middle-earning occupations as “labor-market polarization,” and they expect this trend to continue over the next several decades.

This analysis is not original to Cowen. What’s distinctive about his book is his understanding of the impact this trend will have on society as a whole and on people’s daily lives.

Imagine you are in a business meeting, negotiating a deal. You’re about to say yes and shake hands, but then your computer tells you to walk away. The computer knows that the deal you’re about to accept is bad. Should you listen to the computer? Should you ignore it? (The same thing will happen on a date: Your pocket computer tells you to kiss your date now. Do you obey?)

The ability to succeed in this new world comes down to some basic personality traits, including the ability to handle this type of man–computer interaction in high-stakes, stressful situations. “We can expect to see dramatic gains in the personal and professional lives of people who interpret machine feedback — of all kinds — quickly,” writes Cowen. People who respond to computers the way I was responding to my GPS will fail. “The gains . . . will go to the hardy,” predicts Cowen, “those who can manage stress and embarrassment, but not necessarily to people who act like robots.”

One of the most interesting passages in the book concerns the physician– computer team of the future. The computers that deal with our health will be very smart — but how much medical knowledge will the human operator need to have? We’re “pretty far from accepting this fact,” writes Cowen, “but the person working with the computer doesn’t have to be a doctor or even a medical expert. She has to be good at understanding and correcting the computer’s mistakes, which is a very different skill.” She must have “knowledge of smart machines, how they work, and what their failings are likely to be.”

Unlike me and the GPS, the good physician in Cowen’s future knows how the computer works and when to overrule it — how to work with it, as a weird combination of the computer’s assistant, maintenance man, and supervisor. This is the skill that matters. The human in the man–computer physician team doesn’t need an M.D.

Of course, not everyone will have this skill. What other types of occupation will spring to the fore in Cowen’s new world of work? Cowen expects a significant increase in the prominence of marketing, as getting people’s attention and keeping it will be increasingly important. Related is the importance of personal services to the wealthy: florists, chauffeurs, party planners, landscapers, and the like. And “it sounds a little silly,” writes Cowen, “but making high earners feel better in just about every part of their lives will be a major source of job growth in the future. At some point it is hard to sell more physical stuff to high earners, yet there is usually just a bit more room to make them feel better. Better about the world. Better about themselves. Better about what they have achieved.”

So wages will go up for those who can handle man–machine partnerships, and for those who cater to the material and psychological needs of the wealthy. Cowen thinks we won’t talk about the 1 percent anymore — more like the 10 or 15 percent. Combine a lot of wealth in the top 15 percent with a dearth of middle-class jobs and stagnant or even falling wages at the bottom, and you will have a significant increase in inequality in Cowen’s future.

But this will be a different kind of inequality from the one many on the left argue we have today. Take a prominent inequality critic, Paul Krugman, who wrote recently that “the effect of [the] concentration [of income at the top] is to undermine all the values that define America. . . . We’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity.” Cowen envisions, instead, a future of inequality driven entirely by equality of opportunity, what he describes as a “hyper-meritocracy.” Everyone will be rated on every aspect of his life: how good a patient he is, how good a worker. There will be fewer second chances, so people who exercise discipline in their youth will be rewarded. And the hyper-meritocracy (fueled in large part by cheap, high-quality online education) will mean that anyone will be able to shine — provided he’s got the goods. Sons of wealth and privilege may never reach success, while young people born in the developing world will routinely die in old age fabulously wealthy. Income inequality will be vast, but it will be a golden age of economic mobility.

The book is not without its flaws. It can be repetitive, its organization could be tightened, the middle third drags (unless you’re really interested in chess), and there are a couple of basic errors (the labor-force-participation rate is not the share of people of appropriate age “who in fact have jobs”).

I also wonder whether Cowen underestimates the role of politics. He argues at length that the income inequality he foresees won’t result in extreme social instability, but I’m not completely sold. And even if there aren’t riots in the streets and mobs looting the mansions of the top 10 percent, it’s not clear that politics will support a large class of workers whose job it is to be material and psychological servants to the rich without instituting massive and destructive income redistribution. Cowen predicts that “we will move from a society based on the pretense that everyone is given an okay standard of living to a society in which people are expected to fend for themselves much more than they do now.” If that happens at the same time as a large servant class is born to cater to the mental health and to satisfy the material wants of the fabulously rich, it seems to me that our political leaders will try very hard to take away the punch bowl and end the party. After all, we’ll still have one man, one vote.

Cowen’s answer is in the meritocratic ideal: “Worthy individuals will in fact rise from poverty on a regular basis, and that will make it easier to ignore those who are left behind.” (My emphasis.) I have doubts about this. “Worthy” individuals are those who combine innate ability and raw intelligence with motivation and ambition. Ability, IQ, motivation, and ambition will not be randomly distributed among the people of the world (the parents in the top 10 percent will be relatively more likely to force Junior to complete his online, high-quality calculus course). And even if they were, the enemies of inequality will quickly argue that no one “earns” what she is born with and into. It’s hard to imagine “But we’re a meritocracy now!” being convincing to those who have a strong distaste for vast inequality.

Or maybe not. Maybe, as man–machine productivity soars, we will enter a kind of Star Trek future, where those who have a preference for fabulous wealth can attain it, and those who have a preference for a bohemian lifestyle of leisure and occasional part-time and freelance work can indulge. Maybe the man–machine teams will produce so much that inequality will be vast but everyone’s standard of living will be high (by today’s standards), obviating the need for crushing redistribution.

That’s the great thing about this book — it makes you think. It sparks debate. Spend a few hours with Professor Cowen’s imagination, and wonder about the world to come.

– Mr. Strain is a resident scholar at the American Enterprise Institute.

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