Inequality: a tale of two pyramids

David Seaton's News Links

This pyramid appeared in the Washington Post.

Looking at it I was reminded of another pyramid in a classic poster from the 19th century, which could be a "poetic" rendering of the graph from the Post.

The signs are all around us, if you want to take a peek at the near future, have a look at the scheme Jeff Bezos has dreamed up over at Amazon. It is called "Mechanical Turk" and its goal is to turn clerical tasks that require education and specialized training into sweatshop piece work like making T-shirts in Bangladesh. I urge my readers take a very close look at it to see where their training and skills might be used and what pay they would receive for performing these tasks.

That is the story: in developed countries we are in the process of recreating the class differences and the ensuing class struggle of the 19th century, but this time in a world where consciousness, class or otherwise, with the new social networks, quickly becomes universal. The 1% are sitting on a powder keg. These graphs explain the Tea Party and the Koch brother's spending millions bankrolling it. The idea is to keep a person from thinking clearly and like the fellow said, avoid an individual being "at last compelled to face with sober senses his real conditions of life, and his relations with his kind."

If the problem of controlling the "powder keg" is one of consciousness, the system seems to be working rather well. It would appear that converting human beings into mental cripples is an enormous industry and they have to catch them rather young. The following is a sample of what a school teacher wrote Thomas Friedman, quoted in the New York Times.

We are dumbing down our classes.  It is an inexorable downward progression in which one day all a kid will need to pass is to have a blood pressure. The kids today are not different in ‘nature.’ ... The difference is that back then, although they didn’t want to, they would do the work. Today, they won’t. ... This is a real conversation I had with a failing student who was being quite sincere in her comments: ‘I know you’re a really good teacher, but you don’t seem to realize I have two hours a night of Facebook and over 4,000 text messages a month to deal with. How do you expect me to do all this work?’

Maybe Americans are finally waking up, but for the moment, from my perch on the other side of the Atlantic, the only one really talking any sense is Naquasia LeGrand. DS

You say you want a revolution... it's staring you right in the face

David Seaton's News Links

The continued slide in median earning power, rather than public obfuscation or even lack of jobs, is America’s real problem. It is the wood as distinct from the trees. It tends to loom larger when the television is off. Edward Luce - Financial Times

What we are witnessing in Europe — and what may loom for the United States — is the exhaustion of the modern social order. Since the early 1800s, industrial societies rested on a marriage of economic growth and political stability. Economic progress improved people’s lives and anchored their loyalty to the state. Wars, depressions, revolutions and class conflicts interrupted the cycle. But over time, prosperity fostered stable democracies in the United States, Europe and parts of Asia. The present economic crisis might reverse this virtuous process. Slower economic expansion would feed political instability and vice versa. This would be a historic and ominous break from the past. Robert J. Samuelson - Washington Post

For almost two centuries, today’s high-income countries enjoyed waves of innovation that made them both far more prosperous than before and far more powerful than everybody else. This was the world of the American dream and American exceptionalism. Now innovation is slow and economic catch-up fast. The elites of the high-income countries quite like this new world. The rest of their population like it vastly less. Get used to this. It will not change.  Martin Wolf - Financial Times

The quotes above are the witness to the seeds of mighty change in the years to come. In them is the embryo of the world of the future.

Capitalism's winning weapon in the great struggle with Marxism-Leninism during the Cold War was the elevating of the former starveling, sans culottes of Marx's Das Kapital into the well fed, healthy, well educated, home-owning, fat, dumb and happy, paid-vacationing, new middle class... that, until not too long, ago made up the majority of Americans, or at least the way most Americans saw themselves or at least their children.

Now all of this is being taken away from them in the interest of technological progress, globalization and fiscal responsibility...

Good luck one-percenters, I have news for you. Today's soon to be déclassé  new middle class are infinitely more dangerous than the 19th century proletariat that Marx thought would be the protagonists of his revolution. We are talking about people with much more education, knowledge of and access to the levers of the economy than the "masses" of former days. In fact this sort of educated malcontent was previously only a tiny minority, but even so was feared as the seed corn of revolution: the "vanguard of the proletariat"... now there are masses of them.

The fools that want to take away these people's "entitlements" are just that, fools. This middle class was created so that rich people could sleep soundly in their beds, while sugarplum fairies danced in their heads.Take away their "life style" and they will devour the perp. DS

Democrats and the vanishing American middle class

It seems that the Democrats have had the modicum of mother wit to make the middle class the framework and theme of their 2012 campaign. We know that the Democrats can't really walk the walk, but it is nice to hear somebody at least talk the talk for a change. For the sad truth is that the American middle class is on its way to join the buggy whip and whalebone corsets as a charming relic of America's past.

Historically, such a middle class is totally exceptional; the norm over ages, and in much of the world still today, is a small group of very rich people, who own everything and a great mass of people, uneducated and unhealthy, whose life is "solitary, poor, nasty, brutish and short", and whose role is to serve the rich and powerful as soldiers, policemen, domestics, nannies and sex workers.

The European middle class was created as a bulwark of social stability, basically to prevent the masses from taking the "winter palace" and stringing up the super rich. The American middle class as we know it really came into being when Henry Ford decided to pay his workers enough to buy the cars they made. It made Ford rich and led to turning America into a land of mass prosperity.

The American middle class is perhaps the United States' greatest social achievement, an enormous mass of prosperous, educated and healthy citizens which has been the envy of all the world for nearly a hundred years, and the not so secret weapon that destroyed the Soviet Union and reoriented China.

Simplifying to the extreme you could say that the modern, American middle class was created by Henry Ford and literally saved from extinction, (the first time) by Franklin Delano Roosevelt. The whole story is in that reductio ad absurdum.

What most Americans, except for the one-percent perhaps, don't seem to understand is that the American middle class is in reality a totally artificial construction, which if not carefully nurtured will dry up and die like an un-watered house plant. The super-rich are quite comfortable with its disappearance, as they think that they no longer depend on its prosperity for their own prosperity or even for their own physical safety.

I would argue that if the middle class is devastated then all the problems it was created to solve, all the dangers that it was meant to allay would reappear, just like uncut grass grows on the lawn of a foreclosed house.

What is this middle class really?

The middle class that most Americans believe they belong to is a transitory place on a voyage from some place harder and more difficult than the present to someplace softer and less difficult. It is place of anxiety, what it is not, or what it could be, is often more important than what it actually is: any loss of momentum may have disastrous and dreaded results. Without an adequate social net most middle class Americans are only a serious illness or a layoff away from traveling downward. Examples of that voyage surround them everywhere they look... if they dare to look.

Those who are cheerfully going about the work of dismantling the welfare state seem blissfully unaware that the welfare state was created by men as, or even more, conservative then themselves, (Bismark, for example) in order to avoid revolutionary social movements which would destabilize and jeopardize the entire economic system and society itself. This was a strategy that was so eminently successful that it has practically destroyed revolutionary praxis.

In my opinion dismantling the welfare state at this time is similar to a person who has successfully survived an operation for lung cancer and endured the ensuing chemotherapy and then, finding himself now in  remission, decides that it is ok for him to go back to smoking, the very thing that caused his cancer in the first place: idiotic.

It occurs to me that this tunnel vision, expressed in the obsession of  placating the financial markets, which  ignores popular anger, is the result of the rise and predominance of the FIRE (finance, insurance, real estate) economy and the diminishing influence of manufacturing and agriculture.

The financial sector works with platonic mathematical models: money in the abstract moves with the speed of light. Fortunes that buy admiration, sex and luxury are made by simply tapping the key of a computer in a cubicle or on a trading floor.  All very clean and a bit autistic.

Reality, unfortunately, in as much as it touches living organisms, is never that clean and neat.

Thus farmers and manufacturers understand how the world of living creatures works better than financiers do.

They understand better, because both farmers and manufacturers exploit living creatures for profit and, leaving ethical question aside, to do this they need to have what farmers call "stock sense": an understanding of the animal off of which they make their living.

Take pigs for example.

A pig lives on death row from the day he is born.

Few animals are as reviled as the pig, the very word "pig" is an insult... and yet, perhaps no other animal on earth is eaten with such relish as the pig. Thus there is a lot of money to be made raising pigs

Very few of those who live off of pigs like them personally, however pig raisers make sure that their pigs get plenty to eat, clean water to drink and clean air to breathe and they make sure that their charge's excrement is removed at timely intervals... They also provide them with free veterinary care. The farmers don't do this for love of the pig or from the goodness of their hearts, but simply because if pigs aren't treated like this, they won't get fat soon enough or their flesh pass health inspection after they are slaughtered.

Pigs are not alone.

The short time that chickens pass among the living is also accompanied by a careful attention to their health and diet, as commodity chickens are terribly vulnerable to contagious diseases: plagues that can wipe out a farmer's investment in only a few days or sometimes hours.

Dairy cows have a bit better time of it than most food producers, live longer lives and often get special treatment, as it has been shown that not only clean food and air and lack of stress improves the quantity and quality of the milk they produce, even playing classical music for the cows helps increase milk production. To get the most and the best milk from a cow a farmer will even play Mozart for her.

So, if not properly cared for hens don't lay, pigs don't get fat and cows don't give milk.

In short, farmers know that to make decent a profit from their animals they must treat them carefully and that signs such as wet noses, shiny fur, neat feathers, bright eyes and a good appetite and the quantity and quality of their droppings, all must be watched closely if a good business is to be made from them.

In manufacture everything we have said about pigs, chickens and cows goes in spades for people too.

Manufacturers know as much about the human beings  they exploit as farmers know about pigs, chickens and cows and for much the same reasons: their livelihood depends on getting as much work, both in quantity and quality that they can with the smallest cash outlay possible.

As an example of how the techniques of animal husbandry can be advantageously applied to humans, soccer became the British working class passion par exellence, because 19th century factory owners encouraged their workers to play football in order to keep them healthy and productive in the miserable conditions of the industrial revolution.

Exploiting human animals is a dicey business however.

We are talking about a very bad monkey here, one who can sabotage a factory, go slow, work to rule, go on strike: an animal that to be most profitable requires much training and re-training and much "motivation".

Like farming, manufacture is a messy, hands-on affair, filled with the sort of dangerous, dirty, intangible things that sentient beings produce that are difficult to quantify in  numbers. This makes farming and manufacture unattractive for most Masters of Business Administration.

People don't feel right spending all those years at Harvard or Stanford, just to have to get a recalcitrant assembly line up and running or to stand up to their knees in manure in the middle of a freezing night holding a lantern for a vet himself up to his elbows performing a breech delivery on a struggling milch cow.

To leave the farm, to leave the factory floor and then move to a quiet office to follow numbers that flit across a screen, and while doing it make millions of dollars more than ever would be possible in either the factory or on the farm is a no-brainer.

Managing filthy pigs or cantankerous people with grease on their hands is not an attractive career choice for a good student today. Pigs are a drag. So are people.

Truly though, I can't imagine Walt Whitman celebrating these new masters of the universe.

A curious thing: if nobody ate pigs or eggs or chickens or drank milk, there would be no cows, pigs or chickens: nobody keeps them for pets. That's the way things work.

Here is an example: right up until the 1970s Spain used to be filled with donkeys, an emblematic animal, Sancho Panza rode one, they had a million uses... now there are hardly any donkeys left... The modern world doesn't need donkeys and donkeys can't do anything about it.

In many developed countries it appears that what goes for donkeys goes for human beings too. Their messy needs and wants get in the way of the beautiful numbers. Let us then move all the messy things far away and leave ourselves to contemplate our  exquisite numbers as they shimmer and dance on the screen and fill our bank accounts.

Of course we are talking about human beings, not pigs, chickens and donkeys, so putting numbers aside, we begin to talk about the brotherhood of man in the fatherhood of God and other ancient, creaky concepts that Darwinist, number-crunchers would consider sentimental twaddle.

And so in love are the crunchers with their platonic models and their markets, that they blithely assume that those whose lives they disrupt and futures they jeopardize will simply oblige them by just shriveling up and blowing away.

Students have been traditionally involved in all serious movements for change.

The Occupy and Indignados movements show that that could still be true today.

Up till now the children of the credit bubble have had little to rebel against, all the things that the 1968 generation fought for, especially sexual freedom, this generation have had in abundance. While they enjoyed their freedom or became bored with it they became proficient with computers, cell phone messaging and social nets, all valuable skills for potential agitators. Now the battle is not just about personal freedom and against being drafted to get killed or maimed in imperialist wars, as it was back then, today it is about health, education and welfare: the basics.

Now as politicians like Mitt Romney and Paul Ryan are attacking their future education, future jobs and even their future pensions, today's youth have something more challenging than "Grand Theft Auto" to test their skills against.  And perhaps they will be able to do something that the students of 1968 couldn't do in those times of prosperity and full employment, make common cause with working people and the older generations. If all those segments of society came together for once, things might change.

Because, unlike donkeys, human beings, before they disappear, can do much nastier things than just bray and kick. DS

The middle class

Income inequality in the US is at its highest since that most doom-laden of years: 1929. Throughout the main English-speaking economies, earnings disparities have reached extremes not seen since the age of The Great Gatsby.(...) From a political perspective the notable feature of the inegalitarian, free-market era that began in the 1980s is how little backlash there has been against the stagnation of ordinary people's earnings in such a large portion of the developed world economy. Yet there are signs that the mix of policies and economic circumstances that gave a protracted laisser-passer to the rich and to business is coming to an end. This is potentially dangerous territory. For as Bill Gross, managing director of Pimco, the world's biggest bond fund, has argued: "When the fruits of society's labour become maldistributed, when the rich get richer and the middle and lower classes struggle to keep their heads above water as is clearly the case today, then the system ultimately breaks down; boats do not rise equally with the tide; the centre cannot hold."
John Plender - Financial Times

David Seaton's News Links
The center of American politics is its "middle class". Most observers would not have any problem agreeing that America's greatest contribution to the world's political discourse has been the creation of a large, satisfied, middle class: all of America's social stability depends on that class's satisfaction.

We use the words "middle class" all the time and most American's would define themselves as middle class. What is "middle class", really?

First, lets get clear what upper middle class is. In my definition these are people who have layers of property, relatives other than their parents die and leave them things. They own income producing properties other than the home they live in. They can educate their children out of their current income, without giving up anything, etcetera, etcetera. It is as if their blood had a high helium content and they never quite touched the ground. This is not the middle class I am talking about.

The middle class that most Americans believe they belong to is a transitory place on a voyage from some place harder and more difficult than the present to someplace softer and less difficult. It is place of anxiety, what it is not, or what it could be, is often more important than what it actually is: a loss of momentum may have disastrous and dreaded results. Without an adequate social net most middle class Americans are only a serious illness or a layoff away from traveling downward. Examples of that voyage surround them everywhere they look... if they dare to look.

Perhaps the most self-satisfied, self-portrait of America's middle class in the history of cinema is William Wyler's 1946 classic, "The Best Years of Our Lives", whose poster tops these lines. It is accurate in its portrayal of American's mental image of themselves as they returned from the war and looked forward to peace and the end of the hard times that all had known before the war. There is nothing smug about the film: the characters and the action show "normal" people living their lives.

The film won seven Oscars, including "best film". It was a huge success.

Americans paid money, laughed and cried in pleasure to see themselves being themselves. "The Best Years of Our Lives" was a love song to ourselves that we sung to ourselves.

I can't think of any such self-celebration possible today.

Below the classic poster from 1946, I have put together a mash up of some of the figures from contemporary films who take the place of Myrna Loy, Frederic March and Dana Andrews, populating the dreams of today's movie goers.

It would seem that to engage their fantasy and prosper, you would have to be a magician, or have special powers... or be a robot.

Without getting too far off into cocktail party sociology. Americans today do not appear to see a clear and hopeful path to travel without a cloak of invisibility or the power to levitate.

In my opinion either laissez faire globalization will destroy America's "The Best Years of Our Lives", middle class -- if it hasn't already -- or America's surviving middle class will destroy laissez faire globalization. It's anybody's guess who will win. DS