De-average

Tyler Cowen’s new book is “Average is Over.” The book

suggests that the disruptive effects of automation and ever-cheaper computer power have only just begun to be felt. It describes a future largely stripped of middling jobs and broad prosperity. An elite 10-15% of Americans will have the brains and self-discipline to master tomorrow’s technology and extract profit from it, he speculates. They will enjoy great wealth and stimulating lives. Others will endure stagnant or even falling wages, as employers measure their output with “oppressive precision”. Some will thrive as service-providers to the rich. A few will claw their way into the elite (cheap online education will be a great leveler), bolstering the idea of a “hyper-meritocracy” at work: this “will make it easier to ignore those left behind”. (The Economist)

Cowen’s thesis is built in large measure on the increasing availability of data that enables the de-averaging of data that will increasingly give advantages to those who perform above the central tendency. He also extrapolates that large advantages will accrue to those who are able to master new technologies and data analysis. In the book’s website, the editors note that

high earners are taking ever more advantage of machine intelligence in data analysis and achieving ever-better results. Meanwhile, low earners who haven’t committed to learning, to making the most of new technologies, have poor prospects. Nearly every business sector relies less and less on manual labor, and this fact is forever changing the world of work and wages. A steady, secure life somewhere in the middle—average—is over.

With The Great Stagnation, Cowen explained why median wages stagnated over the last four decades; in Average Is Over he reveals the essential nature of the new economy, identifies the best path forward for workers and entrepreneurs, and provides readers with actionable advice to make the most of the new economic landscape. It is a challenging and sober must-read but ultimately exciting, good news. In debates about our nation’s economic future, it will be impossible to ignore.

An interview with Tyler Cowen on Tech Crunch: