Free Market Capitalism: Miracles, Magic, and Mental Illness

 

Free market economics promised magic.
We got the Hustle instead.

The Miracle-That-Isn’t

This year’s State of the Union Address featured an “economic miracle,” citing economic growth, decreased unemployment, and a soaring stock market. There’s nothing miraculous about any of that. It’s all on purpose. The U.S. economy is doing exactly what it’s designed to do — promote capitalism for capitalists — and it’s hitting on all cylinders.

Capitalists are people and companies with access to capital: the corporate nation-states and the people who own and manage them; the entrepreneurs who start them; and the financial firms who trade their securities. U.S. economic policy provides structural support for the massive amount of worldwide capital: low corporate taxes leave more profits in the companies’ coffers, and low capital gains taxes generate higher returns for those who provide the capital.

Since the new USA tax policy went into effect after the 2016 election, corporations have been using their profits to buy back their own securities in record amounts. Stock buybacks are easier to predict than corporate quarterly performance and dividends; instead, you get cash payouts on schedule. As for the shares that remain, when a company takes some of its shares off the market, the ones left are worth more – same numerator, smaller denominator. That’s good for the remaining shareholders and for executive compensation, which is largely based on share value. Stock buybacks have become what Goldman Sachs called the “dominant” reason for stock market demand.[1] Again, all of that is by design, and if you’re a corporation or investor, the Miracle-That-Isn’t is working just fine for you.

How’s all this working for the non-capitalists?

The Magic That Isn’t

Google “state of the union economic miracle,” and the results are predictable. The right crows over robust growth, the left nitpicks over percentage points, and neither side mentions that non-capitalists aren’t benefiting from the economic Miracle-That-Isn’t – none of that robust economic growth gets to them.

Non-capitalists don’t make money from capital, they work for a living, and their ranks include small businesses and self-employed individuals — your local tech consultant, plumber, florist, bookstore owner, micro-brewer. They aren’t capitalists. They’re not entrepreneurs either. Starting a business on a credit card, pledging your home as collateral, spending your savings to pursue a dream… those things don’t make you a capitalist.

All these working people were supposed to benefit from the same “free market” economic theory that’s powering the economic Miracle-That-Isn’t. This was supposed to happen because benefits at the top would “trickle down” to those below. (The term “trickle down” has been around since the 80’s. We don’t seem to notice that it’s condescending and stingy.) This theory was championed by Nobel prize-winning economist Milton Friedman and the Chicago School of Economics:

“The core of [the school’s teaching on the free market] was that the economic forces of supply, demand, inflation and unemployment were like the forces of nature, fixed and unchanging. In the truly free market imagined in Chicago classes and texts, these forces existed in perfect equilibrium, supply communicating with demand the way the moon pulls the tides

“Just as ecosystems self-regulate, keeping themselves in balance, the market, left to its own devices, would create just the right number of products at precisely the right prices, produced by workers at just the right wages to buy those products — an Eden of plentiful employment, boundless creativity and zero inflation.[2]

As we’ve seen previously, although Friedman and his colleagues characterized their capitalist vision as science, it wasn’t; it was instead a belief system, promoted with religious zeal. The belief was that “trickle down” would happen automatically, like magic. All you had to do was give capitalists free reign — cut taxes, provide trade protection and other incentives — and the economy would grow, the capitalists would get rich, and everybody else would be better off, too.

That’s the theory. Has it worked?

U.S. economic policy has given free market economics its best shot for four decades, including that most recent all-in super-size of the current administration. We now have the empirical data Friedman & Co. didn’t. What it shows is that the policy truly works at the top, but there’s no trickle down.

Trickle-down doesn’t happen magically.
It happens deliberately.
It happens when it’s part of the plan.
And when the plan is carefully executed.

Intentional trickle down policies need to work both sides of the ledger – income and expenses. For example, you could collect tax revenues on some of that newly-created economic “miracle” wealth and spend it for the benefit of the Public (which includes the capitalists). Trouble is, as we’ve seen previously, free market economics has eliminated the Public from policy-making. That leaves low unemployment as the best chance to move money to the pockets of the people who work for a living. But that’s not effective either, because not all jobs are created equal.

Jobs for the Poor

Free market economics’ belief that low unemployment is the best way to benefit non-capitalists has made jobs a sacred cultural norm. Young? Just starting out? Poor? Can’t make ends meet? Get a job! Jobs are morally right – they build character, they’re how you make your way in the world. Public goods and social safety nets are evil, but jobs are everlastingly good. If you don’t work (at a job), you don’t deserve to eat. (That’s in the Bible; [3].it’s also in Lenin’s The State and Revolution.) If unemployment is low, that means there are plenty of jobs to go around, and the slackers have no excuse.

Right?

Wrong.

The capitalist Miracle-That-Isn’t is not creating the kind of jobs that pay a living wage to full-time employees. The jobs are not full time, and the workers aren’t employees. Instead, the jobs are part of the new gig economy. The workers are self-employed contract labor, temporary and short-term. And since there is no Public good anymore, these new gig jobs have to pay enough to cover self-employed FICA and benefits, as well as living costs. That’s not happening, which means we now have something that sounds like a dance craze, but isn’t. We have…

The Hustle

The Hustle is what non-capitalists do when the Miracle-That-Isn’t creates gig jobs.

“Doing my taxes this year, I noticed that the W4 form has transformed into a somewhat confusing jumble of tables and boxes. In one of these boxes, you’re meant to identify if you’re working another job to make ends meet, like freelancing or picking up Instacart shifts. Basically, the form wants to know: “Are you hustling?”

“For most people I know, the answer is a resounding yes. A friend of mine is a talented videographer who bartends and takes odd jobs on the side. I know a preschool teacher who also babysits and moonlights as a Lyft driver. Two employees in my company run a side company and create content on Twitch. A fellow writer on Medium works a nine-to-five, then freelances in the evening. And me? I’m no different. I write, freelance in graphic design, and build websites to provide for my family.

“We’re hustling to make ends meet, ‘building our brand,’ ensuring our startup doesn’t tank, or dreaming about the day our side hustle takes off and we can walk into the office and give everyone the bird.

“Some of the things exacerbating Hustle Life™ are out of our control. I live in Austin, Texas, where the cost of living has skyrocketed in the past few years. Between 2017 and 2018, the cost of living rose by $20,000 per person, about a 33% increase. Also, the average CEO’s salary has grown by 940% since 1978, whereas their workers’ wages have grown by just 12%. It stands to reason, then, that most of us are hustling because we literally have to in order to survive.”[4]

The Hustle means living from paycheck to paycheck, with nothing left over for savings, home ownership, and other out-of-ordinary costs.

“It seems like everyone is just trying to make ends meet.

“One of the latest hashtag games making the rounds on Twitter TWTR, -4.31% invites social media users to provide pithy and honest answers to this open-ended statement: ‘With my next paycheck I will…’

“While these games generally draw amusing memes and witty zingers, many of the responses trending under #WithMyNextPayCheckIWill early Tuesday morning were pretty bleak, with ‘still be broke’ being the general consensus.

“This reflects just how many Americans are living paycheck to paycheck.

“Depending on the survey, that figure runs from half of workers making under $50,000 (according to Nielsen data) to 74% of all employees (per recent reports from both the American Payroll Association and the National Endowment for Financial Education.) And almost three in 10 adults have no emergency savings at all, according to Bankrate’s latest Financial Security Index.” [5]

Poor Becomes the Norm

When robust economic growth doesn’t tickle down, the gap widens between capitalists at the top and the poor at the bottom – this is the economic inequality that dominates economic news – and then the middle class falls into the gap and joins the poor. According to a 2017 Federal Consumer Financial Protection Bureau report,

“Measured by the By the Official Poverty Measure (OPM), more than 95 million Americans (nearly 30 percent of the total population) are either in poverty or considered ‘low-income’ (living below twice the poverty line) … That number rises to 140 million people (43.5 percent) when using the (SPM) [Supplemental Poverty Measure].”[6]

What do we mean by “poor”?

“The OPM was adopted in the mid-1960s and has garnered widespread criticism because it measures pretax income and food-purchasing power, updated yearly to account for inflation. That methodology, experts say, fails to capture many people struggling financially in modern society.

“The Census Bureau responded with the SPM, which since 2011 has measured after-tax income, food costs and other necessities such as clothing, housing and utilities. The SPM accounts for geographic variations in the cost of living, includes welfare benefits such as food stamps and housing subsidies, and subtracts child-care expenses.”[7]

Therefore, “poor” officially means you struggle with food, housing, utilities, and childcare. But what if you can’t come up with $500 to cover an unexpected expense[8] –does that count as a necessity? Or what about a car, washer and dryer, TV, air conditioning…maybe even home ownership, a shot at upward mobility, or relief from the insecurities of the gig economy? Are those necessities?

We have now landed squarely in the center of the necessity vs. luxury debate, which apparently will endure until the seas all melt, and to which the most reliable answer seems to be, it depends on what socio-economic level you’re talking about. For the middle class and up, things like a reliable car, smart phone, high-speed wireless, home ownership, savings… plus the occasional night out… are givens. As for the poor,

“There is a moralistic presumption that poor people, especially those receiving benefits, should not be spending money on anything but the bare essentials, denying themselves even the smallest ‘luxury’ that might make their lives less miserable.”[9]

If 32% – 43.5% of Americans are living at the official poverty line, the USA has truly become what one writer calls “the world’s first poor rich country.”[10] That means look left, look right, and one of you:

  • Does not plan for the future in the press of making ends meet right now;
  • Makes money and purchases stretch as far as possible;
  • Is shadowed by the what if? of emergencies and other unplanned costs;
  • Regularly opts out of social engagements for lack of funds;
  • Relies on unreliable transportation to get around;
  • Constantly sacrifices this in order to do and have that;
  • Does not ask for help because it’s too embarrassing and shameful.[11]

Things get worse when the poor become impoverished. Poor is lack of money, the inability to make ends meet. Poverty goes beyond poor: it is a mindset and belief system that drags the poor into a pit of mental ill health.

Why do the poor make so many dumb decisions?

The poor don’t, not necessarily. But the impoverished do. People use “poor” and “poverty” interchangeably, but not everyone who’s poor is also impoverished. The poor are poor because they lack money, but poverty goes further: it’s a chronic, grinding, demeaning, despairing condition that generates a specific outlook and way of approaching life. When that condition is shared, it becomes a culture. You might not know it when you’re around poor, but you definitely know it when you’re around poverty.

Poverty is institutionalized economic mental illness.

The Lost War on Poverty

“In the sixties we waged a war on poverty and poverty won.”

Ronald Reagan

Poverty is a “personality defect.”

Margaret Thatcher

That’s true: poverty won the war against it. But it’s also true that the poor lost.

The Gipper was referring to LBJ and his Great Society, but he got it wrong:  the Great Society failed to eliminate poverty because it never got all the way to dealing with it. Instead it took a more politically acceptable path focused on education and community involvement — not bad things, but there’s a difference.

As for the Iron Lady, there’s actually some truth in what she said, but almost certainly not in the way she probably meant it. She was more likely voicing the common attitude that the poor are intellectually impaired, morally flawed, prone to bad lifestyle choices, and criminally inclined, and therefore worthy of only the most grudging kind of help. That attitude and the Great Society reputed loss of its War on Poverty[12] explain a lot about today’s lack of safety nets for the poor – which, remember, refers to 40+ percent of Americans.

Rutger Bregman[13] tackles this subject in his book Utopia for Realists: And How We Can Get There (2017). (As smart and creative as he is, he still uses “poor” and “poverty” interchangeably. I wish he wouldn’t.):

“A world without poverty– it might be the oldest utopia around. But anybody who takes this dream seriously must inevitably face a few tough questions. Why are the poor more likely to commit crimes? Why are they more prone to obesity? Why do they use more alcohol and drugs? In short, why do the poor make so many dumb decisions?”

He continues with more tough questions:

“What if the poor aren’t actually able to help themselves? What if all the incentives, all the information and education are like water off a duck’s back? And what if all those well-meant nudges [toward self-help and away from government assistance] only make the situation worse?”

He then profiles the work of Eldar Shafir, a psychologist at Princeton, and Sendhill Mullainathan, an economist at Harvard, who formulated a theory of poverty based on the concept of “scarcity mentality.” Their research shows that the chronic poor are really good at scrambling after short term solutions, but tend to be inept at sustainable long-term thinking. It’s a matter of mental bandwidth: today’s urgency gets all the attention, leaving other matters to go begging (sometimes literally). In fact, their research estimates that poverty costs a person about 13-14 IQ points. In other words, living in a chronic state of being poor can eventually rewire the human brain to the point where clear thinking and prudent behavior are challenged. Hence the grain of truth in Margaret Thatcher’s comment that the poor have a “personality defect”: having your brain rewired by chronic poverty is a personality defect in the same way that a “personality disorder” is a mental illness.

Mental Illness On A Societal Level

But mental illness is not limited to impoverished individuals. It seems that economic policy may have created an entire “Generation of Sociopaths” of policy-makers and the people who elect them. That’s the premise of a book with that title.[14]

“What happens if a society is run by people who are, to a large degree, antisocial? I don’t mean people who are ‘antisocial’ in the general sense, the sort who avoid parties and hide from the neighbors, I mean people who are antisocial in the clinical sense: sociopaths. Could a sociopathic society function? Unfortunately, this is not a thought experiment or an investigation into some ramshackle dictatorship in a distant land; it is America’s lived experience. For the past several decades, the nation has been run by people who present, personally and politically, the full sociopathic pathology: deceit, selfishness, imprudence, remorselessness, hostility, and the works. Those people are the Baby Boomers, that vast and strange generation born between 1940 and 1964, and the society they created does not work very well.

“The goal of American politics has been, until the advent of the Boomers, the creation of a ‘more perfect Union’ and the promotion of the ‘general Welfare’ to ‘secure the Blessings of Liberty to ourselves and our Posterity.’ The Constitution promises as much, and over time America generally made good on that promise, first to a few, then to many. By the twentieth century, constitutional abstractions had taken concrete form, and ‘Blessings’ in the modern vernacular were understood to mean the creation of an ever larger and more affluent middle class. If the middle was not doing well, neither was America. James Carville, the operative who brought Bill Clinton to power as the first Boomer president, understood that modern politics boiled down to ‘It’s the economy, stupid.’ And the Council of Economic Advisors (CEA) has made clear how to evaluate that economy: the ‘well-being of the middle class and those working to get into the middle class… is the ultimate test of an economy’s performance.’ [Citing the 2015 Economic Report of the President] Measured against the Constitution’s noble imperatives of the more prosaic words of Carville and the CEA, America generally made a great success of things for two centuries. Since the Boomer’s ascension to power, American has accomplished far too little, and in many important ways has slid backward.”

The book ticks through the diagnostics on the clinical sociopathic checklist — e.g. risk seeking, breakdown of relationship, lack of long-term thinking and short-term gratification – and cites a 1991 report[15] issued by the National Institute of Health” compiling the work of UCLA, Yale, Johns Hopkins, Washington, and Duke universities, using DSM (Diagnostic and Statistical Manual of Mental Disorders) criteria that found higher levels of antisocial personality disorder in the Boomer cohort. The result goes beyond poverty-related individual mental illness, to systemic cultural mental impairment. (I’ll be looking further at all of this in upcoming posts.)

Why Poverty Matters to Capitalists (or Should)

Capitalists are sometimes characterized as unsympathetic to the poor, but it’s clearly in their best interests not to be: a sustainable economy needs consumers to buy the stuff they make. The rich can only buy so much, then it’s up to the rest of us, but we can’t do our part if our gig income is gone too soon. Ironically, the neglected middle class will have the last laugh. But by then nobody will be laughing.

“The fundamental law of capitalism is: When workers have more money, businesses have more customers. Which makes middle-class consumers—not rich businesspeople—the true job creators. A thriving middle class isn’t a consequence of growth—which is what the trickle-down advocates would tell you. A thriving middle class is the source of growth and prosperity in capitalist economies.

“Our economy can be safe and effective only if it is governed by rules. Some capitalists actually don’t care about other people, their communities, or the future. Their behavior, if left unchecked, has a massive effect on everyone else.

“The danger is that economic inequality always begets political inequality, which always begets more economic inequality. Low-wage workers stuck on a path to poverty are not only weak customers; they’re also anemic taxpayers, absent citizens, and inattentive neighbors.

“Economic prosperity doesn’t trickle down, and neither does civic prosperity. Both are middle-out phenomena. When workers earn enough from one job to live on, they are far more likely to be contributors to civic prosperity—in your community. Parents who need only one job, not two or three to get by, can be available to help their kids with homework and keep them out of trouble—in your school. They can look out for you and your neighbors, volunteer, and contribute—in your school and church. Our prosperity does not all come home in our paycheck. Living in a community of people who are paid enough to contribute to your community, rather than require its help, may be more important than your salary.

“Prosperity and poverty are like viruses. They infect us all—for good or ill.

“An economic arrangement that pays a Wall Street worker tens of millions of dollars per year to do high-frequency trading and pays just tens of thousands to workers who grow or serve our food, build our homes, educate our children, or risk their lives to protect us isn’t an expression of the true value or economic necessity of these jobs. It simply reflects a difference in bargaining power and status.

“Inclusive economies always outperform and outlast plutocracies. That’s why investments in the middle class work, and tax breaks for the rich don’t. The oldest and most important conflict in human societies is the battle over the concentration of wealth and power. Those at the top will forever tell those at the bottom that our respective positions are righteous and good for all. Historically we called that divine right. Today we have trickle-down economics.

“Some of the people who benefit most from that explanation are desperate for you to believe this is the only way a capitalist economy can work.

“The trickle-down explanation for economic growth holds that the richer the rich get, the better our economy does. But it also clearly implies that if the poor get poorer, that must be good for our economy. Nonsense.” .[16]::

What IS Magical and Miraculous

One thing that truly is miraculous about all this is that Americans persist in debating what’s a necessity and what’s a luxury. Why wouldn’t we want everybody to have as much as possible? Instead we concede luxuries to the capitalists but begrudge them to non-capitalists.

Similarly, Americans also persist in debating whether money can buy happiness, when we all know that of course it can, because it can buy things that make us happy – things like food, clothing, a place of our own, clean water to drink and take a shower in, safety and health, a chance to improve ourselves, a net to catch us if dreams don’t come true… all those things that used to be considered part of the Public Good. Countries that still provide those things for their citizens are the happiest in the world.[17] Countries that don’t – like the USA and the former Soviet Union – turn their citizens into a mob of stressed, afraid, hustling, poverty-avoiders who cast our sociopathic votes to elect sociopathic representatives who perpetuate more of the same.

Why?

  • Why wouldn’t we want all those things for ourselves, and for the people around us?
  • Why wouldn’t we think that having all those things is a sign that the human race is making progress, that we’re improving our lives, our world?
  • Why do we instead cling to the self-righteous and self-defeating notion that moral character requires suffering with unmet needs, poverty, and jobs that don’t pay the bills?
  • Why do we want our lives to be precarious and unhappy instead of secure and joyful?

And you know what else is miraculous?

That nobody notices the contradictions and double standards, how we perpetuate cultural norms that work against our own best interests, or that both economic growth and trickle down can’t happen without economic policies that favor both capitalists and non-capitalists.

  • The capitalists don’t notice.
  • The capitalist policy-makers don’t notice.
  • The non-capitalists don’t notice;
  • The former middle class — now the new poor — don’t notice.
  • The voters don’t notice.

The impoverished and the sociopaths don’t notice either, but we wouldn’t expect them to.

But wait — I guess it’s not quite true that nobody notices. I mean, the people quoted in this article notice, and they’re not nobody. But still…

I think we need a longer list of people who notice. A much longer list.

[1] See, for example: Share Buybacks Could Approach Record Levels In 2020 After 2019 Fell Short, S&P Global Market Intelligence (Feb. 13, 2020); Stocks To Buy For Buybacks, Forbes (Jan. 17, 2020); Buybacks Are The ‘Dominant’ Source Of Stock-Market Demand, And They Are Fading Fast: Goldman Sachs, MarketWatch (Nov. 9, 2019).

[2] The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein (2017)

[3] “If any man does not work, neither let him eat.” 2 Thessalonians 3:10

[4] Sledge, Benjamin, We’ve Embraced the Hustle Life, and It’s Making Us Miserable, Medium (Mar. 5, 2020).

[5] A shocking number of Americans are living paycheck to paycheck, MarketWatch (Jan. 11, 2020).

[6] Joe Biden apparently got his math wrong when he said half of Americans are poor – see Fact Checker: Joe Biden’s Claim That ‘Almost Half’ Of Americans Live In Poverty, The Washington Post (June 20, 2019). Right-leaning Ballotpedia also corrected Biden’s math, concluding that only 32% of Americans are technically poor. On the other hand, progressive Common Dreams is sticking with one-half.

[7] Again from The Washington Post’s Fact Checker:

[8] A $500 surprise expense would put most Americans into debt, CBS New Money Watch (Jan. 12, 2017).

[9] Standing, Guy, Basic Income:  A Guide For the Open-Minded, Guy Standing (2017).

[10] Hague, Umair, Why America is the World’s First Poor Rich Country, Medium (May 23, 2018).

[11] Everyday Things Poor People Worry About That Rich People Never Do, Everyday Feminism (May 7, 2015),

[12] Not everyone agrees that we lost the War on Poverty. See this article that considers both sides.

[13] Rutger Bregman is a historian and author. He has published five books on history, philosophy, and economics. His book Utopia for Realists was a New York Times Bestseller and has been translated in 32 languages. The Guardian called him “the Dutch wunderkind of new ideas.”’

[14] Gibney, Bruce Cannon, A Generation of Sociopaths: How the Baby Boomers Betrayed America (2018). “Sure to be controversial,” Fortune said about the book, and it certainly is that.

[15] Psychiatric Disorders in America,

[16] A Wealthy Capitalist on Why Money Doesn’t Trickle Down, Yes! Magazine (Sept. 10, 2019).

[17] While free market indoctrinated Americans seems to have a bad case of being right instead of being happy, the social democracies that feature the public good routinely score the highest in The World Happiness Reporta list dominated by the Scandinavians:Finland again takes the top spot as the happiest country in the world according to three years of surveys taken by Gallup from 2016-2018. Rounding out the rest of the top ten are countries that have consistently ranked among the happiest. They are in order: Denmark, Norway, Iceland, Netherlands, Switzerland, Sweden, New Zealand, Canada and Austria. The US ranked 19th dropping one spot from last year.”

Horatio Alger is Dead, America Has a New Class Structure, and it’s Not Your Fault

horatio alger

January 23, 2020

The member of the month at the gym where I work out is a guy who looks like he’s in his early 20’s. One of the “get to know me” questions asks “Who motivates you the most?” His answer: “My dad, who taught me that hard work can give you anything, as long as you can dedicate time and effort.”

The answer is predictably, utterly American. “Hard work can give you anything” — yes of course, everybody knows that. Parents tell it to their kids, and the kids believe it. America is the Land of Opportunity; it gives you every chance for success, and now it’s up to you. “Anything you want” is yours for the taking – and if you don’t take it, that’s your problem, not America’s.

Except it’s not true, and we know that, too. We know that you can work really, really hard and dedicate lots and lots of time and effort (and money), and still not get what you want.

Why do we keep saying and believing something that isn’t true? Why don’t we admit that things don’t actually work that way? Because that would be un-American. So instead we elevate the boast: America doesn’t just offer opportunity, it gives everybody equal opportunity — like Teddy Roosevelt said:

“I know perfectly well that men in a race run at unequal rates of speed.
I don’t want the prize given to the man who is not fast enough to win it on his merits, but I want them to start fair.”

Equal opportunity means everybody starts together. No, not everybody wins, but still… no matter who you are or where you’re from, everybody has the same odds. None of that landed gentry/inherited wealth class system here.

Except that’s not true either, and we know that, too.

But we love the equal opportunity myth. We love the feeling of personal power – agency, self-efficacy – it gives us. It’s been grooved into our American neural circuits since the beginning:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the .pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”[1]

We’re all equals here in America, divinely ordained to pursue the good life. That’s our creed, and we – “the governed” — declare that we believe it.

Even if it’s not true.

Equal opportunity is a foundational American cultural belief. Cultural myths are sacred – they’re afforded a special status that makes them off limits to examination. And national Founding Myths get the highest hands-off status there is.

Never mind that the Sacred doesn’t seem to mind being doubted – it’s the people who believe something is sacred you have to watch out for. And never mind that history and hindsight have a way of eventually outing cultural myths – exposing them as belief systems, not absolute truths. But it’s too late by the time history has its say: the fraud is perpetrated in the meantime, and attempts to expose it are shunned and punished as disloyal, unpatriotic, treasonous.

If we can’t out the myth, what do we do instead? We blame ourselves. If we don’t get “anything you want,” then we confess that we didn’t work hard enough, didn’t “dedicate the time and effort,” or maybe we did all that but in the wrong way or at the wrong time. Guilt, shame, embarrassment, frustration, depression… we take them all on as personal failings, in the name of preserving the myth.

You may have seen the Indeed commercial. (Go ahead, click it – it’s only 30 seconds.)

Indeed advert

It brilliantly taps the emotional power of the equal opportunity myth.

“With no choice but to move back home after college, they thought he’d be a little more motivated to find a job.”

The kid is glued to his phone, and it’s driving his parents crazy. He’s obviously a slacker, a freeloader. Household tensions mount. The phone dings at the dinner table. Dad snatches it up.

“Turns out, they were right.”

He’s using it to find a job! Faith and family harmony restored! That’s our hard-working boy!

Heartwarming, but still untrue.

But What About the Strong Job Numbers?

Yes, unemployment is low. But consider this analysis of those numbers[2], just out this month:

“Each month, the Bureau of Labor Statistics releases its Employment Situation report (better known as the ‘jobs report’) to outline the latest state of the nation’s economy. And with it, of late, have been plenty of positive headlines—with unemployment hovering around 3.5%, a decade of job growth, and recent upticks in wages, the report’s numbers have mostly been good news.

“But those numbers don’t tell the whole story. Are these jobs any good? How much do they pay? Do workers make enough to live on?

“Here, the story is less rosy.

“In a recent analysis, we found that 53 million workers ages 18 to 64—or 44% of all workers—earn barely enough to live on. Their median earnings are $10.22 per hour, and about $18,000 per year. These low-wage workers are concentrated in a relatively small number of occupations, including retail sales, cooks, food and beverage servers, janitors and housekeepers, personal care and service workers (such as child care workers and patient care assistants), and various administrative positions.

“Just how concerning are these figures? Some will say that not all low-wage workers are in dire economic straits or reliant on their earnings to support themselves, and that’s true. But as the following data points show, it would be a mistake to assume that most low-wage workers are young people just getting started, or students, or secondary earners, or otherwise financially secure:

      • Two-thirds (64%) of low-wage workers are in their prime working years of 25 to 54.
      • More than half (57%) work full-time year-round, the customary schedule for employment intended to provide financial security.
      • About half (51%) are primary earners or contribute substantially to family living expenses.
      • Thirty-seven percent have children. Of this group, 23% live below the federal poverty line.
      • Less than half (45%) of low-wage workers ages 18 to 24 are in school or already have a college degree.

“These statistics tell an important story: Millions of hardworking American adults struggle to eke out a living and support their families on very low wages.”

When the kid got a text at the dinner table, it was about one of these jobs. Mom and Dad better get used to the idea that he’ll be around for awhile. Even if he gets that job, it won’t offer benefits, could end at any moment, and won’t pay him enough to be self-sustaining. That’s not how Mom and Dad were raised or how things went for them, but that’s how the economy works nowadays.

Economics Begets Social Structure

The even bigger issue is that the equal opportunity myth has become a social norm: uber-competitive free market economics controls the collective American mindset about how adult life works, to the point that it’s become a nationalist doctrine.

The Chicago School of Economics – the Vatican of free marketism — believed so ardently in its on doctrines that its instructional approach took on the dynamics of fundamentalist indoctrination:

“Frank Knight, one of the founders of Chicago School economics, thought professors should ‘inculcate’ in their students the belief that economic belief is ‘a sacred feature of the system,’ not a debatable hypothesis.’”[3]

Free market ideology preaches that capitalism promotes both economic and social opportunity. It has had the past four decades to prove that claim, and has failed as spectacularly as Soviet-style communism failed to benefit the workers it was supposed to redeem. Instead, free market ideology has given America what it wasn’t ever supposed to have: a stratified socio-economic class system that skews rewards to the top 10% and leaves the rest in the grip of the dismal statistics listed above.

But we don’t see that – or if we do, we don’t say anything about it, we just keep reciting the “trickle down” mantra. Member of the month and his Dad and the parents in the Indeed commercial and most Americans still believe the myth. Ironically the ones who see through it are the top 10% members who got in before they closed the gates. Meanwhile, the lower 90% — the decimated middle class, the new poor, the hard-working wage-earners – keep blaming themselves.

Even though it’s not their fault. If the kid in the commercial can’t find a job to support himself, it’s not his fault.

“I can’t pay my bills, afford a house, a car, a family. I can’t afford healthcare, I have no savings. Retirement is a joke. I don’t know how I’ll ever pay off my student loans. I live paycheck to paycheck. I’m poor. But it’s not my fault.”

Try saying that to Dad at the dinner table.

But unlike “anything you want,” “it’s not your fault” is true: current economic policy and its companion social norms do not deliver equal opportunity. Horatio Alger is dead, but the equal opportunity myth lives on life support as we teach it to our children and elect politicians who perpetuate it, while all of us ignore the data.

Horatio Alger is Dead

There’s no more enduring version of the upward mobility ideal than the rags-to-riches story codified into the American Dream by Horatio Alger, Jr. during the Gilded Age of Andrew Mellon, John D. Rockefeller, Cornelius Vanderbilt, Andrew Carnegie, and the rest of the 19th Century Robber Barons. If they can do it, so can the rest of us, given enough vision, determination, hard work, and moral virtue — that was Alger’s message. Except it never worked that way, especially for the Robber Barons – opportunists aided by collusion and chronyism carried out in the absence of the antitrust and securities laws that would be enacted under the New Deal after history revealed the fraud.[4]

But never mind that — according to Roughrider Teddy and politicians like him, government’s job is to guarantee equal opportunity for all, then get out of the way and let the race to riches begin. Thanks to our devotion to that philosophy, a fair start has become is a thing of the past — so says Richard V. Reeves in his book Dream Hoarders.

Reeves begins by confessing that his disenchantment over the demise of the Horatio Alger ideal will no doubt seem disingenuous because he didn’t grow up American and is now a member of the economic elite himself:

“As a Brookings senior fellow and a resident of an affluent neighborhood in Montgomery County, Maryland, just outside of DC, I am, after all, writing about my own class.

“I am British by birth, but I have lived in the United States since 2012 and became a citizen in late 2016. (Also, I was born on the Fourth of July.) There are lots of reasons I have made America my home. But one of them is the American ideal of opportunity. I always hated the walls created by social class distinctions in the United Kingdom. The American ideal of a classless society is, to me, a deeply attractive one. It has been disheartening to learn that the class structure of my new homeland is, if anything, more rigid than the one I left behind and especially so at the top.

“My new country was founded on anti-hereditary principles. But while the inheritance of titles or positions remains forbidden, the persistence of class status across generations in the United States is very strong. Too strong, in fact, for a society that prides itself on social mobility.”

Reeves also wrote a Brookings Institute monograph called Saving Horatio Alger: Equality, Opportunity, and the American Dream, in which he said the following:

“Vivid stories of those who overcome the obstacles of poverty to achieve success are all the more impressive because they are so much the exceptions to the rule. Contrary to the Horatio Alger myth, social mobility rates in the United States are lower than in most of Europe. There are forces at work in America now — forces related not just to income and wealth but also to family structure and education – that put the country at risk of creating an ossified, self-perpetuating class structure, with disastrous implications for opportunity and, by extension, for the very idea of America.

“The moral claim that each individual has the right to succeed is implicit in our ‘creed,’ the Declaration of Independence, when it proclaims ‘All men are created equal.’

“There is a simple formula here — equality plus independence adds up to the promise of upward mobility — which creates an appealing image: the nation’s social, political, and economic landscape as a vast, level playing field upon which all individuals can exercise their freedom to succeed.

“Many countries support the idea of meritocracy, but only in America is equality of opportunity a virtual national religion, reconciling individual liberty — the freedom to get ahead and “make something of yourself” — with societal equality. It is a philosophy of egalitarian individualism. The measure of American equality is not the income gap between the poor and the rich, but the chance to trade places.

“The problem is not that the United States is failing to live up to European egalitarian principles, which use income as a measure of equality. It is that America is failing to live up to American egalitarian principles, measured by the promise of equal opportunity for all, the idea that every child born into poverty can rise to the top.”

There’s a lot of data to back up what Reeves is saying. See, e.g., this study from Stanford, which included these findings:

“Parents often expect that their kids will have a good shot at making more money than they ever did…. But young people entering the workforce today are far less likely to earn more than their parents when compared to children born two generations before them, according to a new study by Stanford researchers.”

The New American Meritocracy

Along with Richard Reeves, philosopher Matthew Stewart and entrepreneur Steven Brill cite the same economic and related social data to support their conclusion that the new meritocrat socio-economic class has barred the way for the rest of us. I’ll let Matthew Stewart speak for the others[5]:

“I’ve joined a new aristocracy now, even if we still call ourselves meritocratic winners. To be sure, there is a lot to admire about my new group, which I’ll call—for reasons you’ll soon see—the 9.9 percent. We’ve dropped the old dress codes, put our faith in facts, and are (somewhat) more varied in skin tone and ethnicity. People like me, who have waning memories of life in an earlier ruling caste, are the exception, not the rule.

“By any sociological or financial measure, it’s good to be us. It’s even better to be our kids. In our health, family life, friendship networks, and level of education, not to mention money, we are crushing the competition below.

“The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people’s children. We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy. Our delusions of merit now prevent us from recognizing the nature of the problem that our emergence as a class represents. We tend to think that the victims of our success are just the people excluded from the club. But history shows quite clearly that, in the kind of game we’re playing, everybody loses badly in the end.

“So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1 percent. We’re a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque job titles, and assorted other professionals—the kind of people you might invite to dinner. In fact, we’re so self-effacing, we deny our own existence. We keep insisting that we’re ‘middle class.’

“One of the hazards of life in the 9.9 percent is that our necks get stuck in the upward position. We gaze upon the 0.1 percent with a mixture of awe, envy, and eagerness to obey. As a consequence, we are missing the other big story of our time. We have left the 90 percent in the dust—and we’ve been quietly tossing down roadblocks behind us to make sure that they never catch up.”

Two Stories, One Man

In a remarkable display of self-awareness and historical-cultural insight, Stanford professor David Labaree admits that his own upward mobility story can be told two ways — one that illustrates the myth and one that doesn’t, depending on your point of view.[6]

“Occupants of the American meritocracy are accustomed to telling stirring stories about their lives. The standard one is a comforting tale about grit in the face of adversity – overcoming obstacles, honing skills, working hard – which then inevitably affords entry to the Promised Land. Once you have established yourself in the upper reaches of the occupational pyramid, this story of virtue rewarded rolls easily off the tongue. It makes you feel good (I got what I deserved) and it reassures others (the system really works).

“But you can also tell a different story, which is more about luck than pluck, and whose driving forces are less your own skill and motivation, and more the happy circumstances you emerged from and the accommodating structure you traversed. As an example, here I’ll tell my own story about my career negotiating the hierarchy in the highly stratified system of higher education in the United States. I ended up in a cushy job as a professor at Stanford University.

“Is there a moral to be drawn from these two stories of life in the meritocracy? The most obvious one is that this life is not fair. The fix is in. Children of parents who have already succeeded in the meritocracy have a big advantage over other children whose parents have not. They know how the game is played, and they have the cultural capital, the connections and the money to increase their children’s chances for success in this game.

“In fact, the only thing that’s less fair than the meritocracy is the system it displaced, in which people’s futures were determined strictly by the lottery of birth. Lords begat lords, and peasants begat peasants. In contrast, the meritocracy is sufficiently open that some children of the lower classes can prove themselves in school and win a place higher up the scale.

“The probability of doing so is markedly lower than the chances of success enjoyed by the offspring of the credentialed elite, but the possibility of upward mobility is nonetheless real. And this possibility is part of what motivates privileged parents to work so frantically to pull every string and milk every opportunity for their children.”

Pause for a moment and wonder, as I did, why would the new meritocrats write books and articles like these? Is it a case of Thriver (Survivor) Guilt? Maybe, but I think it’s because they’re dismayed that their success signals the end of the American equal opportunity ideology. You don’t trample on something sacred. They didn’t mean to. They’re sorry. But now that they have, maybe it wasn’t so sacred after all.

The new socio-economic class system was never supposed to happen in America. We weren’t supposed to be like the Old World our founders left behind. But now we are, although most of us don’t seem to know it, and only a few brave souls will admit it. Meanwhile the Horatio Alger mansions are all sold out, and the gate to the community is locked and guarded. That kind of thing just doesn’t happen in America.

Until it did.

[1] The Declaration of Independence.

[2] Low Employment Isn’t Worth Much if the Jobs Barely Pay, The Brookings Institute, Jan. 8, 2020.

[3] The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein (2017).

[4] The best source I’ve found for the American history we never learned is Americana: A 400-Year History of American Capitalism, Bhu Srinivasan (2017).

[5] Matthew Stewart is the author of numerous books and a recent article for The Atlantic called The 9.9 Percent is the New American Meritocracy. Steven Brill is the founder of The American Lawyer and Court TV, and is the author of the book Tailspin: The People and Forces Behind America’s Fifty-Year Fall–and Those Fighting to Reverse It and also the writer of a Time Magazine feature called How Baby Boomers Broke America. The quoted text is from Stewart’s Atlantic article.

[6] Pluck Versus Luck, Aeon Magazine (Dec. 4. 2019) –“Meritocracy emphasises the power of the individual to overcome obstacles, but the real story is quite a different one.”

Progressive Capitalism

torn dollar bill

Torn dollar bill image source and license.

We’ve been looking at economic winners and losers in the zero-sum economy — particularly in the context of higher education, where cultural belief in the importance of college and post-graduate degrees on upward mobility and success in the job market is driving behavior that harms both parents (the college admissions scandal) and the economic and mental health of their children (student loan debt, general anxiety disorder, depression, suicide).

This series of blog posts is now in its third year — throughout, we’ve seen how hyper-competitive capitalism and its staunch faith in the implicit justice of the “free” market is causing other economic loses. For example:

  • the stagnation of middle class real incomes;
  • the rise of the numbers of statistically poor people in the U.S.;
  • the dismantling of compassionate social safety nets in favor of expensive, counterproductive, and humiliating replacements;
  • the rise of the “rentier” economy in which formerly public benefits have been privatized, making them accessible only to those who can afford them through the payment of economic “rents”;
  • the end of the American ideal of upward social and economic mobility;
  • the high cost of housing and the death of the American dream of home ownership;
  • the elimination of “normal” jobs through off-shoring, outsourcing, and the delegation of productivity to intelligent machines;
  • the advent of the short-term, contract-based “gig economy” with its lack of fringe benefits and its precarious prospects for sustainable income;
  • economic inequality that favors the wealthiest of capitalists at the expense of the bottom 90% (or 99%, or 99.9%, depending on your data and point of view);
  • the creation instead of an insular top-level “meritocrat” socio-economic class;
  • the new state of “total work” and the “monetization” of goods and services;
  • rising rates of career burnout, mental illness, and suicide resulting from social isolation and the vain struggle to find meaning and purpose at work;
  • the rise of corporate nation-states with economic and policy-making power that dwarfs that of many governmental nation-states;
  • the private (non-democratic) social policy-making initiatives of the wealthiest elites;
  • and much, much more.

Nobody meant economic policy to do this, but it has, for roughly the past 30-40 years. Good intentions; unplanned results.

We’ve seen that both plutocrats and progressives advocate for systemic change, while status quo inertia weighs in on the side of those who don’t see what all the fuss is about, since capitalism is undeniably the best economic option and always has been, and besides it’s still working just fine, thank you very much. Instead of meaningful discourse, we have a predominant nostalgic, populist doubling down on the neoliberal socio-economic cultural ideology that jet-propelled post-WWII recovery but finished running its course in the 1970s, while the retrenchers and the media slap those who beg to differ with the kiss-of-death label “progressive.” As a result, we’re left with incessant lobbing from one end of the polarized spectrum to the other of ideological bombs that originate in data and analysis skewed by cognitive biases, intentional blindness, and fake news . Economic policy-making resembles WWI trench warfare — a tactical grinding down of the opposition and the numbing and dumbing of everyone else. It was a bad idea then, and it’s still a bad idea now.

I had no idea this is what I was getting into when I decided three years ago to research and write about the new economy and the future of work.

It’s in the context of this toxic environment that Economics Nobel Laureate Joseph E. Stiglitz, offered his “progressive capitalism” alternative, based on “the power of the market to serve society.” Progressive Capitalism Is Not an Oxymoron: We can save our broken economic system from itself, New York Times (April 19, 2019). His article, like virtually all of the economics books and articles I read these days, begins with a long parade of evils and ends with a handful of policy ideas. His version of the former is by now quite familiar:

“Despite the lowest unemployment rates since the late 1960s, the American economy is failing its citizens. Some 90 percent have seen their incomes stagnate or decline in the past 30 years.

“This is not surprising, given that the United States has the highest level of inequality among the advanced countries and one of the lowest levels of opportunity — with the fortunes of young Americans more dependent on the income and education of their parents than elsewhere.

“There is a broader social compact that allows a society to work and prosper together, and that, too, has been fraying. America created the first truly middle-class society; now, a middle-class life is increasingly out of reach for its citizens.

“We confused the hard work of wealth creation with wealth-grabbing (or, as economists call it, rent-seeking).

“Just as forces of globalization and technological change were contributing to growing inequality, we adopted policies that worsened societal inequities.

“Even as economic theories like information economics (dealing with the ever-present situation where information is imperfect), behavioral economics and game theory arose to explain why markets on their own are often not efficient, fair, stable or seemingly rational, we relied more on markets and scaled back social protections.

“Politics has played a big role in the increase in corporate rent-seeking and the accompanying inequality.

“Markets don’t exist in a vacuum; they have to be structured by rules and regulations, and those rules and regulations must be enforced.

“We are now in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.

“If we don’t change course matters will likely grow worse, as machines (artificial intelligence and robots) replace an increasing fraction of routine labor, including many of the jobs of the several million Americans.

“The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society.

“Progressive capitalism is based on a new social contract between voters and elected officials, between workers and corporations, between rich and poor, and between those with jobs and those who are un- or underemployed.

“Part of this new social contract is an expanded public option for many programs now provided by private entities or not at all

“This new social contract will enable most Americans to once again have a middle-class life.

“The neoliberal fantasy that unfettered markets will deliver prosperity to everyone should be put to rest.

“America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people.”

His point seems to be that merely reciting litanies of economic woes won’t bring about systemic relief — for that, we need to embrace an essential factor:

Paradigms only shift when culture  shifts:
new ideas require new culture to receive them,
and new culture requires new belief systems.

Systemic change requires cultural change — remodeled institutions and revised social contracts that tether ideas to real life. Trying to patch policy ideas into the existing socio-economic system is like what would happen if a firm were to abruptly change its products, services, and strategic and marketing plans without bothering to change its mission statement, values and beliefs, and firm culture.

Like that’s going to work.

Coming up, we’ll look beyond policy bombs to the higher ground of revised cultural beliefs, starting with next week’s search for the “public” that’s gone missing from the Republic.

Can Capitalism Buy Happiness?

smiley face

Over two years ago, the first blog post in this series asked, “Can money buy happiness?” Today’s question looks past the medium of economic exchange to the more foundational sociological and psychological implications of contemporary hyper-competitive capitalism — a good example of which is the “meritocracy trap” we looked at last time, which clearly is not making capitalism’s elite happy, but instead is driving maladaptive behavior like the college admissions scandal.

The scandal evokes the kind of horrified fascination you get from reading the National Enquirer headlines in the checkout line:

“A teenage girl who did not play soccer magically became a star soccer recruit at Yale. Cost to her parents: $1.2 million.

“A high school boy eager to enroll at the University of Southern California was falsely deemed to have a learning disability so he could take his standardized test with a complicit proctor who would make sure he got the right score. Cost to his parents: at least $50,000.

“A student with no experience rowing won a spot on the U.S.C. crew team after a photograph of another person in a boat was submitted as evidence of her prowess. Her parents wired $200,000 into a special account.”

Actresses, Business Leaders and Other Wealthy Parents Charged in U.S. College Entry Fraud, New York Times (March 12, 2019)

What the…?

The parents who wrote those big checks now face a stiff legal price, but why did they do it in the first place? An ongoing discussion over the past several years[i] suggests an answer:  they did it because of the “meritocracy trap” as evident in higher education, — an economic necessity for more than just the elite — where the current dynamics of of how capitalism is practiced are a significant contributor to mental ill health.

A long article on that topic came out last weekend:  The Way Universities Are Run Is Making Us Ill’: Inside The Student Mental Health Crisis. The Guardian (Sept. 27, 2019). The subhead reads “A surge in anxiety and stress is sweeping UK campuses. What is troubling students, and is it the universities’ job to fix it?” The article’s U.K. examples mirror those that prompted the USA’s college admission scandal,. Predominant mental health issues on both sides of the Atlantic include general anxiety disorder, depression, and “an alarming number of suicides.” What’s behind all this? Consider these quotes from the article:

“In the drive to make universities profitable, there is a fundamental confusion about what they are for. As a result, there has been a shift from prizing learning as an end in itself to equipping graduates for the job market, in what for some can be a joyless environment.

“Studies have looked at the impact of social media, or lack of sleep caused by electronic devices, as well as the effects of an uncertain job market, personal debt and constricted public services.

“In his book Kids These Days: The Making of Millennials, Malcolm Harris … identifies the pressures of the labour market, rising student debt and a target-driven culture as contributing to steep increases in anxiety and depression among young people.

“Driving our universities to act like businesses doesn’t just cannibalise the joy of learning and the social utility of research and teaching; it also makes us ill,’ wrote Mark Crawford, then a postgraduate student union officer at UCL, in a 2018 piece for Red Pepper magazine… ‘It’s self-worth being reduced to academic outcomes, support services being cut, the massive cost of housing,’ he says.

“[Mental health authorities] have noticed a fall in participation. It’s getting harder to fill up events, most likely a symptom of the sharp increase in students living far away from campus to save money… Others have limited time as they juggle studies with paid work.

“For [Sean Cullen, a student featured in the article], money worries have been a grinding and ever-present aspect of his university experience. In his first year, he socialised more than he does now. But given that a single night out costs as much as a weekly food shop, he soon began to think twice about going out with friends. To complicate matters, the amount he receives from Student Finance England, the body responsible for student loans, changed year by year, with unpredictable amounts and repayment terms. “The financial aid is getting worse and worse, even though the cost of living is going up,” he says.

“In 2017, Cullen was elected as the student union’s disability officer… He heard accounts of mental health problems from hundreds of other students, many of whose experiences chimed with his own. ‘I’ve not yet met a student that hasn’t experienced high levels of stress while studying, whether it’s because of deadlines, balancing paid work, or problems with housing,’ he says.

“While many students survive more or less on their overdrafts, …many have mental health problems in their final year. ‘Nowadays, getting a degree doesn’t necessarily guarantee you a job, or not a better job than without one,’ he says.

“[The need to work many hours per week] has an impact not only on academic performance but on students’ ability to fully participate in university life.

“Students exhausted from working while studying full time, and still struggling to cover their basic living costs, are bound to be more anxious about deadlines and exams. ‘It’s all the environmental stuff that makes it more stressful… If you’re tired, you haven’t had time to study, you have to make a long journey to university, it’s all cumulative.’”

Cuts in social services, educational and housing costs, social isolation, student loans, constricted access to upward mobility, a stingy job market, precarious prospects for sustainable income, a struggle to find meaning and purpose at work… these are economic issues, not education issues. This series has looked at all of them. Next time we’ll look further into what’s behind them..

[1] See, for example, this NCBI study:  “Anxious? Depressed? You might be suffering from capitalism: Contradictory class locations and the prevalence of depression and anxiety in the United States.”

“What Do You Do?”

Anybody else remember when “networking” was something you did at cocktail parties? That was before it became a fact of computerized life — see this pictorial history . The idea of old-style networking mostly gets eye rolls these days — too much objectifying, I’d guess — but it’s not dead yet:  as this promo for Social Media Marketing World 2020 makes clear.

The standard cocktail party question is, of course, “What do you do?” Turns out we’ve been asking and answering that question the same way for 114 years — ever since German sociologist and political economist Max Weber published The Protestant Ethic and the Spirit of Capitalism.[1]

“We use the word ‘capitalism’ today as if its meaning were self-evident, or else as if it came from Marx, but this casualness must be set aside. ‘Capitalism’ was Weber’s own word and he defined it as he saw fit. Its most general meaning was quite simply modernity itself: capitalism was ‘the most fateful power in our modern life’. More specifically, it controlled and generated ‘modern Kultur’, the code of values by which people lived in the 20th-century West, and now live, we may add, in much of the 21st-century globe.

“The idea that people were being ever more defined by the blinkered focus of their employment was one he regarded as profoundly modern and characteristic.

“The blinkered professional ethic was common to entrepreneurs and an increasingly high-wage, skilled labour force, and it was this combination that produced a situation where the ‘highest good’ was the making of money and ever more money, without any limit. This is what is most readily recognisable as the ‘spirit’ of capitalism

“It is an extremely powerful analysis, which tells us a great deal about the 20th-century West and a set of Western ideas and priorities that the rest of the world has been increasingly happy to take up since [the end of WWII and the advent of neoliberal economics].”

What Did Max Weber Mean By The ‘Spirit’ Of Capitalism? Aeon Magazine (June 12, 2018)

“What do you do?” was culturally relevant for most of the 20th Century, when jobs as we normally think of them were still around — but not so much today, especially for the new socio-economic lower class known as “the precariat.”

 “Globalization, neo-liberal policies, institutional changes and the technological revolution have combined to generate a new global class structure superimposed on preceding class structures. This consists of a tiny plutocracy (perhaps 0.001 per cent) atop a bigger elite, a ‘salariat’ (in relatively secure salaried jobs, ‘proficians’ (freelance professionals), a core working class, a precariat and a ‘lumpen precariat’ at the bottom.

“The precariat, which ranks below the proletariat in income, consists of millions of people obliged to accept a life of unstable labour and living, without an occupational identity or corporate narrative to give to their lives. Their employers come and go, or are expected to do so.

“Many in the precariat are over-qualified for the jobs they must accept; they also have a high ratio of unpaid ‘work’ in labour — looking and applying for jobs, training and retraining, queuing and form-filling, networking or just waiting around. They also rely mainly on money wages, which are often inadequate, volatile, and unpredictable. They lack access to rights-based state benefits and are losing civil, cultural, social, economic and political rights, making them supplicants if they need help to survive.”

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay, Guy Standing (2017)

I Googled “how to answer ‘what do you do?’” and got lots of articles about how to give your answer the right spin and turn the question into meaningful conversation — mostly directed at job applicants and people who hate their jobs — but the question’s relevance as an accurate reflection of Kultur is lost to the “gig economy” where the precariat hang out. It could be worse, though:  you could be a member of the “lumpen precariat.” Again from Guy Standing:

 “Below the precariat in the social spectrum is what might be called a ‘lumpen-precariat,’ an underclass of social victims relying on charity … Their numbers are rising remorselessly; they are a badge of shame on society.”

I’ve written before about how I made an ill-timed (at the height of the Great Recession) and otherwise disastrous exit from law practice for a new creative career that bombed,[2] while at the same time dealing with an as-yet-undiagnosed onset of “Primary Progressive MS” (the most degenerative kind you can get). During those years, I barely slowed down as I crashed through “precariat” on the way down from “salariat,” before ending up on the roles of the “disabled,”  a lumpen subclass. I did some awkward old-style networking during those years, and eventually developed my own Q&A. When asked “what do you do?” I would simply describe what I’d been doing that day. When it was my turn, I simply asked, “Who are you?”

Great conversation starters, as it turned out.

Photo is from Nimble Bar Co., re: how to throw an unforgettable party.

[1] Naturally there’s been lots of argument about whether the work ethic was Protestant or Catholic… and if Protestant, if it would be more properly “Calvinist” or “Puritan.” Sigh.

[2] For the full story, see my book Life Beyond Reason:  A Memoir of Mania, available here as a free download and on Amazon for cheap. It’s a short, quick read, I promise.

Ambition: Promised Land or Wasteland?

A heap of broken images, where the sun beats,
And the dead tree gives no shelter, the cricket no relief,
And the dry stone no sound of water. Only
There is shadow under this red rock,
(Come in under the shadow of this red rock),
And I will show you something different from either
Your shadow at morning striding behind you
Or your shadow at evening rising to meet you;
I will show you fear in a handful of dust.”

T.S. Eliot, The Wasteland

We’re exploring how inspiration, motivation, and ambition can help create meaningful work. We found that inspiration is essential, but has a dark side that includes mania and delusional risk taking, and that motivation is a ManagementSpeak relic and a brain stressor.  As for ambition, much current commentary focuses on my kids’ generation, but there’s plenty here for the rest of us if we view it in the larger economic context.

Here’s a quick summary:  Our parents came of age in the glory years of The Job and a Fair Income for the Middle Class. We Baby Boomers were born into that economic model, customized with our own iconoclastic and utopian social visions. The model weakened in the 70’s and 80’s, but we were too busy with kids and careers to notice. The Gen Xers got in early enough to ride the upward mobility escalator, but now that the Millennials are  young adults the model is bankrupt, leaving them to face a whole new gig — as in “gig economy.”

All that happened while most of us didn’t know it. Along with our policymakers, we were and still are stuck in the cognitive and cultural bias of the jobs heyday. Back in the day, we showered the Millennials with self-esteem-building, be-all-you-can-be positive thinking, and told them to follow their dreams. But when they came of age the economy wasn’t set up to support them. Maybe that’s why some parents habitually hedged their advice, urging the kids to have a Plan B and for crying out loud quit with all the cold filtering and get a real job.

(For a remarkable look at the current state of economic opportunity, see “I’m a Millionaire Who Creates Zero Jobs. Why Do I Pay Less Tax Than You?” by Morris Pearl, a career Wall Street One Percenter who is now chairman of the Patriotic Millionaires.)

No wonder people write books like Generation Me: Why Today’s Young Americans Are More Confident, Assertive, Entitled–and More Miserable Than Ever Before , by psychology professor Jean M. Twenge. This is from the flyleaf:

Generation Me“In this provocative and newly revised book, headline-making psychologist Dr. Jean Twenge explores why the young people she calls “Generation Me” are tolerant, confident, open-minded, and ambitious but also disengaged, narcissistic, distrustful, and anxious.

“Born in the ’80s, and ’90s… the children of the Baby Boomers are … feeling the effects of the recession and the changing job market.

“Her often humorous, eyebrow-raising stories about real people vividly bring to life the hopes, disappointments, and challenges of Generation Me.  Engaging, controversial, prescriptive, and funny, Generation Me gives Boomers and GenX’ers new and fascinating insights into their offspring, and helps those in their teens, twenties, and thirties find their road to happiness.”

I was okay with the blurb until it got to “happiness.” I’m more in tune with the article we looked at last time — You Can Do It, Baby! Our Culture Is Rich With Esteem-Boosting Platitudes For Young Dreamers, But The Assurances Are Dishonest And Dangerous,” Aeon Magazine (July 17, 2015):

“Roman Krznaric, founding faculty member of The School of Life in London, says that .. we’ve seen ‘rising expectations among everybody for work that’s more than just a salary… You see this among people who are highly educated… and that helps explain why job dissatisfaction tends to rise over the past couple of decades, because people are asking … to use their talents or passions in their work.’

“The shift in expectation has resulted in tremendous anxiety over achieving these goals and, paradoxically, sheer delusion. Point out to parents or teens just how difficult it can be to achieve such a high-level career and you’ll likely be treated to a catalogue of all the people who bucked the odds. Not just the Oprahs or the Steve Jobses who achieved super-status but the friend of a friend who just bought a modern all-glass home overlooking San Francisco Bay with his signing bonus, or the daughter of a work colleague who was cast in a new TV show, or the neighbour’s son who got a scholarship to Harvard.

“If it’s possible for them, we want to believe that it’s possible for our children too. Besides, who wants to be the killjoy who has to remind the struggling math student that medicine likely isn’t an option? … Besides, technically it is possible. At what point do we abandon possible for probable, and encourage our children to do the same?

“‘This links to the cult of positive thinking,’ says Krznaric, ‘where we’re always wanting to feel up and good and send positive messages… and so we feel that we should only be sending good messages and positive messages to our children and to young people. That it’s somehow wrong or bad or inappropriate to tell them: actually, it isn’t possible.’”

Ambition says it’s possible. Current economics says it’s not. Now what? Back for more next week.

The End of the Firm

industrial revolution factory

 “The official line is that we all have rights and live in a democracy. Other unfortunates who aren’t free like we are have to live in police states. These victims obey orders or else, no matter how arbitrary. The authorities keep them under regular surveillance. State bureaucrats control even the smallest details of everyday life. The officials who push them around are answerable only to higher-ups. Informers report regularly to the authorities. All this is supposed to be a very bad thing — and so it is, although it is nothing but a description of the modern workplace.”

Bob Black, The Abolition of Work and Other Essays (1985)

Peter Drucker’s famous dictum  “If you can’t measure it, you can’t manage it” established math and management as the indisputable co-sovereigns of the modern workplace. As it turns out, Drucker apparently never actually said that[1], but the concept has dominated the workplace since the advent of factories and railroads, telegraphs and electricity. Consider, for example, what it’s like to work at Amazon.

amazon 2

But, while math and management prospered together under the Industrial Revolution’s mechanistic worldview, today’s digitally-driven marketplace demands a freshly-nuanced management style, or in some cases, no management at all. Either idea challenges an even more foundational historical assumption:  that commerce is best conducted by a firm that must be managed. Eliminate the firm and you eliminate the need to manage it. Get rid of both, and you have an unimaginably different “description of the modern workplace” than Bob Black wrote about 33 years ago.

Last time, we looked at an article by science writer and artificial intelligence engineer George Zarkadakis called “The Economy Is More A Messy, Fractal Living Thing Than A Machine.” In it, he says this about the firm:

Ever since the invention of the assembly line, corporations have been like medieval cities: building walls around themselves and then trading with other ‘cities’ and consumers. Companies exist because of the need to protect production from volatile market fluctuations, and because it’s generally more efficient to consolidate the costs of getting goods and services to market by putting them together under one roof.  So said the British economist Ronald Coase in his paper ‘The Nature of the Firm’ (1937).

“Why do firms exist?” asks Ryan Avent in his book The Wealth of Humans:  Work, Power, and Status in the Twenty-First Century (2016). He provides the same answer as Zarkadakis:

According to a 1937 paper by Nobel Prize- winning economist Ronald Coase, it’s to bring all the necessary people, processes, and information under one roof, instead of contracting it all out. In exchange for the convenience of one-stop shopping, one-size-fits-all,  employees trade their independence and the possibility of greater personal market returns for the firm’ management structure and financial capital, which — as long as they conform to the company culture –  the way we do things around here — promises to keep them on task and to deliver a paycheck in return.

Today, however, the new “gig economy” is fast making that unimaginable the new normal — and that’s only the beginning, says Zarkadakis:

Now, in an era of Ubers-for-everything, companies are changing into platforms that enable, rather than enact, core business processes. The cost of reaching customers has dropped dramatically thanks to the ubiquity of digital networks, and production is being pushed outside the company wall, on to freelancers and self-employed contractors. Market and price fluctuations have been defanged as machine learning and predictive analytics help companies manage such ructions, and on-demand services for labour, office space and infrastructure allow them to be more responsive to changing conditions. Coase’s theory is nearing its expiry date.

The so-called ‘gig economy’ is only the beginning of a profound economic, social and political transformation. For the moment, these new ways of working are still controlled by old-style businesses models – platforms that essentially sell ‘trust’ via reviews and verification, or by plugging into existing financial and legal systems. Airbnb, eBay and Uber succeed in making money out of other people’s work and assets because they provide guarantees for good seller-buyer behaviour, while connecting to the ‘old world’ of banks, courts and government. But this hybrid model of doing digital business is about to change.

Avent concurs, and describes two key dynamics of the new anti-firm business model:  operating culture and rent: — how a business gets things done, and whether it owns the kinds of assets it can let others use, for a price:

Current workplace trends are bidding fair to tear down the firm model of operating. If you take employees out from under the firm umbrella — make them mostly freelancers, outsource jobs to countries on the make — then what’s left of value is mostly the company’s way of getting things done and the assets for which it can charge rent, in the economic sense of billing a premium for scarce assets. How assets become scarce becomes an essential policy-making function. These become essential “intangible” or “social” capital, replacing “human” capital.]

We’ll be talking more about social capital, rent, and other changing dynamics of the workplace.

[1] According to the Drucker Institute, Drucker never actually said that. And see this Forbes article for a rousing condemnation of the idea.

Gonna Be a Bright, Bright, Sunshiny Day

We met Sebastian Thrun last time. He’s a bright guy with a sunshiny disposition who’s not worried about robots and artificial intelligence taking over all the good jobs, even his own. Instead, he’s perfectly okay if technology eliminates most of what he does every day because he believes human ingenuity will fill the vacuum with something better. This is from his conversation with TED curator Chris Anderson:

“If I look at my own job as a CEO, I would say 90 percent of my work is repetitive, I don’t enjoy it, I spend about four hours per day on stupid, repetitive email. And I’m burning to have something that helps me get rid of this. Why? Because I believe all of us are insanely creative… What this will empower is to turn this creativity into action.

“We’ve unleashed this amazing creativity by de-slaving us from farming and later, of course, from factory work and have invented so many things. It’s going to be even better, in my opinion. And there’s going to be great side effects. One of the side effects will be that things like food and medical supply and education and shelter and transportation will all become much more affordable to all of us, not just the rich people.”

Anderson sums it up this way:

“So the jobs that are getting lost, in a way, even though it’s going to be painful, humans are capable of more than those jobs. This is the dream. The dream is that humans can rise to just a new level of empowerment and discovery. That’s the dream.”

Another bright guy with a sunshiny disposition is David Lee, Vice President of Innovation and the Strategic Enterprise Fund for UPS. He, too, shares the dream that technology will turn human creativity loose on a whole new kind of working world. Here’s his TED talk (click the image):

David Lee TED talk

Like Sebastian Thrun, he’s no Pollyanna:  he understands that yes, technology threatens jobs:

“There’s a lot of valid concern these days that our technology is getting so smart that we’ve put ourselves on the path to a jobless future. And I think the example of a self-driving car is actually the easiest one to see. So these are going to be fantastic for all kinds of different reasons. But did you know that ‘driver’ is actually the most common job in 29 of the 50 US states? What’s going to happen to these jobs when we’re no longer driving our cars or cooking our food or even diagnosing our own diseases?

“Well, a recent study from Forrester Research goes so far to predict that 25 million jobs might disappear over the next 10 years. To put that in perspective, that’s three times as many jobs lost in the aftermath of the financial crisis. And it’s not just blue-collar jobs that are at risk. On Wall Street and across Silicon Valley, we are seeing tremendous gains in the quality of analysis and decision-making because of machine learning. So even the smartest, highest-paid people will be affected by this change.

“What’s clear is that no matter what your job is, at least some, if not all of your work, is going to be done by a robot or software in the next few years.”

But that’s not the end of the story. Like Thrun, he believes that the rise of the robots will clear the way for unprecedented levels of human creativity — provided we move fast:

“The good news is that we have faced down and recovered two mass extinctions of jobs before. From 1870 to 1970, the percent of American workers based on farms fell by 90 percent, and then again from 1950 to 2010, the percent of Americans working in factories fell by 75 percent. The challenge we face this time, however, is one of time. We had a hundred years to move from farms to factories, and then 60 years to fully build out a service economy.

“The rate of change today suggests that we may only have 10 or 15 years to adjust, and if we don’t react fast enough, that means by the time today’s elementary-school students are college-aged, we could be living in a world that’s robotic, largely unemployed and stuck in kind of un-great depression.

“But I don’t think it has to be this way. You see, I work in innovation, and part of my job is to shape how large companies apply new technologies. Certainly some of these technologies are even specifically designed to replace human workers. But I believe that if we start taking steps right now to change the nature of work, we can not only create environments where people love coming to work but also generate the innovation that we need to replace the millions of jobs that will be lost to technology.

“I believe that the key to preventing our jobless future is to rediscover what makes us human, and to create a new generation of human-centered jobs that allow us to unlock the hidden talents and passions that we carry with us every day.”

More from David Lee next time.

If all this bright sunshiny perspective made you think of that old tune, you might treat yourself to a listen. It’s short, you’ve got time.

And for a look at a current legal challenge to the “gig economy” across the pond, check out this Economist article from earlier this week.