Economic Storytelling [2]: Hail the Conquering Capitalist Comes

handel    hail the conquering

Handel wrote “See, the Conquering Hero Comes!” for his oratorio Judas Maccabaeus, created to commemorate the Duke of Cumberland’s stomping out of the Jacobite rebellion at the Battle of Culloden in 1746.

Two hundred years later, hay fever stricken non-hero Woodrow Lafayette Pershing Truesmith rode a myth of his own heroism, fabricated by well-intentioned friends, to a public moment of truth in the 1944 film Hail the Conquering Hero. But that was Hollywood, and everybody was happy in the end as Woodrow lived out the popular “redemption” narrative that Silicon Valley loves, as we’ve seen previously. As for the Jacobites, their story became a cautionary tale — a more sobering narrative genre.

These two conquering hero stories illustrate why non-narrative economists think we’re better off leaving stories at the water cooler:  narratives contain too much subjectivity, interpretation, cognitive bias, self-deception, and wishful thinking to be trusted, and therefore add nothing to economic policy-making, which is all those things already. You can talk “normative” all you like, but narrative policy will end up being a matter of power, not plot.

Plus, narratives can have unexpected outcomes. This article chronicles the pendulum swings that have characterized political/economic narratives for the past century, and warns that popular narratives of economic doom can have catastrophic consequences because they’re forged in simplistic thinking to the exclusion of more complex analysis:

 “[Catastrophe narrative favor] the politics of the strong man glaring down the nation-doubters… It’s globalism or ‘nation first’, jobs or climate, friend or foe.

“The alternative is not to be wistful about flat-world narratives that find solace in technical panaceas and market fundamentalisms; the last thing we need is a return to the comforts of lean-in fairy tales that rely on facile responses to a complicated world.

“Nowadays, the chorus of catastrophe presents differences as intractable and incompatible, the choice between them zero-sum.

“We need to recover our command over complex storytelling, to think of tensions instead of incompatibilities, to allow choices and alternatives, mixtures and ambiguities, instability and learning, to counter the false certainties of the abyss.”

Why We Need To Be Wary Of Narratives Of Economic Catastrophe, Aeon Magazine (Jan. 22, 2019)

I.e., if we’re going to have economic narratives at all, they need to be complex, not simplistic, and take into account the full range of “positive” and “normative” ethical judgments, as well as both mathematical modeling and fundamental human behavior. Anything short of that promotes polarized thinking, which is not only the standard of the day, but might be inescapable as long as the human brain is in charge. Coach, consultant, and author Karl Albrecht wrote the following in Psychology Today iun 2010 — before discourse disappeared entirely from American public life:

“Recent research suggests that our brains may be pre-wired for dichotomized thinking. That’s a fancy name for thinking and perceiving in terms of two – and only two – opposing possibilities.

“These research findings might help explain how and why the public discourse of our culture has become so polarized and rancorous, and how we might be able to replace it with a more intelligent conversation.

“The popular vocabulary routinely signals this dichotomizing mental habit: ‘Are you with us, or against us?’ ‘If you’re not part of the solution, you’re part of the problem.’’

Albrecht goes on to say that “imagination, creativity, and innovation all thrive in the ‘twilight zone,’ not at the poles of opinion,” and offers these seven antidotes to the plague of silo-building:

  1. Have fewer opinions.
  2. Keep your opinions and conclusions on probation.
  3. Let go of the need to be certain about everything.
  4. Seek the “third hand”- and any other “hands” you can discover.
  5. Modify your language.Replace the word “but” with “and” as often as you can, even if it sounds weird at first.
  6. Remind yourself every day that your “truth” is not the same as any other person’s truth.
  7. Avoid head-butting contests with opinionated people.

Good advice no doubt, but storytelling or not, these days capitalists and capitalism are the conquering heroes making their grand entrances. In fact, they’re so powerful that they’re eclipsing the historic “nation-state” in size and influence.

We’ll look at that next time.

Economic Storytelling

story telling

Last time, we heard Nobel Prize winner Robert Shiller promote the use of narratives in economic policy-making, on the theory that it would produce more humane outcomes than mathematical modeling — for example, reversing trends such as soaring economic inequality, loss of upward mobility, stagnant purchasing power,  and declining cultural wellbeing.

Narratives are up to the challenge, proponents say, because:

  1. Humans are natural storytellers.

 “Our storytelling ability, a uniquely human trait, has been with us nearly as long as we’ve been able to speak. Whether it evolved for a particular purpose or was simply an outgrowth of our explosion in cognitive development, story is an inextricable part of our DNA.”

The Power Of Story, Aeon Magazine (Jan. 12, 2015)

  1. There’s nothing like a good story to make you rethink your life.

“The careers of many great novelists and filmmakers are built on the assumption, conscious or not, that stories can motivate us to re-evaluate the world and our place in it.

 “New research is lending texture and credence to what generations of storytellers have known in their bones – that books, poems, movies, and real-life stories can affect the way we think and even, by extension, the way we act.

“Across time and across cultures, stories have proved their worth not just as works of art or entertaining asides, but as agents of personal transformation.”

The Power Of Story

  1. Narratives supply a welcome sense of meaning:

“Each of us has a story we tell about our own life, a way of structuring the past and fitting events into a coherent narrative. Real life is chaotic; life narratives give it meaning and structure.”

Silicon Phoenix:  A Gifted Child, An Adventure, A Dark Time, And Then … A Pivot? How Silicon Valley Rewrote America’s Redemption Narrative, Aeon Magazine (May 2, 2016)

  1. Stories are catchy: brain scans show that listeners’ and readers’ brains mirror the storyteller’s — another reason why they make good change agents.

“fMRI data [shows] that emotion-driven responses to stories… [starts] in the brain stem, which governs basic physical functions, such as digestion and heartbeat. So when we read about a character facing a heart-wrenching situation, it’s perfectly natural for our own hearts to pound.

“Just when the speaker’s brain lit up in the area of the insula – a region that governs empathy and moral sensibilities – the listeners’ insulae lit up, too. Listeners and speakers also showed parallel activation of the temporoparietal junction, which helps us imagine other people’s thoughts and emotions. In certain essential ways, then, stories help our brains map that of the storyteller.”

Silicon Phoenix

  1. American capitalism already has an established story genre — the “redemption narrative” — that it can rely upon to good effect.

“For Americans, the redemption narrative is one of the most common and compelling life stories. In the arc of this life story, adversity is not meaningless suffering to be avoided or endured; it is transformative, a necessary step along the road to personal growth and fulfilment.

“For the past 15 years, Daniel McAdams, professor of psychology at Northwestern University in Illinois, has explored this story and its five life stages: (1) an early life sense of being somehow different or special, along with (2) a strong feeling of moral steadfastness and determination, ultimately (3) tested by terrible ordeals that are (4) redeemed by a transformation into positive experiences and (5) zeal to improve society.

“This sequence doesn’t necessarily reflect the actual events of the storyteller’s life, of course. It’s about how people interpret what happened – their spin, what they emphasise in the telling and what they discard.”

Silicon Phoenix

  1. Redemption narratives make good citizens, and never mind if there’s some ego involved:

“In his most recent study, the outcome of years of intensive interviews with 157 adults, McAdams has found that those who adopt [redemption narratives] tend to be generative – that is, to be a certain kind of big-hearted, responsible, constructive adult.

“Generative people are deeply concerned about the future; they’re serious mentors, teachers and parents; they might be involved in public service. They think about their legacy, and want to fix the world’s problems.

“But generative people aren’t necessarily mild-mannered do-gooders. Believing that you have a mandate to fix social problems – and that you have the moral authority and the ability to do so – also requires a sense of self-importance, even a touch of arrogance.”

Silicon Phoenix

  1. Stories are good for the American capitalist ideal.

“From a more sociological perspective, the American self-creation myth is, inherently, a capitalist one…. The sociologist Paul du Gay [believed that most people] craft outward-looking ‘enterprising selves’ by which they set out to acquire cultural capital in order to move upwards in the world, gain access to certain social circles, certain jobs, and so on. We decorate ourselves and cultivate interests that reflect our social aspirations. In this way, the self becomes the ultimate capitalist machine.”

Silicon Phoenix:

But of course, not everyone shares these rosy opinions of narrative economics, or of the current practice of American capitalism. We’ll hear from the naysayers next time.

Homo Economicus [5]: Ethics and Economics

homo economicus

This Harvard Crimson op-ed argues that that economic policy-making doesn’t embrace the full human story because what’s missing in free market self-interested capitalism is due regard for “normative ethics” :

“Economists distinguish between ‘positive’ and ‘normative’ judgments. Positive judgments are testable and predicated on objective facts. Normative judgments weigh those facts according to subjective personal values.

“Although Enlightenment-era economics was normative and philosophical, contemporary economics is a precise and quantitative science that seeks to determine what happens in the world under a particular set of assumptions. Policymakers, political philosophers, and ordinary citizens can then evaluate those occurrences according to their own normative judgments and determine whether they find them desirable.

“Responsible economic scholarship requires assigning positive and normative judgments separate roles in the policymaking process. They do not simply trade off; they have entirely different jobs.”

 “[Economists] are often characterized as robots completely devoid of ethics, chasing professional ambitions that are as sterile and soulless as they are. Authors, including in these pages, have written that human ethics are incompatible with good economic policy. This line of argument claims that our economic logic should be free from our personal values, and we must prevent our moral judgments from “getting in the way” of objective decisions…  this logic is flawed… It is not the strength of one’s feelings that matters, but rather that they fulfill their proper role in the decision making process.”

The article urges policy-makers to give equal time to both positive and normative judgments. This commentator agrees, but admits that normative  concerns — the province of behavioral economics — can be messy:

“[In economics], the beauty of a mathematical model may have little to do with the complexity of local institutions and other bottlenecks to getting prices to work or markets to clear without externalities.  Behavioral economics is far messier than standard models of rationality.”

Yale economics professor and Nobel Prize winner Robert Shiller advocates for “narrative economics” — a practice driven by the human love of storytelling  — to bring a human touch to the profession. “Not everyone is equally proficient at understanding narratives,” he says, “and economists are among the worst at appreciating them.” He thinks economists need to fix that.

“Twenty-five years ago, Chicago Booth’s Dick Thaler and I set up a series of workshops at the National Bureau of Economic Research on what we called “behavioral economics.” Behavioral economics was economics with an input from the psychology department. Every department has its own tool kit for approaching research; we were very much influenced by psychology. Maybe a little sociology, maybe a little anthropology, but nevertheless all social-science fields. I’m starting now, with my more recent work, to think that we have to look at the humanities as well.

“There is something difficult to formalize about human beings, but something that we nonetheless have to understand, and I think one way to do that is with an approach that I’m calling “narrative economics”: taking economics and adding the study of the narratives that people transmit.

“The human brain is built around narratives. We call ourselves Homo sapiens, but that may be something of a misnomer…. The evolutionary biologist Stephen Jay Gould said we should be called Homo narrator. Your mind is really built for narratives.”

Economics And The Human Instinct For Storytelling, Robert Shiller, Chicage Booth Review (May 8, 2017)

As usual, Silicon Valley is ahead of the game, having already embraced the power of story as its own cultural norm:

“In Silicon Valley these days, you haven’t really succeeded until you’ve failed, or at least come very close. Failing – or nearly failing – has become a badge of pride. It’s also a story to be told, a yarn to be unspooled.

“The stories tend to unfold the same way, with the same turning points and the same language: first, a brilliant idea and a plan to conquer the world. Next, hardships that test the mettle of the entrepreneur. Finally, the downfall – usually, because the money runs out. But following that is a coda or epilogue that restores optimism. In this denouement, the founder says that great things have or will come of the tribulations: deeper understanding, new resolve, a better grip on what matters.

“Unconsciously, entrepreneurs have adopted one of the most powerful stories in our culture: the life narrative of adversity and redemption.”

Silicon Phoenix:  A Gifted Child, An Adventure, A Dark Time, And Then … A Pivot? How Silicon Valley Rewrote America’s Redemption Narrative, Aeon Magazine (May 2, 2016)

More on economic narratives coming up.

For more on ethics and economics, see Ethics and Economics (The Library of Economics and Liberty), The Economics of Ethics and the Ethics of Economics:  Values, Markets and the State (2010), and Ethics in Economics: An Introduction to Moral Frameworks (2015).

Homo Economicus [4]: Enlightened Self-Interest

homo economicus

The concept of “homo economicus” captures the belief that the rigorous pursuit of self-interest in a free market improves things for everyone. This belief powered Milton Friedman’s famous dictum that “the social responsibility of business is to increase profits,” and finds a philosophical ally in Ayn Rand’s “objectivism”:

“The core of Rand’s philosophy… is that unfettered self-interest is good and altruism is destructive. [The pursuit of self-interest], she believed, is the ultimate expression of human nature, the guiding principle by which one ought to live one’s life. In “Capitalism: The Unknown Ideal,” Rand put it this way:

‘Collectivism is the tribal premise of primordial savages who, unable to conceive of individual rights, believed that the tribe is a supreme, omnipotent ruler, that it owns the lives of its members and may sacrifice them whenever it pleases.’

“By this logic, religious and political controls that hinder individuals from pursuing self-interest should be removed.”

What Happens When You Believe in Ayn Rand and Modern Economic Theory, Evonomics (Feb. 17, 2016)

Thus Ayn Rand became the patron saint of American capitalism in its current iteration. This is from a 2017 Atlantic article:

“’I grew up reading Ayn Rand,’ … Paul Ryan has said, ‘and it taught me quite a bit about who I am and what my value systems are, and what my beliefs are.’ It was that fiction that allowed him and so many other higher-IQ Americans to see modern America as a dystopia in which selfishness is righteous and they are the last heroes. ‘I think a lot of people,’ Ryan said in 2009, ‘would observe that we are right now living in an Ayn Rand novel.’”

Critics point out that there is no such thing as a free market or objectively rational self-interest, arguing instead that the market is inescapably skewed toward policy-makers’  beliefs and values — i.e., their particular interpretations of what “self-interested” behavior looks like.[1] As a result, economic policy always comes laden with ethical and moral beliefs about “good” vs. “bad” outcomes, which the not-so-free market then dutifully delivers:

“Milton Friedman argued that competition between big businesses suffices to safeguard the public interest, but in practice it is almost always insufficient, especially where there is collusion among the players to safeguard their market dominance – and their political influence.

“Free-market economists have an unwarranted faith in the capacity of price adjustments to produce technological changes in production and patterns of consumer demand. Their theories imply that the price system has infinite capacity to shape sustainable outcomes.

“But if the self-interested market behaviours continue to seek an unchanged goal – more personal incomes with which to purchase more material goods – ultimately they cannot be fulfilled.

 “Ultimately, the short-term self-interested economic arrangements are not sustainable anyway. As the US economist Kenneth Boulding once said: “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist”.

“Economic inequalities also predictably widen where self-interested market behaviours dominate. Capital makes capital, while those without capital often remain consigned to poverty. Certainly, the very rich have become notably much wealthier during the last three decades while neoliberal ideologies and policies have been dominant. In the absence of strong unions and governments committed to some degree of egalitarian redistribution, the unequalising tendency is inexorable. The result is predictably unhappier societies that experience a higher incidence of social problems, as empirical research complied by Richard Wilkinson and Kate Pickett clearly demonstrates.

“Something has to give. An economic system that rewards amoral self-interest creates economic instability, fractures economic insecurity, fosters concentrations of economic power, exacerbates economic inequality and violates ecological sustainability. So much for the self-regulating market economy!

“There is currently much talk of ‘social responsibility’ in business and of ‘triple bottom line accounting’ that emphasises the use of social and environmental criteria, as well as a financial criterion, in assessing business performance… Indeed, businesses developing reputations for responsible behaviours may reap benefits in the form of worker and customer loyalty. But unless and until ethical behaviours become integral to how markets function – by directly affecting ‘shareholder value’, for example – it is hard to see the overall effect as much more than window dressing for ‘business as usual’.”

Oh, The Morality: Why Ethics Matters In Economics, The Conversation (in partnership with the University of Sydney) (March 22, 2012)

More on ethics and economics next time.

[1] For more on whether the market is truly “free,” see this article and this one. Or if you prefer, here’s a short video and here’s a TEDX talk.

Masters of the Universe

masters of the universe 2

If the rich can’t save the world, how about the CEOs? They know how to get things done – how about we let them take a crack at it?

That kind of thinking has become “powerful in the public consciousness,”  say the authors of CEO Society:  The Corporate Takeover of Everyday Life, Peter Bloom and Carl Rhodes (2018):

“CEOs epitomize this fantastical figure of the empowered sovereign. Their vaunted decisiveness, guiding vision and ability to proverbially ‘get things done’ speak to this deeper aspiration for being the master of capitalism rather than its mere slave or apparatchik.[1]

“It is no surprise that many people seeking to become more powerful themselves would look to CEOs as heroes and role models.

“Perhaps the most evocative, if not foretelling, in this regard, was Tom Wolfe’s portrayal of stockbrokers and financiers as the new ‘masters of the universe’. [2]

“In the decades since Wolfe’s era-defining novel, the business executive has become the stuff of dreams on a much broader scale than the novel could have imagined.

“The CEO is the ultimate contemporary figure of power. CEOs, in their ideal form, have the ability to thrive in the market, save companies, and spread their influence across the world.”

Nothing wrong with solving the world’s intransigent problems, but watch out:  CEO power degrades into elitism in the marketplace and authoritarianism in politics:

“The marketization of global charity and empowerment has dangerous implications that transcend economics. It also has a troubling emerging political legacy, one in which democracy is sacrificed on that altar of executive-style empowerment. Politically, the free market is posited as a fundamental requirement for liberal democracy. However, recent analysis reveals instead the deeper connection between processes of marketization and authoritarianism…

“The image of the powerful autocrat is, to this effect, transformed into a potentially positive figure as a forward-thinking political leader who can guide their country on the correct market path in the face of ‘irrational’ opposition.

“[For example,] Rwanda is led by the autocratic President Paul Kagame, a close personal associate of former President Bill Clinton whom the New York Times has described as the “Global elite’s favourite strongman.” In the face of mounting criticism of this relationship, “Clinton has privately praised Kagame as someone who can “GSD” (get stuff done). One supporter, Gerald Mpyisi, the managing director of the Institute of Management and Leadership, defended Kagame’s methods in explicitly corporate terms:

‘The president is running the country like a CEO of a company who ensures that every director is accountable for their department. That is why, despite the lack of resources, you still find things happening. I believe for a country in the third world to develop there has to be a certain a certain element of organizing the population. The west tries to use its standards in the developing world and it isn’t fair.’”

Apparently the prospect of being in a position to get things done is irresistible. U.K. politician Boris Johnson once said, “I have as much chance of becoming Prime Minister as of being decapitated by a frisbee or of finding Elvis.” Now he’s the odds-on favorite to become just that. Either he actually did find the King or he’s taking to heart something else he said — back in 2008, just after the Great Recession:  “No matter how much you may dislike the Masters of the Universe, my friends, there are plenty of other parts of the universe that would welcome them.”

Meanwhile, on this side of the Pond, we have CEOs running for the ultimate corner (oval) office.

“Here’s an argument for billionaires in politics, at least as long as they made their fortunes themselves: It takes an incredible work ethic, good management skills, dedication, and a gift for setting priorities to turn a small company into a prosperous multinational one. Those all seem like skills that’d be useful in politics too, right?

“This is the case Perot made for himself, starting in 1992. ‘See, there’s a lot I don’t understand,” he said in a debate with George H.W. Bush and Bill Clinton. “I do understand business. I do understand creating jobs. I do understand how to make things work. And I got a long history of doing that.’

“Billionaires since have echoed him. Bloomberg cited the “pragmatic approach” of business leaders. Schultz’s website prominently features his successes at Starbucks. Trump leaned on his business background, telling voters in early campaign ads, ‘My opponents have no experience in creating jobs or making deals.’”

Dear Billionaires: Stop Running For President:  If you’re a billionaire who wants to transform politics and our world, there are better ways. Also, you’ll lose. (Vox, Jan. 19, 2019)

But are those skills really transferable? Again from Dear Billionaires:

“The problem is that it’s not really clear the skills transfer. In the course of their meteoric professional careers, billionaires mostly interact with people who work for or with them, and lots of political concerns that rank highly for everyday Americans aren’t areas they know anything about.”

Besides, is somebody who rakes in thousands of times more than the average person on their company’s payroll really going to understand what’s good for the rest of us? For an opinion about that, see No One Should Earn 1000 Times More Than a Regular Employee (The Guardian, Mar. 20, 2018).

Today, we’ll let Tom Wolfe have the last word on whether the CEOs can save the world:

“The Masters of the Universe were a set of lurid, rapacious plastic dolls that his otherwise perfect daughter liked to play with… On Wall Street he and a few others — how many? — three hundred, four hundred, five hundred? — had become precisely that… Masters of the Universe. There was no limit whatsoever!”[3]

[1] Merriam-Webster:  “Apparatchik:  1. a member of a Communist apparat,  2. a blindly devoted official, follower, or member of an organization (such as a corporation or political party. In the context of the definition of ‘apparatchik’ (a term English speakers borrowed from Russian), ‘apparat’ essentially means ‘party machine.’ An ‘apparatchik,’ therefore, is a cog in the system of the Communist Party. The term is not an especially flattering one, and its negative connotations reflect the perception that some Communists were obedient drones in the great Party machine. In current use, however, a person doesn’t have to be a member of the Communist Party to be called an ‘apparatchik’; he or she just has to be someone who mindlessly follows orders in an organization or bureaucracy.”

[2] Wolfe’s epic satire, Bonfire of the Vanities. You may know that the original bonfire of the vanities occurred in Florence on February 7, 1497, when Dominican friar Girolamo Savonarola sponsored a bonfire of objects condemned by authorities as occasions of sin — cosmetics, art, books… you know, the usual.

[3] Said about bond trader Sherman McCoy.

Basic Income On The Res

life-on-an-indian-reservation-752x501

Thomas Sowell has a platinum resume:  Marine Corps war vet, bachelor’s Harvard, master’s Columbia, Ph.D. U of Chicago, professor at Cornell and UCLA, Urban Institute and the Hoover Institute at Stanford, books, articles….  You get the point:  when he talks economic and social policy, people listen.

seneca casino

The people at The Institute for Family Studies (IFS) were listening when they published a blog post earlier this year entitled “What We Can Learn From Native Americans About a Universal Basic Income.” The article describes the Seneca tribe’s practice of distributing casino money to its members, and focuses on the particularly disastrous provisions pertaining to the money for minors:

“Half the money for children under 18 is given to their parents, and the other half is put into a trust. When a Seneca youth turns 18 and can show that he or she has graduated from high school or earned a GED, he or she receives a lump sum of $30,000. Those who don’t get a high-school degree have to wait until they’re 21 to receive the money.

“Government officials and other members of the nation tell me that the best thing most young adults do with this money is to buy a new truck. These are kids who have never had very much before; so when someone hands them a huge check, they clearly don’t know what to do. Store owners report that young people will come in to buy candy, handing $50 or $100 without expecting any change. These young people seem to have no concept of saving or investing.“

I used to practice estate planning, and need to point out that the Seneca approach to minor beneficiaries unfortunately borrows the worst kind of legislation drafting laziness from intestacy law, uniform gifts to minors acts, and similar laws involving minors and money. Their experience therefore has nothing to do with UBI specifically. Of course dropping a wad of cash on an unprepared 18 or 21 year-old is a dumb idea. Of course the kids “have no concept of saving or investing.” (Like the rest of us do.) Moving on, the article cites more disasters:

The money “is almost never saved for education.

“Despite a vast apparatus to help Seneca members set up businesses, almost no one starts one.

“Unless people are employed by the tribe (either through the casino or in tribal government), they are largely unemployed.

“Theft is also a problem. One official told me that they have had reports of elder abuse where children and grandchildren were stealing payments from older members of the tribe.

“The results of all this can be seen in the poverty rates for the Senecas, which have continued to rise. Their territory is divided into two reservations. As of 2011, the Allegany reservation poverty rate was 33.3 percent and the Cattaraugus reservation poverty rate was 64.9 percent, the highest in Cattaraugus County. During the first decade that the casino was operating, the poverty rate in Cattaraugus County, which includes part of the Seneca Territory, increased from 12.8 in 2000 to 18.7 in 2011.”

Finally, the article ends by citing Thomas Sowell:

“Writing about the concept of a Universal Basic Income last year, Thomas Sowell summed up the situation: ‘The track record of divorcing personal rewards from personal contributions hardly justifies more of the same, even when it is in a more sophisticated form. Sophisticated social disaster is still disaster—and we already have too much of that.’”

The Sowell article cited by the IFS blogger was “Is Personal Responsibility Obsolete?” (Investor’s Business Daily, June 6, 2016). It begins this way:

“Among the many disturbing signs of our times are conservatives and libertarians of high intelligence and high principles who are advocating government programs that relieve people of the necessity of working to provide their own livelihoods.

“Generations ago, both religious people and socialists were agreed on the proposition that ‘he who does not work, neither shall he eat.’ Both would come to the aid of those unable to work. But the idea that people who simply choose not to work should be supported by money taken from those who are working was rejected across the ideological spectrum.”

And so we see the standard anti-UBI fightin’ words:

“divorcing personal reward from personal contributions”

“government programs that relieve people of the necessity of working to provide their own livelihoods”

“people who simply choose not to work”

“money taken from those who are working”

I confess, I can’t help but wonder what people who say those things think they would do with UBI money. Again moving along….

Other tribes also distribute casino money. The following is from What Happens When the Poor Receive a Stipend?”, published by The New York Times as part of a 2017 series on economic inequality called “The Great Divide.”

“Scientists interested in the link between poverty and mental health, however, often face a more fundamental problem: a relative dearth of experiments that test and compare potential interventions.

“So when, in 1996, the Eastern Band of Cherokee Indians in North Carolina’s Great Smoky Mountains opened a casino, Jane Costello, an epidemiologist at Duke University Medical School, saw an opportunity. The tribe elected to distribute a proportion of the profits equally among its 8,000 members. Professor Costello wondered whether the extra money would change psychiatric outcomes among poor Cherokee families.”

Same idea, different tribe. How’d they do? We’ll find out next time.

The Success Delusion

poverty snareHow did the social safety net turn into a poverty trap? It was a victim of the success of the job as an economic force.

Psychologists call it “the success delusion.” You do something and get a result you like, so you keep doing it, expecting more of the same. It keeps working until one day it doesn’t. Do you try something new? No, you double down — it worked before, surely it will work again. You keep doubling down until you’ve made a mess.

You’re a victim of your own success. If you could listen, hindsight would tell you that there was more to it than what you were doing, that a lot of what happened was you being in the right place at the right time. You might believe that or not, but what matters now is that the times changed and you didn’t.

That’s what happened to social welfare. 40 years of post-WWII economic success positioned the steady job as the cornerstone of economic prosperity and upward mobility. Then, in the 80’s and 90’s, about the time the job was starting to lose its economic vitality, policy-makers doubled down on it:  work had raised the welfare of the whole world since the days of the telegraph and railroad, and surely it was still the best route out of poverty. So now we had workfare instead of welfare, and, as we saw last time, social welfare became “a system of suspicion and shame.”

get-a-job

Standin’ in line marking time
Waiting for the welfare dime
‘Cause they can’t buy a job
The man in the silk suit hurries by
As he catches the poor old lady’s eyes
Just for fun he says, “Get a job.”

That’s The Way It Is”
Bruce Hornsby and the Range

Rutger Bregman sums it up this way:

“We’re saddled with a welfare state from a bygone era when the breadwinners were still mostly men and people spent their whole lives working at the same company. The pension system and employment protection rules are still keyed to those fortunate to have a steady job, public assistance is rooted in the misconception that we can rely on the economy to generate enough jobs, and welfare benefits are often not a trampoline, but a trap.”

Utopia for Realists (2017)

Guy Standing explains it this way:

“The period from the nineteenth century to the 1970’s saw what Karl Polanyi, in his famous 1944 book, dubbed “The Great Transformation.”

“The essence of labourism was that labour rights — more correctly , entitlements — should be provided to those (mostly men) who performed labour and to their spouses and children.

“Those in full-time jobs obtained rising real wages, a growing array of ‘contributory’ non-wage benefits, and entitlements to social security for themselves and their family. As workers previously had little security, this was a progressive step.

“Labourism promoted the view that the more labour people did, the more privileged they should be, and the less they did the less privileged they should be. The ultimate fetishism was Lenin’s dictate, enshrined in the Soviet constitution, that anybody who did not labour should not eat.

“The labourist model frayed in the 1980’s, as labour markets became more flexible and increasing numbers of people moved from job to job and in and of employment.

“To defend labour-based welfare, social democratic governments turned to means testing, targeting benefits on those deemed the deserving poor.

“The shift to means testing was fatal. As previous generations of social democrats had understood, benefits designed only for the poor are invariably poor benefits and stand to lose support among the rest of society.

“Ironically, it was mainly social democratic parties that shifted policy towards workfare, requiring the unemployed to apply for non-existent or unsuitable jobs, or to do menial, dead-end jobs or phony training courses  in return for increasingly meagre benefits.

“Today, we are living in a Second Gilded Age — with one significant difference. In the first, which ended in the Great Crash of 1929, inequality grew sharply but wages on average rose as well. The Second Gilded Age has also involved growing inequality, but this time real wages on average have stagnated or fallen. Meanwhile, those relying on state benefits have fallen further behind, many pushed into homelessness, penury and dependence on inadequate private charity.

“Since the 1980s, the share of income going to labour has shrunk, globally and in most countries of economic significance… The labour share fell in the USA from 53 per cent in 1970 to 43.5 per cent in 2013. Most dramatically, it slid by over twenty percentage points in China and also dropped steeply in the rising industrial giant of South Korea.

“Besides falling wages, there has been an increase in wage differentials and a less-documented decline in the share of people receiving non-wage benefits, such as occupational pensions, paid holidays, sick leave or medical coverage. Thus worker compensation, in terms of ‘social income,’ has fallen by more than revealed by wages alone.

“As a consequence of these developments, ‘in-work poverty’ has rocketed. In some OECD [Organisation for Economic Cooperation and Development — 34 industrialized member countries], including Britain, the USA, Spain and Poland, a majority of those in poverty live in households where at least one person has a job.

“The mantra that ‘work is the best route out of poverty’ is simply false.”

The Corruption of Capitalism (2017)

Not only are jobs doing a poor job at social welfare — for both employed and unemployed alike — but they are themselves an endangered species. More to come…