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Isn't the vast majority of the true problems caused by not enough supply of all KINDS of NEW housing being built to accompany both massive population growth (including immigrants in some areas), massive wealth increase among the global rich (who can now own multiple empty properties in marquee cities), landlords eating up more of your income AND in the US case government rules and regulations creating a predatory medical system that consumes over 18 percent of GDP.
In the 70s a blue collar worker could buy a house and look after their family. Now we have massive asset price inflation due to low interest rates and not enough growth in housing assets. This can lead to future social unrest on a massive scale (not just occasional riots/protests).
There are many places in the US where a _skilled_ blue collar worker can buy a house and look after a family. But HN users tend to have a distorted perspective since most of them live in the SF Bay Area and other expensive areas.
Where? Where in the US can someone live on blue collar salary and afford a mortgage?
Most small and mid-sized cities? I lived in Mobile, Alabama for a couple years. I rented an awesome 1,400 sq ft place with power, gas and water included for about $600/mo.
Looking at that same street on Zillow it looks like there are a few 3br 2ba homes for around $200,000.
Most of the US, I'm guessing. There are 53 million people living out in rural areas. The vast majority aren't college educated.
People just live on a lower standard of living and get by with less. For example, my sister just bought a $28,000 3 bedroom house. It's a boring old company home, in a boring and uneducated area of the country. But, she has lived there all her life and enjoys the people and culture.
One of the properties I own is in Reno which is a 4hr drive from SF. It's a 2br 1ba condo which Zillow estimates $207k. It's nice, fully remodeled. That would be $900 mortgage + $180 hoa + $50 taxes (?) = ~$1200/mo ?
Make $20/hour like most folks in this working class neighborhood do and you are all set. Get a roommate or a spouse that works part time if you can't earn $20/hr.
Enviably close to Tahoe, too.
Generally speaking, the US population is quite concentrated. 66% of people live with-in 100mi (160km) of a border:
*
https://www.aclu.org/other/constitution-100-mile-border-zone
A sizeable portion live on the coast:
> _As of 2014, nearly 40% of the population lived in counties on the coast._
*
https://oceanservice.noaa.gov/facts/population.html
So presumably there's a decent amount of space 'in the middle'.
Plenty of places in the Midwest/South if you're a tradesman. Obviously a McDonald's worker or Starbucks barista is probably not going to be able to afford a mortgage.
I agree with you, speaking from experience with family. But I also see the spillover from the coasts as threatening this. The "wealthy refugees from the west coast" has become a real thing.
Maybe it's all about [over]population and age distributions.
Then spend all their retirement on medical care for their broken body.
We treat each other like animals no matter the job.
Moral relativism has never gone anywhere. It was black people, and women, now it’s just poor people.
Still flogging Anglo gibberish law when it’s clear it’s all just biological need being held hostage by political corruption empowering cliques like a fucking high school
This is _obvious_ because? We certainly have the wealth for it.
You are free to tip until they make whatever you consider a sufficient wage. "We" should start with "you".
Tipping is the worst culture possible for work environments... Make someone's salary hostage to the whims of patrons, what a lovely way to live.
> Where? Where in the US can someone live on blue collar salary and afford a mortgage?
Most places that aren't deep blue cities. That seems like hyperbole but is true.
Picking just a few cities, the median house prices/sq footages are:
- Houston, TX: $238K, 2031 sq ft
- Indianapolis, Indiana: $196K, 1853 sq ft
- Oklahoma City, OK: $152K, 1455 sq ft
- Atlanta, GA: $399K, 1586 sq ft
Each one of these places has a cost of living (excluding real estate) less than 50% that of CA as a whole. All >1M size metros.
The most expensive, Atlanta, has a combined monthly payment inc taxes of $1700 a month on a 30-yr. That's $20,400 a year. Median plumber salary in Atlanta is $63K a year, so this would be 1/3rd their income.
Once again, that's _median_ salary and salaries rise sharply at mid-career, and _median_ home price.
Yes, there are many places like that. Alas, there's almost no overlap between those places and the most productive parts of the country.
GDP would be enormously increased, if eg more people could move to New York City or Silicon Valley.
See also
https://www.mercatus.org/publications/monetary-policy/shut-o...
GDP would be increased if more people moved to NYC or the Bay Area? That's like saying if a company just hired more people they could make more money. It doesn't work like that.
It's not just about the jobs. There are enormous economies of scale to living in cities. Distances travelled are shorter, stores do higher turnover(meaning fewer of them per capita), and multi-family housing is cheaper to heat & maintain to name a few. Urbanization is one of the most tested ways of making people richer.
The problem historically has been the distribution of that additional wealth. It's common to see cycles of increasing rent seeking, followed by de-urbanization/migration, and then a gradual return to cities.
Not sure how "rich" people feel trading a single family home on a quarter acre for a 800 sq ft 2-bedroom house. I've lived in plenty of dense urban cities in developing countries and they live that way because they can't afford better, not because it's ideal.
Yes, that's a trade-off that people have to decide for themselves.
Though if more and higher construction were legal, they could afford a bigger place in dense urban cities, too.
(Of course, the number of plots for single family houses is limited. But there's no limit to how big your apartments can be, if you are willing to stack them.)
I mean it actually does. Concentration leads to much higher economic growth. Both in absolute terms and per capita.
Ive seen this stated a lot and I'd be interested in where this idea comes from/ where it's been validated. I don't know if there's studies or something like that but I think it'd be useful to the conversation to add how we know that. Thanks
You can start with eg
https://en.wikipedia.org/wiki/Economies_of_agglomeration
Aren't most of the big tech companies in the Bay Area located in the suburbs?
Sort-of. If they legalised construction in the area, many of those suburbs would turn into cities.
Or would GDP be increased more (and more evenly distributed, both geographically and demographically) if the jobs in NYC or SV were all required to be remote? Imagine if every small town in the country had HN types bringing money into the local economy instead of taking it out.
No.
Increase in GDP means that someone is making more money. And you seldom have to _require_ anything to get people to make more money. Companies and workers already have the option to negotiate remote working arrangements. And had for a long time.
> Imagine if every small town in the country had HN types bringing money into the local economy instead of taking it out.
They'd just take it out to another 'local' economy. What makes some random spot more deserving than some other random spot?
And in any case, on a macro scale there's basically as much money in the national economy as the Fed wants there to be.
If there's some process that makes money magically vanish (eg perhaps those wacky foreigners selling you goods but then just burying the cash you pay them, instead of spending it), then the Fed will just issue more money to make up for the shortfall.
Similarly, if those foreigners dig the money back up, the Fed will just sell a few items off their balance sheet to soak up the extra money.
You are responding to arguments about GDP with arguments about money supply.
Inflation adjusted GDP is a completely independent measure/concept/entity/quantity from money supply.
Sorry, there were two strands of argument I was replying to. That might have gotten a bit confused.
The first was about real GDP, and natural incentives vs legal requirements.
The second was about money supply vs worrying about keeping money in the local economies.
Milton Friedman made a good career proving you wrong with his helicopter money. Dumping cash in human hands has real effects beyond increasing the price of everything.
(I agree that the parent comment is unconvincing.)
I think we are in agreement.
They are independent entities as measured state of an economy at single points in time. Money supply doesn't tell you what GDP is, or vice versa. Normalizing GDB for inflation is about removing even that connection.
But as far as the dynamics of an economy everything is related to everything. Changes happening to one spill into effects on the other, although as we both know, often not in a simple way.
"the most productive"
Productivity is really mostly a measure of value capture.
So when we say 'productive' we can just mean 'rich people in specific companies hoarding profits and income' and then assume that this is 'productive' by the more common definition.
The problem is that those areas may not quite be more 'productive' per say, but that there's a power imbalance.
I believe that actually they are more productive, but the White Collar workers are playing on a global scale, but the plumber can still only work on a local scale.
It probably would require a 'multi pronged' solution of tweaking taxes, services, building more homes, upping the interest rate, getting companies to spread out a bit etc..
No thanks. There's more to life than maximizing GDP. We don't need to cram ever increasing numbers of people into a couple of geographically constrained metropolitan areas.
People have preferences and agency.
Those people who want to be crammed (in return for higher income) should be allowed to cram.
As a nice side-effect, that leaves more of the rest of the world free for non-crammers.
in the 70s, blue collar workers were not competing with 2 billion workers that were happy to 2 bucks an hour.
Back then those hungry masses would have been ecstatic about 2 bucks a day.
China and India (to take just the two biggest countries) have become massively more productive and massively richer since those bad old days. Thanks to their integration into the world economy, today blue collar workers can afford riches undreamt-of in the 1970s.
>today blue collar workers can afford riches undreamt-of in the 1970s.
All the luxury you could dream of, as long as you don't dream of a home or medical care.
Yes, but we know why these are screwed up. And it's not because of foreign workers.
For medical care: 1970s style medical care is basically outlawed today, and there's lots of regulation. Eg if you want to open a new hospital, the existing hospital in your area that you would compete with have veto rights, and use them. See eg
https://slatestarcodex.com/2017/02/09/considerations-on-cost...
or look for 'Certificate of Need' in
https://slatestarcodex.com/2016/12/04/highlights-from-the-co...
For housing: see eg
https://www.mercatus.org/publications/monetary-policy/shut-o...
Basically, building houses used to be legal in the 1970s. Now it's illegal in many parts of the US.
They're screwed up because of wealth inequality and rent seeking.
Essentially they're screwed up because American union power was destroyed by oligarchs and blue collar workers subsequently lost political representation.
"Everything bad is caused by government regulations!" was a story told repeatedly in many different forms by lavishly funded Koch think tanks (mercatus, which you cited, being just one example) and filtered through other oligarch run mainstream media outlets.
It was inspiredly largely by their battles with their nemesis - the EPA in the 70s/80s and was largely successful at promoting the "overregulation = bad" meme amongst the American proletariat. This was subsequently leveraged by Koch-funded politicians to democratically strip EPA regulations on their behalf.
> "Everything bad is caused by government regulations!"
Who said that? I mentioned two things that are bad because of regulations. But that doesn't mean that regulation is to blame for everything that's bad. Eg try as they may, regulation isn't what's keeping me from running 100m in 10s.
> Essentially they're screwed up because American union power was destroyed by oligarchs and blue collar workers subsequently lost political representation.
Huh? American auto union just got the fisc to pay them about four thousand dollars per electric car they make. I'm not sure how they lost political representation.
>Who said that?
It's a common theme in the source you linked to which I gave the Koch backstory for.
>But that doesn't mean that regulation is to blame for everything that's bad.
Clearly not.
>Huh? American auto union just got the fisc to pay them about four thousand dollars per electric car they make.
The Build Back Better Act hasn't passed yet.
> massive population growth
The U.S. population growth rate right now is easily the lowest it's ever been, except for the 1930s.
Agreed that housing and medical constriction are a big part of what's going on.
Major cities are still experiencing a rate of population growth much higher than the national average.
Yes, though in a national context you'd probably call that migration, not population growth.
And it's a shame that it ain't larger: people migrating to more productive areas of the country is one way to increase the standard of living.
Same thing that happened to Japan - population shrinkage combined with migration to the cities.
I get the impression housing prices aren't a big deal there?
If housing were the problem you wouldn't see parallels in other countries that have vastly different housing landscapes.
Big societal problems don't have one simple solution because if they did they'd be solved and they wouldn't be big societal problems.
> If housing were the problem you wouldn't see parallels in other countries that have vastly different housing landscapes.
Well, have you looked at those other countries?
Housing become more expensive has been a fairly broad trend in many countries. Looking at specific examples (and looking at their other problems) is instructive, indeed.
Housing price inflation is definitely a trend across many developed countries. But it's not universal, or at least uneven. I haven't researched data for this specifically, but a broader trend might be the bifurcation of labor into creatives and non-creatives (or some similar rough dichotomy), with the former seeing faster income growth than the latter. Such a phenomenon would readily explain housing price inflation while also being an obvious consequence of globalized labor markets depressing most strongly income growth for non-creatives.
But labour markets aren't globalised. We have strong restrictions on migration all around the globe. Some goods and services are tradeable, but also with some legal restrictions.
> Some goods and services are tradeable
Most goods are tradable, and for decades now manufacture of consumer goods relocates relatively quickly in search of low cost labor. This leaves a surplus of workers behind, suppressing wages in industries with low costs of entry--remaining manufacturing but especially non-professional services.
IOW, labor markets are strongly globalized from the perspective of capital. A little less so from the perspective of laborers, though their wages remain stagnant all the same, so in many ways it's a distinction without a difference.
The four major black holes of modernity are not the result of incorrectly tuned policy levers but the result of fundamental cultural blindspots. These four areas: education, medicine, housing, and prison, all relate to one central problem. An incoherent philosophy when it comes to the concept of 'responsibility.' When I say black holes I mean that they are capable of sucking up arbitrary amounts of capital as we fight over them fruitlessly. And to be absolutely clear: the claim here is not that personal responsiibity should be 'higher' or 'lower' (whatever those mean) than they are now, that's what I mean by fighting over them. I genuinely mean that the incoherence of the concept itself is the problem.
Consider the following questions:
how responsible is a criminal for their actions?
how responsible are young people for making good decisions about their education?
to what degree are NIMBYs responsible for the housing crisis?
how can externalities of housing be assigned responsibility to various parties?
does the medicalization of problems, and thus the denial of agency lead to more problems than it solves?
You've seen debates about these and they never go anywhere because there aren't final answers. There is no algorithm for 'blame' that is perfectly equitable. Neither holding people to high standards nor relaxing those standards is stable or workable. Reality is always multicausal and situations are different. The traditional answer to this is the discretion of judges to adjust to what is happening. But law still has to deal with the fundamental incoherence and it has been deprived of one of the historical ways it has dealt with it. The idea that different people might have differing capabilities to take responsibility for things, whatever the reason, is in untenable tension with the notion that all men are created equal. We have a few categories that recognize that not everyone can hold the same privileges such as child, felon, or legally mentally unable to grant consent. There are also the only semi legible ways that money and access grant privileges while that very same hidden nature frees the beneficiaries of any responsibility for the poor exercise of said privilege.
Now we're seeing other countries find their own ways forward in creating a tiered society like China's social credit system or the soft classism of inscrutable and gameable admission to elite colleges (whereas before lower class people got in on merit). These are terrible solutions and we had better find better ones before the march of history declares a shitty winner for us. We can find a way to more tightly couple privileges and responsibilities or we can continue reaping the externalities of allowing incentives to drive a stronger wedge between them.
Interesting ideas. If I understand what you are saying, it's that we don't have a great way of attributing cause/effect, and therefore it's difficult to assign merits or demerits in society?
1) "Reality is always multicausal" i.e. the "responsible causes" of an event are a myriad of factors and 2) the law / insurance system have to assume that there is just 1-2 causes, so that blame and deserts can be meted out?
I'm curious what you think about alternate "unified theories of modernity's problems", such as Georgism (
https://en.wikipedia.org/wiki/Georgism
) or racial inequity / colonialism, and how might you attempt to convince a believer of these alternate views that your theory is more correct.
Georgism seems obviously helpful.
Another, simpler (and therefore potentially attracting the wrong kind of response) way of getting at the crux:
There's a reason much (maybe even most) anger on the left revolves around a perceived denial of the existence of privilege, and perhaps most of the anger on the right ultimately boiling down to a perceived denial of the existence of responsibility.
> There's a reason much (maybe even most) anger on the left revolves around a perceived denial of the existence of privilege, and perhaps most of the anger on the right ultimately boiling down to a perceived denial of the existence of responsibility.
Interesting. How do you use this "unified" framework then, to come up with your own political opinions? (as opposed to, say, post-modernism variants like critical race theory)
Georgism's ideals of free markets and efficient taxation are good, and supported by modern orthodox economists.
But Georgism's explanation of eg business cycles is rubbish.
I'm finding it interesting that all of the comments so far seem to have drawn very different conclusions about what the article was about. I think this article has many unique viewpoints that people aren't used to and think of the point that stuck out to them the most as "the point" of the article
As a leftist Asian-American who recently went through US university, I found much of it to be alarmist and incongruent with my own experiences and observations. I was unsurprised to see it was written by a European conservative think-tank. It's definitely unique, but I wouldn't say it's convincing.
There was no "wokeness" at my midwestern engineering state university. In my opinion, the best solution to the increasingly out-of-reach American dream is just to build millions of apartments in cities where housing is very expensive.
To me it’s clear in the concluding paragraph:
> The situations of Asian countries and the United States differ subÂstantially in the details, but both face the same core problem: how to offer as many people as possible a decent job with a family wage.
The argument is everything stems from this failing (declining birth rates, cutthroat testing culture, woke language games to signal elite status etc)
The article itself lurches all over the place and takes some bizarre turns - e.g. the weird conspiracy theory thrown out about how attempts at more egalitarian college admissions are simply a backhanded dig at Jews and Asians, the barely concealed indignation at anything "woke" and the re-definition of elite to mean "literally anyone with a college degree".
The views he holds seem pretty average among worried Beltway center-right elites (actual elites), although not in any way representative of average Americans.
Agree with most of your analysis. However, one place I take issue with is your claim that "the weird conspiracy theory thrown out about how attempts at more egalitarian college admissions are simply a backhanded dig at Jews and Asians". Given that we have it on good historical evidence the up and rising Jewish population in elite colleges in early 20th century made Caucasians in those institutions feel threatened, which caused them to change applications to add extra-curriculars as a metric, which was the mechanism to decrease the number of Jewish students admitted---given it's played out this way before where a rising racial minority group has been discriminated against in favour of White applicants, surely you cannot blame people for suspecting the admission process is again being made (a) less meritocratic, (b) decreasing number of Asian and Jewish admissions, and (c) increasing White admissions all in the name of racial equity?
Except A) there's no evidence for it and B) it's not the early 20th century any more.
Other than that, yeah, I guess it's a cast iron indictment of woke politics. Or at least the most scathing indictment the author was intellectually capable of.
yes it's a good piece. As a non-American reader I'm kind of impressed with the stuff they're putting out because they're representing a much missing view in US discourse which is a Marxist economic point of view for a Conservative audience, basically what you'd call a 'Red Tory' in the UK or a 'Christdemokrat' in Germany.
It's getting people to think and at the same time it's also a reasonable antidote for the 'culture-war' steeped people.
I've been reading a Neil Gaiman book to the youngest kid every now and then which goes like:
Ladies of Light & Ladies of Darkness,
& Ladies of Never-You-Mind,
this is a prayer for a Blueberry Girl.
First, May you ladies be kind.
…
Dull days at forty, false friends at fifteen;
Let her have brave days and truth.
Let her go places that we’ve never been;
Trust and delight in her youth.
And then I read stuff like this, or articles about the grim reality of private schools (
https://www.theatlantic.com/magazine/archive/2021/04/private...
), and I wonder … how did we get here? is this what it means to want your kids to go places we've never been? Is this ... good?
From Flanagan's Atlantic article:
Why do these parents need so much reassurance? They “are finding that it’s harder and harder to get their children through the eye of the needle”—admitted into the best programs, all the way from kindergarten to college. But it’s more than that. The parents have a sense that their kids will be emerging into a bleaker landscape than they did. The brutal, winner-take-all economy won’t come for them—they’ve been grandfathered in. But they fear that it’s coming for their children, and that even a good education might not secure them a professional-class career.
…
Daniel Markovits, a professor at Yale Law School, coined the term meritocracy trap—a system that rewards an ever-growing share of society’s riches to an ever-shrinking pool of winners. “Today’s meritocrats still claim to get ahead through talent and effort, using means open to anyone,” he has written in these pages. “In practice, however, meritocracy now excludes everyone outside of a narrow elite.” This is a system that screws the poor, hollows out the middle class, and turns rich kids into exhausted, anxious, and maximally stressed-out adolescents who believe their future depends on getting into one of a very small group of colleges that routinely reject upwards of 90 percent of their applicants.
Is that all there is? Is it just, work work work, get the kids into a good school, line up their tutors and extracurricular enrichment, watch them graduate, maybe meet the grandkids, die?
Why do so many people want this so much?
> Why do so many people want this so much?
Because material success is all that exists in their worldview. What a depressing form of nihilism.
Not everyone does — many of us are enjoying our lives rather than writing about them. These stories of job anxiety are _dramatic_ and that sells ads. What they don’t show you are the corporate middle manager who does the 9-5 and ducks out of work at noon on Friday to go ride dirt bikes with his kids.
Student loan forgiveness may be a handout to a certain sector but it's a way to shape the economy. The problem the US has is vastly expanded educational sector that's also, uh, crap. A more rigorous but less inflated system would be appropriate. But how you get that is hard to see.
The thing is, you have huge sectors; education, public transit, health care etc, that would be reasonable to improve but where privatization based capital investment have resulted in huge, costly and, well, shitty systems.
The only way out is removing a huge group of corrupt operators at the heart of each of these sectors. I don't know what hope there is of this tbh.
Yes, student loan forgiveness would bloat the education sector even more.
You could shrink the education sector by removing subsidies and tax discounts for it. (Of course, that's politically hard to do.)
> The thing is, you have huge sectors; education, public transit, health care etc, that would be reasonable to improve but where privatization based capital investment have resulted in huge, costly and, well, shitty systems.
I'm not so sure. Eg talk to any 'right-thinking' Brit and they will tell you how horrible British Rail privatisation was. Then compare the graphs in
https://en.m.wikipedia.org/wiki/Impact_of_the_privatisation_...
See also
https://www.econlib.org/library/Enc/SurfaceFreightTransporta...
and
https://www.econlib.org/library/Enc/AirlineDeregulation.html
Or look into the recent-ish success of German legalising long distance bus travel.
> student loan forgiveness would bloat the education sector even more
this is remarkably one-sided
How so?
If you replace the slightly loaded term 'bloat', you would get something fairly unobjectionable:
'Forgiving loans people take out for an activity, would lead to more of that activity.'
Or what do you mean?
I agree with your sentiment. I would fine tune the wording too:
'Forgiving loans people take out for an activity, would lead to more demand and greater price appreciation of that activity.'
I think the great harm was disconnecting students from the immediate consequences of their educational spending with easy to get loans.
That economic disconnect has made it ever easier for schools to charge more for less actual value. Whether in poorly directed education (exceptional education in areas with poor career potential), or simply over priced (top heavy admins, and other overhead or expenses beyond providing actual education).
What do you mean by 'appreciation'?
Appreciation means it would increase (i.e. appreciate). Price appreciation = it will cost more. Essentially saying if you give people a bunch of money for X, the going rate of X will increase as that's how supply and demand work.
Price increases. Easy student loans remove a lot of pressure from qualified education providers for keeping their prices/expenses down.
My rephrase of a key take-away point: As long as the underlying incentives remain misaligned, individual policy changes aimed to disrupt the competition landscape across the board would inevitably play the whack-a-mole game.
How can an article about "elite competition" not mention anything about how, during a few decades in the 20th Century, labor's share of profits increased, and since 1980 has flatlined, with all rewards accruing to capital?
What analysis of elites doesn't include reference to Rupert Murdoch and Charles Koch?
The author seems to get that the ruthless competition in our world is destroying lives, but he seems to blame the competitors and those who seek to improve things.
>What analysis of elites doesn't include reference to Rupert Murdoch and Charles Koch?
Analysis is a bit generous. It's a retread of some pretty stale ideas. It's flagship idea is a redefinition of the word elite to include "even a college degree holder working at Starbucks".
He doesn't outright say it because it's so transparently self serving but it's very obviously painted.
Rupert Murdoch and Charles Koch would approve.
It's a reactionary piece designed to protect and promote elite power by, in essence, rhetorically disguising it.
It mirrors somewhat the way that "boomer" has cleverly been positioned as a sponge for the post-occupy fury directed at the 1%.
That's a bingo.
If there's a list of elite billionaires you'd like bashed on in a piece like this, why limit it to arbitrarily to Murdoch and Koch? Respectfully, your political biases are coming through just as much as the author of this article's.
The media and communication spending efforts of these two families were instrumental in electing specific individuals that directly enabled the shifting of GDP accrual from labour away to capital. (In particular getting people elected who reduce corporate tax/capital gains tax/upper-decile income tax, limit unions, limit minimum wages and individual social protection.)
Yes, lots of other billionaires are individually union-busting, underpaying, colluding against workers in their companies - but the ones above suborn legislation in multiple countries to do it for them.
Rupert Murdoch owns the centerpiece of the right wing media empire and has used it relentlessly to radicalize right wing people and undermine democracy.
Charles Koch is one of the great oil magnates and uses his immense wealth to fund, among other evil things, the climate denial movement in politics and the media, especially in the United States.
It's not _just_ these two men, obviously. But they are the real leading figures in the destruction of our society. George Soros isn't even close. Musk and Bezos might be a net positive; I'd at least consider the argument. This isn't just hating the rich. One side is evil and bent on the destruction of our species.
> How can an article about "elite competition" not mention anything about how, during a few decades in the 20th Century, labor's share of profits increased, and since 1980 has flatlined, with all rewards accruing to capital?
As far as I can tell, the share accruing to land increased. The share accruing to capital stayed roughly flat.
In any case, the labour share didn't drop all that much. A few percentage points.
The bigger deal is perhaps the change in distribution of that labour share amongst workers.
Here's McKinsey in 2019:
"Labor’s share of national income—that is, the amount of GDP paid out in wages, salaries, and benefits—has been declining in developed and, to a lesser extent, emerging economies since the 1980s."
https://www.mckinsey.com/featured-insights/employment-and-gr...
This divergence since 1980 is _the_ subject of Picketty's _Capital in the 21st Century_.
Yes, the labour share of income has slightly declined. I agreed with that?
But the extra has gone to land, not capital.
Piketty fails to make that distinction. See eg
https://www.forbes.com/sites/chuckdevore/2015/07/22/piketty-...
or
https://www.brookings.edu/bpea-articles/deciphering-the-fall...
Interesting. There seems to be some debate among the critics, but putting that aside...
If it's all gone to land, the situation seems _worse_ as far as inequality goes. The top 1% of households own 40% of land in the US as of 2017. The next 9 percent own 42%.
So maybe it's inexact to call it "capital" vs. "labor", but... a class of people is dominating.
> So maybe it's inexact to call it "capital" vs. "labor", but... a class of people is dominating.
Not sure about 'class'.
But the policy implications are quite different:
Land value taxation can capture all that extra rent going to land without hurting the economy one bit. See
https://en.wikipedia.org/wiki/Land_value_tax
By contrast, taxing capital is a really bad idea. Eg capital gains taxes hamper productivity growth.
I was not aware of this paper, I will read it and see what further work has said, thanks (it's from 2015 there's gotta be something).
To be fair it does mention "Retreads of the Reagan program today serve as a stale punchline rather than a serious attempt at politics. ...adding more free-market Reaganism to combat the fallout from free-market Reaganism".
Incredible how Reagan also caused the same problems in countries like Canada where wages are flat and housing is more expensive than the US! Damn you Republicans!
Canada had Mulroney and Britain had Thatcher with Reagan.
Reagan declared that he had come to Washington to “drain the swamp” of bureaucracy, and set up the Grace Commission to investigate the operation of the U.S. government. Thatcher and Mulroney were equally committed to reform and initiated wide-ranging changes. By the end of the 1990s, the changes were dramatic. Many governments operations had been privatized in all three countries, and new management techniques had been introduced. In Great Britain, one observer judged that the changes were historically as important as the collapse of Keynesian economics. Is government now better in these countries, and was political leadership right in focusing on management of the bureaucracy as the villain? Savoie suggests that the reforms overlooked problems now urgently requiring attention and, at the same time, attempted to address non-existent problems. He combines theory and research based on sixty-two interviews, nearly all with members of the executive branch of the governments of Britain, Canada and the United States.
--Thatcher, Reagan, and Mulroney, In Search of a New Bureaucracy By Donald J. Savoie
It's spooky that all these countries did the same thing at the same time.
Also arguably, in the US, it started under Carter (though Reagan became the face of it).
Kind of like how Trump is the face of the "decoupling" from China, but this built on the "Obama Pivot", and seems to be being continued (maybe a little better) by Biden?
The paranoid part of me wants to blame whatever happens at Davos and whatnot, but it's probably just "the intellectual spirit of the times".
Yes, the conservative-neoliberal alliance that has produced terrible inequality and political institutions incapable of solving problems because they aren't actually responsive to the public... succeeded everywhere.
Yeah I know, but this seems like a throwaway line designed to add "both sides" cover, in between several paragraphs of shadowboxing the Left.
The _owners_ of the system seem curiously left out of most analysis.
It explicitly criticises the inability of the economy to create enough jobs. It says that Marx was correct about capitalism (btw, contrary to what people think, this is a fairly common view amongst conservatives who tend to be well-read enough to know that Marx's critiques of capitalism are quite distinct from Marxism). It is a fairly traditional conservative critique of capitalism that actually predates Marx by five decades (capitalism is dehumanizing, it breaks down traditional relations, capitalism is destructive socially/culturally).
The US jobless is at record lows. That is a _bad criticism_ of our economic system, because it isn't true. It might be the case that some powerful economic actors work to undermine full employment some of the time (for instance). But the specifics matter. What matters is the kinds of jobs and how much of the pie is being distributed, a fact completely left out of their article.
Do conservatives care about having an economy that's actually just and equitable? That's a pretty big part of what Marx was getting at; much bigger than the one point about how it undermines traditional religious belief (a good thing). That would probably solve their concerns about not enough young people starting families.
I've heard a lot of rhetoric, and I've seen what literally every "conservative" politician actually does: enrich entrenched elites, undermine democracy, and make the violent parts of the state less accountable to the public.
> But the specifics matter. What matters is the kinds of jobs
From the article, emphasis mine:
> Only by actually addressing problems at the point of production—for example, by ensuring _decent jobs that allow workers to support a family_—can one honestly hope to address these problems in a permanent way.
Maybe not as specific as you'd like, but I don't think it's accurate to say the article doesn't go beyond employment numbers on their face. In fact, in the context of SK, it's explicitly critical of the sorts of "jobs" one might suspect these days of putting a pretty coat of lipstick on the pig that is our job market:
> Though the official unemployment rate in South Korea is below 4 percent, an enviable number in any advanced economy, rosy figures such as these mask a growing structural and social malaise in the country. The rate of “self-employment” in South Korea was estimated to be over 25 percent before the pandemic, compared to 10 percent in the United States. This phenomenon of self-employment, much like the oft-hyped switch to “the gig economy” in America, has little to do with individual freedom and entrepreneurship and more to do with underemployment, a lack of job retraining, and worsening prospects especially for older members of the workforce. On top of this, the South Korean middle classes find themselves not only threatened by a potential shrinking of opportunity, but face constantly growing costs as well, including education and housing prices, especially in Seoul, where median apartment prices have nearly doubled since 2016.
> What matters is the kinds of jobs and how much of the pie is being distributed, a fact completely left out of their article.
Again, this is not left out. This point is explicitly mentioned.
> Do conservatives care about have an economy that's actually just and equitable?
Yes, that is what the article is arguing for. I am not actually sure that Marx did say this because the notion of justice and equity is inherently subjective. What he said is that capitalism changes the nature of social and cultural relations.
Okay, that is what you have seen, it doesn't make it true because your point of view is: conservative people are bad. If you actually think more carefully about what you are saying, you would understand why this is wrong (conservative thought in the US was founded on the principle of challenging an accountable state, challenging entrenched elites, and creating democracy).
There have always been Kochs and Soroses.
What’s new post 1960 is:
1. Massive increase in the college-educated.
2. Women getting educated and entering the workforce in large numbers.
I didn't say Soros, and I didn't say "Koches". I said Charles Koch and Rupert Murdoch because they are the men destroying the fabric of our society by 1) fueling non-stop culture wars and hatred (about a trillion dollars has been spent on right wing media since it's inception as big business) and 2) destroying our environment, which is already a crisis for many people around the globe if it's not for you.
These are the real problems we face. Not "wokeness" (basically just a nouveau slur).
More educated people aren't a problem, this has driven the greatest economic boom in history. It has driven the greatest reduction in interpersonal violence in history. Education is an unalloyed good. Political, cultural and economic equality for women and however many other categories of people you want to add to that list are unalloyed goods.
The problem is that all rewards are distributed to the top, because of the dominance of a small number of evil men over our political and economic system since about 1980. That is why competition to become an elite is so intense: only elites benefit from the current system. It is why we cannot get Democrats to govern properly, and why Republicans govern only with malice.
I agree with your analysis that inequality is a big problem facing the world. However, I also don't see wokeness as an unalloyed good.
I'm a pretty liberal guy, but I'm seeing a rash of articles talking about some real harm wokeness has been causing lately when taken to an extreme. For example:
- California pushing new math framework that recommends no Algebra before Grade 9 in the name of racial justice. This is bordering on Harrison Bergeron territory.
- UC schools eliminating SAT as admission criteria, which is used to disproportionally hurts Asian applicants.
- Elite colleges like Harvard making their admissions less meritocratic and trying to limit Asian and Jewish admissions in favour of White, Black and Hispanic admissions. This is reminiscent of adding extra-curriculars to discriminate against Jewish students in first half of 20th century.
- Cancel culture taking things too far.
Charles Koch and Rupert Murdoch are the ones destroying our environment? Can you explain or justify why you single out those two? Because from where I sit, that claim seems to be completely divorced from reality.
The lobbying efforts of the Kochs were famously inspired by their battles with the EPA. They spent half of their careers fighting environmentalism in service of profit.
Is it that from where you're sitting my points 1) and 2) a) aren't true, b) are true but aren't really harmful to society, or c) aren't the particular fault of the man who sits atop the right wing media ecosystem (which creates constant cultural conflict), and the biggest funder of climate change denial (because he's an oil baron)?
I don't think that your point 2) is true of Murdoch. The right wing media ecosystem is not the prime driver of environmental destruction. People (on all sides) wanting more stuff, and in particular more energy, is the culprit.
Also lots more restrictions on building residential housing.
This is a real problem, and a direct consequence of elite competition: keep other competitors out.
There should be enough places to live built as there are humans.
Have a look at 'Why are there NIMBYs?' (Eg
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.981...
)
I wouldn't exactly call your typical middle class home owner an elite. Would you?
> There should be enough places to live built as there are humans.
We have the technology to build high and stack apartments, and the wealth to afford it. In many places, we just don't have the regulatory environment to do so legally.
Yes NIMBY is a problem and may be more about human nature.
The broken regulatory environment that exacerbates the problem is a consequence of elite competition: government not working for the public is caused by being captured by narrow interests, who work to corrupt its purpose.
The (upper) middle class homeowners who don't want apartments built nearby? They are, for various reasons, better represented by local governments than people who want to do new things. I agree that the concept of "elite" doesn't cover what's going on here, but there are echoes, because power is a spectrum.
That's the point I actually wanted to make.
> The broken regulatory environment that exacerbates the problem is a consequence of elite competition: government not working for the public is caused by being captured by narrow interests, who work to corrupt its purpose.
Alas, not necessarily. Normal voters are perfectly capable of demanding broken stuff all by themselves. Voters (somewhat rationally!) behave like idiots.
Because it's a conservative journal. Their entire world view basically doesn't consider that as something to be concerned about to begin with.
Yeah I know. I wish more people noticed that the most powerful people keep being left out of diagnoses of our problems.
You should have read to the end...you also probably should have actually read more about what conservatives think, rather than what people who aren't conservatives say conservatives think.
As a matter of fact I did read to the end, since other than the eye-rollingly dumb rhetoric around wokeness it did raise interesting points.
They get the root cause completely wrong, but of course that's expected.
Conservatives are free to talk about their agenda whenever they like. The fact of the matter is elite conservative thought is wildly unpopular, and they know it. So all this culture war crap is all they have.
Yeah, it's funny, I read to the end; it's not a bad piece of writing though I suspect I wouldn't see eye to eye with the writer on some economic issues; I hold opinions that you might call classical Marxist, or Marxian, and to be honest, the analysis seemed almost "historical materialist" and he even uses Marx in his argumentation, and this quote _"If politics is indeed downstream of culture, then it must be added that culture finds itself perched snugly downstream from the realm of production."_ could come straight out of an old issue of Monthly Review or Capital & Class.
Anyways, not easy to pigeon-hole. But maybe not super coherent either.
And yeah, his quip about "what passes for the left" -- indeed. The left -- and its bread and butter based economic critique -- is mostly unidentifiable in North American politics today. To the point that most educated Americans can't distinguish between neoliberalism and "socialism" anymore.
It is easy to pigeon-hole because conservative writers were writing about this kind of thing before Marx (about five decades before in fact, this is a slightly complex point because politics then wasn't so linear but a lot of the critique of capitalism came from the wealthiest, it was the new rich Liberal factory owners that were the advocates for capitalism, the traditional land-owning elites, for example Disraeli, were making identical points to the OP).
I think the problem today is that people view Marxism within the context of a discussion that postdates Marx by one century. Historical materialism is also something quite distinct from Marxism. Marx wasn't a Marxist (or so Engels said), and there are lots of historical materialist historians (particularly economic historians) who aren't Marxist either.
On your final paragraph, I think much of the discussion today is totally reductive. You are right there is no difference between neoliberalism and socialism but that is because there is no difference between neoliberals and socialists. I am not actually opposed to "Third Way" politics but there is no real representation for working people. And yes, part of that is because the left has the moral authority and wealthy people have hijacked that moral authority in order to fight their culture wars about social causes that are largely irrelevant to most working people (the enemy doesn't exist, it is just a way for wealthy people to shed their guilt and obtain self-justification). It is telling that working class reaction in the US was led by an orange billionaire, it makes no sense (and btw, I don't think people like Sanders or Warren are particularly compelling or effective leaders, the reason orange man won was because, for all his grievous faults, he actually seemed like a normal human being...as weird as that sounds when talking about someone who is so obviously abnormal in many ways).
I think that you're missing that one of the co-authors of the original piece is in fact an ex-Marxist, and uses Marx and Marxian frameworks in this piece of writing.
Except the piece of writing focused on education/hierarchy/social standing rather than on class analysis.
I also never said that neoliberalism and socialism are the same thing or whatever; I said that among the average American, they don't know what socialism is, and often mislabel liberals/neoliberals with this label, nonsensically. And among the right in the US, this is a frequent talking point -- that somehow Biden is "socialist".. which is preposterous.
There is no effectively organized "left" in the traditional sense in American politics. Not even a social democratic party. Just a repressed minority within the Democrats (a right wing party) that is forced into a forever subservient position to neoliberal elites.
Malcom Kyeyune, at least, is a one-time socialist. Now he seems to be more of a (right) populist, albeit still heavily influenced by Marxism. According to this blog post[0], he believes that the populist right is the actual party of the working class, since leftist parties have invariably begun to advocate for the interests of the professional-managerial class, who are their primary clients these days.
[0]
https://tinkzorg.wordpress.com/2020/05/07/on-strasserism-and...
>he believes that the populist right is the actual party of the working class
A pretty neat way of ingratiating himself with right wing elites and a promising route to political power.
And, if you _are_ on the left, shouldn't you kind-of _want_ the "bad guys" to start borrowing your ideas? That should make things less-bad when they win, right? As far as I can tell, the problem, apart from Trump winning, was that he _didn't_ do enough of this Bannonesque stuff, and instead remained too-much a (typical, apart from the incompetence) Big Business Republican.
Hmm. So both western and eastern education systems are turning away from their cultural roots, trying to find some magic in the other's approach.
The situations of Asian countries and the United States differ subÂstantially in the details, but both face the same core problem: how to offer as many people as possible a decent job with a family wage.
This is the heart of the (rather length) article. Elite competition is so intense because the consequences of not making it into the elite are so stark. (Related: Even getting the elite degree doesn't mean that you get a decent job. The elite competition doesn't end when you get into college, or even when you get out.)
It's ultimately a result of increasing returns to scale from technology. If the top 1% of every class gets you marginally better competitiveness in the market as a firm and you can feasibly capture 100% of the market (or a large majority) across billions of customers with a few thousand employees then you're going to pay for the top 1%.
On top of that, increasing adoption of technology means that more of the economy becomes driven by engineers. Computer science is one of the few fields where a top 1% individual can actually be 10x more productive than the median.
Combine these two things together - being able to instantaneously scale improvements across billions of customers for almost free because of the Internet, and technology's growth resulting in more jobs having a wider productivity gap between median and top 1% - and you get massive salaries for the top 1% and comparative peanuts for everyone else.
The exact same dynamic plays out in finance, Hollywood, YouTube content creation, and other winner takes all markets.
no, winner-take-all markets being natural is one of those fibs economists have been incentivized to 'discover'. it's shrouded in numeracy to make us shrug and accept our poor lot in life. even with capital-intensive markets, if kept fair, can attract enough competition over the long term to keep monopolization in check. if you look close enough at any monopolized market, you'll find a bunch of underhanded distortions that drove it into that state (e.g., regulatory capture, bribery, collusion, etc.), rather than it evolving naturally due to intrinsic properties of the market/industry.
finance for instance has an underbelly of insider information being traded constantly, just as hollywood (and nyc real estate) is choked by cartel behavior (production and labor at least).
Let's take a look at some winners in winner-take-all markets, Facebook, Google, and Amazon.
Is Facebook's dominance due to regulatory capture? No. (You could argue lack of adequate regulation, but that's not what we usually mean by "regulatory capture".) Is it due to bribery? No. Collusion? No.
Same with Google. No, no, and no. Amazon? No, no, and no.
(You could make a case for collusion with Microsoft...)
all of those companies, including ms, have faced numerous fines and sanctions for anti-trust/anti-competitive behavior. these are some of the worst examples you could have raised. they all _cheated_, heavily and brazenly.
Definitely a weird time to try and claim that neither Facebook or Google got ahead by any sort of collusion.
Don't just claim. Prove. How, exactly, did Google cheat? What was their anti-trust behavior? Et cetera. (Don't bother trying to prove it with MS; I already know what they did.)
Google's golden goose is their tracking. Between their ad networks, Android, and Chrome, and their own search engine, they know every single page that most people view. They can then use that data to work out what to display for searches.
The reason that Google Search punishes slow loading sites, as proven by the AMP 'nice comparative boost' controversy, is because most of the time a page loads slowly is because it has multiple ad network trackers on it. Google will do anything to stop a page from doing that. The good news is this stuff is already being called out for anti-trust issues.
But in some ways, it's worse than that, because these evaluations aren't based on the top 1%, they're based on some proxy, and that proxy is assumed to be static.
So, to simplify things, you have some placement exam. You're only allowed to take it once, twice, or a few times at a critical point in your life. We know that exam is only correlated like 0.30 at best with actual aptitude, which fluctuates over time. And yet that exam is treated as if it is correlated 0.90 or greater with aptitude, and that aptitude cannot change.
This is part of the problem too.
Some (much?) of this winner-takes-all phenomenon is due to societal structures around these occupations, nothing inherent to the occupations or activities themselves. It's rent-seeking and protectionism. My guess is at some level it's not a whole lot different from economic dynamics pre-world-wars era, but justified through different means, where society is blind for whatever reason to the errors in economic assumptions that the world works around, and the serious consequences those errors bring.
Increases in scale from technology undoubtedly play a role, but I doubt that's all of it. The NY Times once published an article about income distributions across fields, and you could see this winner-takes all phenomenon in all sorts of places. To me, it seems to have something to do with salary and benefits distributions more than anything else.
If you take medicine just as one example (which could be an entire book into itself), it's true that there have been technological advances that scale all sorts of things. But there's also little natural competition, due to overregulation. So you have a hierarchy, with medical administrators on top, physicians below, nurses below that, and then everyone else at increasing degrees of separation. This occurs in part because of the tendency for the administrators to control cash flows toward themselves, but also because the regulations make it impossible for cost structures to exist in any way _but_ one where physicians get paid the most.
There's lots of examples of this. In my mind, the problem really is income distribution. It's not a matter of _equality_ in the stereotypical communist sense, but more about _fair or rational evaluation_ in an economic sense.
Everyone can point to bubbles in markets and say "this is way too overvaluated." That's something that has a clear meaning, even if it's hard to define at times. To me this overvaluation is everywhere. We live in an era of monopolies, and we rationalize it everywhere.
Medicine is an entirely different problem. Salaries for doctors in the UK and Europe are much lower in part because the AMA limits the number of residencies and thereby the supply of new doctors in the U.S. That's de facto a monopoly.
If you're a top 1% pediatrician you don't get paid much more than a median pediatrician. That's because it's pretty hard (impossible?) to be a 10x pediatrician. On the other hand, you can make the argument that 10x neurosurgeons or heart surgeons exist.
False. The number of residency slots is limited by the federal funding. The AMA has actively lobbied for _more_ residencies.
https://www.ama-assn.org/education/gme-funding
Is "offer as many people as possible a decent job with a family wage" even possible realistically? I am no philosopher but I find it hard to believe that this is possible.
I think if we don't know the answer, I'd rather try than assume it can't be done.
I'm not sure how far policy makers expect to get when the corner stone of public policy everywhere seems (to me at least) to hinge on forcing individuals to try in some particular way that they may not be willing to allocate resources (i.e time, money, labor, knowledge, skills, etc) for weak incentives in return.
It’s certainly possible to offer as much as possible. The question is how much is possible?
I don't know.
Is it possible to do better than we are? Probably. How much better? I don't know.
We could repudiate NAFTA and close off trade with China. This could bring back local manufacturing, and the possibility of a working-class job being a reasonable life. This could also lead to us falling behind the rest of the world, as they create economies of scale that we can't match. Is that better or worse than the current state of affairs? I don't know.
What the author refers to "Prussian" education is hardly the Western tradition, quite the opposite.
Fair. It's the western tradition of the last 100 years, though.
This is a very well reasoned article. The central thesis is that if culture follows economic realities (a notion I first encountered in Sapiens but have come to strongly believe), then readers (seems the audience consists of US cultural conservatives) should focus their efforts on changing the underlying economics, not waging the culture war.
No amount of snappy YouTube videos decrying the “degeneracy” of current elite trends, no amount of influencers selling the “trad lifestyle” to Instagram followers, no amount of pithy arguments aimed at defeating some imagined foe with “facts and logic” will affect these issues in any meaningful way
In the struggle between tradition and economic reality, tradition simply ends up being destroyed, excepting the few parts that can be adapted to serve completely new ends.
I would posit that a 3rd option exists that the author dismissed, but it would be to move to a new system (which is self-sustaining, unlike birth + immigration that the author dismisses) to match the new realities. I get that conservative thought is that it's safest to cling to that which we know, but with all the changes so far (and to come with automation), it might be as fruitless as running a knowledge economy like a feudal monarchy.
> I would posit that a 3rd option exists that the author dismissed, but it would be to move to a new system
Do you mean changing the American system, or do you mean moving, as an individual, from America?
If "changing the American system", then I think that's what he wants. He seems to want industrial policy, possibly state control of industry -- whatever it takes to employ everyone and give them good wages. A Republican pivot to the working class.
(Or even a Democratic one? (Though that's arguably what the Green New Deal is supposed to be about, even if it ends up being modest.))
If "moving from America", then I agree that's the option he didn't even consider. It may be possible to simply escape the competition. Doing this would rest on geographic arbitrage and the privilege of having been born in a developed country. That might make it "bad" in some peoples' eyes, but it might work for the individual. Even a fairly poor American could be a fairly rich person in another part of the world, by taking their (unfair) Fedbucks with them.
The concluding sentence is the key takeaway for me.
Unless the productive forces driving spiraling competition for diminishing social and economic resources are resolved, social atomization, cultural conÂflict, and their many effects will continue, in one guise or another.
My take is that most of the apparent social problems are related to problems like economic inequality and insufficiency. And the best hope we have to improve them is actually logistical/technical. Better application of technology, such as for enhanced collaborative monitoring and reporting of resource usage and more sophisticated distribution systems (including high-tech forms of money) should make a big difference.
An essay on the theme "compare and contrast SK/JP/CN educational cutthroatism with 21st century woke culture." Good enough if that's the question assigned but.. why? Aoparently to push the zero sum narrative of elite overproduction, and pretending we all wanna go to Harvard when state schools are still perfectly adequate, then additionally pretending that you have to be a multi-intersectional individual to get into Harvard... seems like this guy just wants to have his culture war.
The retreat by much of the Right into localism or an exclusive focus on personal virtue is a tacit admission that individuals simply have to look out for themselves, an equally empty response
No you can't just take your ball and leave!
Fascinating. TL;DR: What we think of as the Asian/Confucian/Tiger Mom school model of cramming every minute of your day actually originates from Prussia, while Western universities are rapidly going in the opposite direction and de-emphasizing book learning in favor of public demonstrations of virtue -- only it's not Confucian virtue, but wokeness. Is Europe the only stronghold of sanity left?
In my own area, as an American, I increasingly feel that way.
Holy smokes, pull up a bag of popcorn, pour a glass of Pinot, and heat up that Volcano! This heavy hitter brings the cultural pith of a Franzen novel and the citation-laden academic register of an SEO educated academic behind a pseudonym. Wokeness, SATs, Xi, culture wars, and Marx -- oh my!
For. Real. What pathetic nonsense.