Yesterday Nick Hanauer published an important article on Politico, To My Fellow Plutocrats: You Can Cure Trumpism. I agree with pretty much everything he says there, and I also want to add a few of my thoughts.
Nick writes:
I find myself in deep disagreement with almost everyone I talk to about Trump and Trumpism. I firmly believe that Trump, by himself, is not the problem. Indeed, the left’s maniacal focus on Trump confuses cause with effect. Yes, Trump is a manifestation of a serious civic sickness. But treating the symptom by removing Trump won’t cure the disease, even if it temporarily makes us feel better. No, to heal the body politic we must confront the disease itself.
And here’s what I wrote in my blog post Listen, Liberal – Part I :
Clearly, the Democrats are still in massive denial about why they really lost the presidential elections of 2016. They are looking everywhere except at themselves. But by buying into the Russia conspiracy theory they are setting themselves up for much worse. When this conspiracy collapses (I personally give less than 10% chance that there is any substance behind it), it would be a colossal reputational hit, from which they might not recover before the next round of presidential elections.
The Democrats should stop obsessing about the mythical “Siberian Candidate” conspiracy. Instead, they should read the remarkable book by Tom Frank, Listen, Liberal: Or, What Ever Happened to the Party of the People?
Nick continues:
The real threat to our republic is an alarming breakdown in social cohesion, and the cause of this breakdown is obvious: radical, rising economic inequality, and the anger and anxiety it engenders.
I would add two things. First, I’d use the term “immiseration” rather than “inequality.” Most Americans, including myself and (I am sure) Nick, don’t want radical egalitarianism. Some degree of inequality is fair. Of course, the level of inequality in the US is way, way above what the great majority of Americans consider as fair. But it’s worse than that. As Nick says later in the article, the growing inequality is resulting in declining well-being of large swaths of American population – in absolute terms. The technical term for this is immiseration.
Second, as our historical research shows, popular immiseration is only of the general factors that drive political instability. The other, and in many ways more important one, is intra-elite conflict:
Intense intra-elite competition leads to the rise of rival power networks, which increasingly subvert the rules of political engagement to get ahead of the opposition. Instead of competing on their own merits, or the merits of their political platforms, candidates increasingly rely on “dirty tricks” such as character assassination (and, in historical cases, literal assassination). As a result, excessive competition results in the unraveling of prosocial, cooperative norms (this is a general phenomenon that is not limited to political life). Elite overproduction in the US has already driven up the intensity of intra-elite competition. Another clear sign is the unraveling of social norms regulating political discourse and process that has become glaringly obvious during the 2016 presidential election. Analysis of past societies indicates that, if intra-elite competition is allowed to escalate, it will increasingly take more violent forms. A typical outcome of this process is a massive outbreak of political violence, often ending in a state collapse, a revolution, or a civil war (or all of the above).
(See Intra-Elite Competition: A Key Concept for Understanding the Dynamics of Complex Societies)
And all of these trends, immiseration and intra-elite conflict are spiking, suggesting a peak of political violence during the 2020s:
Structural-demographic theory (SDT) suggests that the violence spike of the 2020s will be worse than the one around 1970, and perhaps as bad as the last big spike during the 1920s. Thus, the expectation is that there will be more than 100 events per 5 years (see the upper panel in the figure). In terms of the second metric (the lower panel) we should expect more than 5 fatalities per 1 million of population per 5 years, if the theory is correct.
A Quantitative Prediction for Political Violence in the 2020s
What it all means is that the main threat to the American elites are not the “miserables” (or even “deplorables”), but frustrated elite aspirants, who have always been the primary moving force behind revolutions and civil wars. It will be not peasants with pitchforks, but the Revolutionary Tribunal commissars with Mausers.
Or the Committee for Public Safety with its guillotines.
So what’s to be done? I agree completely with one solution that Nick discusses:
as counterintuitive as it might sound, the single best way to advance our own interests is to put more energy and money into advancing the economic interests of others. For example: by fighting to pass a $15 an hour minimum wage.
This is a great start, but it’s not enough. The fundamental social process that drives both immiseration and intra-elite conflict is the massive oversupply of labor that developed in the United States over the past 30–40 years. It’s driven by a combination of factors, demographic growth, immigration, massive entry of women into the work force, and shipping of manufacturing jobs off shore. See my analysis that tries to disentangle these influences: Putting It All Together (Why Real Wages Stopped Growing IV)
Most recently, the social force that has loomed particularly large is the technological change, with machines are replacing people. Something must be done about recovering the balance between the number of people who want jobs and the number of jobs available for them. And then there is the second problem of elite overproduction.
These are all massive problems and I don’t have ready answers or solutions. Yet there are things that a group of researchers and policy experts can do—and the American elites can help fund it.
One huge difference between the periods preceding the crises of the English Revolution, the French Revolution, and the American Civil War is that we have a much better understanding of why things are heading south. The Structural-Demographic Theory is not perfect, and much additional work needs to be done. But while different social scientists and public intellectuals focus on different slices of the overall problem, the SDT provides us with the theoretical machinery to deal with the overall problem holistically. Because we have this understanding, we don’t really have an option of sitting the troubles out – we need to use it.
This period is like those before it in terms of immiseration and Intra-elite competition, but the exponential growth of technology is a totally new factor. Minimum wage increase will only accelerate the process.
It is time for a serious public debate on Basic Income. As someone who has spend his working life as an electronic designer and programmer, I see the speed with which technology is wiping out jobs. Humans have never experienced anything like this.
We have a de facto Basic Income in place now when Social Secuuity, Medicare and Medicaid, Food Stamps, and the endless list of other transfer payments are calculated. It is time to ask what it would take to replace it all with a massive simplification, what the rules would be, and how to fund it. A tax on robots? A sales tax on everything.? Income taxes will be obsolete..
Left to themselves, humans will always find things to do for one another that they are willing to pay for, but they are not the jobs we see today, and they are not the jobs that our elites can even visualize.. There should be Basic Income and a total elimination of a minimum wage.
This is actually a time of great opportunity, but just demanding control without a program that everyone can understand has no chance. The public is actually open to big ideas. What they are intensely rejecting is mindless control by those who have no big picture that they can explain.
I agree that we need a serious debate on Basic Income. Personally, however, I favor a “negative income tax”. It’s a more fair system because people are being paid for work, and thus would be more acceptable to American citizens.
Exponential growth of technology is not a totally new factor. Mechanization of farm work had at least as great an impact over a century ago. However, I agree that, “left to themselves, humans will always find things to do for one another that they are willing to pay for”, and it would be better to eliminate the minimum wage that presupposes certain mechanisms for doing things that may no longer be applicable.
I’m not sure we can afford a universal basic income, even at poverty level, just yet. The current de facto system of transfer payments is less costly because the paperwork has a significant deterrent effect; for example, many eligible people did not sign up for Medicaid until forced to by the PPACA individual mandate (and the CBO projects they would drop off if the mandate were repealed, so maybe there’s an issue with whether it actually offers any value to some people). Of course, deterring people with paperwork and with benefits that are sometimes questionably valuable doesn’t seem like the fairest way to approach things either.
This video falls in line with the upcoming labor force displacement via technology and the social disruptions. http://www.bbc.com/news/av/world-us-canada-40814714/why-one-man-left-silicon-valley-and-set-up-a-survival-camp
what is to be done? get democracy. all other discussion is fruitless gossip.
revolution. since elites seldom go quietly, violence is possible. but submitting to elite rule doesn’t work, if your goal is a decent life for most people.
Listen Liberals…this book blew me away. And made me feel less “bad” about this past November (…because I now “understand” why the Dems blew it…).
A great book. Although I might point out that structural demographic theorists like Jack Goldstone and myself had predicted the rise of “selfish elites” many years before Trump.
I agree elite wars play a role in turbulant political times, but this is not just because of a growing amount of competitors for an elite status. There always is a grey area under the elite level, competing for a level up.
In turbulant times however opportunities double, because you could choose either side of the medal, which has an unknown outcome. So basicly they lead the revolutions and force an outcome. This can be seen as a nessecary transformation, more than just a cause for civil war/ although that could in ultra confrontation also be the outcome.
I believe in this case the strong growth of the sub elite class, might very well be responsible for the low income of lower classes; next to aumation and outsourcing; because more managers need to prove their salary’s worth and have all learned economics, how to make more profits by cutting costs.
So, in this case alas the pitchforks have no sub elite representatives.
All bets are on Trump/ or deleting him. The sub elites look upwards and not down. So, yes they fight the effect and not the cause. Which makes it unpredictable.
At the same time it is possible another sub elite does look downward and finds a clue that will inspire masses. As far as I can see a new financial system is the only way out of the economic/ social cultural gritlock.
Minimum wages might make a temporary difference; should have been introduced long ago; but do not stop overall jobloss, which is because of the technological revolution inevitable.
So, yes there could very well be a breakthrough in five years or so. But in reforming also an opportunity.
See my blog post
http://peterturchin.com/cliodynamica/who-are-the-elites/
where I discuss what I mean by “elites”
I am talking about political elites, establishment, that do not nessecarily belong to the wealthy class. Although in the US there seems to be a strong connection between the wealthy few and politicians, perhaps because they are also funding their election campaigns. I am not sure if croudfunding has been that succesfull to trump that.
It’s clear there are strong connections in that regard as well in the republican as the democratic party. So, in that sence there is hardly a difference.
I read an article that expained there have always been orthodoxies, believing in a certain governmental concept, like the Roosenfelt, Johnson and Reagan eras, that overlapped both parties. At this stage there is confiusion.
It might also be that the wealthy class often represents past economic trends that are no longer viable. When you look at Trump he seems to represent the old garde, fighting lile Don Quichotte against the windmills of digital technology eating jobs.
This is a relative young industry and has; also because of a foreign workforce; hardly any political representation (don’t think Gates makes a difference) and even from time to time position themselves as anti political establishment.
So, since parties hardly make a real difference; deep state rules; I guess people feel lost and the economy makes the difference between blue color workers dying for more/ opposed to a democratic crying for social support, that blue color workers should pay for 🙂
The other aspects that are really important here are complexity and carrying capacity. Some of what’s causing the popular immiseration is less return per labour hour invested, due to increased complexity (Tainter), itself a response to reduction in resource quality. So many of our resources are very expensive to extract now, that carrying capacity could fall a long way in response to war and / or social simplification.
I personally find Tainter’s ideas on negative returns to “complexity” unpersuasive.
The Democratic Party won a convincing plurality of votes. It is unclear how that should be interpreted as losing in the sense implied. Since the loser in the election nevertheless took office by virtue of time-honored crank legal machinery, illegitimacy on the part of the winner is natural. (Gore’s validation of Bush in 2000 was entirely unnatural, powerfully influenced I think by Gore’s personal lack of moral and political principles.) The inability of the Republican Party to select a compatible nominee or use its majority is another problem…but it is unclear how one could possibly blame the Democrats for it.
Most of all, it is unclear whether Democrats and Republicans are much more than Ins and Outs. The Democratic Party lost elite support with Johnson’s reforms and has been the Out party ever since. On a national level, individual Democratic Party politicians who have copied conservative elite politics have managed to capture the presidency. But being conservatives, it has made no difference.
I don’t know whether it really makes more sense to talk about elite overproduction and intensification of elite competition, rather than systemic crisis and the inability of the ruling class to solve the problems. In particular, it is entirely unclear how, especially in terms of structural demographic theory, how reforms limiting immiseration will moderate intra-elite competition. But it does seem likely such reforms will intensify the fiscal crisis of the state, which I understood to be an integral part of the SDT as well.
Also, in political terms, immiseration is something that happens to losers. The people immiserated will only be a fraction. All efforts devoted to alleviating partially the misery of a fraction of people will I suspect founder on the difficulty of identifying the deserving poor. In practical terms, that is what this proposed reform amounts to, I think. Conceptually, though, I think this is a non-category, and the many, many failures to identify these worthy creatures suggests it is a non-policy as well. As for the general proposition that some inequality is fairness itself (which is I’m afraid exactly what the OP proposes,) I’m pretty sure that in practice this means a total commitment to the system as a whole. There is of course the practical difficulty that the system as a whole is not actually working, but when principles above mere material gain?
“The Democratic Party won a convincing plurality of votes. ”
They lost dozens of federal and state elections. The Republicans control a greater share of state legislatures than they have in nearly a century. This narrative is BS.
The fundamental social process that drives both immiseration and intra-elite conflict is the massive oversupply of labor that developed in the United States over the past 30–40 years. It’s driven by a combination of factors, demographic growth, immigration, massive entry of women into the work force, and shipping of manufacturing jobs off shore.
But it omits automation. A big factor.
I wonder if you could find a historical precedent for this combination of factors.
What people not in the technology industry miss is the unprecedented nature of exponential growth. IMHO this is something never before encountered by humans. Ray Kurzweil is head scientist for Google and describes it here https://www.youtube.com/watch?v=43zo82W7aPI#t=16
The increase in wealth we are now experiencing and should continue to experience changes everything. Humans can afford to move to Basic Income. This increase in wealth cannot measured only in traditional terms, but in the collapse of prices for most technology. The toys are getting better and ‘sbetter and cheaper and cheaper. I am sitting in a development lab beside a part time employee who has not been able to find a full time job in his 25 years of life. He makes some of his income tutoring gamers online, and is a master of many computer games. He has an advanced gaming PC and display and accessories. He helps me as a tech and programmer. He works part time as a cook in a pizza place but not enough for health coverage. He fixes PC’s over the phone using a tool called TeamViewer. He can’t afford Obamacare and has no health insurance. He is typical of a huge demographic.
Solutions of the 1950’s are totally obsolete. There are no jobs to unionize for these people, boosting the minimum wage just kills more jobs. There needs to be a public debate on Basic Income. All the tech giants are pushing it. As I said in an earlier post, we have a de facto basic income with Social Security, Medicare and medicaid, food stamps, endless other transfer payments. How can it be simplified and funded? What will it mean for society?
simply look at the growth of latifundia, driving farmers into army or clientage in the city.
no real progress can be made until the people rule the state.
And I talk about automation in the next paragraph. Unlike other factors, it’s impact is more recent. However, I think it will be one of the most important forces in the years to come.
And there are precedents–automation during the first industrial revolution, which sparked movements such as Luddites.
Personally, I’m more in favor of a Job Guarantee (something like a WPA that would give work to any who want it) rather than a Basic Income because, if you do the math, you’ll find that currently, a Basic Income would still require a massive increase in taxes (think double current rates) in order to provide people with enough to survive on.
BTW, Peter, have you read Stephen Skowronek?
https://www.thenation.com/article/what-time-is-it-heres-what-the-2016-election-tells-us-about-obama-trump-and-what-comes-next/
In his framework, Trump is clearly a Disjunctive President at the end of a (neoliberal) era: A not-very-Reaganesque leader presiding over a Reagan Republican coalition that is fraying and fighting each other. That was the case the last time we had a Disjunctive President as well (a not-very-FDRish Carter presiding over the disintegration of the Democratic New Deal coalition) That means that, hopefully, 2020 would bring in a Reconstructive President who ushers in a new political era.
I say hopefully but I should express that sentiment more strongly than that. Because the last time that a political era of dominance should have by all rights ended (1856, when the Jacksonian Democrats were on their last legs), the main opposition Whigs imploded and the Republicans weren’t strong enough to win the Presidency. That meant 4 more years of bitter division and bloodshed which exploded in to civil war after 1860.
If we have a new political era/party system starting in 2020, the bloodshed may be kept to a minimum, but if the new political era/party system doesn’t start until 2024, the US will definitely have another civil war.
I have not read Skowronek, but most proposals of cycles in social systems made by people who don’t understand dynamical systems theory are flawed.
i suggest ‘democracy ‘ as the only cure for usa problems, simply because wealth and power are conjoined twins. a democracy will solve its problems by getting most people to vote for policies that benefit most people.
no society ruled by any kind of elite has that motivation. the usa is fortunate in having a written record of the process of creating a nation ruled by and for the wealthy. chatter about ‘what should be done’ that does not address this fundamental principle is trivial substitute activity.
educated people in the usa are not revolutionaries, they have usually been safely within the ‘member’ group. those with incentive for fundamental change are generally in the criminal class, whether convicted, or merely brown.
an education has recently become useless in joining the member class, for many. here is where revolution will begin. not soon, and probably without result in reforming the whole nation. but it may lead to successful secession. california and perhaps the whole west coast might get tired of being american.
Here’s the problem I have with folks like you: The question isn’t “what should be done” but rather “how to do it”, and for that, I haven’t seen a plausible answer yet from you.
And in the next American Civil War, it won’t be the West Coast breaking away from the US but rural/rural-dominated areas (most likely southern, most likely in the interest of defending the fossil fuel economy, most likely with Russian support) who will instigate a Civil War.
almost simple. but very likely impossible, as well.
how? organize voter action groups to extort an amendment establishing an effective and accessible citizen initiative. either the democrat party becomes the party of democracy, or form a purpose driven party with that one goal.
impossible? needs citizen quality people. such people are rare in the usa.
the red states will never leave, they are not economically viable. so also they will not let the blue states leave, without violence. is it hopeless? given the character and education of americans, probably hopeless. that is not a good enough reason to stop discussing the matter.
Interesting. The arguments sound like the ones that created populist movements in Europe. So it’s more likely creating political movement than civil war.
Talking about democracy, with a vote return of 50% of population, resulting in a 25% government representation, is that a majority? and do you call that democracy? No wonder deep state is running the government. There IS no democratic majority.
In Europe occasionally populist parties that are also represented in parliament use the internet for voting on issues.
So, all in all it could mean an evolution has started turning democracy into a more real time community internet function, than just being run by single (feudal) rulers. But still has a long way to go. Perhaps blockchain technology will play an important role in this.
i suggest you simply do not grasp the principle of democracy: there is no ‘government,’ but rather an administration of public servants carrying out the wishes of the electorate as expressed through continual and regular referendum, and occasional citizen initiative.
the swiss vote 3 times a year, to decide the proposals of the administration.
election of people is not democracy. it is an evolution of aristocracy, with civil war replaced by election, ballots replacing bullets.
In many ways Japan has been here first. Their Central Bank found all the old methods for stopping deflation no longer working. Now the EU and Federal Reserve are in the same place. This article is interesting https://www.theatlantic.com/business/archive/2017/07/japan-mystery-low-birth-rate/534291/?utm_source=nl-atlantic-daily-072017 Many point to unromantic 20-somethings and women’s entry into the workforce, but an overlooked factor is the trouble young men have in finding steady, well-paid jobs.
There is a shortage of what we think of as traditional jobs and it is getting worse. I don’t think it will change. Trying to force wages up just kills even more jobs. A new approach is needed. Teaching gaming skills online is a growing occupation among tech savvy young people. Jobs of the future will have to be invented, and the government will screw it up if it gets involved. As I said in an earlier post: Left alone, humans will find plenty of things to do for one another that they are willing to pay for.
The problem is not getting more non-voters involved, it is a problem of imagination. It is time to consider what simplification and just giving people money can do and how it can be set up. If we need more consumption, give people something to consume with. Rather than a negative interest rate which the Central Banks are talking about, just pass out money. Societal wealth is far greater than most people imagine and it can be afforded. The implications need a widespread public debate. People who find Turchin interesting are in a good position to engage in it.
Yes, that’s an interesting article about Japan. But it also overlooks a couple of things, that create a connection resulting in the outcome of no marriages and no babies.
In Japan housing is scarce and very expensive. Young couples often live with their parents, because they cannot afford a house.
Since the labour market due to economic evolution has created freeters, they don’t get a morgage from the bank anymore, because they don’t have guarenteed income.
So it is the inverted relation between an (over) inflated real estate value market/ and no more steady jobs. Which is a global trend by the way.
I agree there should be a medium guarenteed income, that neutralizes the material existence level for everyone. This however in the financial model I am working on, is not tax related. There are more issues, too much explaing for in a brief post.
So I don’t think you need a new economic money related evolution on top of that. The next layer is information exchange, which has no copyright and is availabe for free to everyone involved in this ‘economy’.
Facts need to be correct. A quick Google of “Japan abandoned houses” brought up pages of articles such as this https://www.nytimes.com/2015/08/24/world/a-sprawl-of-abandoned-homes-in-tokyo-suburbs.html They can’t give houses away in Japan. The problem is traditional jobs, they are vanishing and will continue to vanish.
Thanks, things have apparently evolved quicker than I noticed. This was the counter reaction to that. But nevertheless the real estate issue does exist elsewhere, also connected to irregular jobs.
What plays a role next to that is the cultural explanation of a man/ woman relationship. i know for instance that in China women generally first look at a mans material wealth position, before they accept a relationship. This could very wel be an Asian cultural selection, that is stronger than in the western world/ although the same relation certainly exists there too.
Nevertheless, the solution would be a guaranteed medium income to cover material needs. The Asian man than needs to prove his maturity elsewhere :-)..
Here is a trend that will put a lot of attention on joblessness : Automation may replace white-collar workers sooner than you expect. https://www.city-journal.org/html/professionals-and-managers-youre-next-15289.html From the article: it’s easier to build a robot to replace a junior attorney than to replace a journeyman electrician. Do any of you know recent law grads who can’t find work? I do.
MOOCs are a development that will hit the elites. MOOC registration seems to be getting a second wind. From what I see the quality of presentation and support is very good, much better than typical classroom instruction. When academia starts feeling a financial impact there may not be anywhere for those forced out to go. Adding several tens of thousands of literate voices to the conflict will probably do something.
I suggest we find the best way to feed them, house them, and set them free. I don’t know what that way is, but welcome a public debate. It is time to move this issue from the tech industry to the wider world, a much more positive use of time than impeaching Trump. In the same way that only Nixon could go to China, Trump may be the transformative President who will implement Basic Income when he sees his jobs programs not working.
You’re counting on too much competence, compassion, and caring from Trump, all three of which have not been in evidence.
I fail to see what could be accurately called widespread immiseration. If I was to rank average, median and bottom quintile standard of living, health, longevity and opportunity and I compared every society since the advent of agriculture over ten year groupings, I would be willing to bet that the standards are higher today than in any other society/decade. A thousand societies worldwide and a thousand ten-year eras comes to a million data points and the current results in the US, or western Europe are as high or higher than any other era, and WAY higher than 99.99% of them . And a historian calls this immiseration? May I suggest turning town the hyperbole a bit?
In addition I am very skeptical of the elite conflict model when applied to market based economies where the elites can compete constructively or productively by creating new products, services, incpventions and such that improve welfare for others. In other words, the key is to direct competition in constructive directions, rather than denounce it. Markets and science do aim elite competitions in socially productive directions, in general.
As to the minimum wage debate, this is economic and moral foolishness. If we raise the cost of unskilled labor, we reduce the demand for it and increase the relative demand for skilled labor (making it unfair for less skilled or experienced) and increase the demand for technological or foreign replacements. This is the last thing anyone who cares about the less skilled would want to do.
I could provide good recommendations, but will set those aside as I seem to have already flunked towing the line on the good progressive mindset.
Two gross errors here.
Consider Steven Pinker’s argument that our societies have been getting less and less violent since the late Middle Ages. Does that mean that suffering from others’ violence is nothing to complain about and that the violent ones should get away with their acts?
Also, argument from capitalist utopia. Imagine someone defending Marxist-Leninist regimes with similar appeals to to some Communist Utopia.
Look at data before becoming so confident in an assumption:
http://www.motherjones.com/kevin-drum/2011/06/map-day-falling-life-expectancies/
There are large swaths of this country where the average life span has actually decreased in recent years. Outside of catastrophic wars and their aftermath, that’s pretty much unheard of in the first world in any of our lifetime’s.
And sure, competition in constructive directions is good, but if you read Luigi Zingales on the right (who predicted the rise of Trump) and Matt Stoller on the left, they would note that capitalists hate competition (for good reason) and strive to be monopolists. This is the problem I have with economic libertarians: Sure, their ideal world sounds good in theory . . . .if they can keep it that way, but they seem to have a big blindness about power and the wielding of it as well as trouble thinking about a world that can change.
For instance, you would often hear from economic libertarians that the government should be less powerful and shrunk and only enforce laws/property rights. All well and good, but if you have a weak government, then would not some companies/people grow strong enough that they can bend the laws in their favor? They certainly have the self-interest to do so, so what would be there to stop them? Follow this logically, and you end up with libertarians who argue for the existence of unconstrained monopolies. That is, libertarians who are anti-competition. That is, libertarians who are essentially pro-Crony Capitalism (which is little different from Mercantilism). Are you in favor of such a world?
Another indication of immiseration is the attitude of the financial community toward the rest of the economy. http://www.latimes.com/business/hiltzik/la-fi-hiltzik-american-airlines-20170428-story.html I’ll quote:
American Airlines on Thursday did something that’s good for its workforce and good for its passengers: It announced healthy pay increases for its pilots and flight attendants, two years ahead of the expiration of their union contracts.
In response, Wall Street absolutely slaughtered American’s stock. The airline’s shares lost more than 8% in value over the ensuing two trading sessions, a loss of about $1.9 billion in market value in 48 hours.
…
This is frustrating,” Kevin Crissey, an airlines analyst for Citigroup, bellyached to clients after the announcement. “Labor is being paid first again. Shareholders get leftovers.”
…
Crissey wasn’t alone. Morgan Stanley downgraded American shares, on the grounds that the raises establish “a worrying precedent … both for American and the industry.”
…
Wall Street doesn’t seem to understand that decades of enhancing “shareholder value” at the expense of workers has placed American business and the economy in a bad way. The upstreaming of corporate resources to shareholders and senior executives has increased economic inequality, which has been a drag on growth.
Richard,
Seriously? Your argument for “immiseration” is a map showing life expectancy which is pretty close to the highest level EVER for the human race (roughly double the historic average) had been increasing in the vast majority of the US? You do realize that most of the map was not red and that other than red means expectancy rose? When you convert a positive but not universally positive trend and call it immiseration then I have to question the seriousness of this crowd.
And can you try to respond to me instead of some mythical libertarian anarchist straw man? Of course markets need to be regulated so that people don’t collude and force monopolies. Yes, capitalists and unions and incumbents want to reduce constructive competition. A properly functioning market aims competition in constructive directions and specifically prevents incumbents and interest groups from derailing the process.
Rojellio:
“Seriously? Your argument for “immiseration” is a map showing life expectancy which is pretty close to the highest level EVER for the human race (roughly double the historic average) had been increasing in the vast majority of the US? You do realize that most of the map was not red and that other than red means expectancy rose? When you convert a positive but not universally positive trend and call it immiseration then I have to question the seriousness of this crowd.”
Here’s the thing: Whether you call it immiseration or I call it immiseration or Peter calls it immiseration is academic. What is not academic is that Trump was elected President. So if so many people are as happy as you think they should be, please explain to me how we currently have Trump has President of the most powerful nuclear state in the world right now.
“Of course markets need to be regulated so that people don’t collude and force monopolies. Yes, capitalists and unions and incumbents want to reduce constructive competition. A properly functioning market aims competition in constructive directions and specifically prevents incumbents and interest groups from derailing the process.”
All terrific in theory. So let’s get to the nitty-gritty: How would that ideal-state market be maintained and prevent incumbents/interest groups/other powerful entities from derailing the process?
“How would that ideal-state market be maintained and prevent incumbents/interest groups/other powerful entities from derailing the process?”
and that is the argument for democracy: the way to control special interest groups is for sovereignty to be vested in the electorate. when the people who suffer from the activities of special interest groups have the power to initiate and enact legislation and regulate activity, the majority will be better off. this seems better than the alternative.
getting democracy is difficult, when the electorate has been groomed to submission. but not impossible: between about 1890 to 1910 about half the american states established democratic constitutions, as part of the genuine ‘progressive movement.’ not to be confused with modern ‘progressives,’ who are slaves content with searching for a kind master, not self empowerment.
Interesting question.
The whole is a self evolving energy connection, depending on the connections that are relevant in evolving within their time period.
It acts very simular to the brain: concsiousness. So, there are two layers of energy connection: the real world, including the energy connections people have created and are involved in themselves/ and the perceived energy connection of individuals and groups, that includes so called self interest, which is also natural because ones position in the whole knows a centre.
In all of this it is important to be aware of the whole, otherwise you overlook important connections and your position in evolution.
Evolution theory; although ecologists at present claim to be involved in the whole as well from nature’s perspective; is looking for ways to understand the whole the best, by research, by understanding the dynamics and explaining, discussing them.
In general humans realize that the total energy involved in their society is the most important, and use democracy as a self determining proces, because no one knows the whole and it is constantly evolvig.
The difficulty in this proces is to convay others that their thinking does not represent the whole/ or that in reality it generally becomes a discussion between parties both not knowing the whole, that stress the right of their ‘reality’ which basicly is a believe system as well, only stressing the unparallel. So, you get nowhere and basicly have to wait and wonder how the proces evolves itself, if at all.
Overlaying the social cultural spread is fi the economy with its own set of connections and energy rights. Which means labor provides an important extra potential for community, that with its counter connection; inverted at the same time ones are always the most important; means only labor has a single right to consume/ while it overlooks it is producing much more it could ever consume itself. So the inverted connection creates a institunional law system: the financial and fiscal, that basicly functions within its own believe system, which is not the whole.
That is where we are now.
Next to that it is very well posible that a statisctic that uses only a single minded connection, is not perceived as the same, because concsiousness uses multi connections, that also evolve differently over time. So you cannot percieve a statistic as final proof.
A simple example of this is global warming. One group says it is due to human industrial activity involving fossile fuel/ another group suspicially involved in economic benefits from fossile energy, says climate changes have been there all over earth’s history without humans being involved. So it uses an argument from the set of equations the other group uses, not including its own role, so the discussion becomes ‘unknown’. It cannot explain itself anymore. It has a hard time defining the proper connections. Because the argument itself used a central connection, that creates its own reality, determining its evolution, but does not represent the whole.
All in all it probably means that human evolution wiil be to better understand its own condition and learns to use logic thinking, which indead in general is a strikingly missing element in our cultural state in evolution.
Loren,
Same question as I asked Richard. “Immiseration” is now being expanded to including a short term downward blip in the stock price for one company? Huh? I admit to neither knowing or caring about what affected the stock price of American, but can we get off the anecdotes and back on topic?
Seems to me that the answer is immiseration, and everyone reading and writing this blog is making sure it stays that way no matter how much it strays from reality broadly considered against any other stretch of history ever.
No historian can compare current modern living standards to any other era — any place or any time — and call the current age “immiseration.”
That example is not an isolated occurrence but part of a trend of business leaders and bankers forcing down wages and keeping more for themselves and their favorites. Thus making the wage fraction of GDP decline. Our host Peter Turchin has abundant numbers on this and other trends. That fraction was relatively high in the 1820’s, declined to a low in the 1890’s (the Gilded Age), rose to a high in the 1950’s, and then went into its present decline. That is why the present day is often called Gilded Age II.
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That explains news stories like http://www.businessinsider.com/baby-boomers-caused-millennials-destructive-spending-habits-2017-6 — a story that contains long list of things that milliennials have supposedly killed or are supposedly in the process of killing.
The golf business, retailers, the movie business, Home Depot, relationships, running, wine, McDonald’s, manners, paper napkins, cars, crowdfunding, credit, houses, Buffalo Wild Wings, Applebee’s, diamonds, …
Quote from that article:
“I think we have got a very significant psychological scar from this great recession,” Morgan Stanley analyst Kimberly Greenberger told Business Insider. “One in every five households at the time were severely negatively impacted by that event. And, if you think about the children in that house and how the length and depth of that recession really impacted people, I think you have an entire generation with permanently changed spending habits.”
…
Seven in 10 students graduate from college with student loan debt, owing an average of over $30,000, according to the Institute for College Access and Success — and that’s ignoring the massive debt of students who took out loans but did not graduate. As student-loan debt has skyrocketed, income — both for graduates and millennials who haven’t attended college — has failed to substantially increase.
With these economic burdens, it is difficult for millennials to save money. Thirty-one percent of “young millennials,” ages 18 to 24, and 33% of “older millennials,” ages 25 to 34, don’t have any money in their savings account, according to GOBankingRates.
Exactly right. This is due to expectations the economy would keep on evolving like it did in the previous century, so it was right to start with a debt investing in you own future. (apart from the fact wether debt: a missing energy potential in your future, has anything to do with economic reality, where there is no missing potentail at all/ it supposes to create a responsibillity, the human brain otherwise would not understand, which I strongly deny)
It overlooked that economic labor efficiency evolves in the opposite direction. It cuts labor costs, which at the same time are yout income. So in that connection speculating on a growing involvement of labor in earnings to pay off debt, uses the precize most inefficient connection. It does not know its own future, as well as in the meaning of inflating housing costs, that are not an ownership of money/ but future debt.
In this evolution millenials do not repesent a majority in democracy, so the babyboom gegeration is ‘lucky’ to be able to prove its right; against all odds; sort of confusing culture, because no one seems to know anymore what’s going on. I bet if millenials had the same numbers babyboomers had in their time, social revolution would scream from the rooftops. Well, the counter evolution is that many electronic products have devaluated in price, so on that side it also has a benefit for millenials that can use uber and airbnb as cheaper alternatives too.
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Looking back in American history, Colin Woodard has written an interesting book: “American Character: A History of the Epic Struggle Between Individual Liberty and the Common Good.” He mentions Communism as having taken common-good concern to grotesque extremes, and he proposes that the opposite, individual liberty, can cause trouble. Like societies dominated by small cliques of oligarchs that end up depriving the rest of the population of a lot of liberty.
CW discussed the antebellum South as individual liberty taken to extremes, and he noted that the plantation-owner elite ended up depriving the rest of the population of a lot of liberty. Like having steep property qualifications for voting and public office, and owning lots of slaves. Governments were pretty much limited to protection of property claims, and public services were very inadequate, even by the standards of Northern states. Even law enforcement was bad enough to make lots of people be vigilantes.
During the Civil War, the southerners most willing to fight were those in areas with lots of slaves. Those with not many slaves were unwilling to fight, and western Virginians succeeded in seceding from their state because of that. The Confederacy stationed troops in western Tennessee and northern Alabama, keeping those areas from seceding.
Plantation owners preferred growing cotton and other lucrative cash crops, rather than food to feed the Confederate soldiers. They were also reluctant to hire out slaves to help build fortifications. Vice President Alexander Stephens objected to the Confederacy’s military draft.
James Henry Hammond was a plantation owner notable for his mudsill theory of society, that high society depends on the labors of a miserable lower class. Like slaves. But when the Confederate Army requisitioned some of his crops, he stated that it was like “branding on my forehead: SLAVE”. Even though Union armies were already in Confederate territory by then.
So the antebellum South had very low asabiya, something in common with southern Italy since the Roman Empire, when it had big slave plantations and not much external threat.
I have a question, could you say that a lot of laws and rights which benefit the majority of the population were the result of inter elite conflicts and consessions made on order to aquire manpower to fight those inter elite conflicts and wars?
I have a question, could you say that the lots of the rights and laws which benefit the majority of the population were driven by inter elite conflicts because the elite faction needed manpower to fight their wars and therefore concessions were made?
probably true, but your language is imprecise: rights come from power, and are characteristic of the ruling group. other groups hold privileges, extended by the ruling group in return for service, as you imply.
Yes that’s what I mean.
What happens then if manpower becomes less relevant for elite conflicts due to technological advances?
Very funny. You are still thinking in terms of a feudal society. Of course rights are made by democracy; at least supposedly; which is the masses without power rights, so they become the new power. Elites can be everywhere. In millitry, religion, science, commerce, etc. The influence/ but do not rule anymore.
Peter, to me the question is, “How many people are the elites willing to immiserate in order to “get ahead” ?”
If getting ahead has to do with being more connected (creating positive asibiyah), then perhaps the elites can and should get ahead by connecting with those worse off than themselves so no one need be immiserated in absolute terms.
I think it just makes sense — helping others is one way to avoid conflict. To truly help, you have to know what that person needs. If they want to eat chilis, it helps to give them chilis but if they don’t like the tears coming to their eyes, don’t give them chilis. You have to listen to what they want, and the process of listening defuses conflict on both sides. Agreement cannot be reached unless everyone listens to the other side.
the point is, elites don’t have to listen. if the plebs can not organize to rebel with effect, then the elites have no reason to listen. endless examples in human history.
i do not know why ‘educated’ people do not understand the use, in my view the necessity, of democracy, but i presume it is social conditioning, the natural result of being raised, educated and trained to submit to elites. it may well be genetic.
but the potential for democracy exists, and those few extant examples seem adequate demonstration of utility to me.
Begging your pardon, but that is not the point of Dr. Turchin’s post.
As long as less than 1/2 the populace is immiserated, democracy does not help. Organizing a minority to rebel is not democracy.
Ah, yes I see. But when the orriginal startingpoint was disagreeing elites, because they had grown in numbers, that’s a different equation. Concerning only elites.
The problem indeed lies in the immiserated democracy, that is in a way only represented by the rights of the economical elite, because they have a right to be economicly efficient.
The other group of political elite, which wants to be more social now perhaps goes within that equation, in the opposite direction and does not represent a majority as you stated, it has no official rights in neither equations.
So, then what is democracy.
You could say that when democrats who are half of the political elite now, do not represent the immiserated 20%, they are an outnumbered elite, they have shrunk in the opposite direction, because previously they represented other ideals than immiseration. They have not reset themselves/ or believe (hope) it will be only temporarely. They are insicure.
At the same time though there is also a real non elite democratic group living in between jobs; like the Japanese freeters; who still are relativ economic, but not realy happy with their position (who might be democrats) because they have no private lives and a group of still single focussed on their job, blue color workers (who might be republicans) who are also not secure and happy in their jobs, because they might loose them.
So, logically the conservative elites (republicans, as an orthodoxy overlapping democrats) look to find a solution in creating more jobs/ while at the same time less inflated job markets in outsourcing and technological revolution wiping away jobs, move in the opposite direction, so it will democraticly create a majority in the underlying population on both sides.
That is what I ment democracy creating it’s own laws, not by rebelling/ although the evolution is rebelling the wanted outcome.
about half the american states converted to a democratic constitution during the ‘progressive’ movement. not because of immiseration, but to reduce the corruption and incompetence consequent to elite rule.
[…] ebbing (see Peter Turchin on macro-history of immiseration, not inequality, causing political instability, + “counter dominant […]
[…] ebbing (see Peter Turchin on macro-history of immiseration, not inequality, causing political instability, + “counter dominant […]
Personally, I wonder how much Trump’s Presidency has accelerated the SDT trends, that will lead into the Early 2020 Crisis.
Nate Silver actually wrote an interesting to read “Earth 2” scenario last week.
https://projects.fivethirtyeight.com/if-clinton-had-won/
While I have no specific criticisms to the original post, I’m always a bit skeptical of models and philosophies that are purely economic in nature. I’m grinding through Walker Connor’s book on Marxism right now and was musing about how radically different the ways in which human nature in the large can be viewed.
These discussions are always good to read though. Carry on.
Something I noticed in Australia over the past decade in this context (given very similar “structural” trends) is a massive growth in the number of people working in the “Professional Personal Service” sector. This means relatively highly paid jobs such as: Speech Pathologists, Personal Trainers, Dieticians, Masseurs, Occupational Therapists, Psychologists/Consellors, etc.
That would be both an effective “sink” for the oversupply of labor (those jobs are hard to automate) and deliver a real boost to living standards (those serviced deliver real value and boost health).
So, just a partial solution, but …
I think there is a model of politics here that runs something like. . . policy problem, I know, let’s pass a bill to fix it.
What primarily motivates political agents is political survival, and how political agents can amass more power within the system. This never permits systematic change, unless the agent is revolutionary, and revolutions generally manage to accomplish the replacement of one self-serving elite with another self-serving elite.
American democracy is a sea of self-serving, self-interested special interest groups with millions of low information voters on the sideline, voting on the basis of God-knows-what. Nothing can get done in Washington, and no one cares about the good of the Republic. The only ones who might care about “cultural evolution” are Wall Street investors, and only so they can make a buck off calling the right social trend. We are doomed.
american democracy is not democracy. the people do not rule.
the government is a small group who can be bought easily, as they are.
elections are not democracy, merely non-violent civil war, ballots replacing bullets, to decide which master will rule. much better than the old sort, but nothing to do with democracy.
“It may be that we are doomed, that there is no hope for us, any of us, but if that is so then let us set up a last agonizing, bloodcurdling howl, a screech of defiance, a war whoop! Away with lamentation! Away with elegies and dirges! Away with biographies and histories, and libraries and museums! Let the dead eat the dead. Let us living ones dance about the rim of the crater, a last expiring dance. But a dance!” – Henry Miller, Tropic of Cancer”
Having read and understood at least the outlines of your theory, I agree with you on what appear to be the two fundamental issues you mention. Immiseration is primarily due to oversupply of labor. And the coming conflict will involve elite competition.
The plutocrats benefit from oversupply of labor. Most likely, Nick benefits from oversupply of skilled labor, so he can safely propose minimum wages high enough to kick many unskilled laborers into full welfare dependency. Plutocrats who depend on unskilled labor, like the Waltons, will disagree; they’d probably prefer to limit H1B visas, which would perhaps hurt Nick. Minimum wages laws are mostly a form of elite competition masquerading as virtue signaling.
In the context of your theories, Trump can be seen as a good thing. Perhaps having seized political power, this plutocrat can quickly destroy a lot of his competing plutocrats, perhaps including Nick, which will resolve the crisis according to your theory. In the meantime, the antiimmigration platform he used to get elected has a chance of actually becoming policy, which would eventually resolve the issue of labor oversupply.
“In the context of your theories, Trump can be seen as a good thing. Perhaps having seized political power, this plutocrat can quickly destroy a lot of his competing plutocrats, perhaps including Nick, which will resolve the crisis according to your theory.”
Wishful dreaming (done by a lot who supported Trump, I’ve noticed).
There may be plutocrat destruction, but it will be in the future and is more likely to include Trump than be done by Trump. All we’ve seen from Trump so far is chaos and incompetence. That does not lead to plutocrat destruction. It _will_ lead us further on the path to crisis, however. Things have not come to a head yet. They will, and like in the first American Civil War, a lot more than just plutocrats will be destroyed. The only thing that can forestall another American civil war is another Great Powers hot (world) war or cold war.
Good read on Trump (and disruption): https://www.washingtonpost.com/news/posteverything/wp/2017/07/31/why-is-trump-so-bad-at-strategy-its-time-for-some-game-theory-no-really/?tid=ss_tw&utm_term=.181a0bcf60fb
It seems fairly obvious that universal basic income is the only way to guarantee the survival of large segments of the population in the coming decades. The question is, which countries will be adaptable enough to pull this off and which ones will fail? Considering the strength of conservatism in the US and the overall right-wing leaning of US politics, it looks like it’s the most likely of the developed countries to fail this test. But then again, look at Bernie’s sudden rise.
Also, note that poor voting participation is not necessarily a bad thing, at least in the US. During the last presidential elections a lot of people suddenly crawled out of the woodwork and voted against their own interest, probably dooming the country. It would be better for everyone if they kept ignoring the elections.
Lastly, isn’t it time for Peter to admit that his prediction that Russia-Trump connection was just a conspiracy theory was absolutely wrong? 😉
Hayak, Freedman, Nixon, and numerous others on the right have called for basic income for decades. Notable Libertarian Charles Murray has written a book describing how it might be done and making a strong case for it.
The explosion of technology will provide enough wealth to make it practical within the next twenty years at the most. The issue is how to finance and manage it. A public debate on the issue is beginning and needs a lot more attention.
Being able to modernize* and actually doing it are two different things. In the 19th century many Chinese intellectuals understood the need for modernization, and I’ve read well-substantiated opinions that the country was better positioned for modernization than Japan. But Japan succeeded and China failed.
* UBI is, of course, a kind of modernization under the present circumstances.
Yes that’s right. Actually it should not be just seen solely as a social compensation payed out of fiscal extraction/ but as part of an integrated new financial system to make it work properly, as I have found out working on its models.
The current model is inefficient by itself.
But anyway public and political concsiousness has not yet evolved that far. It’s just being perceived as part of a social benefit program so far.
That I totally agree with. But wait a minute, aren’t we forming another echo chamber?
Facts produce data that echo the facts. This creates progressive energy which evolves knowledge.
When this happens in a chamber, yes I guess you could call it an echo chamber/ although the knowledge is not the same as it was (blanc), so in that respect it is not an echo chamber but an evolution chamber 😉
I think it’s a crying shame if Dr. Turchin’s blog descends into becoming yet one more modern political echo chamber op-ed extravaganza.
It’s too early to tell what’s going on, everyone writing is filled with their own personal biases, this is the furthest thing from a data-driven discussion.
Oh well, you can always hope.
Agree, I am disappointed with most of the comments here, I thought of all places this should be the place except from political partisanism, full of rational scientific minded people. I guess I was wrong.
It probably has value in that it’s an example of what I find to be the weakest aspect of this type of historical analysis. Looking for economic causalities under every rock (elite overproduction, etc.) tends to ignore the power of tribal affiliation. The posters have tended to believe in rational economic models while themselves falling prey to their own particular totems when discussing modern times.
Have a good day, Jakob.
Just a thought from this morning.
I do realize that Dr. Turchin’s books bring up the idea of civilizational fault lines, based on things like religion and ethnicity, but only in the largest sense as I remember (Russia vs.steppe tribes for example).
It strikes me, I may have mentioned this before under a different name, that you could also look at the break up of polities, or at least high social tension, by measuring these same things over time within a state. Living patterns like housing location is an easy one, but a more clever concept I think would be to measure changes in language and accents over time. I’ll just bet that an AI could be trained to detect the degree of ‘foreignness’ in someone’s speaking patterns and then see how this maps geographically and over time. For all I know, you could accurately guess someones political party from 10 seconds of a voice recording.
regards…
Yes, I guess that is potentially possible, presuming that fi there are only two main parties of which one is more progressive liberal and the other conservative. On the other hand, what’s the use for that when election results already show the exact same profile.
Apart from that I believe languages as they are already have a ‘political’ profile. English fi is by itself a more progressive liberal than German is, which is more conservative and precise in what it is meaning. This however does not foretell a specific political party, because in each culture both oppositions still exist. It is only a relative/ not a decisive.
In the US because of orthodoxies overlapping both parties one cannot even tell what the exact difference is, although I believe there must be one.
In the current situation economy is decisive, which is not equally represented by one party/ but created a swing to ‘conservative’, because democrats failed to come up with a solution. In this case ‘conservative’ stands for a better job opportunity; so it is actually progressive;, because Trump is a ‘succesfull’ businessman.
Of course a lack of potential in one equation/ does not foretell a solution in the other, because Trump never has proven to be something other than selfish. Still you don’t know what jumps a cat in the dark will make, to save its face.
I guess you could have made an AI comparison in economic labor circumstances foretelling this outcome, presuming you would have known on beforehand its crucial factor/ but since this is not the case; you cannot foresee it; it could still be done afterwards, to prove the point.