In his new book, The Complacent Class, Cowen expands the scope of the argument to sociology. He believes America’s restlessness of spirit is giving way to a safety-first society. Instead of pushing on to the next frontier, Americans are busy gentrifying the neighbourhood. They are also making it harder for others to move in.
We used to suffer from the Nimby syndrome – ‘not in my backyard’. Now we have graduated to Banana – ‘build absolutely nothing anywhere near anything’, says Cowen. Public life is stymied by Cave (‘citizens against virtually everything’) in which politicians fall back on Nimey (‘not in my election year’). Politics has reduced itself to a theatre of symbolic gestures in which pressing issues are left unaddressed. Behind all the electoral volatility lies stasis. Perhaps that is just as well. During the heyday of non-conformism in the 1960s, almost two-thirds of America’s federal budget was discretionary. Now almost 80 per cent of it is locked up. Donald Trump is unlikely to change that.
As a matter of fact, it is actually much worse. According to figures provided by http://www.usdebtclock.org, Tom Mclellan calculated that six mandatory “spending items already account for more than all of the tax revenue coming in, and that is before you pay a single federal civilian employee’s salary, before any discretionary spending, before any research grants, any foreign aid, any NASA rockets, any state dinners, any toxic waste cleanup, any wall-building, any highway or airport improvements, etc.” I shall return to the budget problem further below.
For now, back to Edward Luce, who explains that
Cowen views Trump as the ultimate expression of a country that wants to turn the clock back. America’s 45th president is an authoritarian nostalgist who won by promising to shield voters from the forces of change. People were voting for a return to the certainties of the 1950s. ‘What I find striking about contemporary America is how much we are slowing things down, how much we are digging ourselves in, and how much we are investing in stability,’ writes Cowen. Though they heavily rejected Trump, this is just as true of America’s creative classes, says Cowen. America’s big metropolises and college towns may be the most liberal enclaves in the country. But they are also the most unequal. Just as zoning restrictions keep out low-income housing developments, so the world of social media allows us to screen out opinions we do not like.
We use dating algorithms to sift our romantic field in the same way employers scour social media to screen out misfits. The internet gives us the illusion of speed and change. In reality it is narrowing the scope for serendipity. America is turning into a society of matchers and sorters. ‘We are using the acceleration of information transmission to decelerate changes in our physical world,’ says Cowen.
The spirit of risk-aversion is also infecting corporate America. The once lavish budgets companies devoted to research and development are now spent on legal compliance and human resources. Corporate income is no longer invested in future growth. Earnings are instead returned to shareholders through dividends or share buybacks. The rate of US start-ups has also slowed to a historic low. In the 1980s, by one estimate, such businesses employed 12-13 per cent of Americans. That has now fallen to 7-8 per cent. ‘The complacent class itself has ceased to believe in the regenerative properties of the world we all inhabit,’ says Cowen. America is ageing and older societies take fewer risks. They also try to hold on to what they have. Perhaps unsurprisingly, the millennial generation is the least entrepreneurial of all, in Cowan’s view. They are ‘most committed ideological carriers’ of the new spirit of complacency. [emphasis added]
Lately, the spirit of complacency seems to have infected the financial sector as well. Moreover, the “spirit of complacency,” “the spirit of risk-aversion,” and “how much we are investing in stability” is not endemic or unique to the US. It is probably far worse in Europe and in Japan. But these conditions are nothing new. Edward Gibbon wrote that risk aversion was already a problem among the Athenians: “In the end more than they wanted freedom, they wanted security. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for was freedom from responsibility, then Athens ceased to be free.”
To be fair to the millennials (and most of the ones I know personally are very intelligent, hard-working, entrepreneurial, and responsible) government policies and the propaganda machine of the mainstream media encourages their false sense of security as gospel “truth” is largely absent from the government and the mainstream media’s vocabulary. The government lies about its true fiscal position and about the “true” rate of cost of living increases while the FED plays its part by communicating to the public that any economic problem can be overcome by money printing and more money printing.
I have discussed the Chapwood Index in earlier reports. It is published every quarter by monitoring 500 items which households most frequently use across 50 cities. According to the Chapwood Index the real cost of living rose by a startling 9.6% in 2016 – very close to John William’s rate and has averaged 10% a year over the last five years. At the same time, the academic economic charlatans do not exactly encourage “thrift” by advocating negative interest rates and even more negative rates still if the first set of negative rates fails to revive the economy.