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- [Tyler Cowen] In today's world, we're tended to
by an army of servants.
But no, not those types of servants.
I'm talking about the kind of servants that live in code,
dream in algorithms, feast on big data,
and seek to please us at every turn.
These kind of digital servants --
they're now appearing almost everywhere,
alerting us to a new TV show that will make us laugh,
a shirt that will look just right,
or the perfect restaurant for our big night out.
These algorithms, they help us match to what we already like,
or to what is already like us.
So we're training our digital servants
to find for us the familiar and the similar.
Take marriage.
More and more people are using digital servants
to find their perfect mates through OkCupid, eHarmony,
or maybe a niche site like LawyerFlirts.com.
And yes, that is a real site.
These sites, they gather information about you
and they send you recommendations
to whom you ought to be matched.
All of this has led to a rise in what's called
"Assortative Mating” --
marrying those of a similar level of education and income.
So for instance, lawyers may marry other lawyers,
rather than just marrying
the people they went to high school with
or live next door to.
These digital servants,
they're also matching people at the office.
They're helping the most productive workers
find the most productive firms.
Think of the software algorithms
as having many kinds of information about the workers.
They give the firms better knowledge
of who they ought to hire.
This means higher productivity and that's great.
But it also means that the best workers
are all getting clustered into a relatively small number of firms.
These are fascinating examples
of how individual micro-behaviors can,
at the macro level, lead to some unexpected outcomes.
>From an individual point of view,
it seems like you're simply using better tools to get what you want,
whether it be a more compatible spouse,
or a workplace of higher productivity
or where you feel more comfortable.
But what do we see at the macro level?
Well, more power couples, and also this growing gulf
between the most productive super companies
and all of the rest.
Both of these phenomena are boosting income inequality.
Now at the broadest level, these digital servants
they are helping us find better matches for ourselves,
but there's a complication
because better matching also can mean more segregation.
And when I use that word segregation,
I'm not mainly talking about segregation by race,
but segregation as a broader concept.
I mean there's less mixing by income level,
education level, and also type of work.
So this change in the virtual world more and better matching,
it's also leading to an important change
in our physical world, which is more segregation.
And in some ways, that's problematic.
So visualize this: power couples and highly productive workers,
they're flocking to cities like New York, Boston, and San Francisco.
But there's a problem here, there's growing demand
but there are tight
building restrictions in those cities.
And that means you have a recipe for sky-high rents and home prices.
In San Francisco, the median rent for a two-bedroom apartment,
it just passed $5000 per month.
So what's happening is you have an initial tendency
towards segregation.
The price grows up and that further reinforces the segregation.
There's a self-reinforcing dynamic here
because so many people can no longer afford to live
in Manhattan or San Francisco.
So the old view of segregation
was often about people being pushed out.
Nowadays, so often, it's about people being priced out.
The cities that make those lists like
"Top 10 Trendy Places to Live," very often they're among the most
segregated places in the country.
Part of the reason they're trendy,
is that the less affluent people and the less attractive businesses,
they've been neatly sorted out of sight.
We like to live there because our neighbors
are familiar and safe
or matched to what is comfortable and predictable.
Yet at the same time, we're more and more isolated
from other socioeconomic classes.
And yes, if you're wondering, I'm part of this problem, too.
I live in a pretty nice neighborhood.
But think about yourself as well, who are you dating?
To whom are you married? Where do you aspire to be?
You too may be matching and segregating.
Given this, should it be so surprising
that so many of our elite political commentators
were dumbfounded and indeed shocked
by the rise and election of Donald Trump?
So many of those people -- they live in the same few cities
and increasingly, they are isolated from those who are truly different.
What about racial segregation? There the data are mixed.
But on closer examination, there are some worrying trends.
While more Asians and Latinos are living alongside Blacks,
Blacks and Whites are increasingly living in separate places,
and also attending different schools.
So while overt racism might be going down,
at the same time it seems that
some kinds of racial segregation are going up.
It's ironic that the very acceleration of
information transmission is actually decelerating,
the rate of surprise and happenstance that occurs
in a more mixed society.
Because mixing creates economic opportunity
and it boosts the chances of new ideas.
And in more integrated neighborhoods,
you find more upward mobility
in terms of either income or education.
So when we try to diagnose why today's partly stagnating economy
is in the state of partial stasis,
well, segregation is a big part of that story.
So what can we do about all this?
Well we can start by focusing less on credentials,
giving people more second chances in life,
and also making it easier and cheaper
for ambitious poor people to move into America's
most productive and expensive cities.
We can do that by easing restrictions on building.
Most generally, we should reorient our whole way of thinking
away from just matching, and safety, and protection,
and more toward integration and economic dynamism.
- [Announcer] Next up, Tyler pulls back the curtain
on a disturbing trend in the American economy.
Is it really the Age of Disruption?
Click "Next Video" to see the Stasis.
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