Thursday, December 12, 2013

Masters and servants

I've mentioned the book Average Is Over before. I've had the book in my hands for a while now, but haven't managed to get very far. I've instead been reading Last Ape Standing and watching season 4 of The Mentalist (yeah, I know, but when it's cold and dark you want some escapism). Plus, the arguments are so familiar by now, it feels like I'm re-reading it.

But in lieu of the longer review it deserves, I thought I'd share a couple of recent news stories that seem to confer it's dire predictions of the future, predictions which I sadly must be forced to agree with.

In brief, the central thesis of the book is that even the extreme inequality and gilded-age politics of modern-day America is just prelude, and the middle class (i.e. "Average") is over, done-for, kaput. Where we're headed is a society of 10-15 percent of the population as hereditary super-elites living fantastic lives while being waited on hand-and-foot by human and automated servants with everything they can imagine at their beck-and call (designer babies, organic food, an apartment in Dubai, vacations in outer space!), while 80-90 percent of the human race barely scrapes by as either toadies of the new aristocracy (personal trainers, nannies, and chefs, "image consultants," "motivational coaches" and other such nonsense), marginally-employed in low-wage dead-end McJobs, or homeless and probably dead. This new arrangement is not so troubling, argues the author, because the discarded masses will live fantastic Bohemian lives aided by ubiquitous digital gadgets and ultra-cheap food from made processed corn.

You can see this in major cities all across the country that are bulldozing entire neighborhoods of foreclosed homes while at the same time busily erecting soaring condo towers for the affluent overclass.

Well, that's vastly oversimplifying, and the book's thesis needs a more detailed look. But I think it is a good look ahead at the emerging Neofeudal regime that is coming into power unless it's somehow stopped in its tracks. Oh, and if you think there will be some sort of concentrated revolt against this, think again. The author points out that we've seen soaring inequality for the past forty years, and although there has been lots of hand-wringing, book publishing and isolated protests (like the ones in the last post), the direction of inequality has not even been slowed down much less reversed. For a good overview, see this review of George Packer's The Unwinding by Thomas Frank.

Here are a couple of articles that outline the world we are headed:

Rising riches: 1 in 5 in U.S. reaches affluence. (USA Today) A new demographic bubble of rich Americans may be biggest barrier to income equality.
Fully 20% of U.S. adults become rich for parts of their lives, wielding outsize influence on America's economy and politics. This little-known group may pose the biggest barrier to reducing the nation's income inequality.

The growing numbers of the U.S. poor have been well documented, but survey data provided to The Associated Press detail the flip side of the record income gap — the rise of the "new rich."

Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2% of earners.

Even outside periods of unusual wealth, members of this group generally hover in the $100,000-plus income range, keeping them in the top 20% of earners.

In a country where poverty is at a record high, today's new rich are notable for their sense of economic fragility. They're reached the top 2%, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged.
Is service work today worse than being a household servant? Many service jobs used to be performed in homes of the wealthy, with better benefits (David Cay Johnston, Al Jazeera America):
In 1930, near the start of the Great Depression, 1 in 45 urban American families had live-in servants, economist George Stigler, who later won the Nobel Prize in economics, reported in his 1946 study of servants. In a prescient line relevant to today’s growing chasm between the richest and the rest of society, Stigler noted that “a society with relatively many families at both ends of the income scale would provide both a large supply of servants and a large demand” for them.

That is just what the United States has today — a top 10 percent doing well (the top 1/10th of 1 percent exceptionally so), while the bottom third remains desperate for work. But outsourcing has changed circumstances for the worse for those who would do a servant’s work today.

Consider the family cook. Many family cooks now work at family restaurants and fast-food joints. This means that instead of having to meet a weekly payroll, families can hire a cook only as needed. A household cook typically earned $10 a week in 1910, century-old books on the etiquette of hiring servants show. That is $235 per week in today’s money, while the federal minimum wage for 40 hours comes to $290 a week.

At first blush, that looks like a real raise of $55 a week, or nearly a 25 percent increase in pay. But in fact, the 2013 minimum-wage cook is much worse off than the 1910 cook. Here’s why:
  •     The 1910 cook earned tax-free pay, while 2013 cook pays 7.65 percent of his or her income in Social Security taxes as well as income taxes on more than a third of his pay, assuming full-time work every week of the year. For a single person, that’s about $29 of that $55 raise deducted for taxes. 
  •     Unless he can walk to work, today’s outsourced family cook must cover commuting costs. A monthly transit pass costs $75 in Los Angeles, $95 in Atlanta and $112 in New York City, so bus fare alone runs $17 to $27 a week, eating up a third to almost half of the seeming increase in pay, making the apparent raise pretty much vanish. 
  •     The 1910 cook got room and board, while the 2013 cook must provide his or her own living space and food.
More than half of fast-food workers are on some form of welfare, labor economists at the University of California at Berkeley and the University of Illinois reported in October after analyzing government economic statistics.
 Paul Krugman adds:
     Upstairs, Downstairs, Outside: ...David Kay Johnston has a great piece noting that today’s service economy is in many ways like the Edwardian-era economy in which a small number of wealthy people employed a large number of servants — except that we tend to outsource the service, relying on restaurants and cleaning services instead of cooks and maids. And our outsourced servants are, he notes, arguably paid and treated worse than the in-house servants of the past, even in absolute terms — let alone relative to per capita GDP.

    It’s a novel and useful way to think about just how unequal our society has grown.
Average is Over has managed to rankle both the professional Left and Right; the Left for obvious reasons, the Right because it offends their ideas about free-market capitalism bringing about a better life for all (while gutting the ridiculous myths of upward mobility that they peddle). If you want to know more about Average is Over, I suggest this review:

Visions of a Permanent Underclass. A new book imagines an America of the rich and the 'shantytown' dwellers. (Willain Galston, The Wall Street Journal). The money quote: "Bread and circuses is not the policy of a republic, but rather of an empire entering moral senescence. Nonetheless, Mr. Cowen seems untroubled by his hyperpolarized vision."

And you can listen to this informational radio show:

4 comments:

  1. So I am trying to think it though. Neofeudalism... well, from what I know, feudalism was a rather successful economic and social system where mutual responsibility and fealty were the glue holding things together, and while there is no doubt that the peasants were not treated as Christian morality demanded, it is also true that there was widespread (relative) prosperity linked to bans on usury, demurrage money, highly cooperative guilds, and other features. So I am thinking... the system we fear is coming, neofeudalism seems a misnomer, since what particularly stands out is its complete disregard of mutual responsibility among various sectors of society, with predation of the rich on the poor an accepted norm.

    Heaping abuse on feudalism is a modern preoccupation. Maybe we need another term? I don't think that what's likely coming is feudalism at all, though I can understand the handiness of the image of a few opulent nobles preying on the serfs. (The worst serfdom, as far as I know, came when feudalism was on the wane.)

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    1. I think Lewis Mumford would be inclined to agree with you. The principle of the Middle Ages that you describe was decentralization, which, according to Mumford's narrative, was replaced with increasing centralization of power. This was brought about by urbanization, the invention of gunpowder and artillery (leading to big armies being able to conquer small ones), communication technologies and so on.

      The question is, are we headed for a period decentralization or centralization? The ability of computers to keep tabs on everything and everyone seems to indicate centralization of power. However, some have argued that Peak Oil and social/political breakdown will lead to a new localism. Still others say things like 3D printing and distributed wind and solar power can lead to a resurgence of local economies. Decentralization isn't always great shakes though - you would rather be in a centralized regime than a decentralized one when the Black Death breaks out - one that can track, quarantine, research cures, etc. - one reason I don't see the breakdown of government as a universal good.

      But note the "Neo" in "Neofeudalism." The fundamental cause is the dissolution of a nation-sate where all people are (theoretically) equal citizens under the law with certain rights and duties; and certain public goods are provisioned fairly inexpensively to all people by the government, to one in which everything is simply traded in an anarchic "market" where strongmen control the provision of goods and services by whim (whether a drug lord or a billionaire plutocrat). There are hereditary elites (created by inherited financial assets and access to certain institutions rather than official, legal titles), and a mass of people forced to "serve or die" with very little social mobility. These are a few of the similarities that bring about that terminology.

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    2. I actually see the emerging corporate regime as very similar to what happened in the Middle Ages. You had handshake deals brokered between big landowners and small ones and laborers to create reciprocal rights, duties and obligations in the face of large-scale state breakdown. Everyone made deals with people more powerful above them in the social hierarchy. This eventually developed into the more codified oaths of fealty and loyalty that defined the medieval social relationships under Feudalism.

      The modern analogy is the deal between corporations and their workers. I have a similar reciprocal obligation to my employer. I show up for my 40+ hours of labor, and my employer provides me with basic health insurance, a retirement fund, a salary to procure food and shelter, and two weeks of freedom a year. Unlike most other countries, this is not regulated; I am entitled to none of it, it is only what I have managed to procure for myself (much of it due to social custom as it was the Middle Ages). Many get more or less based on their social position.

      But note that I am entirely and utterly dependent upon my employer for these things. My employer is the "lord" - the more powerful individual in the hierarchy, and I am forced to declare and pledge my "loyalty" to them, or I have nothing - no health care, no home (for I could not pay my mortgage), nothing. Without the social safety net and public services (which it is a central plank of libertarianism/neoliberalism to destroy), this dependency is absolute. Without a central government, these mutual dependency relationships are all you have, very similar to the medieval period.

      So I see the employer/employee relationship that's evolving as very similar to the lord and serf relationships that emerged in the Middle Ages. This is especially pronounced in America, where centralized provision of anything is seen as "socialism" and an affront to "freedom," and citizens are afforded very few rights. Health care is the prime example - every other first-world state (and many non-first-world ones) sees health care as a basic human right. Here we're dependent upon our employer for it. The same goes for retirement, particularity when they finally eliminate Social Security (and they will). You will be dependent on you relationships with the "strong" and what you can provide for them. They still do need us for something, just as medieval lords needed labor to work their fields and craftsmen to make their goods. The problem is that they need a lot less of us than before.

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  2. Slightly related is the connection between climate change and actual slavery/human trafficking. Poor folks in resource-poor areas are more easily taken for forced-labor.

    http://www.theguardian.com/global-development-professionals-network/2013/dec/13/slavery-climate-change-poverty?CMP=twt_gu

    Also, I'm so glad you are back. :) You are one of the folks that "gets it," and I always appreciate your posts.

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