I've spent my career working in public policy circles, and this rings true to me.
> At most, working-class voters can cast their ballots for an “unacceptable” candidate, but they can exercise no influence on policy formation or agency personnel, much less on governance areas that have been transferred to technocratic bodies.
> Unlike the working class, the professional managerial class is still capable of, and required for, wielding political power.
I've never seen actual grassroots activism accomplish much, if anything. Protests in DC are like rain; bring an umbrella, but no need to pay it much attention because it will blow over in no time. It's always insiders who make a career out of policy that ultimately shape it. Hill staff, think tank wonks, professional bureaucrats, etc--it's that professional Washingtonian class that really shapes the government's policy, because they are the ones that show up to do that work every day.
To +1 one this: Having spent a great deal of time consulting to government, in addition to working in media, but with a deep background in tech, the managerial class of people making policy have a revolving door to the universities, which are seized by faddish ideas as often as the elected representatives.
Many of these policy people actually come to hate technologists because they find their more chauvinistic plans are thwarted by the privacy and security people who are at the table because of competence that can't be ignored, and not elite credentials.
As a result, the managerialists double down on what makes them different from techs, which means being extra airy, vague, political, and what most working people interpret as untrustworthy. It's practically a shibboleth, as if to say they don't need to seem honest because they are powerful.
I don't think this managerial class is as necessary as people who are a part of it think.
The class disconnect is more pronounced in recent years because of the stark differences in physical competence and the precarious status of people who imagine themselves as "elite." What they deride as populism is much more complex than they perceive. Working people expect their elites to at least be somewhat noble, and when they aren't, history is the story we tell about what happens to them.
I wonder how this would relate to the Peter principle which states that every employee rises to their level of incompetence. The conclusion might be that the managerial class is not qualified to decide on what's good for others.
If you were to look at the individual histories of most senior corporate executives, most of them were in various middle management positions at some point before they became executives...
The kinds of people who were able to move above each layer of middle management were basically those who were the most skilled at manipulating others for their own personal benefit; the simple game of taking credit whilst deflecting blame. It's not surprising that the kinds of people who are able to traverse several levels of the management hierarchy to become executives completely lack any self-awareness. Thinking about themselves would distract them from their main activity which is fooling others.
I've worked in enough companies to know that those who get promoted are not those who care about others' (or even the company's) well being. This is provably true because the contrapositive statement would create a contradiction because in such case, the manager would help others to get promoted and thus they would never get promoted themselves.
There is a capability for abstraction we overlook.
Forget for a moment about what we might think about people who succeed in business, and look critically at the ones who fail. People who fail in business are the ones who want friends, honour, fame, validation, sympathy, justice, social good, and esteem. They personalize failures against these needs and stop dealing with the higher level abstraction of the success of the venture. The ones who succeed want something else, either because they already have or self-fulfill those other things, or just don't care. We can moralize and say it's the latter, but it's more often the former.
It's easier when an institution has given you the conceit that you are not morally accountable to the uninitiated or uneducated. The thing about class is that barring crime, there is no downside to betraying someone who isn't a part of your tribe, which is usually from a school. If you believe people get what they deserve, they call that the "just world fallacy," for a reason. It's a noble lie. If it weren't, you'd see more nurses and veterans in business class seats.
Anyway, long topic, but in spite of my opinions, I think it is difficult to accurately criticize management and class without the perspective of an elite education, as (perhaps horrifically) what can instruments know of their players?
My own experience is that the Peter principle is outdated. People don’t rise vertically anymore: they rise horizontally.
Instead of working their way up within a single institution, they make lots of “lateral” transfers.
The government/lobbyist revolving doors are a good example, but not the only one. How many tech workers go back and forth between big tech companies and startups, each time rising more than if they stayed put?
It creates an administrative class that has little commitment to the institutions they “serve”, and an overly valued senior class that is able to run out the door, taking the company with it.
Meanwhile people who stick with the same company - often for reasons beyond their control - end up in “lower management” positions at best.
BTW, my own experience with executives is that most have a sales or engineering background. Very few, of any, have a background in true middle management background (HR, accounting, governmental compliance, etc.)
My impression in recent years is that the middle class has real value in almost any society we had until now. They are the glue that brings stability to any organization, they are what keeps to energetic lower layer people from gaining power from crazy ideas, and they are the first to get blamed when a crazy idea from the top management layer fails. Do you see differences between that statement and your experience?
And the real question I want to ask: Do you feel that especially the middlest of managers have to fear AI the most, because AI could theoretically replace exactly that middle layer and do it even better than a human could?
AI will not replace the middle manager any time soon. Their job is too general and not specific enough to be solved by AI. Some of the tasks they do like scheduling can be aided by AI and have been aided by scheduling software but that doesn't mean AI could do their whole job. Stuff like talking to people about how they are getting along and helping develop and grow the people on the layer below them is something a good manager should be doing and something that would be foolish to replace with a system that has no humanity. See also defusing team conflicts and keeping up morale.
The problem is your reference is some kind of broken organisation where people are basically slave labour and managers only serve to dish out the work given from above. Sure bad managers of that description could be replaced by a good AI in the future but that would be awful because a good manager brings vitality to a team, helps individual team members and helps to filter and promote ideas up and down the organisation.
> My impression in recent years is that the middle class has real value in almost any society we had until now.
The middle class really isn't any less powerful today. Near as I can tell what happened isn't that the middle class became less powerful, but that journalists in particular no longer find themselves in the upper middle class so they spread the perception that the middle class has lost its power because they themselves feel like they have lost power, especially economic power.
I suspect that society is most likely perceived as most stable when those with megaphones and that buy ink by the barrel feel most stable.
"journalists in particular no longer find themselves in the upper middle class"
For most of the history of journalism in the U.S., journalists were not in the "upper middle class". Journalism was a poorly paid working class job for most of the 20th century. Maybe a couple decades at the end of it different.
That low pay serves as a gatekeeping mechanism so poor people can't survive on that career. On the other hand, journalists have a disproportionate influence over public discourse, now tightly controlled by the elite class.
Or maybe it's the reverse, because the field has high prestige and impact, it attracts upper class children who don't need the salary, causing a downward pressure for journalist wages.
Eh, I don't think that's what was actually going on for most of the 20th century. Journalist was not a prestigious job, it was in fact done by working class people. I think. It's instead a new thing that journalism is dominated by "elites".
The original claim I was challenging was "journalists in particular no longer find themselves in the upper middle class" -- I don't think they ever were, it's possible that MORE of them are now than previous -- as you say, even as salaries drop.
This article is just standard journalistic myth-making. The journalists cited as examples of success without college degrees, Carl Bernstein and Walter Cronkite (who both went to college, just dropped out), came from privileged backgrounds just like the privileged kids who fill the industy today.
Idealistic professions done "for the greater good" typically struggle. These days, anyone with internet access can do low-paid writing through various services or publish their own thoughts via a blog or social media. There has been tremendous downward pressure on writing and many local papers have closed, among other things.
> public discourse, now tightly controlled by the elite class.
Maybe 10-15 years ago that was true, but today the control of public discourse is no longer controlled by the elite class. Blogging completely ended that control.
Journalists for the most prestigious outlets (NYTimes, WaPo, Newsweek, Time Magazine, etc) certainly did well for themselves. At secondary institutions it was a solid middle class job.
Now because of blogging and commodification of the news, the money is no longer in journalism but in clickbait and it's a race to the bottom.
This article about the decline of Newsweek does a good job chronicling what is happening at news media companies all over the world:
Journalists now find themselves among the precariat, especially those in the long tail of journalism working at clickbait factories like Business Insider, HuffPo, Jezebel, etc. News media is now a gig industry job.
Are you suggesting that skyrocketing education, housing, and medical care costs in proportion to stagnant wages for most people resulting in less economic security and mobility for the next generation is not real?
In the context of this article's framing, well-paid tech employees are part of the same managerial/professional class of lesser elites (as distinct from the true elites in the capitalist class, our owners).
It sounds to me like you're allowing aesthetic considerations distract you from your common interests.
Have you never heard of the labor movement? The grassroots activism by working class people that forced the federal government to develop an entire arm of federal law, with its own Cabinet-level agency, to protect them from the professional managerial class?
How have you spent your career working in public policy circles and come away with so little understanding of what grassroots activism is, and the impact it has historically had?
For the same reason that Hillary Clinton got nominated in 2016. Because too many politicians are completely out of touch with the movements, conditions and perspectives of working people.
Where I live, grassroots organizers are doing all the hard work. I'm not talking about protesters. I'm talking about people who are building and connecting organically, who are facilitating workshops and popular education sessions, who are raising awareness about what's going on in local government to enable democracy to happen. Democracy doesn't function without grassroots participation. This country would be a hell hole without the hard work of local organizers everywhere.
Hillary won working class voters in the 2016 primary by a comfortable margin. +28 with non-college-educated voters and +13 with voters under $50,000 in income.
Not just the politicians. I recently overheard a conversation at the startup where I work where people were talking about the benefits of unionizing I’m front the executive team.
It was clear they wouldn’t do it and talked about it like it was a joke. Something poor people do.
Part of it is that unions badly need reforming.
The other part is that nobody cares enough to reform them.
Most folks at my company don’t care because they get paid too much to care. Not a bad reason.
> Have you never heard of the labor movement? The grassroots activism by working class people that forced the federal government to develop an entire arm of federal law, with its own Cabinet-level agency, to protect them from the professional managerial class?
The irony, of course, being that government bureaucracies are inherently an instrumentality of the managerial class. It's not as if the Secretary of Labor is a line worker with no college degree.
So the agency becomes subject to regulatory capture the same as any other and private sector unions declined. Meanwhile the public sector unions remained because most government workers are themselves members of the managerial class, so the public sector unions, rather than representing line workers against a corporate bureaucracy that employs them, came to represent the bureaucracy itself against the elected representatives of the people.
Is it so surprising that it doesn't come first to mind as an instance of successful activism?
I think we're reading the parent comment in very different ways. I think the key word was seen, just like the quote from the article says the managerial class is still capable of wielding power.
Basically anyone in public policy circles, even on the right, should know some labor history. But America hasn't seen a major private-sector strike victory in 20 years, and the 1997 UPS strike was a rare exception: "traditional" mass strikes haven't been a major force since the 1980s at best. It's true that pattern bargaining and labor laws have decreased the need for mass strikes since the bad old days, and people sometimes forget that OSHA and the NLRB are not a replacement for labor power but a consequence of it. But it's also true that union membership, labor bargaining power, and the union 'edge' over nonunion labor have been in decline for decades. The heyday of the UAW, the AFL-CIO, and the UFW was over by the 1980s, and even where labor has made substantial gains since they've come through courts and legislation rather than grassroots action. Even for someone who's been in public policy for 30 years, grassroots labor action has basically been a historical topic, not an active concern.
Harlan County was the cradle of the modern labor movement, but for 30 years its only political relevance has been as a symbol of the Democrats losing their labor support. I only know how things used to feel from movies and songs, not from anything that's happened in my lifetime. Maybe that'll change, the miners struck just months ago, but they haven't won yet. I've never seen grassroots labor wield power either, but that's not the same question as asking whether I know what it used to be like, or whether I want it to come back.
Was the GM strike last month not a victory for the UAW? From what I've read they got most of what they demanded when they started out over the company's initial offer.
Wow, yes it is. You're right, I just hadn't seen the final outcome of that.
It's not a knockout victory, it looks like only 57% of members ratified the new contract, but it's an impressive show of solidarity given how tiered employment has weakened unions. Salaried workers got less overtime, hourly workers got better rates, and temp workers got PTO and full-time opportunities. Plus, post-08 hires will be brought up to pre-08 wages, which has been a concern ever since the bailout.
Even if it's not an overwhelming win, that's impressive news for UAW keeping its influence across a growing range of workers statuses.
M&P are workers also and any one who works in tech is by definition are in "the professional managerial class"
I think you are confusing stunts with long term sustained lobbying.
For example I got several k people a substantial improvement to their pensions, passed a motion at a union conference got it put on bargaining agenda and successfully changed the companies mind.
> The grassroots activism by working class people that forced the federal government to develop an entire arm of federal law, with its own Cabinet-level agency, to protect them from the professional managerial class?
The working class has been satiated since the times of such strikes and accomplishments with tax breaks, easy access to credit and a booming economic growth rate that was long-term unsustainable. Keeping in mind both parties are at fault in that trade: the politicians for being willing to ply the electorate with unsustainable economic policies to ensure votes, and the voters for being so shortsighted and naive to think infinite growth was possible. Now those chickens are coming home to roost and most of those people most responsible will probably be dead and dust before the debts are paid.
I'm not one of those people who thinks the planet is actually going to kill us off. We're a clever bunch, we'll survive. That said our world in 100 years or so will look significantly different, and I don't think in any of the ways people wanted.
Sustainable business practices. Recognition that YoY growth, every year in every business, is unreasonable. That in a world of limited resources, limited audience, limited funds and limited attention, expecting infinite growth is childishly naive.
Gay people can get married in America, which was completely unthinkable a generation ago. 100% due to activists, many who risked their lives to make it happen.
The gilettes jaunes are on the streets, nobody cares to make them cultural icons. Gays had very visible and generally disproportionate (compared to population) media coverage of their rights. Was it really 100% due to activists on the street, or very influential but high profile gay people who helped build one of the few successful rights movements of our times?
When I read this the first person I thought of was Alan Turing [1]. His was the fate of high profile gay people until the grassroots movement sprang from the Stonewall riots [1]. It was these activists who took the first steps to even make it possible for a high profile gay person to come out in public.
Do you seriously believe that upper class gays/lesbians and lower class gays/lesbians was the same?
In order for Alan Turing to be charged with “gross indecency”, he had to go the police himself, inform them he was gay (without being asked or prompted), and affirm it in a statement signed under penalty of perjury.
The only reason he did that was because he was so accustomed to people not caring, he didn’t think he was in any danger.
I just had to look up that claim, and it seems that Turing admitted a homosexual relationship during a police investigation about his house being burgled, seeing as that relationship was with the accused burglar. That's slightly different to the implication that he walked into a police station of his own free will and promptly signed his own castration order.
My description of his conviction was incomplete. I wasn’t trying to give a comprehensive account. I was simply trying to explain the level of protection his privilege afforded him.
He was comfortable reporting one of his lovers to the police because he was used to people looking the other way.
Obviously, one of the many downsides to criminalizing harmless behavior is that it places people outside the protection of the law.
Was it really 100% due to activists on the street, or [high-profile insiders]
Okay, 90 percent activists on the street, 10 percent insiders (who generally only stepped in after the 90 percent had already laid their bodies on the tracks, and accomplished the hard part).
Reason i m asking is thay certain countries had 0% activism and it all changed thanks to culture and osmosis. The fact that audiences were prepared for the changes was huge
Gay people are distributed throughout the various ranks of American society. No one really gives a care at a broad level about the rights of a poor gay person.
What actually brought about the change was that due entirely to the fact that people in power had relatives that were gay, or were gay themselves. And these people turned the wheels of society toward making it accepted.
A century ago those people were in the closet so nobody knew and those that did didn't say anything.
People had to come out in order for their acceptance to be possible. It's really easy to justify not caring when the group you don't care about seems other. When they're people you know it's much harder to justify not caring.
Activists, yes - but not really through marching. Money, judicial challenges and coordinated political action to promote marriage equality as a goal were the key. The debate was reframed, messaging was crafted carefully and the groups organizing and paying for it all were extremely organized and cohesive. The Proteus fund and specifically the CMC did a heck of a lot here.
Marching is the first necessary step to get people organized. It is the lowest bar for starting to organize and to participate. It is where people can drum up support, awareness and donations.
I listened to an hour-long podcast in which Chris Hayes interviewed Alicia Garza, who co-founded Black Lives Matter (BLM). They talked specifically about this question and since you're interested, perhaps it would be one place to go to hear informed organizers/activists discussing it. It aired on June 4.
Besides BLM, one other recent place in which this question of "are demonstrations enough" comes up is, of course, Occupy. (In that case: no, demonstrations were not enough.)
One thing I remember Garza saying is that the ability to organize a large, nationwide march on Washington showcases the scope and depth (down to the grassroots level) of a movement. If your movement isn't broad and organized, your nationwide march will not succeed.
But that's a necessary condition for political action, not a sufficient condition. A movement can't let marches be the endpoint, and in the interview, Garza emphasized this.
Clearly the organizers of the 1993 "March on Washington for Lesbian, Gay and Bi Equal Rights and Liberation" (which I attended) did not view the march as an endpoint. Many of the roughly 600K (+/- 300K) people present had a lot at stake, including their jobs, at that time. The march was more of a focal point, a coming of age. A constituency made visible. But not an endpoint.
Of the set, ACT UP was arguably the most successful, and probably deserves much of the credit for mainstreaming gay / nonbinary gender culture.
The WTO protests are more mixed, but put a damper on the Washington Concensus / Neoconservative Agenda movement. Global trade meetings are no longer casually-hosted affairs, and now tend to be in remote / secluded locations.
The Iraq War protests were arguably the least effective, though massive in many cities. They simply disappeared off news coverage though. Clearly they didn't stop the war or lessen the catastrophic impacts of it, though they did help cement a strong political divide over it in the US.
Whether or not more recent movements, particularly on the right, could be considered mass / popular uprisings is a fair question. I'd be inclined to say "no", but a case might be made for the Tea Party and alt-right movements.
I'll be the first one to sound the 'correlation is not causation' alarm over and over. After all, maybe the social issue is getting enough people to protest because society is already on the verge of change, rather than society changing because of the protests. Protesters may be getting the causation backwards. However, there's some evidence that protests are helpful in causing change.
My favorite study to establish a directional causal link looks at policies enacted after protests, accounting for the effect weather has on protests. The weather is presumably random enough to not be related to where society is, and it affects protest turnout, which lets you connect protest turnout to policy change causally. It's not definitive, but yeah, there's decent evidence.
I disagree with the other poster who is suggesting that marching is a necessary step for change, but it does seem to be a useful instrument for it.
Yep it is a solid way to meet people who might also have an inside track to influencing the institutions of a given government. It also gets eyes on your cause when it's not right in the front of society at large. A lot of it is just to get otherwise ignorant people becoming aware and seeing the activists are just people like them trying to make a fair go of it.
Perhaps it's necessary but not sufficient: if you have zero lawyers, press, or government officials on your side, marching is a great way to get thrown in jail for "rioting" and have your reputation destroyed.
Gay marriage was also prevented in America for hundreds of years 100% due to activists. There is no money for or against gay marriage, it was always only activists on both sides so it isn't a good example of a class war.
It's interesting (and sad to me) how popular this article is on here when it exclusively describes our current political climate in terms of economics.
It seems like social issues are front and center more than ever at the moment. I think economics can largely explain the divide, but it's interesting for the author to talk at length about the top 10% and leave this out -- as if the top 10% is filled with Econs who vote solely on what they think is best for them economically, and not based on how they feel about social issues.
I think the reason the current climate feels so "divided" is because it's more of a social divide than before.
I think it's easier when it's just a class war. But this is a human rights war. When your basic rights feel threatened, it gives you a little more skin in the game.
100% isn't quite right. I think the parent comment applies to gay marriage as well.
Federal recognition of gay marriage eventually occurred in America due to a gay widow who took the government to court over a $300k inheritance tax bill on her wife's estate [1]. Of course the changing cultural attitudes towards LGBT people is overwhelmingly due to grassroots activism, but this shouldn't be overlooked.
For LGBT rights, money has played a factor. If wealthy, upper-class Americans did not also suffer from anti-LGBT laws, I'm not sure we would have made the same progress. There are also financial incentives for LGBT acceptance [2]. A more cynical view might be that acceptance of gay marriage was accelerated due to increasing anti-capitalist sentiments within the LGBT community in the 20th century [3]. The continued oppression of gay people might have led to uprisings far worse than Stonewall. Legislative acceptance of LGBT rights has weakened the link between LGBT activism and anti-capitalist ideologies, to the point that nowadays gay pride parades are turning into a parade of adverts for corporations.
Federal judges care little about mass opinion, but a great deal about elite opinion.
Roe v. Wade had nothing to do with feminism, and everything to do with the positions of the American Medical Association, the Mayo Clinic (formerly represented by Blackmun), and academic researchers at elite universities.
Not a terribly important distinction if you’re pro-gay rights or pro-choice.
The elites have always tolerated homosexuality while the masses have always been creeped out by it. This particular change just looks like another case of the elites getting their way at the expense of the masses.
I used to diss protests that accomplish nothing but then I realized what their real use was: to connect people into doing actual stuff. To open a place for discussion on a specific issue, sometimes in the media, but at least in the street, for few hours, with like-minded people.
If you are rich serious people concerned over an issue, you create a forum or gather a summit. If you are poor, or rather, let's be realistic, middle-class, then you do a protest. It's rent-free, it filters out people who can't be bothered to move from the couch and the nay-sayers, it shows a wide range of groups with varied interests.
Protests are the first step in making policy change, but it takes several bounces before it affects people in DC.
The biggest counter example I can think of was Occupy Wall Street. AFAIK nothing ever came out of it, not even a small organised group.
Most protests I've seen have actually been the other way around. They were organised by pressure groups or unions and the protesters were already members of those groups. They existed primarily as a chest-beating exercise to show politicians their power. A few protests are more spontaneous especially the sort when democracies get overthrown or established. But in the west protests don't ever seem to create new organised movements.
That's how it worked for me (privacy advocacy protests in France). But now that I think about it, it makes sense that big protests are actually more of a recruiting tool for already established organization than a way to know each others. My example may be marginal in that it was on a small subject that did not bring a lot of big names.
I've never seen actual grassroots activism accomplish much, if anything.... It's always insiders who make a career out of policy that ultimately shape it.
Did the Vietnam War end because the Washington insiders (who were, if you'll recall, the ones who started it) had a change of heart, got together one day and decided to stop it? Or because the country threatened to become ungovernable if they didn't?
Really, the blithe dismissal of the impact of public protest expressed in your statment is astounding.
My friends have worked on marriage, marijuana, human trafficking, consumer protection, etc, etc.
(My own efforts weren't as potent. At the time. Though I'd like to think my cohort moved the needle on election integrity issues. All the "radical" stuff we pushed 10 years ago is now received wisdom.)
In fact, I'd argue that most progress is bottom up, happening locally.
I highly recommend Camp Wellstone training for activists. Of course there's many others. On the left.
The political right has no shortage of resources for their activists.
> because they are the ones that show up to do that work every day
As I used to say back when I was a programmer, often in the context of fads like "quality is free," nothing gets done unless you do that thing on purpose.
Hard to say this when the entire immigration and trade policy of the US veered into an extremely unlikely configuration on the back of a candidate universally loathed by the establishment on both the left and the right.
If you want a policy proposal to be burned to the ground; organize grassroots support for it. The following PR disaster angry mob will set it on fire for you without you getting your hands dirty.
> I've never seen actual grassroots activism accomplish much, if anything.
> it's that professional ... class that really shapes the government's policy, because they are the ones that show up to do that work every day.
Yup.
"Activism is a way for useless people to feel important, even if the consequences of their activism are counterproductive for those they claim to be helping and damaging to the fabric of society as a whole." – Thomas Sowell
What a fantastic article; this might be the high point for my 2019 Hacker News reading. What clarity of vision.
It is remarkable reflecting after an article like that on the complete inability of the US political system to organise itself to reward work done rather than access to the super-elite social circles. I'd love to know if this Julius fellow has a take on what mechanisms the 0.1% are using to drive the growing wage gap.
I already have an opinion; I just think if he has one it will be more insightful.
what mechanisms the 0.1% are using to drive the growing wage gap
I don't think the 0.1% cares much about the wage gap. They don't take wages and the gap simply doesn't affect them.
They care about wages generally in that any wages growth has an effect on investment returns. So they oppose wages growth, and if that means an increasing wage gap that is fine.
> They care about wages generally in that any wages growth has an effect on investment returns. So they oppose wages growth, and if that means an increasing wage gap that is fine.
There is no reason to think that wage growth negatively impacts investment returns in general. It requires employers to pay more but it also means that customers have more money to buy your products. For legislation that applies to all employers, wage growth is generally a net positive for investment returns because it grows the overall economy. People buy more stuff when they have more money.
The real problem is when industries get specific carve outs, which they do have the incentive to lobby for because most of your customers are not your employees, and the business won't lose as many sales to their own employees as they benefit from paying lower wages, as long as their other customers' employers don't get to pay lower wages too.
Doing that actually harms investment returns on net, because the harm to businesses across all industries lost from your employees is more than that specific industry gains from paying lower wages. But it's the same problem as avoiding pork barrel spending -- one industry will fight much harder to take a billion dollars off the table than everybody else will collectively fight to avoid losing fifty dollars each, even if fifty dollars times everybody is significantly more than a billion. So then that happens over and over and adds up to real money.
If your country has a broken political system then it's unremarkable that it's unable to to organise itself. The forces that shape economic decisions come to shape political decisions too.
Where is the growth? The Federal Reserve pumping easy money into the economy doesn’t count. The author completely missed the point as to why capital is misallocated. True growth is when productivity increases, prices fall, and capital investment increases.
It’s easy to sell 10 dollar bills for 8 dollars a piece. In what world is that considered growth?
When prices fall it is called deflation. The investment then decreases as well, because who in the sane mind would invest into something that is getting less valuable as time passes?
Someone who wants more stuff or anticipates change in the future. Best time to buy an asset is in the latter stages of a long price decline.
Speaking from a mining industry perspective, best time to invest might be after about 3-5 years of price deflation. If you invest in capital when prices rise sharply then you can lose a lot of money; as mining companies generally seem to do discover when there is a bull market :/. I've seen mining companies do a pretty good job of bankrupting themselves by not investing when prices have been dropping for a while then over-'investing' when the price rises.
So, in the real economy, sane people would invest when prices drop. On a sane timeframe. None of this millisecond knee jerk day trading business.
Basically, the argument is that investment depends on anticipated change over some time horizon. If someone has a long time horizon, best time to set up is in a deflationary period. It isn't a general rule but you'd certainly see some canny people getting their hands dirty if they anticipated a shortage of some good or service.
Far too many people apparently. New phones every year or more often. Apple products built with the intention to prevent their repair.
I was reflecting on the increasing gap recently between price and quality. If inflation were the cause of increased prices the expectation is that quality would stay the same. Quality is going down however.
Where is that difference going then? Shareholder pockets.
What is the value of hoarding all that cash? If the Fed didn't print more there would not be enough currency liquidity in the market.
This is what we see today. Deflation is staved off only through QE. It should be through incentives to spend, but there are too many incentives to hoard.
Piketty et.al. showed the exact opposite, for the US and other countries. Economic growth seems to generate more opportunities for upwards social mobility.
But they and you (and me) agree that inheritance is a main driver for the growing inequality, and progressive taxation of capital was proposed as a solution in the book, too.
Economic growth may or may not, but neoliberal trade regimes definitely do, for both more and less developed partners in such trade; they also tend to cement the position of economically advantages (and disadvantaged) ethnic groups by the same process.
Advertising encourages people to spend, even in some times to do it by going into debt. This in turn leads to more economic activity, more widgets ordered, which in theory should mean we can reap benefits of economies of scale, we can better amortize costs, etc. Which leads to R&D and innovation, which helps technological change, which leads to a more efficient economy, which leads to more surplus, which means more wealth created, etc.
Now, of course we could do this probably without spending so much on ads, but just saying ads are zero-sum is incorrect, because there's a bigger picture.
Social status is again not so simple. Because after a certain group size there will be value in being different. See also the classic equilibrium between strategies in any game (as in game theory).
> which helps technological change, which leads to a more efficient economy
You made a leap of logic here. The technological innovations in finance directly contributed to a more volatile economy that crashed and inflicted massive losses on huge swaths of the global population, many of whom never recovered.
Singling out one causal chain in one period while ignoring the rest is not a good way to weigh "progress".
Yes the lack of oversight led to a crash, the lack of social safety net prolonged it, and the lack of effective adult education keeps people chasing low-income jobs and in poverty.
And lo and behold Basel III was signed, now systemic risk analysis is regular part of the financial sector checks, even if the current US administration tries to (and succeeded in) roll back some of these protections. That's the rent seeking regression. (And many people are happy for it, for they don't understand these processes, but they also don't trust "technological change" and economics, because it took their jobs - which is an understandable sentiment, even if incorrect.)
Not too mention, at least in America, the vast majority of American lives are far worst off than they were in the 70s, 80s, or 90s. Making smart phones and personal computers just made rich people richer.
Smart phones and PCs both coincide with big shifts in global politics, the post 2001 War on Terror, Operation Iraqi/Afghan Freedom, etc. Trillions spent on insurgency control, that could have been spent a lot more effectively.
All the while the middle class shrinks. (David Autor's 'Why there are still jobs?' paper is open access and has striking graphs that show just how much happened/happening.)
Globalisation lifted hundreds of millions out of poverty, while the financial benefits of this economic optimization were not distributed back to those who lost their old socioeconomic status. (They only got the lower prices, but that's not much considering most of those people affected were not living in a distortion-free "free market", they had no idea what to do, they were not used to chasing new skills-in-demand, not prepared to relocate, etc.)
That said comparing healthcare outcomes, civil rights to the 70s is worthwhile, and if you think it was better then, that is mighty strange.
> Making smart phones and personal computers just made rich people richer.
With some positive sides also. Having a free encyclopedia, cheap universal access to educative videos or detailed satellite photos of the whole planet in 70s would have been mind blowing. Being poor today is more frustrating, but the DIY part is much easier, as making connections, and this has also an economic value.
Knowledge is not protected in semi-secretive guilds anymore. The counterpart effect is the disparition of entire sets of steps in the social stair. You can not make a living anymore selling printed maps for example. Poor people could climb, a little, but there is no so many stairs to grasp.
The harsh truth is that your largest effects will always be local. What you do for your immediate family and friends will always dwarf anything you can do for society.
To expect your day to day to serve a larger social purpose is to subordinate either your lifestyle or your cognitive integrity to something you’ll never be able to completely convince yourself isn’t a lie you’re telling yourself.
If you can put your kids through college well-adjusted, you’re already doing better than most on that front. Beyond that, maybe maintain a few open source libraries for awhile?
The big ideological divide in families (usually between generations) is a serious symptom of our inability to really communicate and compromise. In large part these ideological groupings are meaningless and inconsequential. Mostly because it doesn't really matter, for most of the people the feedback is very much lost in the noise. (There's institutional inertia, states are big, changes are slow, Congress doesn't change that fast anyway, the Senate is entrenched; and similar situations exist in other countries too.)
And thus it's hard to reconcile how trivial it is that people don't see what's going on, yet they are the problem themselves.
"The big ideological divide in families (usually between generations) is a serious symptom of our inability to really communicate and compromise. In large part these ideological groupings are meaningless and inconsequential."
I think this is only true in very specific circumstances. Ideological divide can also mean disowning your child for being gay, which is why among homeless youth there's a disproportionate amount of LGBTQ children and why the concept of "found families" is very relevant to the LGBTQ community. Certain families also will disown or withdraw from any member who doesn't follow religious teachings.
Often times ideological differences is quite meaningful when it results in the abuse/neglect of vulnerable family members.
But it is different. You ( like the russians and the english ) live in a gerontocracy which I would guess is a effect of your personal power base focus with individuals driving political campaings for them self, instead of being pawns that are whipped if they step out of the party line on issues ( an effect based off having multiple small parties ).
Swedens demographic among the MPs.
18-29 år 10,6 %
30-49 år 49,0 %
50-64 år 37,8 %
65+ år 2,6 %
USA
Congress Representatives
Newly Elected
Representatives Senators
Newly Elected
Senators
115th 57.8 years 50.8 years 61.8 years 54.8 years
Not OP, but my personal belief is that all work is valuable, otherwise it wouldn't be desired. I don't think it's a good exercise to decide how much it is worth, except to say that work that requires X unit of time should provide at a minimum an amount of compensation that allows a person to obtain a standard of living above the poverty line.
In my book, work has negative utility. It is something you tolerate to get the fruits of it, which may have positive utility. Being paid in exchange for work is the sign that otherwise the work won't be worth doing for you.
The less work you do to achieve a desired result, the better. This is why technical improvements are valuable: they allow you do less work.
There are activities that are rewarding by themselves, like playing games, watching the sunset, or otherwise having leisure. You are not paid for that, you sometimes pay for it yourself, and still it remains worth doing.
I fundamentally disagree with the separation of life into toil and leisure. That mentality debases both acts. It implies that the more miserable our job is, the greater the moral reward we have earned. And, conversely, our leisure must be maximally hedonistic and selfish to make that suffering worthwhile.
All of our waking day is a mixture of good and bad experiences, intertwined with all manner of internal and external rewards and punishments. A hobby is just a job that pays you more in fun than cash, and a job is a weird club you go to more than you want but that pays you dues in return.
Trying to separate them into strict binary options makes it hard to build a complete, balanced life that has all of the various kinds of rewards that are meaningful to you as an individual.
You're describing the utility of work for the worker, and I agree with your description.
But work also has utility for the person who pays the worker, and this is extremely different from what you've described.
This difference in the utility functions for each party (one wants to maximise the return on work and minimize the work; the other wants to minimize the work and the cost on it) is what sets up most of the "classical" marxist class tension. This is despite their agreement that the less paid work that needs to be done, the better.
No, the work done by worker still has a negative utility — it's time spent and salary paid, a clear loss for the employer.
The fruit of the work done is what's valuable, thus is what the employer buys from the worker by paying wages, or a slave owner forcibly takes from a slave. This is why an employer is interested in technical improvements: they reduce the required amount of work per unit of the resulting valuables.
The tension between the worker and the employer is about the price paid for the fruits of the work. Definitely, with standardized industrial manufacturing, it's about the amount of time and work conditions, because a worker can't significantly influence the performance of the machines he's using, or could not at Marx's times. As the Japanese (e.g. Toyota) have shown, workers with right motivation and right education can influence performance of industrial manufacturing quite significantly, e.g. by spotting inefficiencies and by lowering the defect rate.
The way you are doing the accounting here, it's like the supplies used in manufacturing have negative utility -- they are a cost paid, "a clear loss for the manufacturer".
Work has positive utility when it creates something of value. Considering the money paid for it as coextensive with the work is a mistake because people can work to create value without getting paid, as sometimes happens to unfortunate people. It is no more reasonable to treat the work inputs into a good as having negative utility as it is to treat the money paid for it as having negative value.
I'm not making a distinction of how valuable a particular piece of work is, just that work in general is valuable and should be valued such that whoever is employed by it should be able to be sustained by it.
If a person desires work but doesn't value it high enough to sustain a person whose time is wholly consumed by it, I would question the necessity of that piece of work. If it's not critical to your business maybe it shouldn't be done. If it is critical then it sounds like it's worth the compensation.
Sometimes someone's valuation of work is questionable. It may have had value to them, i.e. they paid someone to waste time out of pity, or their valuation could be wrong. They could pay someone to pray their stock prices increase not realizing it's useless.
There are much more obscure ways in which work can be entirely useless without anyone noticing, and plenty of ways people can end up with jobs that are pretty obviously a waste of time.
It's not about which specific categories of work are valuable, it's about treating labor in general as more valuable than capital. Currently in the US, income from capital is taxed at far lower rates than income from labor. Why?
I invent (at the cost of $500) a programming tool that improves your output by 50%. This enables you to earn $5000 more per year than previously. You purchase that software for $1000, providing me a profit of $500.
It's a company which makes the profit. If you started a company and sold the tool for $500 and the company paid you $500 then there is no more profit for the company. If the company paid you $250, only then can they claim to have made $250 profit.
Hence, profits are nothing more than unpaid wages.
A goes and buys flour for 100$ from farmer B. Then A goes and pay independent baker C 100$ to make bread from the flour. Then A goes and pay independent retailer D 100$ to sell the bread for $500.
Each cycle A makes $200 in profit, nobody loses out as everyone agreed to the terms.
This is enough margin for A to pay an independent manager $100 each time he repeats the process, ultimately netting A $100 without A doing anything. Is A taking advantage of everyone here? No, of course not, everyone still agreed to all the terms, A was just aware of a business opportunity the others were not, risked his own money paying for goods and labor he wasn't sure he could sell and now everyone is richer as a result.
This is how businesses works. Of course in practice sometimes businesses does scummy things, but that is why we have laws which are meant to ensure that all businesses are net positive for society. If a business is not net positive then we send the police to them and shut them down. That doesn't work when businesses have politicians in their pockets, but it works in parts of the world where workers have more political influence.
In reality most people are not sole traders and the market does not operate under conditions of perfect competition. Over-simplification is not helpful; I could describe a similar virtuous circle based on entirely different economic arrangements, and it would be just as facile.
There's a word for this in economics. The 'normal profit' is the 'wages' of the entrepreneur and risk-taker -> the return on the money invested or put at risk, and the time and effort of the entrepreneur to build the business. Nothing immoral about that.
I don't entirely agree either. I was just expanding on the idea. However, when there is no employee, such as in the example you gave, there is also no profit. What you have called profit is actually your wage. Do I make a profit when I go to work for a company? No, I earn a wage.
It's never positive as your life is worth far more than those wages in all cases. That's why no one can be considered overpaid, or we would limit payment to CEOs. Thus wages can only be considered at best, a trade.
That's why I asserted that profits are nothing more than unpaid wages. Since it's objectively a trade of your life for wages, paying others less than the value you produced is simply not valuing human life. The worst sort of theft.
For your example, it doesn't hold up because most people only make enough to live, there's nothing to optimize other than going "full ramen". While others have far more than necessary for basic food, shelter and medical care. Those who are just-surviving aren't doing anything wrong, when an economic ponzi scheme simply doesn't value their life by paying them less than the value they produce.
> That's why I asserted that profits are nothing more than unpaid wages. Since it's objectively a trade of your life for wages, paying others less than the value you produced is simply not valuing human life. The worst sort of theft.
This is ridiculous. As someone who has, in the past, run their own business, and now works for a living, the fact of the matter is that my employer does a lot of work I am unwilling / uninterested in doing, such as making sure there is money to pay me and advertising the product to others, as well as figuring out how to accept payments, get the requisite insurance etc.
The profit retained by the company is the share agreed upon in advance paid to those who, through their own labor, at some point made the company possible, whether it be by direct action, or by stored labor output from a previous position (i.e. capital).
That’s extremely loaded, and not true. I’ll unpack it all if someone is curious but in short your statement is only true if you define wealth in terms of faith-based fiat currency or define wealth as central bank issued scrip. There’s a reason credit is readily available. It’s a scheme that only works until it doesn’t, which is objective evidence that it makes for a very hollow definition of wealth.
It should be worth noting that this is a pretty strong (and I don't think defensible in the case given) claim to make - you're echoing the Marxist/socialist objection to profits (one which I may agree with) but Marx (nor anyone else) ever claimed that this happens without employing wage labour. For profits to be nothing more than unpaid wages, we need to be talking about at least one waged worker who applies labour, and his product is appropriated by his employer.
For what it's worth, the principle objection I have to the Marxist position on wage and profit is the redefinition of the term "exploitation".
It muddies the argument because it enables a circular argument whereby the transaction of employment can be labelled as exploitative, where it's easy to defend against the claim of exploitation if the original definition of the word is preserved.
In other words, profit generation as it comes from an employer/employee relationship is Exploitative but not exploitative.
The definition of "exploitation" is a technical one; even those who argue against the Marxist claim actually take this in stride, for instance, there is an objection to the Marxist idea of exploitation that Marx's selection of labour-power as the exploited commodity is arbitrary, thus we can say that any commodity (such as steel, peanuts or shoes) is "exploited" - the Marxist reply to this isn't to say "well, exploitation doesn't mean that, exploitation is evil and you can't be evil toward inanimate objects".
In other words, I think the definiton used by Marxists is somewhere between the two. It not only means to use something up (to exploit resources) but also the Marxist idea that exploitation relates to workers being forced (by man-made historically arisen structures, that is) to sell their labour-power.
Nevertheless, newer schools of Marxism (such as the ones from the 80s which attempted to use neoclassical economic models) have axiomatic definitions of exploitation. For some simplified models of a commodity economy, researchers such as Veneziani and Yoshihara (and Roemer on different grounds) prove that the axiomatic definition of exploitation is satisfied. Defined axiomatically, we can escape the talk about morality. But you can easily rephrase Marx without the word "exploitation" - the claim is, rather simply, that there is some amount of labour that is unpaid, this labour forms the substance of surplus value, which is appropriated. No judgement, no morality, no right or wrong - that's just the fact, and of course it may well be a good thing(!) that workers are "exploited" - Marx certainly said as much, when writing that the capitalist's point of view, his idea of "fairness" is just as worhless as anyone else's.
I could agree with almost everything in your last paragraph, but you're still using loaded words. "Appropriated", for instance. Even "unpaid" carries (perhaps just to me?) the implication that it should be paid.
I would describe the same thing like this: The workers plus tools (capital) create value. The workers don't get all the value produced; capital also gets a cut.
You can say that this is morally right. Or you can say that this is necessary, because the capital isn't invested out of the goodness of the capitalist's heart. We have to give them some payback if we want them to buy the tools. The alternative is to have only the tools that our in-house workers create, which is usually a sub-optimal situation.
Now, any given situation can still be exploitation of the workers (in the common rather than axiomatic sense), and still be morally wrong.
The question is incomplete without knowing how the $15 and the $10 breaks down - if you paid, say $3 for the materials (C) and $10 for the labour (V), you'd sell at a $2 profit, Marx would say that assuming equivalent exchange of values on the market, neglecting the role of advertising and such, and assuming the chair is freely reproducible (i.e unencumbered by patents and trademarks, and not a one-of-a-kind item like a piece of artwork), the $2 is the monetary value of the surplus labour (S), also known as "unpaid" labour. This provides a rate of profit (or "rate of exploitation") r = S/(C+V) = 2/(3+10) = 0.153, the final product of course having a value of S+V+C, expressed, i.e 2+10+3 = $15.
> the $2 is the monetary value of the surplus labour (S), also known as "unpaid" labour
What about risks and decision making, investing in the future products and potential failures? How much is "paid risk" and "unpaid labor", how to objectively evaluate that?
I would argue that $2 is paid risk, not unpaid labor, how to prove that that's not the case?
Also, if I paid you a salary, and than the product failed in the market, is it just according to marxists to ask your salary back, or, if the product was net loss, to ask you to pay for it as an employee?
The proof follows from the labour theory of value (the proof of which is, I believe, more controversial, especially as Marx does the "proof"), which states that the magnitude of value of a commodity is objectively determined by labour-time, not by "risk", and I think that's shown in cases where many busniesses, no matter how risky (and it seems here you're only talking about the capitalist's risk, not that of the waged labourer), realize different rates of profit which don't align with what we consider to be the risk of production. More risky businesses, in general, simply don't generate more profit than non-risky ones. If it were the reward for decision making, the rate of profit would diminish the more you sell something the same way and in the same place, since there are fewer decisions to be made for each subsequent commodity. Investing in future products and protecting against potential failures are uses of the $2 profit, not explanations as to its origin.
Let's say that it is risk. The capitalist labours the monetary equivalent of $1, i.e he spends $1 on his labour power, producing a total of $2 worth of labour. When the product is sold he is still given $2, but not all of that is profit, only $1 is, since the $1 paid is now a cost, he only gets $1 "for free", not $2. Therefore it's clearly in the interest of every capitalist to minimize the amount of work he does himself and instead "exploit" a waged worker for it.
Marxists have never argued that the worker has a "right" to the surplus value, only that it would be, in the most non-moral sense possible, in the interests of labourers who have this surplus appropriated due to the structure of production to ensure it is no longer appropriated in this way - i.e. a socialist or communist society.
> The proof follows from the labour theory of value
But I'm asking you about the proof of the labor theory of value in fact. I didn't thought that there exist people who take it seriously after marginal revolution.
> and I think that's shown in cases where many busniesses, no matter how risky
Business shows exactly the opposite, the most risky (volatile) domains have the highest gains and highest losses: pharma, construction, fintech.
> value of a commodity is objectively determined by labour-time, not by "risk"
So when the value of a bottle of wine inflates with time, somebody is working on it?
> no matter how risky
Did you ever run a business? When you pay for a snack, you pay not only for a snack, but also for a stolen snack. When you pay for a Intel x86 processor, you also pay for failed Intel iAPX 432 which never appeared in the market.
Risks are pretty material, and should be payed for. When you are starting a project, you never know in advance whether it would be successful or not. If it fails, the only way to pay the salaries and costs is through revenues of other projects.
> If it were the reward for decision making, the rate of profit would diminish the more you sell something the same way and in the same place, since there are fewer decisions to be made for each subsequent commodity.
Strange inference. Not the number of decisions matter but their impact. If you sell something many time, it means that the first one decision was very clever and rewarding. Not to mention that revenues are falling with time and it requires new strategies and decisions to make your company competitive and profitable again.
> The capitalist labours the monetary equivalent of $1, i.e he spends $1 on his labour power, producing a total of $2 worth of labour
Again, I see no evidence that labor creates any objective value on its own. Goods have value, labor has value as a good evaluated by an employer, but it does not "create value". If you make a chair, you apply labor, but if nobody values it and nobody buys it, it has no value, hence your labor has no value.
How did you evaluate that capitalist labors $1? Maybe his decisions and ability to take risks cost $100, and his workers are just freeriding him? How exactly did you infer that he spends exactly $1 of labor power? What is a labor power, how could you measure it objectively?
Forget about capitalists, here is a simple though experiment: there are two workers living in a commune and owning the means of production. They do chairs and sell it to the outer capitalist world. One worker is a carpenter who does the woodwork. Another one make nails. They sell chairs for $1, which share of this $1 each of than created? How to measure that objectively?
After that add a capitalist who start the business, takes risks, credits, make decisions and devise strategy. How to evaluate the "value" of his activity?
>But I'm asking you about the proof of the labor theory of value in fact. I didn't thought that there exist people who take it seriously after marginal revolution.
The proof is "in the pudding" as it were; there are a few theorists (either heterodox economists or philosophers of economics) who argue that Marx himself did enough to "prove" the theory, either logical-deductively, or otherwise; see Elena Lange[0], Patrick Murray[1], Guido Starosta[2], Andrew Kliman[3], Chris Arthur[4] and a few others - though they approach the matter from different angles. Martha Campbell defends the objectivity of value in capitalist society as opposed to marginalist accounts and Veblen's "habitual action" account[5]. In general, those that hold to Marx's exposition with the "third thing" argument argue that the theory cannot apply to each commodity individually, though it would apply to an aliquot as taken as a sample of the lot of them.
>Business shows exactly the opposite, the most risky (volatile) domains have the highest gains and highest losses: pharma, construction, fintech.
These are not businesses, but fields of businesses, within them it is possible to find the greatest variation in risk. It is also not clear whether the risk is taken by the owner of the capital, or by the labourers themselves - in construction, a major risk falls on the safety of the workers. To say that they have the highest gains and the highest losses implies risk is a mere tautology (of course! that's what risk means, you win big or you lose big), but it says nothing about profitability.
>When you pay for a Intel x86 processor, you also pay for failed Intel iAPX 432 which never appeared in the market.
Again, offsetting the effects of failed developments and theft is what capitalists do with profit, it is not an explanation as to the origin of profit.
>Goods have value, labor has value as a good evaluated by an employer, but it does not "create value".
What you're saying is absolutely true, but it's an equivocation on "value". When you speak of the value to someone, from someone's perspective, that's not what Marx means by "value". Marginalist accounts of value are semi-compatible with the labour theory of value, so long as we're talking about different things when we say "value"; for example, it's clear that what the LTV means by "value" is not "artistic value" or "moral value" or any of a huge range of values. In the same way, it does not mean value as a subjective preference for one thing over another. That concept gets a look-in with the Marxist concept of use-value - but not exchange-value.
>If you make a chair, you apply labor, but if nobody values it and nobody buys it, it has no value, hence your labor has no value.
Only use-values count as values, because according to Marx, a commodity is a complex of a use-value and value (expressed in a given magnitude of exchange-value). Therefore it's meaningless to talk of something usunable and undesirable as having value. Even Ricardo knew this was the case. Wine is a more interesting matter; depending on how one looks at it, either the very act of storage is (objectively) highly valued, or the good is not entirely freely reproducible (i.e my wine aged for ten years will never sell as well as a brand name aged for five years), or along with Murray, the theory does not apply to this individual commodity, but if you were to take a sample of all capitalist commodities, you'd find that the identity of total value = total price holds in aggregate.
> They sell chairs for $1, which share of this $1 each of than created? How to measure that objectively?
There is no way to determine that; it is just as impossible as quantitatively determining "utility". Value is not sensible, it is a socially-determined supersensible aspect of commodities. In other words, the essence behind the appearance. See Murray on the neoclassical focus on capital's shadow forms[6]. In the same way, measuring skilled versus unskilled labour may not be possible quantitatively, but it clearly happens qualitatively - what the market rewards in wages on average to two groups of people with different skill sets means the abstraction and calculation is already quantitatively done for us in the real world. This is exactly the same with the neoclassical concept of utility, in which we can actually see prices, but not a drop of utility, no matter how we twist and turn an object.
> Again, offsetting the effects of failed developments and theft is what capitalists do with profit
Wait, what? I'm asking, how would you subsidize failed developments if you consider 100% of profitable development as wage.
If you consider net income as wage, should the net loss be paid by the workers?
> in construction, a major risk falls on the safety of the workers
Which is also payed by the employer in the form of insurance. And the investment risks also totally lie on the employer here, workers just get wages. If the construction is failed/not being profitable, workers get wages and insurance, employer and investors are paying bills and credits.
> what the market rewards in wages on average to two groups of people with different skill sets means the abstraction and calculation is already quantitatively done
But again, market rewards have nothing to do with created values, but rather the utility of labor. If your labor could be substituted with the machinery for the smaller price. It's based solely on marginal utility of labor.
No calculations based on value creation is done whatsoever, the wage is a result of a bargaining process.
> measuring skilled versus unskilled labour may not be possible quantitatively
> it is just as impossible as quantitatively determining "utility"
But you don't need to, that's why labor theory of value is dead and Marginalism has conquered the world. You don't need to quantify utility to evaluate wages, just let people bargain based on their subjective notion of utility, ability to find substitutions etc. Marginalism is suitable for modeling and planning here, all you need is gather statistical data other how the preferences and desires for the good change with the appearance of substitutes or changes in quantity.
You can't, however, evaluate wages based on labor theory of value, you can't measure the value one has added to the value of raw materials, if it's even the case.
You can't even solve a simple problem of two worker's shares of surplus value with the labor theory, it's totally useless for anything but being a justification for exploitation theory.
There are neither empirical nor deductive evidence that the value of commodity is proportional to the wages. Even if you exclude luxury goods (which is already a clear intellectual dishonesty, because the notion of luxury is vague, and differences between luxury and basic are impossible to be quantified of defined), you would still have a huge difference in prices of buckwheat and wheat, or water simply in different contexts (even if no labor is applied to extract it, as in the case of oasis, oasis water in the middle of desert would be evaluated more than the water being extracted from a deep shaft in a less severe conditions).
Value is inherently subjective, it stems in scarcity, utility, ease of finding a substitute etc. Even labor is such a good, evaluated subjectively.
Profits are the "wages of capital". No one pays companies wages. The owner or owners of a restaurant doesn't have anyone to pay them -- they have to arrange for their to be more in gross receipts than there are expenses or taxes; otherwise, they go under.
> Indeed the conspicuous embrace of “elite values” by journalists and academics is often little more than an aspirational attempt to remain connected to an economically distant elite—just as educated millennials’ conspicuous consumption of “experiences” often serves as a necessary distraction from the grim reality that most will never be able to own a home.
> An entire “creative class” ideology was constructed to explain this phenomenon, but its intensity simply concealed the desperation of second-tier elites to assuage their status anxiety.
The author doesn't pull any punch sent the bourgeoisie way.
> Although, on a website made by a company that funds the bourgeoisie
...in the hope that their venture,by some miracle, is the winning ticket to join the elite - usually by being "blessed" by an elite via a 6- or (preferbly) 9-figure acquisition
It makes sense that the top 10% to 2% become more active as blame and anger are re-routed toward them. For example, many people think the "elite" are the educated but not necessarily the wealthy. So for many, adjunct faculty are called "elites" while the Koch brothers are not.
Likewise, discussions of wealth inequality are becoming conflated with income inequality.
Yet the professional class has only marginal voting power and comparatively little to contribute to political funding, so it's not surprising that the astute ones are concerned.
> So for many, adjunct faculty are called "elites" while the Koch brothers are not.
I think this is an important point. Wealth in the West knew to stay out of the radar. The whole concept of "old wealth" has the key characteristic of not spending frivolously in public or making a scene. Even in the Instagram age, they largely keep it under control. Their wealth - while beneficial - is not their defining characteristic. Some even argue that the celebrity class exists in part to monopolize the headlines that would otherwise be taken by paparazzi hounding old wealth.
This contracts to the extreme with all the new wealth which spends flamboyantly and spends to get attention. We seem to see this thousand fold with the Chinese new rich and their children - hence the Fuerdai term emerging.
The resentment of the working class against the old wealth is minimal - they stay out of sight and out of mind. The resentment towards the new wealth is tremendous and I don't think it will end well.
Old wealth also spent lavishly, just on things more beneficial to the public. Imagine the costs with constructing an ornate art deco build today, vs. another 6 story wood frame box. At least with the pricey art deco building, the luxury is enjoyed by everyone who uses the space. Not to mention old wealth often donated huge fortunes to civic endeavors.
There was good reason why the working class resentment of old wealth was minimal, it was because they weren't only hoarding it for hedonism or a lust for power.
That's exactly my point earlier. It actually costs relatively more today to get a similar sized building as that high quality art deco building of yesteryear, while the quality has simultaneously declined. Buildings like that aren't built of stone today, rather twigs by comparison.
Prices have gone up and quality down.
It's not just the wealth gap that is increasing but the value gap even more so.
Being a declassee from "really old wealth" - thank you WWI and the collapse of Austria Hungary - culture was a veneer to hide the hedonism. My great-grandmother, born in 1890, had stories about who would fund the ballet vs the opera. And it had mostly to do with foot fetishism.
I've often suggested this to the chagrin of relatively equally wealthy people (people earning 0.5-2x what I earn) . We're all living the same life, just with different levels of shiny.
One drives a used corolla, the other a new one, the 3rd a lexus (made by toyota still). Each has a house with varying levels of pretty etc.
The 0.01% is living in an existence far removed from us. They dont play games of wondering which car has the lowest TCO or signals a little status etc. Instead they're playing power games and games of access to things that go beyond the ability to pay for them.
Different levels of shiny perfectly captures how I feel after taking a 66% paycut. Now I mostly buy food at Costco instead of Whole Foods and wear uniqlo. But I’m much happier having more time and less stress. I couldn’t buy a decent 2br house/apt in my big city before, still can’t. Unless you are trying to pay for kids college or something making an extra 100K in a major metro area mostly just raises your taxes.
I'm sorry you received a pay cut, and I'm glad you are happy with more free time.
However, making an extra $100k puts an extra $65k in your bank account. It's basic math. Now, psychologically, I can see it being not so clear cut, especially if one lets their standard of living and spending habits rise up as their paycheck increases.
In SF/Peninsula that's not even enough marginal income to go from renter to home owner. Eg: Single bedroom apartment is ~4k and mortgage on a 1.6M home is almost 12K a month unless you have 350K down payment.
IMO the only option in the bay area is FAANG or live as frugal as possible and take the wealth to a lower CoL area.
EDIT: or improbably be a highly paid Cofounder / Executive and earn >400K per year.
The professional class has contributed the most to the wealth gap. We blame the wealthy, but it's not they who are performing the task of wealth extraction. The banks owners don't sign mortgages or repossess homes. The shareholders aren't doing the actual labor that increases page views or patents doodads worth negative value to the poor who buy them and funnel the money up. Owners don't do the taxes that rob society of its own worth.
No. It's the professionals who do that immoral work. They are to blame. Not the wealthy. They just pay for it.
The professionals, most all of us here are the cause of the wealth gap. It is we who exacerbate the divide and decline of civilization by sacrificing our moral duty to those less fortunate to get a little more cash for ourselves.
Listen to us all here now. We know this, yet we continue.
> the professionals [...] are to blame. Not the wealthy. They just pay for it.
This brought to my mind on old Chomsky comment about civilian casualties in war:
"Evidently, a crucial case is omitted, which is far more depraved than massacring civilians intentionally. Namely, knowing that you are massacring them but not doing so intentionally because you don’t regard them as worthy of concern. That is, you don’t even care enough about them to intend to kill them. Thus when I walk down the street, if I stop to think about it I know I’ll probably kill lots of ants, but I don’t intend to kill them, because in my mind they do not even rise to the level where it matters. There are many such examples. To take one of the very minor ones, when Clinton bombed the al-Shifa pharmaceutical facility in Sudan, he and the other perpetrators surely knew that the bombing would kill civilians (tens of thousands, apparently). But Clinton and associates did not intend to kill them, because by the standards of Western liberal humanitarian racism, they are no more significant than ants. Same in the case of tens of millions of others."
Work widens inequality whether or not it’s extractive. Any time you’re creating value, someone else is not, and the difference between the two of you grows.
That's not true. We can both be better if I work for you and you pay me right. It's not a negative sum game and can be positive and equal value for both. The value of your cash to me and my product for you.
I see your point. I still disagree and have more counterpoints. I also don't appreciate that perspective, nor do I believe I'll change your opinion on it, so I'll stop here.
Presumably adjunct faculty could be more current and active in their respective field than someone who got their degree but spent the bulk of their efforts working on unrelated projects.
Don't you have to have a PhD to teach at most universities in the US? Not to mention someone with a masters in engineering from MIT could very well be an adjunct faculty themselves.
> Yet the professional class has only marginal voting power and comparatively little to contribute to political funding, so it's not surprising that the astute ones are concerned.
Likelihood of voting is highly correlated with education. I wouldn’t be surprised if the top ten percent are three or four times more likely to vote than the bottom decile. Money is also far less important in politics than many think. If money won elections Michael Bloomberg would have been president long ago, Eric Cantor would still be a Congressman, rather than having been beaten by Dave Brat[1]. Joe Crowley would still be a Congressman rather than having been beaten by AOC[2].
> Add up all US spending on candidates, PACs, lobbying, think tanks, and advocacy organizations – liberal and conservative combined – and we’re still $2 billion short of what we spend on almonds each year. In fact, we’re still less than Elon Musk’s personal fortune; Musk could personally fund the entire US political ecosystem on both sides for a whole two-year election cycle.
In his challenge of House Majority Leader Eric Cantor for the Republican nomination, Brat was outspent by Cantor 40 to 1: Cantor spent over $5 million, while Brat raised $200,000 and did not spend all of it.
Better example. Of course, I think Perot could have had a shot if he hadn't dropped out to drop back in. He could have easily have gotten 2nd place or 1st place in more states than UT and ME if he was less impulsive.
1. The author perhaps underestimates the bottom 90%, who are written off as politically irrelevant (in terms of real power) near the start of the article.
I do think there's a good reason for this, but we are only one true crisis away from that changing. For example, suppose India and Pakistan only were to have a nuclear engagement and the outcome was a small global "winter" for a few years from the dust and rubble kicked into the atmosphere. When crops and supply chains fail and famine kicks in, who is going hungry?
That's about the point that true populist revolts happen.
2. The author discusses at length the phenomenon of "the 10%" elites who align themselves (in ideology) with the working class, perhaps blinded by not realizing that they are actually trying to support their own interests.
But I think some underestimate how soon the developers and programmers of the world will crater from "elite 10%/5%/1%" to something resembling median salary.
This is my own opinion, but it's clear to me that the tech industry (and it's associated venture capital scene) are in a state of irrational exuberance as the capitalist class is convinced that tech startups (or the word "tech" attached to non-tech startups) offers incredibly high ROI.
This paradigm will end as easy opportunities and low hanging fruit dry. Maybe we're already there, but nobody has acknowledged it yet. When this happens (and is widely recognized), venture capital will flee to safer vehicles. Meanwhile, the big tech of the world will consolidate and cut costs to grow shareholder value.
When this happens, we will all stop hopping jobs for 30% pay raises and instead we will start hopping jobs (post-layoff) for 30% pay cuts. And this will continue for decades.
> But I think some underestimate how soon the developers and programmers of the world will crater from "elite 10%/5%/1%" to something resembling median salary.
I generally agree with this. I think for the traditional programmer building apps and apis this begins to happen in 5-10 years. We'll essentially become mechanics. However, there is always the next front of technology that you can surf.
For millennia those on the forefront of technological progress have done well relative to the rest of people. This was due to having skills that were relatively rare, access to equipment that was uncommon or both. Blacksmiths, photographers, car mechanics, stock traders, etc. Programming in certain verticals will be added to that list.
But imo there is good news. Being able to create or deploy new technology in ways that creates or protects wealth will always be in demand. And the thing about programming is you are first-and-foremost a problem-solver. Couple that with technical math-based skills and you can bring immense value to most organizations.
If you are a "programmer"--I really don't like that term, but whatever. My advice would be to be trained in multiple disciplines across multiple verticals. Know how to look at a business or social problem and deduce it to its fundamental inputs/outputs so that you can then construct a solution that turns those inputs/outputs into the desired result.
Hand-wavy, but that really is the key to being valuable. Solve real problems.
>The author perhaps underestimates the bottom 90%, who are written off as politically irrelevant [...] but we are only one true crisis away from that changing. [...] When crops and supply chains fail and famine kicks in, who is going hungry?
Regarding the first point, some people have noticed that food price changes can lead to revolts [1], but I'm not sure that says anything about the political power of the bottom 90% nor whether those revolts would lead to meaningful change. I imagine any food revolt in the US would mirror the Revolutions of 1848 [2].
Only due to wider adoption and commoditization of the skill set. It well always be hard to find the best. Home builders once milled their own lumber until the industry commodified the process. Homes didn't get cheaper but the corporations that formed and the knowledge workers who designed them took more of the cost for themselves. The highest paid software folks will be those who simplify the process of making software so more less skilled and and difficult to train people can do it.
Tech has always gone through boom and bust cycles. At the end of the day though, it's really hard to write good software and we're only going to see demand go up over time. There may be some bumps in the road, but there will always be new opportunities. I think programmers are one of the only professions not at risk of automation or disruption as all of that is powered by software which maybe 5%-10% of the population has the ability to write and maintain.
> software which maybe 5%-10% of the population has the ability to write and maintain
I sure hope you're right about this. I have no doubts on the rest of what you said, but given enough incentives (both push and pull), there may be a lot more latent ability out there than you think. Especially as the on-ramps from raw talent to real productivity keep improving.
From my direct personal experience, I suspect there are a bunch of current Uber and Lyft drivers who could definitely code if they had enough reasons to. A lot of them have better social skills than your average coder, too.
I used to think most people had the ability to code but ~20 years of managing development has made me reconsider. Most people just really can't deal very well with abstraction and complexity (not to mention things like recursion). I think a lot of people can write some code, but it won't be good and it will require someone more senior to extend, maintain and scale it. So basically the more people who write code, the more in demand those top 10% of people with natural coding ability will be.
I do think we are definitely in a state of rapidly declining relevance of need for programming work. Code is an Ouroboros that eats its own tail to grow. Especially with the ethics of open source free software development and the dismantling of moats and credentialism, we might be in an accelerating state of programming jobs vanishing.
For your point 2, I think it's really interesting to think about creating value and capturing value.
There's currently only 1 measure of success for capitalism, and that's capturing value. Creating value without capturing it is seen as stupid and a waste of time.
I wonder if this is slowly changing due to the nature of "capturing value" having so many negative externalities that it really ruins the spirit of creating value.
Companies routinely crow about charitable work, community involvement, social justice advocacy, cultural benefits of their work, etc. Companies pull out of states with undesirable politics, funds divest from fossil fuels, wealthy capitalists give away wealth, others speak out for higher taxes.... Almost all have some foundation or the other supporting some social good.
>underestimates the bottom 90%, who are written off as politically irrelevant (in terms of real power)
Yeah, that disregards that they vote and could vote in a considerably different government which they did to an extent with Trump and could flip the other way to a Sanders or similar.
Recently, I have a friend group who all graduated from Stanford, with relatively upper middle class(but not suburb/NY upper middle class) roots, and you might even describe as "woke" who belonged to a fb messenger group called "Anti Asian Asian Group".
I felt like I had to call them out on it. Though they made the group as a play on "anti social social club" and to counter conservative sentiments their upper class counterparts might've had, I too thought it might've just been punching down on working/middle class Asians who had traditional values and almost can't help but have those values.
I guess that's the real class war; when people punch down on those who almost don't have the opportunity to decide who to become. Not that people completely lack agency in this country but I think a lot of people forget how much your environment can shape individuals and their values.
It’s a reference to the sociological concept of marked versus unmarked identities. If you think of an American you probably think first of a white man of Christian heritage. If you think of a Chinese person you picture someone of Han ethnicity, not Miao or Manchu. If you think of a nurse you picture a woman. All of the people who fit that identity but are different from the unmarked version are marked by their difference from the unmarked version that springs to mind unbidden when the concept is named.
> The company I now work for started as a parking app. . . . We were growing sustainably as the result of having a superior product based on a great understanding of consumer needs.
> But sustainable growth isn’t what VCs (or the execs that they install in the firms they have stakes in) are looking for. So we pivoted.
> Without going into too much detail, we are now exclusively focused on getting acquired by a big tech firm. Meetings with low-level product managers at a few of the world’s largest companies dictate every decision about which projects we pursue. We’re no longer building a company. We’re not even building a product. We’re building a feature that we hope will end up getting included in an app owned by a mega-corporation.
> When I talk to my friends and peers at other tech startups, they tell me that it’s pretty much the same story at their companies. Everyone is building to the specifications set by Google or Amazon or Apple. This “competitive” industry, supposedly a shining example of the power of the free market, is really just a massive risk-free R&D department for the faang companies.40
As someone who works at those very companies, I have to say that the code itself isn’t worth that much - everything that’s not a utility package will definitely get rebuilt. Nor is the idea, the only value proposition is existing customers and potential patents for software startups.
I disagree that the working class is not going to radicalize itself. They too are out here on the internet, talking to each other and culturally evolving at an unprecedented rate, like everyone else. For the first time they have the power to publish and think in public uncoupled from professional barrier. Better believe it’s being used, and that they will assert their awareness.
Agreed. The author is looking through slightly blue tinted glasses.
The "working class" put "their guy" in a certain colored house in the US and got together to tell the EU to screw off in the UK. They might not be using their political power for things we all agree with or you could argue they're all being duped but they certainly aren't powerless.
Furthermore, I think the author is over stating the homogeneity of white collar political professionals. Tech and academia are very homogeneously blue/left leaning (relatively speaking) but other industries less so.
The author seems to be very confident in his predictions of where politics will move over the next decade or two but I see some massive variables that are not controlled for. Things could go any which way.
American Affairs Journal was actually founded by a conservative nationalist as a pro-Trump journal, designed to "to give the Trump movement some intellectual heft." The editor changed his mind (and his political position) 6 months after the election, after Charlottesville.
I think that what you see here may be some amount of bitterness after watching how events play out and what actually changes. The working class he decries as powerless were his people (he grew up in a small town in South Dakota); it's just that now that we've had 3 years of Trump he sees just how ineffective it's been.
The author explicitly acknowledged that the deplorable majority can pull the lever once every four years, “At most, working-class voters can cast their ballots for an “unacceptable” candidate, but they can exercise no influence on policy formation or agency personnel, much less on governance areas that have been transferred to technocratic bodies”
But once in office their guy maintains the status quo even though populist rhetoric got him into office.
So far this theory appears to be true. Historical data corroborates. What is less certain imho is that grassroots activism has ceased to be ineffective. Nobody expects the pitchforks and guillotines until they show up on their doorstep.
I agree with you, the author seems to assume that Brexit/Trump/France are all one-off political movements.
I'm not even so sure as to how homogeneous tech i if the drama at Google is any indication. Academia probably is as they have a financial interest in the federal government expanding.
The working class is already radicalized, however it's powerless through division. A poor minority in the city and a poor majority in the countryside have a lot more in common than either of them might like to believe; their economic interests are shared as they are both simply the working class.
However, the poor person in the city is unlikely to vote at all, and the poor person in the country is likely to vote against their own economic interests in favor of perceived social narratives. As long this remains true, I wouldn't hold my breath on a working class awakening anytime soon.
IIRC, revolutionaries in Russia didn't wait for the proletariat class consciousness to arise on it's own, as it had been predicted by Marx.
The middle class helped spark the revolution hoping that the proletariat would come around eventually.
The fact that the article, and many of the commenters here are mentioning this again makes me wonder if socialist movements have always been primarily middle class movements.
> The middle class helped spark the revolution hoping that the proletariat would come around eventually.
That resulted in several decades of false starts by what Krein would call the Russian "secondary elite", in the form of the Narodniks, in the 1870s and 1880s. They had almost zero experience with the real "narod", only an idealized mental picture, and when they moved out of the big cities into the countryside (where the majority of the poor, Russia being vastly unindustrialised, lived), most of them got homesick and went back again.
Have a look at the cadres of the early Bolsheviks. Stalin - the supposedly uneducated thug - quit seminary school through disillusionment and decided the join a revolutionary party instead.
At a time where the majority of people in Georgia got 4 years of part time schooling at best he spent over 10 years in education.
> They too are out here on the internet, talking to each other and culturally evolving at an unprecedented rate
If by "talking to each other" you mean "increasingly consuming only whatever media the machine learning has been trained to foist onto them", yes.
> uncoupled from professional barrier.
This was true ten years ago, but not today. The recommendation algorithms run by the big tech companies are the window most people use to look into the Internet now.
I think the author's take would be that the working class can radicalize all they want, but it probably won't change anything without the support of a significant part of the 10%-0.1%. I wish he had gone into detail on why he thinks the upper-middle class is required to effect political change. Is it because they have just enough capital? Or maybe they are closer to and more familiar with institutional power?
Because his class consciousness is with them so he sees their participation as pivotal to anything taking root across the whole of society because they are how he relates to the whole of society
On the off chance some unsubscribe from their media streams to create then platform X is well prepared to flag their ideas as too similar to other quarantined fake news items.
I think it's more likely due to the echo chamber of the media/pollsters and big cities who didn't count of all the 'fly over' areas actually coming together.
I remember working a temp job at a polling call center and although I was just doing grunt work of calling people, it was clearly obvious they were doing polls to hear what they wanted. There was only 1 survey out of maybe 200 that was what I would consider unbiased and didn't have any leading questions or pre-picked answers.
You would screen out people in the beginning of the survey that were obviously not interested in whoever candidate you were calling in regards to, and more often than not the survey itself would have leading questions to get the answers they want so they can take the results and be like, "See our Candidate is winning!!!" - yet they only called people and did the survey with those who were already willing to vote for said candidate.
Polls are literally circle jerking people who were voting democrat and those regarding republican candidate were always negative.
It also could be that the particular call center I was working out of only had contracts with Democratic parties/PACS but from my time there it was clear that polls are a racket.
I’m not sure why you’re downvoted, this is definitely true at least for the white uneducated working class. Yes, it is a reflection of old ideology that was used to exploit them in the past, so it is tragic that this is where their expression of group assertion is getting its start.
Yet I think as the public discourse among this group continues to grow in sophistication it will develop a more nuanced worldview and will assert its power with greater wisdom.
I would guess (completely based on personal experience) that most in the service class voted for Clinton, while working class is more centered around manufacturing, which does pay better than the service industry.
A big part of the issue is that people have different definitions for all the various social classes, so it's hard to compare things correctly.
I think that's evident in the Bernie Sanders movement (and to a lesser extent, Warren). Folks like myself support him even though we're some sort of "upper middle class" or some form of middle-merchant class. Not owners, not truly capitalist/investment class, but solidly aligned with everyone else who also has to show up at 9AM daily to get their checks.
This more affluent middle class of information workers are leading the rest of the folks who punch a clock for a living to a better life. It's not everyone though, there's older folks who are fully committed to a dog eat dog existence, because it worked out easily and well for anyone willing to even try their hand in the post-WW2 era. It's understandable that they don't see the connection between relatively easy prosperity, and destroying all of your industrial competitors. Some of the younger conservatives don't have the life experience of being exploited and tossed out to form well-informed views on labor, and are often afraid of challenging their tribe's view, with their fathers often being the aforementioned Boomer. Then you lose another chunk from those who are not very capable, but inherited wealth. Insecurity that they couldn't duplicate their position in life from scratch leads to extremely anti-social behaviors that we see from the capitalist class.
Claiming some defectors from each of those groups, add in the blue collars who know the score, and add in the "Bernie Sanders" educated folk and I definitely am seeing more support for the movement in American society today than I do for any other grassroots movement. Judging from the strength of support of someone like Sanders, the only competent base of support that rivals it is Trump's. It may not be tomorrow or next year when it succeeds, but we're definitely seeing what you're describing and I suspect it'll continue to build until big money can't stop it any longer.
I was referencing the article which states, it's (almost) against class interests for these people to do so. That said, I disagree with any distinction in classes other than their actual function, workers vs owners. The upper/middle/lower descriptions don't mean much to me.
No, the article explains that Warren and Sanders are popular among exactly the professional class and that this is their natural electorate. Which it is.
Sanders’s left-wing challenge to Clinton found significant support among educated, relatively affluent voters, especially younger ones (similar to Obama’s). As one 2016 Vox headline put it, “Bernie Sanders’s base isn’t the working class. It’s young people.”32 Within any given age group, the article explained, higher-income voters were actually more likely to support Sanders.
Elizabeth Warren’s campaign more explicitly appeals to the professional class, both in form and content.
Your citation is only stating that they receive support from the professional class, not that it's the natural electorate. The article never states as such, you're asserting that. The actual content reads and suggests just as I recall, offering this point as a clear preface-
>This underappreciated reality at least partially explains one of the apparent puzzles of American politics in recent years: namely, that members of the elite often seem far more radical than the working >class, both in their candidate choices and overall outlook. Although better off than the working class, lower-level elites appear to be experiencing far more intense status anxiety.
This assumes that internet radicals are working class , which they are really not. Not even the majority. Isn't it mostly college kids and older boomers?
Isn't there something patronizing, even patrician, about saying "the propaganda machine has so effectively manipulated the working class"? Why aren't their views as legit as yours or mine? There seems to me a great assumption in saying that they are "manipulated". Who isn't?
This is the idea of false consciousness (https://en.wikipedia.org/wiki/False_consciousness), and it has always seemed questionable to me. Who are we to say that someone else's way of relating to their own life and their own concerns is wrong? Why should their priorities be any different than they are?
By the way, I'm not trying to start an argument. These are questions that I worry about myself, and I'm genuinely interested.
> Why aren't their views as legit as yours or mine?
Could it not be argued that the legitimacy of views depends on how much information the person has access to? The average working-class person, due to lack of free time and interest may be unable to acquire more information than is conveniently delivered to them through a handful of sources, and if those sources are controlled by certain actors and not balanced by other sources, then that would appear to place a limitation on how informed their views might be.
Some influential 19th-century traditions of working-class radicalism heavily emphasized learning for the sake of it, but I am not sure that conditions today are conducive to that.
The average working class person knows more than you think.
They probably don't have a lot of time for abstract theory, but they do have experience dealing with the government. They've seen how broken their local public schools, VA care, and Medicare are. They've been overwhelmed and overborne by the complicated rules of government programs, and faced harsh penalties for slight missteps.
They also know that Democratic programs generally exclude them because by working for slightly more than minimum wage they earn too much to qualify. And they usually know people receiving government benefits, and they see the lifestyle these benefits impose, and they don't want that for themselves.
> The average working class person knows more than you think. They probably don't have a lot of time for abstract theory...
Yet there are traditions both within working-class leftism and working-class libertarianism that emphasise that what you call the "abstract theory" is key to activism and informed participation in the democratic process. After all, the argument for why whatever political system is just and fair is based on a canon of writings that goes back centuries. Thus, as I said, in the past political thinkers have urged the working class to read, read, read, and not just go off their anecdotal experiences of interaction with government and society or their gut feelings.
> the argument for why whatever political system is just and fair is based on a canon of argument that goes back centuries.
Those would be the same kind of arguments that justified communism, which was once popular among the intelligentsia? Abstract theory often leads people astray.
I think the working class might be wise to ignore those arguments in favor of their own experiences.
We've seen what the government is actually doing, and theory doesn't match reality. Those who advocate more government intervention should first improve those government interventions that already exist, so government programs can serve as an advertisement for their ideas, instead of a warning.
> Those would be the same kind of arguments that justified communism, which was once popular among the intelligentsia?
Or the arguments for American democracy and the nascent European democracies, whose founding fathers advocated for such systems by citing literature from Ancient Greece to the Enlightenment. The 19th century saw a wave of low-cost, mass-market editions of the classical canon precisely because it was thought that democracy required an educated citizenry.
Or modern libertarianism, which points to many of the same sources but adds more recent thinkers like Hayek or von Mises.
With your third paragraph, you seem to be suggesting that I favour government invention, but I have made no such suggestion in my posts. Rather, as I said, the need to be informed and aware of the tradition of political argument holds regardless of where a person might be situated ideologically, whether on the "left" or "right".
You did more than argue in favor of staying informed and aware of the tradition of political argument. You suggested that the political opinions of those who do not spend time on that are illegitimate:
> Could it not be argued that the legitimacy of views depends on how much information the person has access to?
But politics is not mathematics. Political ideas should be judged by their outcomes, not their theoretical validity. And everyone gets a vote about whether those outcomes are good.
> But politics is not mathematics. Political ideas should be judged by their outcomes, not their theoretical validity. And everyone gets a vote about whether those outcomes are good.
With voting based merely on a gut feeling, a politician’s charisma, or the candidate’s party affiliation, one may well have to wait until the next election cycle to express one’s feelings about whether the outcome was good or not, and try all over again. But an informed voting public has a better chance of getting the outcomes they want the first time around. There has always been that expectation in American democracy and some of its analogues elsewhere that the populace, beyond merely having the right to vote for its representatives, would be keenly self-educating. If a voter fails to live up to the ideals which were considered crucial for democracy to run smoothly, then I think it is fair to question the legitimacy of their views.
Also, simple, straightforward voting is not the only action or mechanism for “outcomes” in modern democratic states. There are things like strikes, tactical voting, lobbying, resorting to legal action, etc. (Radicals on either end of the political spectrum would add uprisings, too.) It is the political literature of the past that lays out all these options for the citizenry, explains the pros or cons, and lets them make an informed decision on how to better their lot.
> But an informed voting public has a better chance of getting the outcomes they want the first time around. ... It is the political literature of the past that lays out all these options for the citizenry, explains the pros or cons, and lets them make an informed decision on how to better their lot.
A bold assertion that you should provide evidence for. I'd argue that, in practice, things rarely happen the way political theory predicts. Politics is not physics, either.
I can't believe you have to defend democracy in this day and age. Reading your interlocutors, I feel like I fell into the Queen Victoria's reign. But it seems the old patricians never die, they just become deluded members of the working classes trying to keep other members of the working classes away from their bit of the pie.
> The average working-class person, due to lack of free time and interest
The average American watches three hours of TV a day. People have plenty of free time. If they’re not interested their political opinions are irrelevant, politics will happen to them, not with them.
Yet they still get a vote. And if they vote for something you don't understand, then it just proves that watching the news helps you know what journalists think - not the public.
That's a good argument, but let me continue the other side: I wonder if this doesn't just repeat the question. Who are we to say that the information we have is the true information? At least on the internet, we all select the information we want. I listen to my preferred sources, and I bet you listen to yours. Why are the working class doing something less legitimate if they do the same?
It's a very tricky problem. My awareness of false consciousness is more from feminism.
So what if a woman aspires to being nothing more than a good housewife? But what if she's been brought up in a culture where she has been told from early childhood that being a good housewife is all she every should aspire to? I don't think you can tell that person that their desires are wrong but you can point out what other options they have. It's up to them how they personally live.
Voting and public life are different, however, because they have an impact on wider society. I think is then reasonable to critique others' decisions because those decisions impact us. On the big, high-level stuff there will always be disagreement about objectives, their relative importance, the best way to get there and so on. I don't think you can do too much there.
But on more focused things you absolutely can question someone's rationale, their evidence base and how their vote or political activity will achieve their stated objectives.
Take Brexit as an example. If you just don't want foreign people around then voting for Brexit probably makes sense. I disagree with your objective but there's a consistency to what you're doing. If you're voting for Brexit because you think the NHS needs more money then it's absolutely incumbent on you to explain what kind of economic impact you expect Brexit to have, how that'll affect tax receipts and the evidence for all of those expectations because I'm not aware of any informed analysis that says Brexit is consistent with increased NHS funding. It's not sufficient to just say "well they said on the bus that we give £350m a week to the EU and now that's going to go to the NHS".
You're entitled to have whatever concerns you want, relate to your own life however you like. You're not entitled to have inaccurate beliefs based on a poor understanding of how things work.
(I don't mean to be rude or argumentative, just interested.)
Don't you think this is patronizing in the way I described above? By all means point out options, but if people decide not to choose those options, I don't see what entitles us to call that false consciousness. A caricature of this view might go as follows: "if you accept my political agenda then you have true consciousness and are entitled to your beliefs; if you do not then you have false consciousness and are not entitled to your beliefs." What is missing in that caricature?
I think it's the distinction between intrinsic beliefs and beliefs based on knowledge of the world. Maybe I didn't make the distinction clear enough. The former, though we may want to change them, can't usefully be called "wrong" but the latter can. False consciousness is then wrong beliefs deliberately propagated to achieve some end.
What is missing from your caricature is whether the beliefs expressed make internal sense and fit with what we know about reality. Are you entitled to a belief that we shouldn't fund space programs because they're too expensive? Of course. Are you entitled to a belief that we shouldn't fund space programs because the world is flat? No.
Another good UK example is government austerity over the last decade to reduce the deficit. The government gained popular support for it using analogies about household budgets that in fact aren't very applicable to government spending. This and other arguments got picked up and repeated by the media despite not being accepted by mainstream economists [1]. This led to a divergence between popular and academic understanding of the economy's strength and weaknesses. Given all of that, how much weight should be put on the economic beliefs of someone whose only macroeconomic knowledge is gleaned from the headlines? I would say that this a classic example of false consciousness.
Of course, in politics and economics neutral knowledge is a tricky concept. That's why this is inherently discursive. My economics knowledge is mostly from reading a few introductory textbooks and reading blogs. Some economics expert might come along here and say I'm totally wrong on austerity and here's why. That's fine. I don't have an inherent right to be wrong.
I think the way you portray Brexit is rather telling.
There's actually a ton of very informed analysis that could be boiled down to "leaving the EU will result in increased NHS funding". Some of it is academic and wonkish, some of it is intuitive and working-class. But it's there. If you aren't aware of it that says more about how much you tried to expose yourself to such arguments, I think.
A simple version goes like this:
1. The Eurozone is an economic backwater and Brussels a monolithic quasi-socialist archetype of Big Government.
2. So, growth in the EU is terrible and will remain terrible for a long time. The UK's economy is actually beating the other big mature economies in growth, even Germany, despite Brexit related uncertainty, so there are good reasons to believe the UK has it more right than the rest of Europe does, economically speaking.
3. But in the EU the Euro is sancrosanct, it cannot be questioned and EU institutions will do "whatever it takes", to use Monti's phrasing, in order to avoid it breaking up.
4. Inside the EU the UK is a sitting duck politically. It's unpopular with other member states because it's not populated by true-blue starry-eyed EU ideological believers and tends to argue for smaller government. But its political elite feels like it literally can't leave, which means its membership fees can be set arbitrarily high and money can be and should be extracted from its economy at will.
5. We can already see this happening with the entirely political and arbitrary "exit bill", a so-called bill that's written in no treaty or legal text anywhere. The EU demand it purely because they can and they know the psychologically weak and ideologically addled governmental classes will roll over and do whatever Brussels wants. We can also see it in the rapidly rising membership fees, which are tied to GDP and not any kind of actually delivered services.
6. Thus to Remain is to signal vast weakness to the Brussels conglomerate, who will then extract as much wealth from the country as possible. In case of Eurozone recession or bank collapse the UK will certainly be called on to fund a bailout, despite all the treaties saying this won't happen. Anyone who believes that hasn't studied the EU's history: it is a dead cert thing.
7. As a consequence, remaining in the EU will drain funding from all local government services, and especially the NHS, which will be hit by a double whammy of reduced UK government budgets due to the EU taking tax revenues and becoming a free hospital for all of Europe as a Eurozone financial crisis knocks out health insurers and freedom of movement ensures the NHS can't separate Brits from everyone else.
What I outlined above is a scenario you seem to believe isn't supported by any "informed analysis", but it's not complex, or absurd, and you can read about the individual components in many informed analyses. Just search for it.
Moreover, all the above is considered obvious by the working classes. Look at the Conservative election adverts that spell it out specifically - switch to an Australian style immigration system and there will be more money for the NHS because fewer low-earning immigrants will be using it.
My belief that Brexit will lead to lower NHS funding is as follows: assuming Brexit results in higher trade barriers with the EU, our biggest trading partners, it will dent trade, which will lead to lower growth, which will lead to lower tax receipts, which will lead to lower funding available for the NHS (and other things). The unknowns are by how much trade with the EU is affected and how quickly trade with other countries grows to fill the gap. Given current trading patterns [8] I feel justified in thinking it'll take some time. The other points are basic macroeconomic principles.
Leaving aside the factual points addressed below, your belief is based entirely on how you think Brussels thinks, how the UK elite think and how they will respond to some hypothetical event. It's basically playing out a possible sequence of future political events. I would be interested in links to the informed analyses you mention (I'm not sure what search terms you think I should use).
What's interesting about it is that it's not falsifiable. It's your political opinions, which can't be proven either way, and playing out a hypothetical, which is unknowable. My belief can be disproven easily by demonstrating how Brexit won't harm overall trade or some plausible offset that I haven't considered. Your belief is correct if your reading of the entire EU and UK political classes is correct and you correctly predict their intentions. My belief is correct if we have a correct understanding of how trade affects growth. Do you think that both beliefs are equally robust?
On factual points, recent data [1, 2, 3] shows that the UK is actually underperforming the Eurozone in growth, including Germany (though it's also experiencing negative growth). In addition, this is from a bad start as the UK has recovered very poorly from the GFC [4], especially relative to other major economies [5]. On your final point it is at best highly questionable [6, 7] that fewer EU migrants will lead to higher funding for the NHS.
The fact that this is considered "obviously true" in the face of evidence to the contrary is a very good example of what I'm talking about. I agree we should challenge our own views. In particular, I worry that the argument that EU migrants are a net benefit overall is all well and good on paper but ignores the localised impact in places that experience high immigration and don't see a corresponding increase in central government funding. That said, given the evidence of the relative economic consequences of austerity and EU migration I feel justified in saying that people "should" direct their anger at the government that mishandles migration, not migrants themselves.
The unknowns are by how much trade with the EU is affected and how quickly trade with other countries grows to fill the gap.
Yes, this is an entirely reasonable perspective, but I'd note that it's also a projection of hypothetical future events (large trade barriers) based on a projection of what Brussels thinks (no trade deal with the treacherous Brits regardless of the mutual costs).
My projection is not less valid than yours, even though it may appear that yours is more projected or more common than the other. My own research led me to conclude that the facade of 'expert consensus' is mostly a creation of journalists and (at the time of the referendum) the Civil Service operating under direction from Cameron and Osborne. There's really much less agreement in the field of economics on the topic of Brexit than is first apparent.
Now, you say this:
My belief is correct if we have a correct understanding of how trade affects growth. Do you think that both beliefs are equally robust?
Actually, yes, I think my beliefs are slightly more robust. Mainly for two reasons:
1. I don't think we have a correct understanding of what economists call growth theory.
2. I think EU realpolitik is significantly easier to analyse than something as large and complex as an economy. It's far fewer people for one, but also, I have made my own predictions about how things would play out both economically and politically with the EU, and so far I've been more right than most of the so-called experts (but not completely right).
The second is hard for me to prove without giving up my identity: I did write publicly about my predictions at the time of the referendum but prefer to post on HN anonymously these days. But anyway, the first will more interesting both for us and anyone reading this thread.
How well do we understand economic growth? The evidence suggests: very badly. It can be easily argued that our understanding hasn't really advanced since the 18th century.
Let's start with one piece of evidence: economic projections are basically always wrong. The only time they're right is when economists are just extrapolating the current trend line and predicting a continuation of whatever's happening now. But they more or less never successfully predict changes from the current trend.
To read about this Google "economic forecast accuracy". There have been many studies. But most working class people don't need studies to know economists don't understand the economy, they just need two events:
a. "Nobody" forecast the 2008 financial crisis.
b. "Everyone" forecast recession in case Leave won.
For example, the Treasury department published an economic forecast that said if Leave won the vote, the 2 year period of Article 50 negotiation would create such massive uncertainty that the economy would enter a year long recession in which it would lose 500,000 jobs in the best case, and 800,000 jobs in the worst case.
Clearly this prediction can be tested against reality: the British economy grew strongly (for Europe). These forecasts weren't just wrong, they were wrong in the wrong direction and of course anyone outside of the London elite's knew that was going to happen: they were being told by idiot Londoners in Whitehall that leaving the EU should be the scariest thing that ever happened to them, and it just isn't.
The total corruption of the field of economics can be supported in many other ways. Paul Krugman, a Nobel Prize winning economist and staunch left wing anti-Brexit writer for the staunchly pro-EU New York Times, wrote this:
"I believe that Brexit is a tragic development, which will do substantial long-run economic harm. But what we’re hearing overwhelmingly from economists is the claim that it will also have severe short-run adverse impacts. And that claim seems dubious. Or maybe more to the point, it’s a claim that doesn’t follow in any clear way from standard macroeconomics – but it’s being presented as if it does. And I worry that what we’re seeing is a case of motivated reasoning, which could end up damaging economists’ credibility."
One of the most frustrating things about Remain supporters for me - and very relevant to the class war this HN thread is originally about - is the complete refusal of so-called elites to update their priors in response to failed predictions by so-called experts.
It doesn't matter that economists get it completely wrong again and again. It doesn't matter that famous economists themselves are saying the field is riven with "motivated reasoning" i.e. politically biased BS posing as expertise. Working class people who draw their own conclusions based on their own lived experience and get it right are ignorant and bad; people with a bachelors degree who put their faith in professors and get it wrong are superior and should be in charge.
How long will it take until EU supporters recognise that many of their predictions have been tested and failed? My guess is never. I've never seen a single one say, gee, I believed the predictions of recession if Leave won and it didn't happen. Maybe I shouldn't have listened. It's a psychological and political decision for everyone in the end, not really about facts or economics.
Now, how badly will trade barriers affect the EU and UK? Honestly, I'm skeptical it will have any noticeable impact on the average British person's life. I think we're overdue for a global recession anyway and thus when the UK does next tip into recession, there will be a brief argument of the form "see! we told you Brexit would create a recession" because of the timing that will be answered with, "Europe is in recession too and America is sliding, because the world economy is cyclical and we were overdue". But that will pass and I don't think Brexit will have much impact on the real economy (except maybe currency prices, which are mostly reflective of the consensus of the sort of people who are hired as traders).
The reasons are pretty simple. Firstly, free trade is less important to economies than experts tend to say. I actually work with an expert in global trade, someone whose entire job is to be a specialist in trading policies, and she's said publicly that one of the lessons learned in recent years by the field is that free trade policies seem to have less impact than they predicted.
Secondly, the UK economy is primarily services oriented and its exports especially so. Services are tariff free under WTO GATT rules so wouldn't be affected, and anyway, the EU has never really created a single market for services and selling services into the EU is difficult, so the UK is less exposed than you might think. For instance I work for a company that sells software and services, so the EU can't impose tariffs on us without exiting the WTO framework.
Thirdly, the EU actually needs UK services much more seriously than most Remainers realise (because the newspapers they tend to read don't want to admit it). For instance there was much talk of the collapse of the City right after the vote because the UK would supposedly lose its so-called financial passport i.e. the EU would ban member state firms from buying UK financial services in retaliation for the UK leaving. You don't hear much about that anymore, because the Commission folded very quickly when it became clear Brexit wouldn't be immediately cancelled and granted "temporary" permission for trade with the City to continue due to the EU's dependence on London's financial services. Likewise for air travel and a variety of other things that would supposedly all be banned outright by the EU. All given "temporary" extensions (but not much will have changed by the time these extensions expire, so what will they do then?).
Add it all up and I think it's fair to say that the people who do understand growth theory the best aren't the ones being put in front of the British public, and even they don't really understand it that well.
Even if they did though, so what? Leaving the EU isn't actually about economics to most people. Polling showed the top issues for Leave voters are immigration and sovereignty. Pretending it's merely a cost/benefit calculation to be decided by discredited economists is exactly why Remain lost. The EU is structured as a dictatorship pretending to be a democracy: the average British person, working class or not, has no say whatsoever in its decisions and the EU elites routinely enjoy reminding them of that.
On factual points, recent data [1, 2, 3] shows that the UK is actually underperforming the Eurozone in growth, including Germany
You can't compare UK GDP growth to the Eurozone directly because the Eurozone includes a lot of ex-Soviet economies that have high percentage growth because they're poor, and that pushes up the percentage-wise average. Nobody would claim Romania has a better economy than Germany though. If we compare UK and Germany directly:
We can see that the graphs look pretty similar. The UK compares very well to the best "100% European" case. In 2018-2019 UK growth has been lower in some quarters and higher in others, although German growth benefits from an artificially weak currency vs the pound. France was doing great until Jan 2018 when growth dropped off a cliff and has never recovered (what happened there? is that the gilets jaunes?). Italy is stagnant at near zero. Spain is doing better than I expected, actually: consistent growth, albeit very low.
Of course, this misses the bigger picture. British and German growth is all peanuts compared to the USA. The UK is doing pretty well compared to other EU member states. They're all doing terribly compared to a culturally and technologically very similar country that's not in the EU. The firehose of money the NHS would get if we had American levels of growth would render most existing political bun fights irrelevant.
I don't believe the British government will actually adopt US style economic policies and get US style growth anytime soon, even if we leave the EU, but that's partly because the policy-making classes can't psychologically escape the EU's moral and social philosophies. Leaving the EU completely and then getting a good trade deal with the USA is still a necessary step if we want to get there ... and I think we do.
It seems that you are not disagreeing with the concept of false consciousness. You just believe that a different group of people suffer from it. I hope you don't consider it too much of a caricature of your position for me to say that you think the elite labour under a lot of false beliefs but the working classes are able to see through all of this based on their own experience and clear insight.
I think at the core of this discussion, and false consciousness in general, is the question of how can we know what knowledge is true. I certainly agree with you, probably more than it appears in this thread, that we shouldn't take economics as some objective science. That's why I said up-thread that this is all discursive. But I think we are in real danger of throwing the baby out with the bath water and dismissing any economic knowledge at all. Larry Elliot has a good article here about economists' failings [1]. What I take from that is that, yes, forecasts are very shaky but economics itself analyses the failings and uses it to build better understanding (whether HMT uses that knowledge is a different question). SWL talks here [2] about the benefits of trade and compares dismissals of economic knowledge to climate denial. I think that's too strong but I am reluctant to dismiss the idea that we can gain empirical economic knowledge. (Incidentally if you know any good, pro-Brexit economics blogs please do let me know).
It seems that you implicitly rely on economics in some of your scenarios, thinking etc but then when you come against an economic idea or prediction you disagree with you just dismiss it with "oh well, economists are always wrong". I mean, if they are then how do you know the economics implied in your scenarios are correct? Why bother trying to get trade deals? Why bother making any economic arguments for Brexit if it's all unknowable? How do you know which of the US-style economic policies are the ones that created the growth? Surely there is some validity in testing hypotheses?
Continuing this skepticism, maybe you don't intend this but your comments read as if you think working-class people have some kind of natural, clear-headed insight from their lived experience that the elite and their academics don't have. I'm not sure from where you draw your certainty that you know what the entire working class is thinking, nor why a judgement based on individual lived experience should be any more reliable than one based on broader evidence. I don't think "economists missed the 2008 crash and got post-Brexit wrong so I can ignore them all now and go off what I see around me" is really a strong argument.
If all these expert economists with their models and their papers can't make a prediction why should you or I believe that you can? Maybe, like some economist, you've got a model that worked a few times but is going to come crashing down any day now. Shouldn't the same skepticism apply to you? Your whole scenario was based on the idea that the EU coveted the UK's growth rate but when I linked to World Bank data showing that in 2018 the UK underperformed literally every member state but Italy (ok, level with Germany) you still say that we're doing very well compared to other member states. See [3] for more recent data -- hardly comparing very well either. France is comparable and I wouldn't say the US is in a different ballpark. It doesn't seem like you update your priors in response to new data so what makes you think you are any more likely to be right? Or, to return to falsifiability, what would make you think you're wrong?
Coming back to false consciousness, I don't think it's the views themselves that are problematic but the way in which they are reached. I am doubtful that many people complaining about immigrants overcrowding their hospitals have looked at any evidence to decide whether the complaint is valid. I don't think "lived experience" is enough to make an objective, accurate assessment. You are right of course that we should critique arguments and not just take them at face value. For what it's worth, I'm a lukewarm remainer and I agree entirely with you about the Remain campaign's terrible campaigning. They also failed to mention the impact on N Ireland, which is far more significant and it's a terrible indictment of the British public that neither side bothered to think about the border. That didn't last long anyway...
I suppose I didn't quite understand what you meant by false consciousness. It sounded a bit like "people want what they're told by others to want and that's bad" in the example of feminism, but isn't that just the process of opinion forming? If the governing classes have been told their whole life the EU is good, the future, peace, civilisation etc and then support Remain, are they labouring under false consciousness? Or what does it mean, precisely?
I think there is economic knowledge we can know to be true. A lot of the basics is surely sound, but also quite obvious and simple (supply and demand, printing money creates inflation etc).
The problem and question is to what extent things go off the rails after that? It's worth calibrating our expectations against other fields of science, for example:
1. Ioannadis argued in a very well known paper that about half of all published research findings are false.
2. I've heard repeatedly that Big Pharma/VC supports this, and biotech doesn't get more investment (vs say software firms) partly because about half of all academic microbiology doesn't replicate.
3. Psychology as a field has witnessed large areas collapse completely during the replication crisis: entire careers and phenomenons with hundreds of papers investigating them just turn out to be based on nonsense.
It's entirely reasonable to assume that most academic output is false, and that average is significantly biased upwards by hard sciences that are empirically testable. If you focus on subjects that produce explanations of observed data independent of large scale experiments (psychology, economics, history, sociology, yes also climatology etc) then it's fair to assume the vast majority of published output is wrong.
This may seem radical or absurd, but I think this view will become more widespread in future. For instance even in psychology, where experiments are possible (unlike economics), many studies are statistically underpowered to a level that can't plausibly be fixed:
It's certainly going to be the case that economics is more wrong than psychology; at least in psychology you can run experiments, even if they're too small.
Thus, given the structural and financial setup of these fields, we can assume they will continue to produce spurious findings indefinitely.
Now, you pose the following question:
If all these expert economists with their models and their papers can't make a prediction why should you or I believe that you can?
You and I have a major structural advantage over professional economists when it comes to making accurate predictions: our careers are not judged by our output.
This gives us a huge edge because we can be as imprecise, simple or intuitive as we like and nobody will care. My Brexit economy prediction wasn't very precise, it was literally "We're being told there will be a huge recession caused by uncertainty and I think that's completely wrong". No recession, thus, my predictions were better than the economists! But mine also didn't have any numbers in it. This is the right level of precision for such a prediction given the state of economic knowledge, and for a non-professional that's fine. For a Treasury official, not so much.
The underlying cause is social: academics and related professions (like government economists) are required by their peers to "publish or perish", preferably in reputable journals. Like speakers on the dinner circuit, they must speak even if they have nothing insightful to say right now. If they come up with something novel or clever sounding they will be promoted and become one of the judges themselves, where they apply the same criteria.
I've been referring to the working classes because Brexit is so often positioned as the 'educated' vs the 'working class', and the article is about class distinctions. But that's actually kind of a gloss over what I really mean. My point is really about specific professions or classes vs everyone else.
Your whole scenario was based on the idea that the EU coveted the UK's growth rate but when I linked to World Bank data showing that in 2018 the UK underperformed literally every member state but Italy (ok, level with Germany) you still say that we're doing very well compared to other member states.
For UK vs France/Italy, remember the UK has a much lower unemployment rate:
You're right that my original point about "growth" was over-stated. I was thinking of some quarters where the UK had better GDP growth than Germany along with better employment stats than France, wage growth etc. There's been lots of positive economic news lately.
But it doesn't actually matter - the overall point I was making remains even if the UK would have weaker growth at the moment. Namely, there are plausible scenarios in which leaving is good for growth and you don't have to be ignorant to believe them. We can see how the EU seems to be scared of the idea of the UK deregulating and becoming more competitive. For instance Angela Merkel stated outright that in future Germany may have to face the UK as a competitor alongside China and the USA (implication: today they don't). The French Secretary of State for European Affairs has said outright about the UK, "I don't want a tax haven on our doorstep". It seems like they take the scenario of a stronger British economy outside the EU seriously, and I guess that's enough to validate the scenario.
Re: economics blogs. Unfortunately I don't read any economics blogs. The Telegraph has columnists who lay out some of the ideas and Leave campaigners (including Boris, to his credit) have in the past proposed various things the UK could do to increase competitiveness, like the free ports.
Finally, falsifiability. Yes, I do think about this. One thing that makes it hard is my own predictions are a mix of short range which were proven true already, and long range, but those are only about a specific scenario that probably won't happen (Conservatives get more conservative and significantly liberalise the economy). But the advantage of not being an economist is I can happily say "I don't know what will happen next year" and nobody will care, which is why I can be more accurate than them :)
My understanding of false consciousness is that it's a false belief knowingly spread by others to achieve some aim. When someone justifies their political views as "just common sense" it's often an indicator because what's taken to be self-evidently true changes over time.
In my view, what matters is not so much the belief itself but the way in which it's reached. Let's return to the hospital example and assume that your local hospital is overcrowded and underfunded. If you look at immigration levels in your area, read about the economic impact of migration and the levels of government funding to your area and decide that, on balance, hospital overcrowding is due to immigration then I would not consider that false consciousness. Possibly incorrect, but not false consciousness. If you just see a lot of Romanians on the street and read lots of anti-immigration stories in your newspaper and conclude that the overcrowding is due to immigration then I'd consider that false consciousness because you are relying on a notion of "basic common sense" and haven't even considered the possibility that the migrants are contributing more than they take or that the government funding has been inadequate.
The whole questions of knowledge that we've been debating, though very important, is in a sense secondary to this because the person relying on common sense isn't actively dismissing the claims of economic truth, they're completely unaware of them.
And in this particular example I think it's pretty clear that the government sought to deflect anger at austerity to immigrants. Assuming that Cameron and Osborne shared the kind of elite worldview we've been discussing, they would have known that the deflection couldn't be justified. They were deliberately spreading a view of the world that, in their minds at least, they would have known to be wrong. So that's why I think it's false consciousness - knowingly spreading a false belief.
Where it gets complicated is when the elite come to believe the idea as well, and then it's just a received wisdom (and the original intent has completed succeeded). I think you're right to call out remainers' unquestioning belief that the EU is a good thing, though I disagree on how much we can rely on economic. You're right that we should be skeptical of that too, of course.
One important thing that neither of us has mentioned that much is the role of the media in propagating beliefs and the extent to which the British public's view of the EU has been shaped by the likes of Boris Johnson printing knowingly false stories about the EU ("knowingly spreading a false belief"...). I'd argue that all of these [1] are examples of false consciousness. Either the official figures are all totally wrong and a person looking down their street can make a more accurate estimate than teams of statisticians measuring the entire country, or views are shaped by distorted reporting of these issues. And if the media aren't trying to present a factual account of reality, that raises the question of what are they trying to do instead...?
Edit to add: I used to read the Telegraph but then they went down a weird spiral of clickbait mixed with making everything interesting premium-only. A pity because it used to be very good.
My understanding of false consciousness is that it's a false belief knowingly spread by others to achieve some aim
Hmm. Isn't that just a lie? What makes it false consciousness and not just a more ordinary concept like manipulation?
If you just see a lot of Romanians on the street and read lots of anti-immigration stories in your newspaper and conclude that the overcrowding is due to immigration then I'd consider that false consciousness because you are relying on a notion of "basic common sense"
Is the key issue here newspapers vs government sources or is it the inclusion of personal eyewitness observations? I'm not sure newspapers are really worse at spreading false beliefs than government sources are, but that would seem to be the only distinction based on who's speaking here. Indeed there'd seem to be less risk of false consciousness in this scenario because claims by third parties are being augmented with 'reality checks' against personal observations, whereas in the first scenario you seem to be relying almost entirely on government sources.
And in this particular example I think it's pretty clear that the government sought to deflect anger at austerity to immigrants.
Did they? The UK has had strongly pro-immigrant governments for decades. It only started getting serious about reducing immigration numbers recently and even then only in rhetorical terms: non-EU immigration has now hit record highs, and they could already control that. People want reduced immigration but they don't get it. As for austerity, the Tories blame Labour overspending/structural deficits and Labour blamed conservatism and the financial crisis. Only UKIP made an explicit link to immigrants, and UKIP collapsed after Farage left because they took a stronger anti-immigrant turn that got painted as racism.
So I'm not sure that telling matches my own recollections. I remarked on the Tory poster about immigrants and the NHS partly because it's remarkable: this is the first time I recall seeing Conservative campaigning that directly blames overloading of public services on immigration. It's a ... bold ... move? Given that it's pretty clear they've been supporting high levels of immigration for a long time and Boris is also a big supporter of it.
Either the official figures are all totally wrong and a person looking down their street can make a more accurate estimate than teams of statisticians measuring the entire country, or views are shaped by distorted reporting of these issues.
Are you sure the press is less reliable, or deliberately distorting things? If it contradicts elite sources like academic studies, or government statistical reports, many people assume the elite sources are true and the newspapers are false. Especially papers that the working classes tend to rely on like the Daily Mail.
OK, I think we agree that economists should be treated with some skepticism. What about statistical agencies?
The reason I keep hammering on the unreliability of supposedly neutral and informed elites is because there's so much evidence that they're hopelessly compromised, to the point that average man on the street can beat their reliability. Certainly they shouldn't be shamed for taking their own experience into account.
Here's another piece of evidence I encountered today in support of that view. Above, you're suggesting it's unlikely official statistics about immigration are wrong. I used to believe this too. Fine, academic analysis may be wonky, but surely basic numbers are free of political bias and being measured correctly?
[Priti Patel] We don’t really know how many people are in the county either. Earlier this year, the Office for National Statistics downgraded its immigration statistics to “experimental.” In other words, they don’t know how many people are coming into the country or who they are.
So now the Home Secretary is admitting publicly the UK's immigration data is so wrong that "we don't really know". She's the most important consumer of the stats! If she doesn't believe them why should anyone else?
Seeing a Cabinet member admit this so unambiguously was surprising. The conclusion itself less so. I've been suspicious about UK population data for some years now, ever since learning they had stopped correlating with other stats like electricity and water usage in the way they always did historically. You don't read much about that because in fact, most newspapers are also pro-immigration.
My estimation of Patel has gone up for her unobfuscated and honest language. But that just makes the unvarnished truth even more horrible: the left/globalist consensus of "more immigration is always good" has saturated government and academia to such an extent that basically nothing from it on the topic can be trusted. The sort of people who completely ignored what economists, statisticians etc were telling them and just went by "is my hospital waiting room full of immigrants" had an equally accurate or quite possibly more accurate understanding of the impact on public services.
And yet they were so slated for it! So much scorn poured down on their heads, they were called ignorant and racist, and yet now we know the economic analysis was wrong, the stats were wrong, all the sources supposedly superior individuals were relying on for decision making were just completely wrong. We don't even know by how much!
It makes me so sad. I'm not even against immigration. I am myself an immigrant! But watching how deeply this issue has compromised every institution it touches makes me sad for the state of epistomology.
Because it's not just economists and statisticians. Every institution that claims to be neutral, informed and unbiased is shredding its credibility. Ofcom is supposed to enforce political neutrality on broadcasters but the people who work at major TV channels are constantly tweeting their political allegiances, with no consequences. The Speaker of Parliament claimed to be neutral whilst driving around with "Bollocks to Brexit" on his car, then admitted he wasn't the moment he retired. The Electoral Commission claims to be neutral and most of its board have expressed anti-Brexit views in public. The Civil Service ... well, you get the idea.
Not only are these people not neutral, they don't even pretend. Yet constantly they feign offence at any suggestion they might be anything but 100% trustworthy and neutral. It's obvious to the man on the street that nobody claiming to be politically neutral in public life actually is, that they're mostly in the bag for the EU and willing to systematically lie/distort to get their preferred outcomes. So why shouldn't the working classes ignore them and make up their own minds?
I don't know where all this goes, but you're completely right that over time I find my respect for ordinary common sense and 'street logic' going up. Not because it's getting better or more accurate: it's not. It's more that the alternatives presented as better keep getting revealed as being just 'common sense' and 'street logic' of different social classes.
I think you might be having a completely valid emotional response to your consciousness being called false.
False Consciousness, like Dictatorship of the Proletariat, are specific terms within Marxist thought that are popularly misinterpreted, and often used by more cynical capitalists to misdirect.
False consciousness has to be understood as false as it relates to 'class consciousness', the true consciousness of the Proletariat as the Proletariat relates to its position within the dialectical materialism applied by Marx to the historical process. This has nothing to do with psychological consciousness.
The Proletariat has class consciousness when it collectively realizes that capitalism is simply a phase in history, and not an eternal state of nature.
It's awfully pompous. Marx wasn't infallible. False consciousness developed a lot after Marx, and you truly can't see it when you're in it. Krein, for example, is in false consciousness. He can't properly conceptualize that capitalism will be replaced, and has developed his own asinine class analysis not on the bedrock of Hegel, but on dividing the working class by race, gender, and ethnicity. It blinds him from seeing the real class antagonisms in society between the Proletariat and the bourgeoisie.
He doesn't seem to know he's a prole like the rest of us, for instance.
The definitions may be as you say. But you seem to be assuming that the Marxist definitions are correct; that is, that they correspond to reality.
Here's what I mean: By your definition, I'm a prole. I should have "class consciousness" that I'm a prole, and since I don't, I have "false consciousness". But try and expand your mind to the point where you can consider the alternative: People like me might actually see our condition reasonably clearly. When Marxist theory puts us in the same bucket as a ditch-digger, that could be because Marxist theory doesn't correspond to reality, and it's not reality's fault. And telling us that our understanding is false could betray the weakness of your analytic framework rather than the weakness of our understanding of our own position in society. If this alternate position is correct, then we really don't need to care very much about what bucket Marxist theory puts us in, or about what it says we ought to think.
You've got your position, which you think is correct. But at least consider the possibility that it could be mistaken.
> Why should their priorities be any different than they are?
Because we are all humans with the same priority, to carry on the species / tribe.
> Who are we to say that someone else's way of relating to their own life and their own concerns is wrong?
Humans don't consider their way of life they act on instinct (of self / human preservation) first and only consider their life upon reflection if at all.
Personally I find it difficult setting aside time to consider my life and even more difficult to reflect and deal with the fact that i'm usually wrong, at first.
I know the average person doesn't bother doing this, maybe they are just way smarter than me and don't need to but more likely they have the same default as me and are wrong and just haven't considered.
I know a lot of working class people, and their views are just as valid and often they are smarter/more well informed about some particular low level details of the way the economy/society operates. But without a college education in today’s complicated world its really hard to be a sophisticated consumer of information (even with one many fail) so working class people are more susceptible to manipulation by propaganda, oral information, conspiracy theories, availability heuristic etc. Being able to google something vs being able to search skeptically and critically are two different skills.
Isn't there an argument that many people currently saddled with college debt made poorly informed decisions? Maybe the working class people who knew not to do that actually processed information better than many people who took massive amounts of debt on for degrees of dubious economic value.
I’m not following how a college education somehow inoculates someone from being susceptible to propaganda. Aren’t they just trying to install their own branded software on your OS anyway? Searching skeptically and critically is, at least judging based on some recent hires coming from well-know and (ostensibly) “elite” universities, not necessarily part of the base install.
100% not saying you intended to imply this, but the “sophisticated” qualifier can imply that the people or group in question is simply not reading the “right” things. Which is an interesting thought (again I don’t think you meant to imply that).
You’re right many college educations still fail to teach these skills (as I said) but I disagree completely about installing their own OS. That was not my experience at all, though maybe its changed. My professors encouraged open minded critical inquiry. College failed me in other ways but forcing an agenda was not one of them.
Sophisticated is probably the wrong word but what I mean is like paying attention to which news sources are accurate and push which agendas requires a fairly lengthy process of learning the institutions themselves, politics, economics etc. I think college gives most people a better shot at doing that but obviously isn’t the only way.
This is a very elitist and condescending ran. Assuming everyone who disagrees with you is being manipulated is not going to bring anyone to your side and will further distance people who disagree.
It's not "everyone who disagrees with me", it's one very specific point: public intervention - be it healthcare, infrastructure, job training for people in dying industries, workers' rights, etc. - is the only way to stave off the natural gravity of economic stratification. But I've seen more Fox News than most people here probably have, I listened to hours of conservative talk radio in the car with my mom over the years, I've argued the points and heard theirs.
They think the solution to everything is faith and the free market. They vote for reduced taxation and deregulation when the only people it benefits are the 1%. They buy into the meritocratic view that the ultra-wealthy earned it, and that it's somehow immoral to try and redistribute some of that insane wealth. They do not - cannot - accept the idea that the meritocracy is a sham, and that they need help from their society if they want things to get better. And I truly believe that most of the strength of that entrenchment is from hours and hours of exposure, day-in, day-out, to the ranting and raving lunatics (or perhaps masterful orators) on Fox News and talk radio.
A lot of what you say is true, but also applies to the likes of MSNBC and (even) CNN. Raving, frothing at the mouth, 'journalism'.
I grew up in a commumity much like the family life you described. Rush Limbaugh, Fox News, etc etc 24/7. There were some non-ideological types who - while staunchly conservative - actually thought through their beliefs. They were the exception.
I left and attended an elite school, where... almost the exact inverse of that existed. Sure, it was more 'educated' types in that in general they had attended better schools, had more degrees, etc. than the people from the rural area I grew up in. However, most of them were startingly dogmatic and could not reason through their beliefs to provide a proper justificatory ground. Just the same tired slogans and phrases recited by academics and students who all already agreed with one another.
To quote David Foster Wallace, "human beings are generally pathetic." You will find many people on either side of the divide who just go with the flow.
And sadly this honestly is just a given with human nature. We should encourage higher levels of critical reasoning and the like in politics, but at the end of the day people are going to choose their communities.
I didn't mean to imply that the left is any less emotional and irrational with its beliefs. I find it equally exhausting.
What's special about the right-wing case, at this present moment, is the profoundly self-defeating nature of it. It isn't just dogmatic, it's actively self-destructive.
The only thing I'd say is that we treat should treat the claim about it's self-destructiveness as possible, and remove the certainty (some conservatives think progressive economic policies are self-destructive).
I would also add that there is a moral element here. Some conservatives take economic policy to be not only an empirical matter but a moral one. Some will interpret poor economic conditions as, say, their lot in life before thinking it right to tax someone more. Is it right to claim that someone who morally detests non-minimal taxation is being self-destructive?
Yep, and I suspect that particular moral conviction may be the root of the whole thing.
The overly-complex moral system that conservatives have is one of the main reasons I left conservatism behind. A plethora of things that should be practical matters just become all gummed-up and given significance they shouldn't be given. And in addition to the cases like this one where it's self-destructive, there are many many more cases where it inspires undue judgement towards others.
That's why, for me, morality is being good to others. That's where it starts and ends. Everything else is just deciding how best to accomplish that in context. If a moral assertion can't be traced back to the good it does for real people, it isn't valid in my book.
So to take this case: "Each person is responsible for his or herself and it's immoral to depend on the government for support or for the government to tax citizens to that end."
I mean, sometimes. If your government is a corrupt dictatorship that does nothing for its citizens with those taxes. Or if you actually are in a position to fully support yourself without any outside help. But there are too many exceptions for me to list them here. Raising generalities like this to universal moral assertions just causes them to crumble like a skyscraper made out of bricks and mortar.
The answer is staring at you. You base all your arguments on agreement that the free market is under attack and being regulatory captured. The govt. is the only institute that can help level the playing field.
Yes, but I think a lot of people are worried about the kind of radicalization that blames everything on intellectuals, foreigners, minorities and women.
Unemployment is at historical lows, consumer confidence is at historic highs. It can get so much worse. Look at Venezuela and Colombia for modern examples of what happens in failed states
>>>Or, better yet, taxes the massive, useless dragon-hoards of the 0.1%.
You do realize that "net worth" != cash/liquidity, right? Even if the billionaires were all sitting on piles of literal money that you could confiscate, it would be a mere band-aid on the Federal government's budget[1], let alone the state and local budgets. So what's the plan past the next few years those few trillions buys you, when you won't be able to dump the wealthy upside down and shake all of the change out of their pockets a second time?
The kind of radicalism that raises my taxes to keep our country from falling apart
How is that “radicalism”? It’s a common mainstream opinion that people do often vote for. In fact I would say that radicalism starts with options that aren’t even represented in mainstream politics.
You make an interesting point that I found easy to overlook. “Radical” is thrown around a lot but when you ground it in its definition a lot of “radical” things aren’t radical by virtue of being a mainstream political topic.
Another definition of “radical” that might be helpful here is “the root of something” so when you propose a radical idea you’re proposing to fundamentally change basic policy.
>If the working class turns to radicalism what makes you think it will be the kind of radicalism you agree with?
This is something I like to mention whenever I see HackerNews talking about revolution.
The odds that the "rednecks" from fly-over country (the people with guns) will partner with the California intellectual cognoscenti, who enabled a massive concentration of wealth and built the state surveillance machine, is practically nil.
In all likelihood, the tech-elite will be seen as the enemy: "what were you doing when this machinery was being built?"
This is more about the middle class professionals who where Eisenhower republicans or on nation torys (in UK terms) finally waking up and realising that their part has been taken over by entryists.
The reaction against the trinational working class who Trump and Boris have used, could be brutal as they are the ones who will be hurt, I bet like the foolish CP fellow travellers aka useful idiot.
It’s more likely to be the kind of radicalism you find terrifying.
Exactly this. The “woke” at lavishly expensive colleges or in richly rewarded tech-adjacent jobs are kidding themselves if they think their solidarity with the genuine Workers will in any way be reciprocated. They will be up against the wall with the investment bankers.
I wouldn't say never, but it is the current frontier and so far disruption has seemed remote without being able to just buy Fox, Sinclair media etc off the air or some other free speech impediment.
>Instead of frankly acknowledging their own professional class interests, they project their concerns onto the working class and present themselves as altruistic saviors—only to complain about a lack of working-class enthusiasm later.
George Orwell covered this basic point in `1984` (published in 1949):
> The aims of these three groups are entirely irreconcilable. The aim of the High is to remain where they are. The aim of the Middle is to change places with the High. The aim of the Low, when they have an aim -- for it is an abiding characteristic of the Low that they are too much crushed by drudgery to be more than intermittently conscious of anything outside their daily lives -- is to abolish all distinctions and create a society in which all men shall be equal. Thus throughout history a struggle which is the same in its main outlines recurs over and over again. For long periods the High seem to be securely in power, but sooner or later there always comes a moment when they lose either their belief in themselves or their capacity to govern efficiently, or both. They are then overthrown by the Middle, who enlist the Low on their side by pretending to them that they are fighting for liberty and justice. As soon as they have reached their objective, the Middle thrust the Low back into their old position of servitude, and themselves become the High. Presently a new Middle group splits off from one of the other groups, or from both of them, and the struggle begins over again.
It's pretty common to Christian, especially Protestant, theology and culture.
"There is neither Jew nor Gentile, neither slave nor free, nor is there male and female, for you are all one in Christ Jesus. If you belong to Christ, then you are Abraham’s seed, and heirs according to the promise."
And that principle is the often (most?) quoted part of the Declaration of Independence:
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness."
A few years later, the U.S. Constitution banned titles of mobility. We are probably overdue to follow up with nixing professional titles and titles for government officials (Mr. President, Your Honor, etc.).
It's not clear to me that Orwell was saying that. And neither of the passages I vite are talking about laws as such. The Declaration of Independence was certainly extralegal, and perhaps it is more foundational than any given body of law, even.
That's a pretty political bent on things, especially if you are considering the protestant world view:
"For it is by grace you have been saved, through faith--and this not from yourselves, it is the gift of God -- not by works, so that no one can boast." (book of Ephesians)
The text (and theology) clearly divorce the outcome from the work being done. Frankly a plan reading of the text would be sympathetic to socialism (also see the day of Pentecost, the parable of the workers, etc..). It's very tortured to suggest that somehow this is actually a libertarian "pull yourself up" world view.
I know, the idea that we'd all be born into more or less equal stations and afforded the more or less the same opportunities, is a thought too frightening to behold amiright?
Or tip the balances of power between the 3 groups.
It seems in the last 10+ years, social media empires and big tech have done just that. It seems to me, the High turned the Middle and Low against each other.
So the idea behind this is what? That you shouldn't trust the revolutionaries because they dont have your interests in mind? That its hopeless? This model of the world is just run of the mill statusquoism trying to make people too despondent to tear down hierarchy, not some deep truth.
To be honest I dont know if Orwell agreed with the position of the high or not, but the fact people repeat this propaganda of the "high" from 1984 is absurd.
You absolutely shouldn't trust the revolutionists who tell you to die for their causes. Revolutions and chaos in general make most people's lives worse off, hence why they tend to happen when peoples' lives are so bad that they can't possibly get worse than status quo.
That doesn't mean revolutions are bad from a system point of view, they serve as reboots for a system plagued with memory leaks.
Orwell's biography is so famous that we can guess the basics of how he would answer this: revolutionaries don't necessarily have your interests in mind; it's not hopeless; oppose the status quo; don't be blinded by ideology; be honest before being political.
Which biography are you referring to? I’m seeing a few. I didn’t know it was famous and never thought to check, but would definitely like to read now that you mention it.
P.S. it’s always a treat to stumble on a non-moderator comment from dang
Oh, by biography I just meant his life story. I didn't have a specific book in mind.
Orwell is famous for having been early to break with political allies whose tactics he abhorred, even though they were fighting for his side. He had a genius for intellectual honesty, which made his writing exceptionally clear. If there's a clearer writer in English I wonder who it is.
I've read it as we repeat a cycle where people are always far up on top and the only way to break that cycle is to be content with more or less everyone being in or near the middle.
Or put another way: So long as there is a high that people can day dream about becoming then there will never be equality for the majority of people. Otherwise people will get into the high places, slam the door shut as soon as they can, and the fighting and day dreaming will continue.
I agree with your sentiment and I am probably on the lower end of the middle class now, coming from a working class family, but I can't find a way to avoid that someone will get more than me by simply not caring about obeying the rules.
If you have more resources you can buy your exemptions from the law.
Probably from someone who can be "bought" because that money is a significant amount compared to what usually earns.
I hoped in this third Industrial revolution to free us up from labor, but it looks like people don't get it well when you tell them "your job doesn't exist anymore" even if it's generally a good thing.
"The Fourth Industrial Revolution" is one of the most successfully lobbied and marketed instruments of our time. It has preoccupied governments and distracted them from addressing existing inequalities.
Alternatively it can be seen as a lesson for the low to not allow the middle to use them as a weapon. If they want to avoid this same result they'd need to take over their own revolution, not be led by the middle.
By Orwell’s definition you can’t depend on The Low to defend themselves
> The aim of the Low, when they have an aim -- for it is an abiding characteristic of the Low that they are too much crushed by drudgery to be more than intermittently conscious of anything outside their daily lives
On the large scale, I think Orwell's view is correct. The pattern always repeats itself.
However on the individual level, you can reap the benefits of the revolutions and will die before the next cycle, so there's always at least some incentive to challenge the status quo.
It doesn't change the fact that it's hopeless on the large scale.
Technology has the potential of flattening the social hierarchy somewhat. Or more likely it gives some an out even if they can't get the social status they want -- like making it easier for one to live a life cut off from immediate social circles (and status competition). Anonymous online association is an example that comes to mind.
> That you shouldn't trust the revolutionaries because they dont have your interests in mind? That its hopeless?
If you've read Orwell's Homage to Catalonia, chronicling his experience in the Spanish Civil War on the side of the socialists, I think that's a reasonable interpretation of his position.
The resentment of big capital is not entirely without a reason. Most money right now is "passively" deployed into pre-existing securities. This means it's used to extract existing value by market cornering / scarcity generation / rent seeking / monopolies / oliglopolies.
On the other side there is new value / securities creation. This is what people like Elon Musk are doing. He took circa $50mln of his own money, added a couple of billion from investors. Added 1000 highly skilled jobs and result is $50bn company.
Extractive capital alocation is offering much easier profits, but jobs working it are mostly the "bullshit" type.
As a democracy we have control of the laws, we can "nudge" the big capital away from rent seeking into new value creation by changing the tax code.
It's extractive to the extent the economy at large is extractive. Your index fund invests indiscriminately in profit-seeking enterprises proportionately to their size. A lot of profit-making economic activity is dependent on things like cornering a market for trucks through the chicken tax, scarcity generation in housing through restrictive zoning, etc. etc. - government regulations which, for better or for worse, interfere with the "free market".
Want to invest non-extractively? Invest in companies that you truly believe provide value without explicitly engaging in such activities. Most index investing is incompatible with such a thesis. Some index funds try, for example VFTAX.
Passive investments like index funds allow you to buy some ownership of a productive investment vehicle (public companies usually, or rental properties through REITs), an in exchange you collect rent on that vehicle in proportion to earnings and your share of ownership, for all eternity.
It's extractive in that you are literally bidding up ownership of a rent-seeking vehicle, rather than creating any new value at all.
In theory you might say bidding up asset values creates something like "potential energy" for productive investment: if an entrepreneur (or venture capitalist to-be) wants to liquidate stock to use as capital for starting a new company, inflated asset values would then contribute to a larger pool of capital for that entrepreneur.
Still, I argue that's a stretch. The existence of extractive investment vehicles are the main motivation for capital to invest in new value, yet their continued existence for all eternity leads to an entrenchment of wealth that may threaten the entire system. This is what Marx is all about (although he seems to presuppose a revolution is the end result, rather than say a wealth tax like Bernie / Liz would promote).
Whether a company is "rent seeking" vs. "value creating" has nothing to do with whether it's a pre-existing security or a startup.
If investors put $1B into a company that manufactures commodity widgets, and the company spends that $1B on a factory that produces $100M worth of widgets per year (with no market cornering, monopoly, etc.), this is obviously a value-creating business model. If the original investors sell their shares to passive index investors, that doesn't magically make the underlying business rent-seeking. Twenty years later, the company might still be doing basically the same thing, and the securities might have changed hands many times, but it's still a $1B company producing $100M of genuine value per year.
Conversely, if investors put $1B into a startup whose business model is to build a monopoly, starve the competition, and then jack up the prices (as Uber is allegedly doing), then that's obviously a rent-seeking business model. It's a rent-seeking business model from the very beginning. It doesn't have anything to do with how long the company has been in business.
There's a valid debate to be had over what fraction of the returns on stocks come from value-creation vs. rent-seeking, but the "pre-existing security vs. startup" distinction has nothing to do with it. Personally, my hunch is that the majority is genuine value creation. Every factory, farm, train car, power plant, office building, etc. is an asset that creates genuine value.
The valuation of his companies doesnt translate to societal value necessarily. As much as i love Musk, Rockets and battery cars are aspirations. I d much rather he was leading a couple of biotech companies instead
Elon Musk signed the most lucrative CEO pay package in history (tied to company market cap, not anything of actual value), SWATed a whistleblower, is being sued by shareholders for self-dealing in Solar City, gleefully built a factory in one state with a horrible human rights record (China) while trying to sell the company to another (Saudi Arabia), and his factories in this country don't look great, either:
The whole talk is worth watching, but I'll just point to Lionel Shriver's segment, where she beautifully sums up, what most people – especially in the underclass – know already: https://youtu.be/ddBKQIomyYI?t=2200
Today's western progressivism is taken hostage by the elite.
Disturbing as it is for itself, it is even more freightening what this might lead to. What happens if the bottom 50% effectively looses any political say, because their choices by whom to be represented become completely blurred. If you are like me and considered to yourself to be under-/working class, none of today's "leftist" ballot options are even remotely relatable, the more radical their representatives are, the more they reak of privilege.
You can see this beginning in roughly 2011 when the Occupy Wallstreet protests start to fracture. This was when Starbucks began advocating for anti-racist policy (why? they make money selling permutations of coffee and milk) and a bunch of other corporations chimed in. The 99% movement quickly splintered off into anti-racist memes and whirled into Third Wave Feminism + needs for "inclusion" and "intersectionality" and whatever terms the Wallstreet-backed Left felt best to appease the working poor and working lower-middle class of academics and journalists (who are basically working poor now, but would not like to admit it).
So when you say:
>Today's western progressivism is taken hostage by the elite.
I agree. In fact, there is likely evidence that it was manufactured by the elite. This discussion is heading to the territory of Hypernormalisation[https://www.youtube.com/watch?v=yS_c2qqA-6Y], a film I recommend.
>Since at least 2016, the divide between the “working class” and the “elite” has been considered a defining issue in American (and Western) politics.
I watch a bit of US news (CNN et cetera) when travelling and almost never hear it defined in those terms. Based on what I've seen the debate is almost entirely framed in terms of the "middle class" and the elites.
In America the middle class defines almost everybody. Nobody want to be "upper class" because then you'll be the target of envy, and nobody wants to be "lower class" because of insecurity. For Americans, the phrase "upper middle class" means "Upper class but not multi million house"
From 2018-2019, we saw teachers protests and strikes lead to massive concessions being gained in 7/9 states they occurred in, most of which were red states. The working class has a considerable amount of power when wielded correctly.
This is a good point, but it's notable that the only major strike victory since 2008 was by government employees.
There have only been a few other notable strikes in that time, outside of special cases like pro sports. And aside from one narrow strike (UAW vs Kohler), most of them have ended with token concessions (Verizon, which yielded to strikers much further in 2000) or complete collapse (USW Oil Workers, in their first strike since the 80s). It's not a coincidence that the last strike by GM workers was in 2007, right before the company became obviously precarious.
Government employees in general have been insulated from the decline in private-sector union strength. And beyond that, there's real reason that teachers are not a standard example of the "working class", even compared to other government work like the USPS. They are working class by salary, and that's important to remember. But it's also true that schools aren't subject to market downturns and offshoring the way manufacturing has been, and that teachers - who have multiple degrees and responsibility for people's children - are unusually hard to hire and replace.
I think you're right that the working class has more power than it's currently bringing to bear, but it has lost quite a lot of actual and even potential influence over the last few decades.
As it stands any broad based working class revolt in the US can be effectively nullified by bringing up a culture war issue like abortion, homosexuality, etc. and using it to split the electorate. This has been true for a long time. These issues evoke emotional responses that easily override any rational concern for one's economic well being.
Whether intentional or not, the culture war continues to be the most effective tool in history for sidelining and fragmenting any struggle for economic equality. This is because culture war issues do not slice the electorate along the same lines as economic issues.
Additionally, Kevin Kruse of Princeton has written a great book called One Nation Under God: How Corporate America Invented Christian America. An intro article on this book can be found here:
Red State Revolt (referenced in parent) has material in it showing how in practice class battles have the potential to cut across other social questions like party loyalty for example. There was a new-found unity in the teachers strikes. Economics is the sturdiest division in society because it is most rooted in the day to day life of everybody. Some people are bosses, and some people have to work for them 8+ hours every day.
Please don't break the site guidelines by posting like this.
Vote totals fluctuate. When users see an unfairly downvoted comment, they often give corrective upvotes. Then the comment goes back to positive, but a post like yours here lingers on, orphaned and inaccurate.
Exactly right. The working class has power because we are the ones who make society run. In the case of teachers, a strike creates a complete crisis in the city. For private sector workers, they can completely halt profit-making by their employer. Unfortunately we are largely unorganized and taking this kind of action requires a lot of organization. We also do not have a political party made up of workers and representing workers genuine interests. So I see how journalists with no real understanding of the labor movement can get confused.
> Unfortunately we are largely unorganized and taking this kind of action requires a lot of organization. We also do not have a political party made up of workers and representing workers genuine interests.
I think this is what the author meant when saying that the working class has lost a lot of effective power over the last few decades.
I'm not saying this argument is incorrect, but I think it is complicated by the fact that teachers are public employees.
The article mostly touches on private industry and the economics reaped within that sphere. Your argument is salient, but there is probably room for both the argument in TFA and this one.
The real class war is between the 0.1 percent and (at most) the 10 percent—or, more precisely, between elites primarily dependent on capital gains and those primarily dependent on professional labor.
Reading this thing is an incredible downer and it makes everything sound black and white. It is literally poo-pooing on everything. Life is never this black and white, although the thesis make for a good read it is still an inaccurate model of the real world.
> Moreover, increasing numbers of engineers, even at the most prestigious companies, are hired on temporary contracts. When the artificial growth model stalls, employees can expect mass layoffs, “anti-hierarchy” propaganda notwithstanding.
As an example, I dont find this to be true at all especially for great engineers. Our company is trying to move completely away from contractors.
> But it is precisely for these reasons that the working class is unlikely to be decisive in shaping politics for the foreseeable future. However one defines the working class, it has scarcely any political agency in the current system and no apparent means for acquiring any. At most, working-class voters can cast their ballots for an “unacceptable” candidate, but they can exercise no influence on policy formation or agency personnel, much less on governance areas that have been transferred to technocratic bodies.
While I don't really agree with the author on this point, I think the basis of the claim is implied to be the election of Trump. Trump prevailing in the primary (and the general even) could be seen as a referendum of the working class on establishment politics.
And yet, what has changed? Trump hasn't brought back American industry as promised, nor has he made a trillion dollars infrastructure package as promised. He has succeeded in a tax plan (approved by establishment Republicans in the Senate), supreme Court picks (approved), etc.
The authors argument would be that this illustrates that picking the occasional anti establishment candidate doesn't uproot necessary structural change which happens across a large number of both elected and nonelected organizations, and well-connected elites are implied to be the only ones in a position to affect such change.
> occasional anti establishment candidate doesn't uproot necessary structural change
The anti-establishment is the bare minimum for structural change to happen. The difficulties that Obama and now Trump have faced in bring change (whatever their version of it), actually make the point more strongly that we need even more out of the box thinking in our leadership.
Underrated comment. This is deeply true, but points to something ominous. There isn't really a way that this political vortex ends except through ever more extreme policies/pendulum swings.
I hear you, but that's an argument that the person that the "working class" voted in has been ineffectual in bringing about the change they are looking for (debatable). That's not an argument that they are not decisive in shaping politics. If electing Trump is a referendum on "the elite" then his election proves the opposite, no?
I think I might agree with the author in a more limited context, that on an institution by institution basis there is a fair amount of power that is outside the reach of voting and hence outside the influence of the working class.
An example here is the federal reserve. Interest rate decisions and quantitative easing decisions are vastly influential, and famously independent of the president.
I don't subscribe to any conspiracy theories that the federal reserve is being controlled by the rich. However, I think there's no doubt that both the individuals at the top of the fed, and their professional circles, have no overlap with the working class, and in the long run this shows.
For example, when the fed did their last interest rate increase near the end of 2018, the stock market essentially revolted, with a "huge" correction (to about august 2017 values). The federal reserve acquiesced to pressure and proceeded to take a much more dovish tone, following with 3 rate cuts the next year.
There's another story there about a trade war, low inflation, and sustaining an expansion. But if you take a look at a long term graph of interest rates over time from 1980 to present, you see a trend of going down, down, down. It just so happens that interest rates going down also inflates asset values.
I don't think it's a coincidence that the asset-owning class that populates the federal reserve often makes decision that benefit those who own assets.
If you look longer term, after WWII there was this cycle of recession and recovery, but each recovery was at higher interest rates. This lasted until 1979. Then the Fed, led by Volcker, changed policy. Since then, each cycle has been at lower interest rates - but higher unemployment.
I agree with your points generally, but I don't think these are the claims put forward in this article. The article makes sweeping generalizations without any basis (AFAICS).
In a nutshell, public choice theory. Try The Myth of the Rational Voter by Bryan Caplan which explores the phenomenon from a systems standpoint without being especially partisan or ideological.
But does the book look at it from the angle of the working class specifically? Knowing only the broad thesis of that book, I'm not sure it's relevant to the claim made in this article which is about the working class specifically.
To a large extent. Like any academic work you'll need to do some of the work to joint he dots from the source material to whatever socioeconomic schema you prefer, it's not written to conform to a particular ideological tendency.
> This [billionaire] class has no idea what to do with its wealth, much less the power that results from it. It can only withdraw and extract, socially and economically, while the political justifications for its existence melt away.
Would love to hear his perspective on Bill Gates.
It's very interesting to think about this because most people pursue wealth for this very reason - to be freed from constraints of responsibility and to do whatever they want.
However, it seems to be the opposite once you get too much wealth - you all of a sudden become (due to the closed economic and political system) extremely publically responsible.
This is also the first generation of such public billionaires in an era where everyone with power has their lives projected on a live screen for people to see.
Bill Gates is in my view deserving of every praise for his civic engagement, as well as a few others (e.g., those who have agreed to the pledge to give away much of their wealth). But I don’t think this is common. Just from the public statements of many billionaires, it seems that many do not think they have any civic obbligation at all.
It's why I'm curious to see his opinions on this matter.
The author pointed out the problem but didn't say much about the solution. I was wondering if his discourse on those who aren't the problem would yield insights.
I read it, though not closely, and am still unclear what is the "real class war". The educated-but-alienated professional elite against the oligarchs? I'm just guessing.
Also, he kind of loses it in the final paragraphs, which weakened my impression of the rest.
>I read it, though not closely, and am still unclear what is the "real class war"
The real class war is between the 0.1 percent and (at most) the 10 percent—or, more precisely, between elites primarily dependent on capital gains and those primarily dependent on professional labor.
It's pretty clearly defined.
It's the group that makes their money primarily from investment returns vs those who make their money primarily from wages/salaries/payments for skills.
I would say that capital gains and professional are more variables than hard coded aspects as the lines may be drawn differently in a context.
With an actual warrior elite vs merchantdom you can subsitute "spoils" vs "profits". Both blocs depend upon both skill and capital in that case and find themselves in tension.
Feudal societies distrust merchants and often consider them beneath even peasantry - but the merchants in turn may force respect and have undeniable advantages for funding the warrior elites.
Similarly take the Antebellum US with the Southern Slaveholder "Aristocrats" vs the Industrialists. Both are capital dependent and rely upon lower classes although the later are far more skill demanding than the previous who make a virtue of idleness to those who can afford it.
Even Soviets and other "nominal Communists" totalitarians who furiously insist that they aren't fascists due to the least relevant distinctions have similar factional elite branches despite their capital being social.
It reminds me of the saying that most "revolutions" tend to involve the aristocracy (the 0.1%) and the bourgeoisie (the top 10%), the French revolution is a classic example of this.
The status of the remainder of the population never really changes as a result.
> However one defines the working class, it has scarcely any political agency in the current system and no apparent means for acquiring any.
Revolutions don't happen when people feel that they have political agency in the status quo system. And if people don't have actual agency, the outlets which provide the illusion of agency eventually fail.
That is my fear as well. I would say that the conventional outlets that provide the illusion of agency have in fact failed. That's why we got the rise of both Trump and Bernie. When people realize that neither unconventional approach gives them real political agency, look out.
> But the Valley has never been particularly fertile for the salaried professionals and “engineers” hired by these companies, who even now generally make less than their counterparts on Wall Street or in Big Law. Kindergarten playroom office spaces and other exaggerated perks often serve to distract employees from this harsh reality.
It's always a bit funny and sad when statements like these happen. Most people seem to have _no_ idea how much money Engineers/Product Managers can make at certain companies.
Seems like the author knows exactly how much they can make, he states that the median income is 81k/yr.
Now you could argue that that's deliberately missing the long tail nature of this, but if anything, the theme of outliers of the industry just reinforces the point.
What is often forgotten is the hyperdeflation of technology.
All your gadges would be worth many millions in pre 2000 dollars. Your car is probably better in many ways than a million dollar car from 1980.
If anything, the value of a car is lower than ever in history because decades of sprawl (and recently ride-sharing apps) have contributed to unprecedented traffic nearly everywhere
Everything is way more accessible than pre-2000's, but I would argue that the overall quality of the user-experience is probably worse. If you buy a TV today, you get amazing image quality, but you also have to live with the fact that the TV spies on you and that the software it runs on will discontinue in 5 years. (this of course doesn't matter because it's been designed to break before that point). I would gladly take an old CRT over a modern smart-tv.
> Many industry observers believe Schmidt contributed virtually nothing to the company, but he became a billionaire because of his superior grasp of business etiquette: “Google policy is to get right up to the creepy line and not cross it,” he once said. Jeffrey Epstein, erstwhile dinner companion of Schmidt, Bill Gates, and seemingly every other member of this class, had a slightly different policy.
Funny. Obviously this is going overboard with the facts but it makes a good point.
>"Indeed the conspicuous embrace of 'elite values' by journalists and academics is often little more than an aspirational attempt to remain connected to an economically distant elite...they gave professionals greater scope to manage “postmaterial' concerns that suited their cultural sensibilities..."
In other words, this potential class war is pacified by telling the upper-middle class that they are culturally superior in spite of their increasing economic precarity. Someone in this class who has to take out massive loans, move across the country, and spend $30,000 a year on rent with no hope of ever owning a home in order to have an insecure job in their field must be assured that living this way, combined with a mix of vague cultural markers, is tasteful and elite, and not an empty bag. There may also be a variety of well-funded social movements that pose zero threat to the economic position of the 0.1% to participate in as an activist.
Honestly, this is what gets me. Say what you will about the man, but few people complain that Elon Musk is a billionaire because clearly he's repeatedly investing his wealth in actually trying to advance humanity in meaningful ways. Similar story with Bill Gates and his foundation. But wtf is the average billionaire (of which there are thousands) or hundred-millionaire (of which there are tens of thousands) doing with their money aside from trying to acquire more money? You would think such people would be into building a positive legacy, but it's just not happening that way.
Why? The service and/or product provided by their business is providing significant value to society (lest they wouldn’t be collecting profit). Is the reward for creating a successful business really more responsibility to just give back instead of using it to create more business?
> The service and/or product provided by their business is providing significant value to society (lest they wouldn’t be collecting profit).
This is assuming the conclusion.
They could just be collecting a monopoly rent or a land-rent or an IP rent; for example, when Martin Shkreli raised the price of insulin dramatically he wasn't "providing more value to society", he was extracting that value, potentially at the cost of human lives.
There's a lot of confounding issues here in relation to the insulin problem: the fact that medical patents are poorly structured - insulin is hard to make, and making it via a biological mechanism means the "molecule" is slightly different, and so the FDA needs time and money to assess it. This creates a defacto monopoly, and thus, said monopoly can raise their prices.
The fix isn't to force billionaires to give out their wealth for free - but instead to fix monopoly laws, as well as to stream line the way approvals can be made for generic molecules made via biological means (like the way generic drugs are today).
In fact, an insulin factory _should_ be easy for a billionaire to fund and if the relevant regulations are better, there'd be more insulin sellers as there's profit to be made (seeing as Shkreli has raised the price).
This close to the money, there's no distinction between what you are proposing (fixing the monopoly laws) and force billionaires to do something. Currently, the companies write the laws. You want to force them to stop writing the laws.
> It's a hugely privileged position to be in, and the idea that it comes with exactly zero responsibility to Rest of World is nonsensical.
and tell me if you also spend a portion of your income on donations to under-developed countries. Because that's what you're asking the billionaires to do - altruistic giving.
I m of the position that if they legitimately made their money (i.e., nothing illegal), they are entitled to spend it however they see fit. It's _good_ if they spend it on altruism - but it's not an entitlement that i expect of them.
There was once a tradition of public service among the elites; they recognized that their position was good fortune at having been born into a family of means, and that selfishly speaking without a strong civic society their position would be fragile (even setting aside the altruism many of them felt).
This notion was reinforced by the Ivy League system.
Bushes, Kennedys, you can see the tradition of service (even if we may tire of political dynasties).
Selfishly, if you're wealthy and wish your progeny to be the same, it's not a bad idea to make sure the cathedral doesn't collapse around you.
Legally speaking sure. Pragmatically, extreme wealth is as much a product of luck and timing as innate superiority or diligence, and often that wealth is expanded through political lobbying; eventually the resulting asymmetries will become unsustainable and the wealth will be redistributed one way or the other. The less prospect people have of economic security through normal effort, the less incentive they have to uphold the property rights of those with structural influence.
Advancing humanity can be very terrible but I am sure most people would create that certificate for themselves. Especially if you are high on money and cocaine.
Sure, but once you’ve done that and you’re rich, what do you do then?
For most billionaires the answer seems to be that you buy a moderately upgraded version of all the stuff you had when you were middle class, and then you sit around content to watch the numbers slowly increase.
Do something interesting! It doesn’t have to be noble, it doesn’t have to be for the greater good, just do something! Build a palace to rival the Queen’s! Build an enormous statue of yourself! Hire a thousand concubines on a desert island! Colonise Antarctica! Single-handedly bring back the classical symphony by sponsoring an annual competition for the best one! Build an island and declare yourself king of it! Just do something, guys!
>>>It doesn’t have to be noble, it doesn’t have to be for the greater good, just do something!
I'd argue that to be inspired to pursue acts of greatness, people need to, in the words of Patrice O'Neal, "Believe in their own righteousness". I'd say that in the Western world today, that is HEAVILY frowned upon, and self-deprecating guilt over economic success is lauded as a virtue. We're in an awkward time, where we haven't reached conditions of post-scarcity, but still have instances of overwhelming material abundance. We are only a few generations removed (if at all), from times when humanity would slaughter each other by the millions to secure resources. It's in our DNA and in our culture, in deep-seated ways. So humans still have an acquisitive nature but have no muse to provide them with direction.
>>>Build a palace to rival the Queen’s! Build an enormous statue of yourself! Hire a thousand concubines on a desert island!
Yeah, that's how you end up with the commoners at your gate with pitchforks when the revolution comes. And on that last one.....arguably Epstein pursued that course of action and nobody says "Well at least he was doing something interesting" about that guy...
> For most billionaires the answer seems to be that you buy a moderately upgraded version of all the stuff you had when you were middle class,
I don’t think you know what billionaires live like. Either that or the middle class you refer to is something very different from the one in the states. A 150ft yacht that you fly to with your helicopter from an airport you landed at with your private plane isn’t really relatable to anything in the middle class... unless you count jumping out of a tree into a canoe.
> Do something interesting! It doesn’t have to be noble, it doesn’t have to be for the greater good, just do something!
paradoxically, this is worse in terms of resource allocation, than to attempt to create more businesses.
Making a statue in your self-image, or to build extravagant palaces, are expenses that would better be spent else where (since a statue derives little to no value to any one else, and thus the only expected profit is self-indulgence). Similarly to a palace, unless it is for the purposes of making profit (ala, like disney land, via tourism).
Funding orchestra/competition/arts is similar, but because these arts can be used to derive profits, it means other people will also find them relevant/interesting. Therefore, it is OK to do so, and not a waste of economic resources.
> Conservative donor gatherings are somehow even more pathetic. Most of the attendees are there only because they are not smart enough to recognize that the Democratic Party offers a far more effective reputation laundering service. The rest are probably too senile to know where they are at all. There is often a special irony to these events: an uninspiring ideologue is usually on hand to repeat a decades-old speech decrying Communism—recounting the horrors experienced in countries ruled by a self-dealing, incompetent nomenklatura and marked by a decaying industrial base, crumbling infrastructure, poor education system, a demoralized populace, low confidence in public institutions, falling life expectancy, repeated foreign policy failures, a vast and arbitrary carceral system, constant surveillance, and even massive power outages in major cities. Imagine that.
For some reason my mental image of the messenger behind the article was that of a well studied and neutral academic throwing out firehouse citations.
his points are thought provoking, but it reduces everything to purely economic competition by a delusional population with only the author to cut through the illusions.
His article shows why we need a wealth tax instead of an income tax... There is a huge difference between a hard working manager making $100k and an equally hard working owner with $10m in assets. I suggest dropping the income tax entirely, and tax wealth under $50k at 0%, $50k - $1m at 1%, $1m - 10m at 2%, $10m - $100m at 3%, $100m - $1b at 4%, and everything higher at 5%. This keeps even billionaires motivated to work hard to earn returns on their assets, without taking from the little guy who can't afford it.
I keep hearing this idea from a variety of sources recently, and the idea is so absurd I don't even understand how it came to be. How, exactly, do you expect the government to tally the amount of wealth to be taxed for each person in the country? The amount of bureaucracy and auditing and enforcement it would require would dwarf the insurance industry, and waste taxpayer dollars to the extent that it couldn't actually be profitable for the government.
> How, exactly, do you expect the government to tally the amount of wealth to be taxed for each person in the country?
Ask and audit, the same way it does income. Of course, it's harder to get filed confirmation data for wealth and even easier to have an alternative valuation for wealth held in non-cash assets than for realized income, so it will be much easier to evade, but that's probably part of why it (which complicates our overall system of taxation) rather than taxing the currently tax-favored income of the rich, primarily capital gains, at the same rate as other income (which would simplify the tax system) is favored by people whose concern is to be seen as doing something about tax fairness.
I think by "easier to evade" you actually mean "impossible to enforce". The sorts of things the wealthy store their money in aren't easy or even possible to value, especially on some yearly basis.
The (US) government today has a tax on investment returns. Tallying up the buys and sells seems like to be a much more complicated than keeping track of the total wealth.
The way you accomplish this is by asking everyone: "What's your total wealth?" and then doing random audits.
The very wealthy don't have liquid and easily-appraised assets. Calculating the total wealth of someone who owns art, jewelry, real-estate, historical artifacts, animals, and fractions of many international businesses is impossible.
The idea that the wealthy can just print off a report from their TDAmeritrade account and turn it into the government is laughable. Even they don't have any real idea how much wealth they have.
This would be problematic for people who've paid income taxes for their whole lives and have planned retirement based on the current system. Assume a $1.5M nest-egg and a safe-withdrawal rate of 4% per year. Ignoring capital gains taxes, property taxes, etc, this leaves you with a modest $60,000 retirement income. Based off your proposed figures, that wealth would have a $20,000 annual tax bill, which is 1.3% of the total. Now, since the safe withdrawal rate is 4%, you can only withdraw 2.7% for your retirement income, which leave you with $40,500.
In other words, your 1-2% tax has reduced the passive income by 33%.
Of course, it would be much easier to grow the retirement account without income taxes, which would likely more than offset offset this reduction. For people who have paid income tax and planned their retirements based on the current system, this change would be devistating.
This is a great article but I think it misses the counterpart to the professional class - moderately well-to-do small-business owners, millionaire next door types. I think these are heavily represented in the top 10%. They are not as well-educated, lean much more to the right than the professional class. Economically they identify more with the 0.1% and consider themselves capitalists, but culturally they identify more with the working class.
These two groups seem diametrically opposed to each other, much more so that they are with the actual elite or with the actual working class.
> But it is precisely for these reasons that the working class is unlikely to be decisive in shaping politics for the foreseeable future. ...
This seems like an odd statement given that the American system of government was designed from its inception to insulate the ruling elites from the masses. The founders were terrified of mob rule. The term "democracy" was used at the time to mean something not far away from "mob rule."
The people don't directly elect the president, the Electoral College does that. The people don't vote on any pending legislation. The House and Senate do that. The people don't set foreign policy - the executive and legislative branches do that. The people don't strike down any legislation - the courts do that, members of which at the top level are appointed for life. The full legislature is never up for re-election specifically to prevent a popular uprising.
One wonders what the article has in mind here. The answer comes shortly:
> ... In countries like France, the working class might still be able to veto certain policies through public demonstrations, but such actions seem unlikely in the United States, and even the most heroic efforts of this kind show little prospect of achieving systemic reforms.
Even in France, that's an extra-governmental action. There's no mechanism to include popular dissent except for routinely scheduled elections in either France or the US.
What's more troubling though is the ubiquitous disengagement from the parts of American government through which people can effect (small) changes:
> At most, working-class voters can cast their ballots for an “unacceptable” candidate, but they can exercise no influence on policy formation or agency personnel, much less on governance areas that have been transferred to technocratic bodies.
The problem here is that we don't have direct democracy. I've noticed that citizens in countries with direct democracy elements like Switzerland seem to feel significantly better represented by their governments.
It blows my mind how little is spoken about direct democracy and concepts like delogative/liquid democracy. There's absolutely no reason we must confine ourselves to a representative democracy conceived in a time when direct democracy was literally impossible because messages were delivered on horseback.
From Zinn's A People's History of the United States: "One percent of the nation owns a third of the wealth. The rest of the wealth is distributed in such a way as to turn those in the 99 percent against one another: small property owners against the propertyless, black against white, native-born against foreign-born, intellectuals and professionals against the uneducated and unskilled. These groups have resented one another and warred against one another with such vehemence and violence as to obscure their common position as sharers of leftovers in a very wealthy country."
Great article. Regarding the wealth accumulation, there is an interesting parallel with black holes: a single blob of wealth absorbs other wealth at the exponential rate: dw/dt=k*w, where k is the population growth dp/dt. The same blob of wealth has a Hawking radiation that evaporates this wealth, but at a constant rate: dw/dt=-e, where e is expenses to support ones lifestyle. Big blobs of wealth have about the same rate of evaporation, but absorb surrounding wealth much faster. Add to that the constraint: the total wealth is fixed and generally grows with the population size. In practice, all the small wealth bubbles (workers) evaporate quickly and the radiation gets absorbed by the big black holes. Eventually they become too big for this planet and collide: US vs China. This boom cycle of the wealth bubbles universe is always followed by the bust cycle: a war. The big bubbles explode and firm many small bubbles, that evaporate and so on. Nothing new here. In the black holes world, the force distributing the matter is gravity. In our world of wealth bubbles, this force is called greed. It is the driving force of the boom and bust cycle. Greed is one the few fundamental imperfections of the human mind and it takes eons fir the human mind to change. The previous driving force was cruelty, and it still is in some places. The next driving force will be
> The real class war is between the 0.1 percent and (at most) the 10 percent—or, more precisely, between elites primarily dependent on capital gains and those primarily dependent on professional labor.
There is a sharp contrast here, but I don't think it'll be the basis for a war – figuratively or otherwise. But this divide deserves more illumination.
I would like to further understand the societal, political and economic forces in the context of the political outcomes described in this article. Has anyone got a couple of recommendations on where to start?
A well-written article about politics in US and its class conflict. I still think and insists that US citizens don't look enough to the rest of the world. Just observe what happened to South-America since 2000's. Popular Revolution and Popular Governments was the way out of the capitalist-neoliberal crisis, at the time when global "promises" were being risen by the elites. The struggle had its positives results because even when the dictatorships, imposed by Washington, tried to drown the working class and the professional class, they couldn't kill inequalities and the political structure that generated that inequalities. Those measures (dictatorships) were brought for preserving those inequalities and that structure. Now South-America is entering into a new crisis, the elite's reaction to the conquests for the People.
US needs new leaders, grassroots political leaders. Many people believe that "change" comes from upper classes, but that happens when class struggle is in the stagnant state, when the conditions are uncertain for the majority. Building a new leadership and activism style for the affected classes will effectively replace the excuses and the fear, that Fear that was imposed by the elites.
Theorists of capitalism long argued that it and it alone could efficiently distribute resources across an economy (though not, oddly, within a firm).
This might be true in an economy whose rules about contrantracts, commerce, and property relations were fixed and predictable, but most economic simulations overlook or sidestep the fact that the most powerful economic incumbents can and do adjust the legal conditions to maximize their own gain.
Adam Smith had recognised that in “Wealth of Nations”.
He goes on to conclude that “the mercantile system” allows the “merchants and manufacturers” to pervert legislation towards their “sole end and purpose” – production for profit – and away from the legitimate “sole end and purpose” of production – to satisfy human needs.
He also points out that the interests of these manufacturers, have been “peculiarly attended to” by the government.
Capitalism can't do that without redistribution in the form of severe taxation of the wealthy. That's why we need to revive estate taxes and inheritance taxes: in their absence, great dynasties of incredible wealth are formed and then sit idle for decades or even centuries, protecting themselves in trust fund fortresses to no particular end than their own existence.
Most places with high per-capita GDP (Canada, Scandinavia, England, Germany etc) have found that they can make meaningful, consistent, incremental progress on a lot of the problems Krein is trying to address through introducing a public system in sectors like healthcare, education, and child care - probably literally the only tack Krein would never agree to.
The problem isn't "billionaires" or "capitalism." I would probably rather billionaires lock up their money in Vangaurd stock - where its allocation is at least beholden to market forces - than spent it on misguided vanity projects.
The problem is that market failure is a real thing. Every other country on the planet seems to have realized this.
> The problem is that market failure is a real thing
At least two of the examples you site (healthcare and education) are nowhere near being functional markets, so blaming market failure for poor outcomes in these sectors seems like a red herring.
> I would rather live in a country where an individual can save and invest to become a billionaire.
Steinbeck has a dynamite line about this. It's a goofy point at any rate because there is no evidence that you can realistically _save_ to become a billionaire. It's typically inherited.
> Where is the growth and innovation in those countries?
Literally everywhere? A fun exercise is to read about some burgeoning Canadian or European tech companies and contrast them with eg Uber or WeWork.
> I want to live in a country with opportunity, not one of equality
Without public schools and healthcare, most people get no opportunity.
That's a false dichotomy. There is no reason that you can't have the opportunity to be a billionaire, while making sure that no one goes homeless or dies from a preventable disease.
People love to point to FANNG but the reality is America did this for the boomers, union membership was over 30% and we still had super wealthy people. CEO to average employee income was around 80:1, now it's closer to 250:1.
When 3 people own 50% of all wealth in America (1) it's not insane to say that we have a serious problem. I don't want everyone in America guaranteed a six figure salary but come on there's got to be a better balance.
I agree that there can be more equitable distribution. I struggle with why seizing wealth through taxes is the current war drum being beat. I think the most productive means to making wealth would be stressing the importance of investing and compound growth as part of the high school curriculum. Note: That's where my idea ends right now, I don't have a viable implementation path
Nobody gets rich through starting out with few resources, working diligently, and investing/compounding their wages. It's possible to become financially independent that way if one is smart and lucky, but not rich. By 'financially independent' I mean you can stop working for other people without putting your survival at risk.
If you want to be rich you either need to start out with money (giving you bargaining power in every negotiated investment decision) or innovate in some way and bargain very aggressively and successfully. And that doesn't just mean bargaining with your competitors and members of the investment class, but doing the same with employees in your organization. One of the most reliable ways to do this is to suggest that you got rich through a mixture of hard work and fiscal prudence and then get them to sign away most of their negotiating power on a contract drafted for your benefit.
How can you invest when you have to decide whether to fix the car or eat?
The rules aren't fair, they're made by the rich. Learning how to follow them won't make you richer because they're designed to increase the wealth at the top.
Almost no-one advocates seizing wealth hrough tax. Merely work (income). Since the rich have wealth and the poor work (earn income)
Learning how to follow rules is exatly how to become rich. Entry level retail store now pays 15/hr. 60 hours at week equates to 48k/year. Hardly unfair
Either you're trolling or extremely naive. $48k/year ain't shit when a) you'll pay some of that back in taxes and b) in places where you can get $15/hour for retail you also need to shell out $30k/year just to have a small studio apartment.
Shell out 30k/year on a studio apartment? Get off the caosts and explore America. I spend less than 30k/year on my mortgage for a house and pushing carts at Costco will net you 15/hr
1. 60 hours per week at $15/hr for 52.1429 weeks per year is $47k/year.
2. In this magical world where you can get 60 hours per week on the clock, you'd also be entitled to time and a half for 20 hours per week, which would actually be $55k/year. You're underselling it here!
3. And if you're talking about two+ 30 hour / week minimum wage jobs:
3a. Chances are you're now in the world where you also don't get employer healthcare. Hooray!
3b. Good luck getting all of your jobs to schedule in such a way that you actually get all 60 hours per week, without getting fired from your second job because of scheduling conflicts with your first.
For real. I was thinking back to this thread earlier today as I realized that ~25 years ago in SF I was making $14 or $15 an hour as a network technician...but my rent (for a large room in a house share) was only about $300/mo. A studio apartment would have been around $5-600 and I think my monthly travel bill was $50 or so. I don't remember enough to think out my whole budget but offhand food was maybe half or 2/3 of what it is now so your blue collar dollar went a great deal farther than it does now.
So 30 hrs/week for each parent.... ? I personally work ~50-60 hours a week and have plenty of time for investments. It takes around 10 minutes a week to manage, could probably trim that to 10 minutes per quarter
The Affordable Care Act was a blow to entry level workers in that regard. Now its probably more likely to have 2 jobs at 29.5 hours each then one at 40. Maybe the healthcare debates going on can address this
About this: "CEO to average employee income was around 80:1, now it's closer to 250:1."
I think that is nearly equivalent to saying that the average company is now 4x larger. CEO pay is strongly related to the size of the company.
If this is a problem (not saying it is or isn't) then the solution would be to make companies smaller. We could break them up. Nothing else is required, certainly not income confiscation.
Something feeding this change is that companies now operate across borders more. That makes companies bigger. A trouble with breaking up large companies is that other nations might not do likewise. Nations that don't break up companies could have an advantage over those that do, with their companies having greater economy of scale.
This article is interesting, partly due to the blatant political biases which are present but unrevealed, and partly due to the attempt to address those biases in closing segments. This line in particular was telling "the state—the only way to address the most important issues of the present".
The author of this piece is a left-wing statist, and they interpret all of the data they reference through this lens. That does not mean that their conclusions are wrong in whole, as there's definitely some intriguing things in this article. Their ending statements are relatively on-point and don't align with any particular political leaning.
A good read, but unfortunately didn't tell me anything I didn't already know just from watching the news and paying attention.
Perhaps the most disappointing fact is that the author hinted at but failed to make the correct mental leap. This change in our society and economy is largely a result of globalism. Those in the top elites were able to improve their personal margins at the expense of the rest of the population by moving both production and knowledge work outside the bounds of the US, and in so doing increase the divide. The interaction of state-backed industrial interests in other countries and the anointing of new billionaires at their behest is not to be overlooked either.
I don't see any immediate solutions, as anything direct action will result in chaos, and anything taken slowly will not produce a positive effect in my lifetime. Like many other people in the professional class, my focus is on my own self-reliance and ensuring that I am not beholden to society any more than I must.
The state is the entity that signed all the free trade treaties in the first place — that enabled the outsourcing and let the production be moved out of the country — and still has the power to set tariffs and industrial policy. So the author's argument is that the only way to fix these problems is through state power.
Maybe I overstated my case, then. I am not familiar with the author beyond this piece. This piece, though, shows a very deep disdain for anyone who could be considered conservative and blatantly makes the case for statism. So, perhaps they are not left-wing, merely a statist.
I tend to think there are more than one way to skin a cat, and statism is not automatically the correct answer. Their direct statements disagree.
Author is saying that the state is where opportunity is best found at the moment due to all the reasons laid out in the article, which is quite good. It’s not a value judgement, just an observation.
This is all driven by globalisation, and don't get me wrong I'm a globalist, but this is just a fact. First manual labour in manufacturing was outsourced abroad, then higher tier tech jobs in software and product engineering. Now big firms from former third world countries are muscling in on markets at every level of the economy, creating competition at every level of business.
You can't add hundreds of millions of Chinese people to the global work force, now at every level of the global economy, without affecting the market for that labour.
I said I'm a globalist, yes I am. My wife is Chinese, I've been going there regularly since 2001. When I first went private car ownership was near unheard of. It's a different country now, near-empty streets with a few donkey drawn carts are now choked with commuter traffic.
The result has been a pause in income growth in the western world. We've benefited from cheap imported goods, but lost out in domestic growth. The upside is that hundreds of millions of people, not just in China but in plenty of other places too, have been elevated out of poverty. I've seen that for myself and it's done an incalculable amount of good, it's just that all the benefits haven't been evenly distributed.
Could we in the west have benefited more if we'd had less globalisation? I really don't know. We have benefited I think, and we've had opportunities to invest and sell into those markets we wouldn't have otherwise had. I don't know, it's hard to evaluate what could have been as it's such a radically different shape for the world economy. Maybe we'd have ended up even worse off, who knows? But we might have been better off, I can't deny it.
For the future, we can already see incomes in China have shot up. Low level manufacturing jobs are moving out of China, because Chinese labourers have more skills now and can command high enough wages in more upmarket jobs that they don't need the low end work any more. I suspect that's why the employment rate in the US and elsewhere, at the bottom end of the economy, is picking up. I hope that continues, and in future growth will be more balanced across the economic and wage spectrum.
Sure, but "growth" isn't some physical thing that the very wealthy might have stolen. "All the income growth has gone to the very wealthy" means the same thing as "Income growth has paused, with an exception among the very wealthy".
Except that they have stolen it. Through lobbying and other means, they've gotten the laws changed so that it's much easier for them to hoard vast amounts of money and not be taxed on it (low capital gains taxes, offshore tax shelters, etc). Simultaneously, they've gutted the power of unions, reduced social safety nets, and convinced a huge chunk of America that the ones that are really to blame are other poor people (who just happen to look slightly different than them).
There isn't just some random "exception" among the wealthy. They've very specifically engineered the economy so that they get vastly disproportionate amounts out of it.
I don't think that's a helpful way to look at the issue. You're pointing at real phenomenon, and it probably is true that the policies you're describing disproportionately benefit wealthy people. But there's no point where "they" looked at society and said "hey, let's steal the average American's money so that we can be richer". If you're looking for cartoon villains, you're not going to be able to make progress in the real world, where most people honestly believe the policies they advocate for are right.
Oh, I actually quite agree—at least in part. Jeff Bezos isn't sitting in Washington rubbing his hands together, twirling his little mustache and cackling with glee every time an Amazon warehouse worker pees in a bottle.
But...who would? I mean, that's not the behavior of real people. That's the problem, and the way these things are allowed to happen—people have a hard time understanding that real people, who love their family and tell jokes and have opinions about Game of Thrones, can do terrible, evil things.
It's not that the extremely wealthy actively seek the suffering of those beneath them (mostly; there are probably a few who are weird enough, but it's not enough to make a policy out of). It's that they don't care...or, worse, they see it as some kind of necessary evil to make the pure libertarian utopia they envision. And indeed, the idea that many of them are based in principles of individual freedom is a huge part of how they've sold the whole lot, despite the fact that carrying those principles to any sort of logical conclusion inevitably results in terrible suffering among real people.
But while I agree that there wasn't some intentional conspiracy meeting where they laid out a New World Order-type plot to take 99% of all the world's wealth, that doesn't mean that all the various efforts to enrich the wealthy aren't very deliberate—and to some degree coordinated.
Actions do not have to be taken by cartoonishly evil people to have cartoonishly evil outcomes, and looking around at America today, I can't help but think that's where we've ended up.
There are records of coordinated efforts to reduce the power of the working class, which in a political climate that operates under monied powers, means the stripping of wealth from the working class and further inequality. This was done via things like union busting (this picture showing union membership vs economic inequality is great: https://i.redd.it/r6wy0dcb09d01.jpg), globalization, etc.
The Powell Memo, written in the 1970s by future Supreme Court justice Powell, specifically called on business to reassert power over American politics:
> On August 23, 1971, prior to accepting Nixon's nomination to the Supreme Court, Powell was commissioned by his neighbor, Eugene B. Sydnor Jr., a close friend and education director of the US Chamber of Commerce, to write a confidential memorandum for the chamber entitled "Attack on the American Free Enterprise System," an anti-Communist and anti-New Deal blueprint for conservative business interests to retake America.[14][15] It was based in part on Powell's reaction to the work of activist Ralph Nader, whose 1965 exposé on General Motors, Unsafe at Any Speed, put a focus on the auto industry putting profit ahead of safety, which triggered the American consumer movement. Powell saw it as an undermining of the power of private business and an ostensible step towards socialism.[14] His experiences as a corporate lawyer and a director on the board of Phillip Morris from 1964 until his appointment to the Supreme Court made him a champion of the tobacco industry who railed against the growing scientific evidence linking smoking to cancer deaths.[14] He argued, unsuccessfully, that tobacco companies' First Amendment rights were being infringed when news organizations were not giving credence to the cancer denials of the industry. [14]
> The memo called for corporate America to become more aggressive in molding society's thinking about business, government, politics and law in the US. It sparked wealthy heirs of earlier American Industrialists like Richard Mellon Scaife; the Earhart Foundation, whose money came from an oil fortune; and the Smith Richardson Foundation, from the cough medicine dynasty;[14] to use their private charitable foundations, which did not have to report their political activities, to join the Carthage Foundation, founded by Scaife in 1964[14] to fund Powell's vision of a pro-business, anti-socialist, putatively minimalist government-regulated America as he thought it had been in the heyday of early American industrialism, before the Great Depression and the rise of Franklin Roosevelt's New Deal.
> The Powell Memorandum thus became the blueprint for the rise of the American conservative movement and the formation of a network of influential right-wing think tanks and lobbying organizations, such as The Heritage Foundation and the American Legislative Exchange Council (ALEC) as well as inspiring the US Chamber of Commerce to become far more politically active.[16][17] CUNY professor David Harvey traces the rise of neoliberalism in the US to this memo.[18][19]
> Powell argued, "The most disquieting voices joining the chorus of criticism came from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians." In the memorandum, Powell advocated "constant surveillance" of textbook and television content, as well as a purge of left-wing elements. He named consumer advocate Nader as the chief antagonist of American business. Powell urged conservatives to undertake a sustained media-outreach program; including funding neoliberal scholars, publishing books and papers from popular magazines to scholarly journals and influencing public opinion.[20][21]
> This memo foreshadowed a number of Powell's court opinions, especially First National Bank of Boston v. Bellotti, which shifted the direction of First Amendment law by declaring that corporate financial influence of elections by independent expenditures should be protected with the same vigor as individual political speech. Much of the future Court opinion in Citizens United v. Federal Election Commission relied on the same arguments raised in Bellotti.
> Though written confidentially for Sydnor at the Chamber of Commerce, it was discovered by Washington Post columnist Jack Anderson, who reported on its content a year later (after Powell had joined the Supreme Court). Anderson alleged that Powell was trying to undermine the democratic system; however, in terms of business's view of itself in relation to government and public interest groups, the memo only conveyed the thinking among businessmen at the time. The real contribution of the memo, instead, was its emphasis on institution-building, particularly updating the Chamber's efforts to influence federal policy. Here, it was a major force in motivating the Chamber and other groups to modernize their efforts to lobby the federal government. Following the memo's directives, conservative foundations greatly increased, pouring money into think-tanks. This rise of conservative philanthropy led to the conservative intellectual movement and its increasing influence over mainstream political discourse, starting in the 1970s and '80s, and due chiefly to the works of the American Enterprise Institute and the Heritage Foundation.[22]
Well, the executives making the outsourcing decisions still have their paychecks and people who own stock are reaping the profits from cheap labor. It matches the gp comment's description of events just fine.
Have you started or worked in a small business? Margin makes the difference between making payrolll and continued operation or failure/closing. Large corporations also prosper or fail based on margin.
Not coincidentally, in terms of rich western countries the English speaking countries have the strongest historical ties to neoliberalism movement of the 80s, e.g. Reagan + Thatcher. See the graph of income inequality in English speaking countries vs non in the OECD since 1910.
> There's been growth; it's just all gone to the very wealthy in the West.
Wrong. According to ourworldindata.org the world population in extreme poverty fell by half since 1990. I'm sure there are other sources to match this data as well.
Could you please stop using HN for ideological flamewar? Your comment would be just fine without the nasty bits at the beginning and end.
We've had to ask you this before, and eventually ban accounts that keep ignoring such requests, so if you'd please review https://news.ycombinator.com/newsguidelines.html and take the spirit of the site more to heart, we'd appreciate it.
"In the West, it's just all gone to the very wealthy" is also a claim that is broad, hard to define, and is empty without evidence.
Of course those who pay attention to these sorts of things know that the reality is more complex than that, even if you limit your analysis to "The West," which isn't a unified bloc. See the differences exhibited by the change in income inequality by these nations: https://ourworldindata.org/uploads/2018/07/Top-Incomes.png . You can't make a generalized statement about "wealth in the West," because it has exhibited different patterns in different countries over different timeframes. You have to specify all of those parameters before an intelligent conversation can even be started.
Even if the grandparent was worded too vaguely to communicate the poster's actual point, the grandparent turned out to be making a statement that was too low resolution to actually communicate anything beyond hand-waving anti-Capital rhetorical sentiment.
> those who pay attention to these sorts of things know that the reality is more complex than that
Kind of, but the trends are similar if the magnitudes are somewhat different. States with more distributive policies have less inequality, surprise surprise.
> Even if the grandparent was worded too vaguely to communicate the poster's actual point, the grandparent turned out to be making a statement that was too low resolution to actually communicate anything beyond hand-waving anti-Capital rhetorical sentiment.
I guess technically that's true, but it's also not far off. Because the West is back into relatively low growth, capital's influence is growing [2]. When you consider the only way to get capital is income or returns on capital, this is a simple recipe for inequality growing. And it indeed is the likely trend without (again surprise surprise) more redistribution policies [3].
The problem is the imbalance between the mobility of capital and the mobility of labor. If it were as easy for Joe Iowa to move some place with a lower cost of living to compete for labor as it is for Joe CEO to setup manufacturing there then I'd be all for Globalization.
The mechanisms by which globalization works to favor the rich is laid out well by economist Dean Baker in his book Rigged. The introduction looks at how trade imbalances with the global south benefit the rich in the west. The third chapter examines the macroeconomics of upwards redistribution itself.
In terms of US policy, the state of American inequality, and the domestic movement of corporate interests to create policies to favor the rich - the book Winner Take All Politics is a concise overview of this history since the 70s: https://en.wikipedia.org/wiki/Winner-Take-All_Politics
Thing is, Joe Iowa generally can move to cheap third world countries and work in manufacturing there, the work visa rules usually restrict only the opposite movement of labor - it's just that it would be a really bad deal for him because despite the the much lower cost of living, his working conditions and purchasing parity adjusted income will be much worse than in Iowa.
A USA blue-collar worker can't possibly expect to compete for labor in the global market and keep their current lifestyle - for an illustrative example, many such workers can afford cars and houses, which is a relative luxury if they would have to compete with workers who live in dormitories next to the factory. Someone who's earning $35000/year is in global top 1% in income; and adjusting for purchasing power doesn't change it that much, they'd still be in top 10% globally, and they can stay so relatively wealthy only because (and until!) they don't have to directly compete with all the much poorer laborers of other countries. Any increase in global labor mobility will only make it much worse for Joe Iowa.
Average voter doesn't care about the merits of competitive advantage. Maybe if the Chinese actually opened their markets up to competition would we see true benefits in the west. The problem of course is preventing the majority of the wealth going straight to the top.
China IS doing something about industrial espionage: they're supporting and encouraging it. This isn't dissimilar from what all the Western economies did with industrial espionage during the 1800's. In Rhode Island, we have the first mill in the US, known as Slater Mill, which was created by an industrial spy who stole secrets from England. The English were ahead in industry for textiles, coal mining, steam engines, steel, railroads, and all the other Europeans and Americans sent spies there to "tour" the factories or "apprentice" only to disappear just in time.
So, we shouldn't forget history and be shocked that the US is having its economic secrets stolen, as that's happened numerous times in the past.
I really hope they don't. Western IP laws have become suffocating to innovation (life of author +70 years copyright, software patents), and need to be weakened. Perhaps if China is successful with weaker IP laws it will get some politicians off their ass on the issue.
Trade secrets are even worse than draconian copyright laws arguably. The copyright at least calls for preservation. Trade secrets keep the knowledge from circulating and laws encouraging it do it more so if someone bypasses them for more competition.
Well, they're both lumped into this bucket called "intellectual property". Indy cars and unicycles are both vehicles, too. They share the property of having wheels. That doesn't make them particularly related.
The laws for copyright and for trade secrets are quite different. In fact, when someone talks about "intellectual property" rather than about one of the specific kinds (patents, trademarks, copyrights, and trade secrets), they often wind up reaching wrong conclusions. They try to apply concepts from one kind of IP on another kind, and it doesn't work.
So: Theft of trade secrets isn't going to fix draconian copyright law, not only because two wrongs don't make a right, but also because copyright and trade secrets don't have all that much to do with each other.
The pie may have grown, but aside from labor in the Global South, the people who have captured the gains from that growth have been the capital class in the developed nations (i.e not blue collar workers or the professional class). And no, getting some of your compensation in stock options doesn't make you apart of the capital class, unless you can stop working.
> the people who have captured the gains from that growth have been the capital class in the developed nations (i.e not blue collar workers or the professional class)
Wrong. Middle-class Americans have captured gains through cheaper, higher-quality products than would have otherwise existed without trade and development. Are you using a phone made in China, or wearing clothes made in Bangladesh, or eat fresh fruit in the winter? Then by definition, you've captured gains from trade.
Sure, we can say that there has been some benefit to the middle class in the West through reduced price on some of the goods but certainly not on big bill items such as housing and education. It's great that I can buy a cheap jacket and keep some of my income, it sucks that my housing expanses went from 1/5 to 1/2 of my income (as an example).
Overall an American worker who lost his well paying manufacturing job and replaced it with a job at walmart lost massively.
> It's great that I can buy a cheap jacket and keep some of my income, it sucks that my housing expanses went from 1/5 to 1/2 of my income (as an example).
Maybe they went from 1/5 to 1/2 precisely because trade made everything else so affordable? In the world without international trade, housing, education and health care could still be expensive, but cheap jeans would be $100 and cheap jackets $200.
> but certainly not on big bill items such as housing and education
On average, housing expenditures only makes up about 25% of American household income. And education expenditures are nearly a rounding error at 1.8%.
Adjusted for inflation the median cost per square foot of a new home in the US actually fell by 8% from 1992 to 2018. It's true that Americans are spending more on housing than in the past, but that's mostly because they're buying significantly bigger houses.
The median new home saw its square footage increase by more than 50% since 1985. Despite a decline in the average household size. And that doesn't even cover the significant increase in quality in things like central AC, attached garages, fire safety, higher ceilings, high ampere electrical circuits, better insulation, etc.
The HN community is biased on this topic because they tend to live in HCoL metros like the Bay Area and to only recently be out of school.
But the fact of the matter is that the vast majority of middle America in flyover states has not seen any significant loss of affordability in housing. That should tell you that the problem isn't globalization, it's the San Francisco zoning board.
> Overall an American worker who lost his well paying manufacturing job and replaced it with a job at walmart lost massively.
Since 1980 the decline in manufacturing employment have been more than offset by growth in high-paying jobs in healthcare, education, professional services, real estate, and financial services.
American manufacturing output is at an all-time. There's huge job shortages in the industry, and American factories are desperate for workers. That should tell you that manufacturing jobs were never "replaced", rather Americans workers decided to move to other industries.
Manufacturing jobs are good-paying, but dangerous, physically demanding and unpleasant. Most workers who left decided to either go to skilled construction trades or natural resource extraction, where pay is significantly better. Or they decided to become skilled professionals like nurses, teachers, or realtors, where pay is still good but working conditions are significantly better.
Healthcare expenditures only makes up 6.3% of the average income of an American household. Education only makes up 1.8%.
Vehicles and apparel alone, without even breaking out any other tradable sector, make up the same percent of household expenditures as healthcare and education.
Housing makes up 25%. But the cost of housing, as measured by the median inflation-adjusted cost per square foot of a new house has actually fallen by 8% since 1992.
> But the cost of housing, as measured by the median inflation-adjusted cost per square foot of a new house has actually fallen by 8% since 1992.
That's a relatively meaningless statistic given that new houses don't account for a significant subset of the housing supply.
A better measure of true housing costs is BLS's annual Consumer Expenditure Survey [1], which shows that just from 2013-2018, average annual housing expenditure has risen from $17148 to $20091, an increase of 17%.
Using that same source shows that after tax incomes increased from $56k to $67k over the exact same period. So housing expenditures actually grew at a slightly slower rate than income (17% vs. 19%). That proves the opposite: housing is actually become more affordable.
Moreover, according to the source shelter only made up about half the increase in expenditures in the category. Expenditures on shelter grew even slower than housing as a whole, 16%.
From the source, Americans spent 32% more on furniture and appliances (including a whooping 50% increase on major appliances), 28% more on housekeeping services, 30% more on their cell phone bill (which is weirdly part of of the housing category), 23% more on household products, and 20% more on their water bill. In other words Americans are splurging on smart fridges, maid service, mobile data plans, organic cleaners and long showers.
That doesn't really sound consistent with the story of cash-strapped workers struggling in an overpriced housing market. That sounds a lot more consistent with the macroeconomic data, which is tells us that since 2013, the economy has been booming and unemployment is at post-war lows.
> So housing expenditures actually grew at a slightly slower rate than income
The point was that new home construction cost (the stat you used) isn't of significant magnitude to be relevant to overall housing price trends. I wasn't addressing price to income ratio.
But regarding that, averages can hide growing divergences between incomes and home prices. Instead consider the median home price to income ratios over time:
It is also correct to observe that the divergence is most strongly correlated to large metropolitan areas, but that doesn't make it any less of a problem, since that's where most people live, and where most people are moving.
Thanks for linking that, very interesting. But I think if you dig into the report cited you'll find that it's not as simple as looking at the ratio of home prices to incomes. The report you linked cites:
> In fact, the monthly payment for the median single-family home purchased in 2017, assuming a 30-year loan with a 3.5 percent downpayment at the average interest rate, totaled $1,620 in real terms—slightly below the $1,650 averaged in the 30 years from 1987 to 2016, but more than $900 below the real median in 1981 when interest rates were at an all-time high.
Moreover that doesn't even take into account the rising square footage or quality of the modern housing stock compared to thirty years ago.[1]
In terms of the relative comparison between high and low cost metros, the relevant division isn't large and growing metros. The report finds that two thirds of the 100 largest metros have price to income ratios below 4.0. Add in those outside the major metros, and the sizable majority of the American population lives in low cost housing markets.
Figure 19 of the report also shows that high-cost states like California, New York, New Jersey, Massachusetts and Hawaii have strong net outflows of young people. Whereas predominately low-cost states like Texas, Florida, Georgia, Arizona and Tennessee have strong net inflows.
Since 2010, high cost major metros New York, LA, and Boston have grown significantly slower than the US population. San Diego and San Francisco have barely outgrown the US as a whole. Miami, Seattle, and Denver are the only high-cost major metros to grow faster than the rest of the country.
Can you please make your point directly instead of snarking about regulation instead? It contributes little to the conversation if your don’t put forth any arguments or discussion.
I am not a fan of making people guess what the point is, but I thought that dantheman's point was actually pretty clear. It becomes reasonable to suppose that government intervention and regulation play at least a role in the unaffordability crises in education, housing, and healthcare.
I think that's a consequence of pulling wealth from the future into the present to counteract the loss of wealth due to decreases in the price of labor due to increase in supply of labor from other countries and decrease in demand of labor due to automation.
Question is how far into the future are we going to keep pulling.
>Middle-class Americans have captured gains through cheaper, higher-quality products than would have otherwise existed without trade and development.
Cheaper products, sure, but higher quality? Retailers like Walmart and Amazon are essentially operating cartels, they dictate the prices they are willing to pay for manufactured goods. For manufacturers to meet these demands, cuts will have to come from somewhere--cheaper materials, less R&D etc. Consumers may benefit in a cheaper price for their widget, but that widget is not as likely to have the service life it would have in the past. Shorter service life results in buying 'cheaper' goods at a higher frequency (which is likely to result as a net loss for the consumer). This is rhetorical, yes, but not hard to defend. Clothing, appliances, electronics (in price-point verticals) all reflect this 'trend'. This is not even going in to 'Planned-Obsolescence', which is another symptom of the same problem.
Autos, which were the first major industry to globalize, have shown undeniably significant and sustained improvements in quality, reliability and safety over time.
I don't really hard data for any other major sector, and would be interested in anyone that does.
This is true, but there are 2 things to consider here. First, purchasing a new or gently used car is likely to be a person's second biggest monthly expense after housing. It is therefore in the best interest of the manufacturer to create a product that is reliable (at least reliable enough to last as long as the 6-7 year loan which are common today). Secondly, you have a couple of 'unicorn' manufacturers (to use a SV parlance) in Toyota and Honda that have historically been outliers in reliability within their market, and have subsequently dominated the market.
This is a huge difference from the sweat-shop in Bangladesh making t-shirts for Wal-Mart or H&M, or the electronics manufacturer in Shenzhen making toasters.
It's all about supply and demand, the demand for a reliable automobile creates a market for that product. Meanwhile, as lower and middle-class people have less purchasing power due to high housing prices, debt, medical expenses etc, the demand for cheap toasters is greater than the demand for a more expensive (but robust) alternative.
You can retire on your investments in your 30s or 40s on a higher end professional salary if you’re not an idiot with money. My old boss retired at 31. Not a CEO or a venture capitalist, just another schmuck who came in to the office to write code every day and got paid a lot of money to do it.
Indeed, particularly if one eschews chasing after some ephemeral and meaningless concept of "status".
The article repeatedly frames the professional class' decision making and motivation as pursuing status or in joining the ranks of the upper-class elite... Perhaps I live in a bubble, but this is not a trend that I observe at all among my peers, most of whom are (young) professionals.
> All those new workers are consumers for goods and services from America.
While this might be nominally true, our ability to sell into China is so asymmetric compared to their ability to sell here it might as well be nonexistent.
Has it grown proportionally to the labor force addition? Global GDP per capita should be be around $11000. And thats where its trending to for rich countries.
“ We have benefited I think, and we've had opportunities to invest and sell into those markets we wouldn't have otherwise had.”
The we in this case being those who have easy access to capital. Those who have seen their wages stagnate or jobs erased could care less about what happens to the citizens in another country when they themselves struggle to put food on the table.
Well, I'm one of the losers--my blue collar parents did better than me and most of my siblings. And I am genuinely happy for those who have risen out of abject poverty thanks to globalization. The fact is, there is no reason we couldn't have spread the costs and benefits of globalization across society.
Aren't there billions of people in the world outside of China who can continue to provide cheap manufacturing labor for decades to come? Also automation will begin to pick up any slack left by outsourcing. I don't think the blue collar jobs of the 70's and 80's are ever coming back. The knowledge economy is replacing globalization as the transformative economic force.
In a knowledge economy, the winner takes all, and that means more and more education is required to play in the big leagues, even as the big leagues become the only game in town. I believe only aggressive wealth and income redistribution like universal basic income can prevent a dystopian future of stark inequality.
Globalism has definitely supported the US tech industry significantly and wealth in cities that have tech giants. The internet was left basically open across borders, and I don't think that American tech's dominance would have been possible if everyone acted like China did by throwing up firewalls to protect local companies.
One big problem is GHW, Clinton, GW and Obama said we’d be able to sell into their market and we’d come up on top. That the middle class would see more and better jobs as a consequence (we’d graduate from arduous manual labor into more value add).
That’s been nonsense.
Perot was prescient and he was right. But we laughed him off the stage.
Instead, big biz, some bankers some dealmakers, politicians and other value add service professionals made money.
Joe and Jill Bluecollar and Cindy and Ted Middleclass saw an erosion in job prospects, income, job security and future prospects for their children. These people cannot afford the Chinese au pair to teach their kids Chinese.
These people vote for Bernie and they vote for Trump. The pols made that bed, so don’t cry when people vote for the above. It was a long time coming.
I don’t see how it’s any different, let alone “amateurish”. Clinton cleared the way for the internet to create as much wealth as it has (Telecommunications Act of 1996). Every President has had positive policies and negative policies, so we could play that game all day.
Acting like deregulating airlines and busting unions are on the same level is curious. One has created some new companies (and many corporate bankruptcies) while union busting and trickle-down economics helped lay the foundation for the income stagnation the article is largely about.
Clinton's policies have lead directly to these sorts of wealth imbalances. His deregulation of the financial industry is a large reason for the 2008 recession, his work with NAFTA left behind many of the working class, his welfare and prison reforms stole livelihoods from the poor, his CEO pay reforms lead to the massive increase in CEO compensation (mainly in the forms of stocks, which Clinton reduced the tax burden of by lowering capital gains tax), etc. Clinton's policies were neoliberal and largely skewed towards the wealthy.
Income stagnation is directly correlated to outsourcing and globalization. Union busting’s contribution to stagnation is sort of a side show. That’s to say strong unions cannot stop jobs from being sent overseas.
What good does it do you to have a union without members because all work has been sent overseas? None!
That’s Clinton and his MFN and fastracking into WTO. That’s who we have to thank as well as everyone who didn’t dare challenge that world view but rather cheerled it, including the Bushes and Obama.
You are taking theories and treating them as scientific facts.
Is it possible that weakening of unions made it easier for politicians to pass globalization policies which ultimately lead to wage stagnation?
Is it possible that trickle-down economics (lower taxes on the rich) lead to concentrated political power for the wealthy who were able to push policies that benefit them (Citizens United, Right to Work, stock buybacks, carried interest loopholes, NAFTA)?
Treating 40 years of economic history as a simple binary does nobody any favors. These things are very complex and deserve more than a brush-off.
I don't think I'd have GHW on that list - Clinton, sure, but during GHW's presidency we had pretty strict sanctions on China and investment in China was mostly curtailed.
Is that quite right? My impression is that it has been half-true, with part of the middle class doing better than ever and rising, while the other part did poorly & lost out. A bifurcation of the middle class.
Which was not unexpected, globalization always has losers. But we've failed to help them out.
"because Chinese labourers have more skills now and can command high enough wages in more upmarket jobs that they don't need the low end work any more"
I think what is happening is that the low-skilled laborers can now earn higher wages in service (such as online shopping delivery) because the higher skilled labor force can now command a higher income and generate demand for more service. The point is while the overall skill level is up it is not necessary for the low-skill section to also have higher skill in order to have higher income. This has already happened in the developed economies, but people here seem to look down on these service jobs and pine for manufacturing jobs.
The pause in growth (or rather the growth in inequality we got instead) have almost killed of our democracies stopping any real fight for a better future.
Was it worth it? I would say no. We all had a feast of our seedcorn and now we will reap what we didn't sow.
I was under the impression that automation has had a much larger effect than globalization. Unfortunately they both have happened in the same time period and are hard to disentangle.
The story of Rome’s fall is both complicated and relatively straightforward yet it eerily resembles America: The state became too big and chaotic; the influence of money and private interests corrupted public institutions; and social and economic inequalities became so large that citizens lost faith in the system altogether and gradually fell into the arms of tyrants and demagogues. If all of that sounds familiar, well, that’s because the parallels to our current political moment are striking. Edward Watts, a historian at the University of California San Diego, has just published a new book titled Mortal Republic that carefully lays out what went wrong in ancient Rome — and how the lessons of its decline might help save fledgling republics like the United States today.
Mortal Republic is not about the fall of Rome. It's about the fall of the Republic, or the transition from a republic (oligarchy) into an empire (monarchy). Rome in fact reached its largest extent about a hundred years after the fall of the Republic, under the emperor Trajan.
When people talk about "Rome's fall," they're usually referring to the decline of the western half of the empire which happened 400-500 years after the fall of the Republic. The reasons for this fall are debated, but it's likely due to some combination of plague, invasions, elite infighting, and a lack of rules about succession leading to constant civil wars.
One could consider Americans poisoned by something, considering that 40% of the American population is obese (not just overweight) and sperm count has declined 50% in developed countries over the past few decades.
Hmm... is the sperm count stat normalized to the obesity problem? I keep hearing things about America’s declining health, some of which seem to be “mysterious” and concerning. But then I’m always reminded that a lot of it is just people being fat. People being fat sounds like a highly probable culprit for why sperm counts are dropping on average.
Just as an additional data point to the conversation, I didn’t know who the author was (I don’t live in the States) and I think this was my first time visiting the website on which the article was published, and as such I thought the author was more on the left of the political spectrum.
I didn't know who he was either, and regardless it's possible for him to be both alt-right and on the mark in this article (although I assume that I had a similar response to you, I was a little disconcerted to see him described as alt-right).
In my limited experience huge swathes of the so-called alt right are, regardless of their other political positions, just as dismal about their economic future as the young left, and they have no illusions about concentration of capital, etc, since the 80s and have drawn similar conclusions.
I understand a little of what you're saying in your second paragraph, and personally I prefer the term 'working poor' instead of 'working class'. Since people these days can work 3 jobs and still be poor. But these kinds of definitions are not what should be focused on. I think you're missing the forest for the trees.
I see no evidence for the argument you make in your third paragraph. Nor do I understand why you read this as some neo-fascist trick on class consciousness.
You would have to understand class in the academic sense, as opposed to what you've been told your entire life, so being confused is entirely understandable.
Class is a term that relates to an individual's relationship with the means of production in a society. The means of production is the capital property, of course, the businesses, the factories, productive agricultural land. This relationship is material, meaningful, and provides a precise description of class in society.
Class is not about whether you swing a hammer or use a Macbook.
Hacker News comments are not the appropriate place to learn or teach any of this, because quite frankly I'm tired.
The Communist Manifesto is twenty pages. It's available freely online. Yes, it's greatly simplified propaganda from the 19th century. That said, you should take an hour to read it, and then hit up Wikipedia, look for counter arguments, whatever, make up your own mind - once you do, see if you come back and believe that Krein knows much of anything at all.
While Krein used to support Trump, he decisively abandoned him after Charlottesville and calling him alt-right now doesn't seem founded in fact: https://en.wikipedia.org/wiki/Julius_Krein
To be frank, I think your sort of self-satisfied academic left rhetoric is a large part of the problem, and so you are so in love with it that you've fundamentally misunderstood the writer's argument, which is a great deal closer to your position than you seem to realize.
It looks like you've been using HN primarily for ideological battle, which is against the site guidelines (https://news.ycombinator.com/newsguidelines.html), and we ban accounts that do it. The flamewar style doesn't lead to interesting internet discussions, it leads to boring and nasty ones, so please don't do it here.
The gap between the haves and have nots that will cause problems is between 0.1% and 90% to 99.9%, rather than the gap between 10% and 90%. I think.
And there is a lot of misallocation of resources as people try to hold onto their percentile, or spend an inordinate amount of resources trying to climb to the next one. I think.
The US has healthy capitalism, and a separate theft by crony capitalism. GDP growth is stolen away from workers to investors. Crony capitalism has completely spread across the pharma industry, medical, banking, and so much more.
US congress men and women sell out on the key areas where crony capitalists need their laws changed.
The top 0.1% consists mostly of top 1% folks having a windfall, and the top 1% is mostly top 10% folks having some good years. These aren’t really separate and distinct classes of people as is popularly imagined
> The performance gap between the top 1 or 0.1 percent versus the top 10 percent is actually larger than the gap between those right at 10 percent and any part of the bottom 90 percent.
> The top 0.1% consists mostly of top 1% folks having a windfall, and the top 1% is mostly top 10% folks having some good years. These aren’t really separate and distinct classes of people as is popularly imagined
They aren't "separate" in that we're not literally a feudal society. Sure, I can agree that an ordinary engineer has a chance of making it big on stock options and becoming a multi millionaire.
But that's not common. It's like winning the lottery. You can't plan to join a startup that will make you a millionaire, especially if you aren't a software engineer or aren't living in silicon valley. And for everyone else, the gap between the 0.1% and the 1% and the 10% is widening.
The key thing here is that most of these measures are measuring income, not wealth. The graphs in the article definitely show income.
And what that means is that "top 0.1%" or "top 0.001%" is not the same group year to year. Especially given the way capital income is handled: in the year when you sell a bunch of stock, or sell a house, or whatever, you suddenly move much higher in the income distribution, but just for that one year.
To make this concrete, let's look at the "top 1%" of the population in the sense that their income is consistently in the top 1% of incomes (let's ignore lifecycle effects for now, which throw extra wrenches into the works). These people buy houses, then sell them at some point. I really doubt they average more than 20 years between sales, so in any given year at least 5% of them are selling houses. Any such house sale is likely accompanied by significant capital gains (from inflation, if nothing else, though the real estate markets in various places have been helping, of course). In what fraction of cases are those capital gains enough to move you into the 0.1% for that one year? What fraction of 0.1% incomes are then due to "top 1%" people selling their house?
If we were tracking lifetime cumulative incomes here, rather than annual incomes, we might be able to say something more useful. But a significant part of what we are seeing in the data is that income at the top has become more volatile, so when you get taxable events those taxable events are larger than they used to be.
Now of course the gap between someone who consistently makes a "0.1%" income and someone who consistently makes a "10%" income has in fact been widening. But I'd really like to see some data on how big those classes of people are. Consistent "0.1%" income accrues to _much_ less than 0.1% of the population, from everything I've seen.
Virtually every problem listed in this article is solved if bitcoin continues its historic rise - and yet you mention bitcoin on hacker news and you're down-voted to oblivion, it really is unbelievable.
The "Elites" are getting richer because capital is being used to accumulate more capital through dividends on stocks and revenue producing assets. The only reason money is being funneled into these assets is because they have the best return on investment, period. Money goes where it can get the best return.
The script gets flipped if that asset is a hard, un-inflatable asset like bitcoin with a built in scarcity mechanism.
Bitcoin doesn't have a dividend, if you're part of the 0.1 percent you can buy a ton of it, but in order to realize any gains you have to sell it and if you can't replenish it you'll have to go back to work to earn more.
Of course all of that is in theory, a lot of the truly rich people in this world have income producing businesses and other assets aside from stocks but you could argue that that's a lot better than money simply producing more money.
I can't tell if this is a parody post or not. But I will try to understand it.
> Bitcoin doesn't have a dividend...in order to realize any gains you have to sell it
So...like gold and silver? We've already had those for millennia. We've also had inequality for millennia - and at times it was way worse than it is now.
> The script gets flipped if that asset is a hard, un-inflatable asset like bitcoin with a built in scarcity mechanism.
I'm trying to understand this. If everyone puts their money into Bitcoin, inflation won't eat the value of their money so they won't try to increase it by investing into dividend-producing businesses? Otherwise how is this "script" "flipped? I don't understand this line of reasoning.
Also if lots of people pull money out of dividend-producing businesses and put it into Bitcoin, the prices of those assets will go down which will make their returns even better. So it seems like it would cause more of the thing ("elites" putting capital into revenue producing assets) that you're saying is the problem here.
> a lot of the truly rich people in this world have income producing businesses and other assets aside from stocks but you could argue that that's a lot better than money simply producing more money.
Money simply producing more money is bad, but selling appreciated Bitcoin to make money is good? I don't see the difference between the two. And flipping Bitcoin is better than using fiat money to start businesses that produce value?
Like maybe you have a good point but I have no idea what you're trying to say or how it relates to TFA.
> yet you mention bitcoin on hacker news and you're down-voted to oblivion,
Maybe only mention it on articles related to Bitcoin or other cryptocurrencies?
> The world desperately needs bitcoin to succeed.
Given the already-well-known environmental cost of mining Bitcoin, one could argue that that's the last thing the world needs.
Yes, except gold and silver don't scale. Bitcoin scales, it's almost infinitely divisible and can be traded without a third party on the internet. It's Gold 2.0.
> I'm trying to understand this. If everyone puts their money into Bitcoin, inflation won't eat the value of their money so they won't try to increase it by investing into dividend-producing businesses? Otherwise how is this "script" "flipped? I don't understand this line of reasoning.
No, but if bitcoin proves to be the better investment (which it has over the last decade of its existence) people will put their money where they can get the best return. Bitcoin is still largely unproven and considered risky but the more times it increases exponentially in value the more stable and secure it will seem.
To put it another way - If I had 1 million dollars ten years ago conventional wisdom would have said the absolute best place I could have put it was either the stock market or into real-estate. Looking back obviously there would have been no better place to put it than into bitcoin but nobody knew that back then.
The more people who move their investments away from "Conventional" investments like real-estate and into more inclusive assets like bitcoin the better it is for society as a whole. It's well documented that one of the big reasons silicon valley is so expensive to live in is because Chinese investors are moving in and purchasing real-estate just to sit on, good for them, bad for people in the area who get no piece of that economic action.
I could go on and on. I'm not going to pick apart every point you made but I certainly can, I think you'll see the light in a few years when bitcoin does what it does and skyrockets again.
Can I ask you this though: Do you think bitcoin will gain in value from this point on or do you think bitcoin will fizzle out, and why do you think that?
> Do you think bitcoin will gain in value from this point on or do you think bitcoin will fizzle out, and why do you think that?
If I knew the answer to that, I'd be off making money rather than arguing with random strangers on the Internet :-)
Gold and silver have valid (if limited) practical utility and thousands of years of history as stores of value. Bitcoin has neither. And gold and silver only became synonymous with money and value once they began to be used in coinage i.e. as a currency, issued by the state, and you could pay taxes with it.
Your thesis is "Bitcoin is a good investment because it appreciates". It doesn't answer "why does Bitcoin appreciate?". Practically everything that can be called an "investment" or "asset" has at least one of two properties:
1. has practical use
2. generates income
Say all you want about investors buying up houses and driving up prices (and the Bay Area's housing problems run deeper than that), but they're getting an asset that has actual value. Even if people stop believing in the value of houses, a house will still shelter you, and afford access to good jobs and/or surroundings/weather.
I'll grant you that Bitcoin has one property that can't be found anywhere else. It's a store of value that can be exchanged without intermediaries. So it has exactly one practical use.
But the point of a store of value is to...store value. The idea that "someone will pay more for this later" has been the basis of innumerable bubbles and crashes throughout history - as recently as the Great Recession to as far back as the Tulip Mania, and probably farther still. Volatility isn't a great property for a store of value to have, because most people don't like crazy gyrations in their net worth every day.
And if Bitcoin isn't a store of value, but is a currency instead, then it has a different problem. As you said, it's non-inflationary. So people are incentivized to hang onto it rather than spending it.
> Looking back obviously there would have been no better place to put it than into bitcoin but nobody knew that back then.
Past performance is no predictor of future performance. Someone putting a million dollars into Bitcoin in 2017 would be pretty sad right now. People believe in the stock market, not (just) because of its past performance, but because it represents companies that deliver actual, real-world value.
> Bitcoin doesn't have a dividend, if you're part of the 0.1 percent you can buy a ton of it, but in order to realize any gains you have to sell it and if you can't replenish it you'll have to go back to work to earn more.
You're describing all forms of currency. You can still buy stocks with Bitcoin and receive dividends in Bitcoin. Bitcoin is worse in this regard because you don't even need to invest it for it to grow in value. You can literally get rich from hoarding it.
Oh god, I'm hardly describing all forms of currency, quite the opposite actually. All currency is fiat and artificially inflated which is actually the root of the problem entirely.
And yes by buying and hoarding bitcoin you can make yourself very rich - that's the point.
There is a pervasive idea in the article that the entire financial-political loop system is rotten, rusty, zombified, unproductive, stagnant, indifferent, overall totally useless. Yes, that makes a good case for a total reboot of the global financial system.
Do you really think the elite would accept any threat to the status quo without a fight? Besides, even if you were to somehow succeed, the scarcity of bitcoin would just be the new elite. Bitcoin ownership is already incredibly concentrated. Meet your new boss, same as old boss.
You're always going to have people in life who have more than other people, life is inherently unfair, there's always going to be a 1%. You can put measures in place to ensure that the gap doesn't widen too greatly, but that's a different discussion.
It's true that bitcoin creates a disparity in ownership, but you can't actually realize any gain unless you sell what you have. If I'm accumulating and holding bitcoin, that's good for me and everyone else who's accumulating and holding bitcoin because it keeps the price up. If I sell bitcoin at a profit, that's good for me but bad for most other people, but I also lose my position and the price goes down to allow others to enter into the market.
There's no incentive to sell with dividend producing stocks and real-estate because they produce money, if you're strictly speaking about money begetting more money then that's the problem.
The middle class can gain a strong foothold in bitcoin in its nascencey, the elites aren't willing to give up their income producing assets but if bitcoin continues to multiply by 5-10X every four years like many expect it to then that gives the middle class incredible leverage to move up the economic hierarchy like we've never seen before.
I actually think this is how the next decade will play out, bitcoin will continue its historic rise and we'll see economic changes like we've never seen before. Bitcoin is going to restructure the way the economy works over the next decade or two.
Millennials will be able to pay off their loans, they'll be able to buy houses and many will become the new "Elite" until something else comes along.
> At most, working-class voters can cast their ballots for an “unacceptable” candidate, but they can exercise no influence on policy formation or agency personnel, much less on governance areas that have been transferred to technocratic bodies.
> Unlike the working class, the professional managerial class is still capable of, and required for, wielding political power.
I've never seen actual grassroots activism accomplish much, if anything. Protests in DC are like rain; bring an umbrella, but no need to pay it much attention because it will blow over in no time. It's always insiders who make a career out of policy that ultimately shape it. Hill staff, think tank wonks, professional bureaucrats, etc--it's that professional Washingtonian class that really shapes the government's policy, because they are the ones that show up to do that work every day.