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Why tougher times lie ahead

Rick Newman

President Trump, as everybody knows, wants to “make America great again.” By some measures—a booming stock market, a steadily improving economy, millions of new jobs during the last couple of years—America is already making itself great again.

But these improvements, whether real or promised, may be illusory, if economist Tyler Cowen turns out to be right. In his new book, “The Complacent Class: The Self-Defeating Quest for the American Dream,” Cowen argues that Americans have become so risk-averse during the last several decades that they’ve forfeited the economic dynamism that made the United States a powerhouse and consigned themselves to lackluster futures.

“We’re seeing an America that is stuck, and in some parts of the country it’s moving backwards,” Cowen tells Yahoo Finance in the video above. “When it’s harder to gain and move ahead, people have this mentality of entrenching themselves. There will be a Great Reckoning coming, and part of that has already arrived.”

It’s well-known that the US economy is more stagnant than it used to be, with slower growth that has barely averaged 2% per year lately. But economists disagree on what’s causing the slowdown. Globalization? The digital revolution? An aging population? Poor government? All of the above?

Cowen, a professor at George Mason University in Virginia, adds some socioeconomic factors to the mix. He believes complacency has led Americans to take fewer risks and opt for safety over boldness. That might explain why fewer people move these days, the rate of business startups is down and overall economic growth is weaker.

Cowen dubs today’s safety-seeking Americans the “complacent class,” which he describes this way: “the growing number of people in our society who accept, welcome, or even enforce a resistance to things new, different or challenging.” This includes wealthy Americans, who want to protect what they have, as well as working-class people who might complain about lack of opportunity but are reluctant to move where there might be better prospects.

Trump undoubtedly tapped into a vein of frustration among Americans fed up with the kind of economic stagnation Cowen documents. But Cowen doesn’t see Trump as a savior. “I think he’s proving to be an ineffective president who isn’t getting much done because of lack of attention to detail,” he says. “For all this talk of change, Trump is just another symbol of complacency.” Trump fulminates about protecting Americans from terrorism, for instance, and claims the government will bring relief to Americans falling behind. But he doesn’t call on Americans to take more risks, show more initiative or make short-term sacrifice for long-term gain.

Where is all this heading? To more economic volatility, the continued displacement of jobs by technology, and even more feckless government, if Cowen is right. But the gloom won’t last forever. “People will be shook out of their complacency by changes and risks that are so big they can’t control them,” Cowen says. “Only then will America somehow find itself once again.”

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Confidential tip line: rickjnewman@yahoo.com

Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman