Average is Over – Book Notes and Summary

Average is Over by Tyler Cowen - one of the scariest interesting reads I've found
Average is Over by Tyler Cowen – one of the scariest interesting reads I’ve found

One-sentence summary: In Average is Over, Tyler Cowen describes the workplace of the future – a small percentage of high-earning humans paired with intelligent computers, while most are not so lucky.

Rating: 6/10

Author: Tyler Cowen

Date Completed: March 19th, 2020

Tags: Mental Models, Knowledge Capital, Social Capital, Frameworks, Career Strategy, Decision-Making, Rationality

Hot take: In Average is Over, Cowen makes a compelling case for human-machine pairings as the future of knowledge work. But the rest of the picture is so bleak that it’s hard to get excited about the cool things yet to come. If you’re not a mathematician, manager, or programmer, prepare to frantically Google online courses. 

“The machine doesn’t have to reach perfection or even come close, it just has to do better than you.”

Tyler Cowen, Average is Over

Big Ideas

Your relationship with computers will determine your future career outcomes.

  • More people work in tandem with intelligent machines than ever before, and it will become a divide in the way people work in the future. Do your skills complement the computer, or is the computer better off working alone? Are you in competition with the computer?
  • As computers become more competent, administrative and routinized jobs (that were previously a mark of the middle class) are being hollowed out. People will tend to fall to one side or the other, while the middle ground ceases to exist:
    • The growing, well-paid segments that can work in tandem with more intelligent machines
    • Lower-wage, less stable work that’s at risk of automation or outsourcing
  • A few things about the future of work we can learn from the chess world:
    • Human-computer teams are the best teams
    • The person working the intelligent machine doesn’t have to be an expert in the task at hand
    • Below some critical level of skill, adding a man to the machine will make the team less effective than the machine working alone
    • Knowing one’s limits is more important than it used to be

Three things will thrive in this future environment: land, managerial skills, and creativity.

  • If we believe that value tends to accrue to relatively scarce resources, we should value:
    • Quality land and natural resources
    • Intellectual property
    • High-quality, skilled labor
  • Cowen also suggests that two resources aren’t currently scarce:
    • Unskilled labor
    • Money in government securities or bank accounts (which he points out have been earning zero or negative real rates for years)
  • What kind of skills should you hope to have if you want to augment our future computer overlords?
    • Math and analytical skills
    • “Computer nerds,” with programming skills
    • Communication skills
  • But these things aren’t going to work by themselves – computers will be able to take these over eventually – so you’ll want real-world problem-solving skills, too.
  • Managerial skills are also likely to be rewarded handsomely. In most environments, the scarce input isn’t skilled workers – it’s managers to oversee them.
  • If you end up on the wrong side of this divide, though, things will not go well for you. Cowen suggests men, notorious for their lower conscientiousness, will suffer in this environment. They will be more likely to show up drunk to work, end up in prison, and become irreparably unemployable. Good stuff.

As the frontier of contribution to a field pushes out, general intelligence becomes more valuable.

  • Have you ever wondered why high-performing college students tend to go into finance, law, or consulting and earn what seems like crazy salaries given their lack of experience and skills?
  • Cowen suggests that the horizon for specialist achievement is being pushed out. Those who were previously adding to the specialized knowledge in their fields at 20 are now doing so at 30. That means if a young person hopes to make contributions (and earn high wages) quickly, they need to choose a field that values high general intelligence. Law, finance, and consulting firms get lots of value out of these kinds of workers.
  • As they get older, they’ll have the combination of general intelligence, some additional skills, and experience that will allow them to help the rest of the specialist world solve problems. “The more the rest of the world specializes in production, the more that general intelligence can produce some value.”
  • “If you are a talented twenty-two-year-old, just out of Harvard, you probably cannot walk into a furniture factory and quickly design a better machine. Young people have made fundamental contributions in some of the internet and social networking sectors, precisely because of the immaturity of those sectors. Mark Zuckerberg needed a good grasp of Myspace, but he didn’t have to master decades of previous efforts on online social networks.”

We tend to oversimplify, even at the highest levels of rationality and analytical ability. 

  • Cowen believes that the depth of complexity of decisions is often far higher than we think.
  • Intuition and tidy answers to avoid intellectual chaos hold us back from considering the range of potential outcomes in second and third-order effects from our decisions.
  • A few takeaways:
    • Human strengths and weaknesses are surprisingly regular and predictable
    • Be skeptical of the elegant and intuitive theory
    • It’s harder to get outside your head than you think
    • Revel in messiness
  • Testing our ability to compute in difficult situations vs. the computer helps us get better at making calculated decisions over time – it allows us to be informed by the computer but develop intuition on our own.

Jobs, competition, and immigration

  • Lots of people can work on an assembly line. Fewer can partner with intelligent machines in the finance, service, or medical sectors. That means technology creates downward pressure on jobs available.
  • We blame trade policy, China, immigrants taking jobs meant for Americans, and lots of other boogeymen, but Cowen believes the ultimate source of the slowdown in wage growth is technology.
  • “At a fundamental moral level a job for ‘a foreigner’ is every bit as worthy an outcome as a job for ‘a real American.’”
  • “If you’re worried about outsourcing, you should probably have a more liberal rather than a less liberal attitude toward immigration. If the United States takes in more immigrants, the areas in which those immigrants work are less likely to see jobs outsourced abroad…in fact, the bigger a threat outsourcing becomes, the more important immigration is for keeping us competitive and keeping other complementary jobs in place.”
  • To sum up: immigrants are often competing more with offshored workers (the dreaded outsourcing to India, etc.) than with other laborers in the US.

Bits and Pieces

  • Recessions are the mechanism through which the hollowing out of the middle class takes place. Middle-class jobs are culled in recessions. Post-recession, these jobs either come back as low-skill jobs or get outsourced. The middle-class jobs themselves don’t return.
  • Players play their best in close games. “A player is least likely to make a major error when the game is tight, and if anything, players do their absolute best when they are faced with a slight disadvantage in their position. When players are decisively up or down, they don’t seem to think or concentrate with the same facility. Again, this is a sign of human rationality, at least if there is some need for a conservation of effort.”
  • Humans, particularly in careers, may benefit from some level of ambiguity about intelligence and ability. In the future, as the assessment and analytic capabilities of computers improve, we may end up missing this quite a bit. 
  • “We wish genius machines to serve our practical ends, but we don’t want to turn over to them the spheres of life that structure our narratives, drive our emotions, define what our lives are all about, and help us separate right from wrong. We’re determined to ‘keep them in their place.’ That’s understandable, but it shows we are a bit intolerant of alien intelligences. It shows we will remain reluctant to consult the wisdom of machine intelligence when it comes to our personal lives, such as our romantic decisions or whether we should take all of our medications.”
  • Self-control and conscientiousness will be disproportionately rewarded characteristics in a machine-enhanced future. Even if Medicaid or Medicare cut the value of health coverage by 40%, you might be able to make those losses back by focusing on improving health. If you exercise, eat well, and (if you’re a man) get married, Cowen says you might still be able to live longer than if you hadn’t done those things and had the full-value Medicaid. If you don’t do those things, your health outcomes will get even worse (and much faster).
  • Most envy is local. We don’t resent the billionaires very much because we don’t compare ourselves against them, at least not economically. We’re much more likely to be envious of a coworker on our floor or the friend of someone you know. Facebook today is probably the most powerful envy engine in the world.

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Related Reading:

Thinking in Bets – Annie Duke

Range: Why Generalists Triumph in a Specialized World – David Epstein

Risk Savvy: How to Make Good Decisions – Gerd Gigerenzer

Optionality: How to Survive and Thrive in a Volatile World – Richard Meadows