Average is Over, by Tyler Cowen

Average is Over is billed as a follow-up to The Great Stagnation, but it doesn’t really read that way. They’re both really interesting works on what the future might look like.

There’s no need to have a summary of Tyler Cowen’s most recent work when it’s so easy to find around the web comprehensive outlines of his argument. This summary, for example, is good. Here are some of the nuggets of insight that I didn’t find in articles about Average is Over.

According to the air force, keeping an unmanned Predator drone in the air for twenty-four hours requires about 168 workers laboring in the background. A larger drone, such as the Global Hawk surveillance drone, needs about 300 people working in the background to make the mission feasible.

To hire a risky and iffy worker, without a competent overseer, simply isn’t worth it, no matter how low the wage. It’s not just that the bad workers are lazy or maybe destructive. It’s that low quality workers spread bad morale to many others in the building.

The premium is on conscientiousness, namely whether the worker can follow some straightforward requests with extreme reliability and basic competence… If you’re a young male hothead who just can’t follow orders, and you have your own ideas about how everything should be done, you’re probably going to have an ever-tougher time in the labor markets of the future.

There is no high morale without exclusion, no integrity without exclusion, and no corporate culture without exclusion. If the management style at today’s quality companies seem so nice, so friendly, and sometimes so downright heartwarming, it is possible only because those cultures are so very picky, snobbish, and elitist at the same time.

Imagine yourself as an economist back in 1969, being asked to predict the course of American male wages over the next forty years or so. You are told that no major asteroid will strike the earth and there will be no nuclear war. The riots of the 1960s will die out rather than consuming our country in flames. Communism would go away as a major threat and most of the world would reject socialism. Who would have thought that wages for the typical guy were going to fall? It’s a stunning truth.

After the first quarter of 2009, per-labor-hour productivity rose dramatically. Why did that happen? It’s because we laid off a lot of workers who weren’t producing enough for their level of pay. Bosses were pulling the less productive workers out of the higher-paying jobs. And afterward they didn’t want most of them back. That caused average productivity to rise.

Newly minted PhD economics candidates are extremely proficient with data, but a lot of them don’t have much microeconomic intuition. You could ask them some simple microeconomic questions, of the kind the University of Chicago used to pose at the undergraduate level, and not get an answer. If you ask job market candidates with newly minted PhDs, “Under what conditions will allowing brands to purchase shelf space in supermarkets, as opposed to banning the practice, benefit customers?” you will end up with a fair number of blank stares.

If I see an important economics paper, circa 2013, odds are it was based on a clever way to find or generate a new data set, not a new theoretical idea.