December 18, 2017

The Secret Joys of Bureaucracy

“So we have inspectors of inspectors and people making instruments
for inspectors to inspect inspectors.”

-Buckminster Fuller

We met anthropologist David Graeber last time. His book The Utopia of Rules: On Technology, Stupidity and the Secret Joys of Bureaucracy takes on a universally-acknowledged kind of modern workplace drudgery: the mind-numbing bureaucracies built around filling in forms. This is from an interview in The Guardian:

A few years ago David Graeber’s mother had a series of strokes. Social workers advised him that, in order to pay for the home care she needed, he should apply for Medicaid, the US government health insurance programme for people on low incomes. So he did, only to be sucked into a vortex of form filling and humiliation familiar to anyone who’s ever been embroiled in bureaucratic procedures.

At one point, the application was held up because someone at the Department of Motor Vehicles had put down his given name as “Daid”; at another, because someone at Verizon had spelled his surname “Grueber.” Graeber made matters worse by printing his name on the line clearly marked “signature” on one of the forms. Steeped in Kafka, Catch-22 and David Foster Wallace’s The Pale King, Graeber was alive to all the hellish ironies of the situation but that didn’t make it any easier to bear. ‘We spend so much of our time filling in forms,’ he says. ‘The average American waits six months of her life waiting for the lights to change. If so, how many years of our life do we spend doing paperwork?’

The matter became academic, because Graeber’s mother died before she got Medicaid. But the form-filling ordeal stayed with him. “Having spent much of my life leading a fairly bohemian existence, comparatively insulated from this sort of thing, I found myself asking: is this what ordinary life, for most people, is really like? Running around feeling like an idiot all day?”

In other words, it’s almost 2018 — with all our smart technology, you’d think we could do better — for the people on both sides of the bureaucratic desk. The interview continues:

[Graeber] quotes with approval the anarchist collective Crimethinc:

Putting yourself in new situations constantly is the only way
 to ensure that you make your decisions unencumbered
 by the nature of habit, law, custom or prejudice
 – and it’s up to you to create the situations.

That’s good paradigm-shifting advice. We could follow it all the way to eliminating “the Secret Joys of Bureaucracy.” As you would expect, a whole bunch of enterprising software developers are already on it — here’s a software list. In fact, if it’s a dull, repetitive job, we probably already have technology that can do it better than humans can.

But that would eliminate all those mind-numbing bureaucratic jobs. Then what? Then it’s time for the second half of the Buckminster Fuller quote above:

The true business of people should be to go back to school
 and think about whatever it was they were thinking about
before somebody came along and told them they had to earn a living.

A friend of mine was a chimney sweep. He’d be up on the roof, shaking down soot with his long-handled brushes, and downstairs his helpers would screen off the fireplace and capture the soot with a high-powered vacuum before it ruined the homeowner’s den. “Don’t wallow in it,” he’d tell them.

That’s also good paradigm-shifting advice. Trouble is, our brain wiring loves to wallow in the old ways of doing things — including filling in forms — at least until, as the saying goes, the pain of status quo becomes greater than the pain of change.

We’ll be looking more at workplace paradigm shifts in the coming weeks. But first, next time we’ll let a poet help us wallow a bit more in workplace drudgery.

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

Bullshit Jobs

“Work is the refuge of people who have nothing better to do.”
Oscar Wilde

Radio journalist Studs Terkel interviewed hundreds of people for his 1974 book Working. Here are a couple quotes from it:

Work is about a search for daily meaning as well as daily bread, for recognition as well as cash, for astonishment rather than torpor; in short, for a sort of life rather than a Monday through Friday sort of dying.

Most of us have jobs that are too small for our spirit. Jobs are not big enough for people.

Apparently not much has changed in the 43 years since Working came out. Consider this from The Power of Meaning, by Emily Esfahani Smith (2017):

Today, about 70 percent of all employees either are “not engaged” in their work—that is, they feel uninvolved, uncommitted, and unenthusiastic about it—or are “actively disengaged” from it, and less than half of all workers feel satisfied with their jobs.

Or consider anthropologist David Graeber’s widely circulated 2013 article On the Phenomenon of Bullshit Jobs: A Work Rant:

In the year 1930, John Maynard Keynes predicted that, by century’s end, technology would have advanced sufficiently that countries like Great Britain or the United States would have achieved a 15-hour work week. There’s every reason to believe he was right. In technological terms, we are quite capable of this. And yet it didn’t happen. Instead, technology has been marshalled, if anything, to figure out ways to make us all work more. In order to achieve this, jobs have had to be created that are, effectively, pointless. Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul. Yet virtually no one talks about it.

“Virtually no one talks about it.” Why not? The Financial Times ran an article a couple months ago called Britain’s Joyless Jobs Market Can Be Bad For Your Health. (It’s here, but you’ll have to subscribe to read it.) It makes the same point as the following quote from the article published by the Lawyers Assistance Program of British Columbia which we looked at a few weeks ago:

[I]t is unhealthy to do meaningless, unchallenging, uncreative work, especially for those that are intelligent and well trained.

Seems like a pretty uncontroversial thing to say, but you can’t tell from the nastiness in the comments that follow the article — one more sad case of polarized opinions talking past each other and the loss of meaningful discourse. Not only can’t we talk about economics, but apparently we also can’t talk about how crummy jobs ruin our health.

Why has it become so inflammatory to suggest that boring, meaningless work might not be a good thing? Because of the widespread “truths” about work that have become culturally sacred. To many — maybe most — people, work represents a moral good, no matter how boring, trite, thoughtless, and demeaning.

One person who isn’t afraid to talk about it is Rutgers history professor James Livingston. He says the following in his book No More Work: Why full employment is a bad idea (2016):

Work means everything to us. For centuries—since, say, 1650[1]—we’ve believed that it builds character (punctuality, initiative, honesty, self-discipline, and so forth). We’ve also believed that the market in labor, where we go to find work, has been relatively efficient in allocating opportunities and incomes. And we’ve also believed that even if it sucks, the job gives meaning, purpose, and structure to our everyday lives—at any rate we’re pretty sure that it gets us out of bed, pays the bills, makes us feel responsible, and keeps us away from daytime TV.

Those beliefs are no longer plausible. In fact, they’ve become ridiculous, because there’s not enough work to go around, and what there is of it won’t pay the bills—unless, of course, you’ve landed a job as a drug dealer or a Wall Street banker, becoming a gangster either way.

[Work] no longer functions as either a moral calendar or an economic calculator. You will learn nothing about character by going to work at the minimum wage because the gangsters or the morons at corporate headquarters control your opportunities; you will learn nothing about the rationality of the market because the same people determine your income.

More next time.


[1] 1650 is the year René Descartes died.

 

Kevin Rhodes left a successful long-term law practice to scratch a creative itch and lived to tell about it… barely. Since then, he has been on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. He has also blogged extensively and written several books about his unique journey to wellness, including how he deals with primary progressive MS through an aggressive regime of exercise, diet, and mental conditioning.

Some Suggested Reading

Last week was a rich one for new articles on the topics we’ve been exploring lately, such as economic inequality, neoliberalism, globalization, and the need for an economic paradigm shift. If you’re so inclined, you might like to check these out:

This article from The Boston Review, by Dani Rodrick, an economist whose research covers globalization, economic growth and development, and political economy. He is the Ford Foundation Professor of International Political Economy at Harvard’s John F. Kennedy School of Government. He was previously the Albert O. Hirschman Professor in the School of Social Science at the Institute for Advanced Study in Princeton (2013-2015), and is President-Elect of the International Economic Association. Here’s a sample from the article:

As even its harshest critics concede, neoliberalism is hard to pin down. In broad terms, it denotes a preference for markets over government, economic incentives over social or cultural norms, and private entrepreneurship over collective or community action. It has been used to describe a wide range of phenomena—from Augusto Pinochet to Margaret Thatcher and Ronald Reagan, from the Clinton Democrats and Britain’s New Labour to the economic opening in China and the reform of the welfare state in Sweden.

The term is used as a catchall for anything that smacks of deregulation, liberalization, privatization, or fiscal austerity. Today it is reviled routinely as a short-hand for the ideas and the practices that have produced growing economic insecurity and inequality, led to the loss of our political values and ideals, and even precipitated our current populist backlash.

As we heap scorn on neoliberalism, we risk throwing out some of its useful ideas.

We live in the age of neoliberalism, apparently. But who are neoliberalism’s adherents and disseminators—the neoliberals? Oddly, you would almost have to go back to the early 1980s to find anyone explicitly embracing neoliberalism.

This report from Credit Suisse on the state of global wealth, as summarized here by Time Magazine. Again, a sample:

In its annual report on the state of global wealth, Credit Suisse says 1.1 million new millionaires were created in the U.S. in 2017. That brings the total number of millionaires in the U.S. up to approximately 15,356,000, or about one in every 20 Americans.

Americans now account for 43 percent of the world’s millionaires.

Yet not everyone is benefiting from the booming global economy. Credit Suisse finds that across all global regions, wealth inequality has increased from 2007 to 2016. And in every region of the world except for China, they say, median wealth has actually declined. Despite its plurality of millionaires, the U.S.’s median wealth of $55,876 puts it 21st place in the world, alongside Austria and Greece.

Median wealth per adult favors countries with lower levels of wealth inequality, Credit Suisse said, and there is exceptionally high disparity between the rich and poor in the U.S.

This article from the World Economic Forum, written by Alberto Gallo, Portfolio Manager and Head of Macro Strategies for Algebris Investments, a London-based asset management company which specializes in the global finance sector. The subject is economic inequality. Here’s a sample:

Paul Ryan, speaker of the House of Representatives, recently stated that “in our country, the condition of your birth does not determine the outcome of your life.”

Yet the idea that every American has an equal opportunity to move up in life is false. Social mobility has declined over the past decades, median wages have stagnated and today’s young generation is the first in modern history expected to be poorer than their parents. The lottery of life – the postcode where you were born – can account for up to two thirds of the wealth an individual generates.

Finally, I just finished the book Grave New World: The End of Globalization, The Return of History, by Stephen D. King (2017). Mr. King is Senior Economic Advisor to HSBC as well as an author, journalist, consultant. and specialist advisor to the House of Commons Treasury Committee. His other books include Losing Control: The Emerging Threats to Western Prosperity (2010) and When the Money Runs Out: The End of Western Affluence (2013). Grave New World is unique among those I’ve read in that it offers a multi-national history of globalization:

Globalization is often regarded as ‘one-way traffic’. In the modern age, we think of extraordinary advances in technology… Seen through these technological advances it is easy to believe that globalization is inevitable; that distances are becoming ever shorter; that national borders are slowly dissolving; and that, whether we like it or not, we live In a single global marketplace for goods, services, capital and labor.

Technology alone, however, does not determine globalization, and nor does it rule out competing versions of globalization at any one moment in time.

Globalization is driven not just by technological advance, but also by the development — and demise — of the ideas and institutions that form our politics, frame our economies and fashion our financial systems both locally and globally. When existing ideas are undermined and institutional infrastructures implode, no amount of new technology is likely to save the day.

Our ideas and institutions shift with alarming regularity… Even when patterns of globalization endure for many centuries, they can break down remarkably quickly, leading to dramatic changes in fortune.”

Happy reading! And Happy Thanksgiving! See you next week for a look at “bullshit jobs.”

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

The Tide May Be Rising, But Some Boats Are Sinking

Last week I quoted from Ryan Avent’s book The Wealth of Humans: Work, Power, and Status in the Twenty-First Century (2016), which makes the following points:

  • The rising tide of neoliberal economic policy did in fact lift all boats from the post-WWII years through its heyday in the 70’s and 80’s.
  • In particular, it benefited the wealth and income of individual wage-earners — most dramatically in countries where government-centric models such as social democracy and communism had previously been in charge.
  • But since then, continued allegiance to neoliberal policy has had the reverse effect, resulting in rapidly growing economic inequality which is leaving wage-earners behind.
  • The problem seems to be that, since the 80’s, the “lifts all boats” paradigm has not kept pace with the altered economic dynamics brought on by globalization and the technological revolution. The result has been a shift in wealth creation and sustainable income away from the wage-earners neoliberalism once benefited.
  • Continued allegiance to the neoliberalism is undermining the traditional concept of working for a living.

This week, we’ll finish with Arent’s analysis, again quoting from his book:

  • As a result of the above, the continuing viability of neoliberal economic policy is being questioned.

Around the world, dissatisfaction with the fruits of economic integration fuels inward-looking political movements: protectionist in some places, separatist in others. Some politicians find themselves able to gain traction by playing identity politics or by criticizing institutions of liberal democracy. Many succeed through withering critiques of the elites who minded the tiller over the last few decades. Faith in markets and their ability to generate broad-based growth has been shaken.

  • Questioning neoliberalism also challenges its support base of cultural, societal, and national institutions.

In a way, it would be much easier if the robots were simply taking all the jobs. Solutions might not be any more straightforward to come by, but the sight of millions of robot dog-walkers and sanitation workers strutting through crowds of unemployed humans would at least be clarifying.

Instead, the remarkable technological progress of the digital age is refracted through industrial institutions in ways that obscure what is causing what. New technologies do contain the potential to revolutionize society and the economy. New firms are appearing which promise to move society along this revolutionary path. And collateral damage, in the form of collapsing firms and sacked workers, is accumulating.

But the institutions we have available, and which have served us well these last two centuries, are working to take the capital and labour that has been made redundant and reuse it elsewhere. Workers, needing money to live, seek work, and accept pay cuts when they absolutely must. Lower wages make it attractive for firms to use workers at less productive tasks . . . [and reduce] the incentive to invest in labour-saving technology.

  • A new economic paradigm seems to be indicated, but its coming won’t be easy.

This political era [the post-war surge of neoliberalism] is at an end.

[I]ncomes must rise. Not just the incomes of China’s middle class and the rich world’s 1 per cent. But achieving higher incomes is a fraught business, both economically and politically.

This process will not end without a dramatic and unexpected shift in the nature of technology, or in the nature of economic institutions.

Neoliberalism’s apparent faltering threatens many economic ideas that have come to be held sacred, such as the notion of working for a living, which we saw a few posts back is revered as a moral virtue by Communists and Christians alike. These kinds of notions are deeply rooted in the minds —literally, in the neurological wiring — of the human beings who have inherited them and the values they stand for. As such, they are much more than economic ideas, they are the personal and cultural narratives that define our identities and guide our choices, both individually and collectively.

These kinds of entrenched cultural ideals will not go quietly into the night. Instead they will retrench and aggressively pushback against an interloper. Next time, we’ll look at one of those reactionary responses: the advent of “bullshit jobs,” which contribute much to current workplace dissatisfaction.

And just for fun, here’s the “not go quietly into the night” speech from Independence Day, and here’s Dylan Thomas’s “Do Not Go Gentle Into That Good Night.”

 

Kevin Rhodes left a successful long-term law practice to scratch a creative itch and lived to tell about it… barely. Since then, he has been on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. He has also blogged extensively and written several books about his unique journey to wellness, including how he deals with primary progressive MS through an aggressive regime of exercise, diet, and mental conditioning.

Does A Rising Tide Still Float All Boats?

The world’s post-WWII economic surge was founded on the idea that macroeconomic advances benefit everyone equally — i.e., that “a rising tide lifts all boats” (a phrase widely attributed to JFK, which his speechwriter apparently borrowed from a local New England chamber of commerce). This idea is a hallmark of the neoliberal economic model.

Whether the aphorism still holds today is predictably a subject of highly polarized economic debate — see, e.g., this June 9, 2014 LA Times article. My own research leads me to conclude that the idea worked powerfully for decades, began to break down in the 70’s and 80’s (as we’ve seen in prior posts in this series), and since then has begun to fail as remarkably as it once succeeded.

This week and next, I’m going to quote extensively from Work, Power, and Status in the Twenty-First Century (2016), by Ryan Avent, a senior editor and economic columnist for The Economist, whose analysis runs like this:

  • Neoliberal economic policy did in fact lift all boats from the early post-war years through its heyday in the 70’s and 80’s.

The last generation, during which the digital revolution’s first powerful effects made themselves felt, was an era of remarkable political moderation and consensus. The period began, in the 1970s and 1980s, with a liberalizing impulse across a broad range of countries . . . As global markets integrated, politics in most rich democracies coalesced around support for market-oriented economies, global openness and progressive social goals. It was a pleasant sort of era for the cosmopolitan, technocratic elite: the believers in the notion that the market, lightly tended, offered the best route to global prosperity and peace.

  • It especially raised national economies and benefited the wealth and income of individual wage-earners — especially where government-centric models such as social democracy and communism had previously been in charge.

[T]he nature of economic growth shapes political priorities . . . Political momentum for economic liberalization in the 1970s and 1980s emerged as typical voters lost confidence in the ability of the more statist economic policies to raise long-term living standards.

The outcome of that liberalization differed substantially across countries. In China and India, liberalization delivered on its promise. In China, especially, a generation of rapid growth succeeded in elevating a large middle class out of poverty. China’s economic pie grew massively.

  • But in the past few decades, continued allegiance to neoliberal policy has had the reverse effect, especially in the USA and other nations where it was most entrenched, resulting in disproportionate benefits — i.e., rapidly growing economic inequality.

In the rich world, things worked differently. In 2014, the inflation-adjusted income of the typical American household was just 7 per cent higher than it was in 1979. By contrast, the income of a household in the 95th percentile of the income distribution grew 45 per cent over that period.

  • Since the 80’s, the “lifts all boats” paradigm has not kept pace with the altered economic dynamics brought on the technological revolution, resulting in a shift in wealth creation and sustainable income away from wage-earners.

[T]he world economy operates on a framework very much rooted in an industrial, scarcity-bound world. The interaction of that world with the technological advances of the digital era have landed labour in a trap. The digital revolution generates fantastic labour abundance; that abundance contributes directly to downward pressure on the wages of the typical worker. It also reduces the bargaining power of labour relative to other, scarcer factors, allowing those factors to capture outsize share of the gains from growth.

  • Continued allegiance to the paradigm is currently undermining the concept of working for a living.

We now have new economic challenges, and the former labor/wage model is no longer producing equitable results. Job-based economic security and prosperity is being left behind.

Low pay for the great mass of workers is distributionally unfair. It undermines support for the market-based economic system that enables sustained economic growth.

We might not care so much about these inequities if the digital revolution were reducing the costs of all the many things the typical household wants to buy, from steak dinners to adequate housing to a top-flight university education. But cost reductions have so far been highly uneven: massive for some things, such as digital entertainment, completely absent for others, such as homes in nice neighborhoods.

This analysis essentially restates that of economist Guy Standing, which we looked at over the past two weeks.

Arent concludes by saying, “This process will not end without a dramatic and unexpected shift in the nature of technology, or in the nature of economic institutions.” Change on that level means shifting long-standing, deeply entrenched societal paradigms. More on that next time.

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

Whatever Happened to Working for a Living? (Continued)

“Politically, every transformation has begun
with a repudiation of the certainties of the previous age.”

– Economist Guy Standing

Last time, I quoted at length from economist Guy Standing’s analysis of how the notion of working for a living has historically fared under the social democracy and neoliberalism economic models. Prof. Standing believes that, as a result of the developments chronicled there, a new class system now dominates the working world. Again, I’ll quote from his book The Corruption of Capitalism (2016):

Globalization, neo-liberal policies, institutional changes and the technological revolution have combined to generate a new global class structure superimposed on preceding class structures. This consists of a tiny plutocracy (perhaps 0.001 per cent) atop a bigger elite, a “salariat” (in relatively secure salaried jobs), “proficians” (freelance professionals), a core working class, a precariat and a “lumpen-precariat” at the bottom. The plutocracy, elite, salariat, and proficians enjoy not just higher incomes but gain most (or an increasing part) of their income from capital and rental income.

The three classes below them gain nothing in rent. Indeed, increasingly they pay rent in some form to the classes above them. First, there is the shrinking proletariat, relying mainly on labour in stable, mostly full-time jobs, with schooling that matches the skills their jobs require. The precariat, which ranks below the proletariat in income, consists of millions of people obliged to accept a life of unstable labour and living, without an occupational identity or corporate narrative to give to their lives. Their employers come and go, or are expected to do so.

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

This precariat is all over the world. . . . For instance, more Americans today see themselves as in the lower classes. In 2000, according to Gallup polls, 63 percent saw themselves as middle-class and 33 percent as lower-class. In 2015, 51 percent saw themselves as middle-class and 48 percent as lower-class. Similar trends have been reported elsewhere.

Below the precariat in the social spectrum is what might be called a “lumpen-precariat,” an underclass of social victims relying on charity, often homeless and destitute, suffering from social illnesses including drug addiction and depression. . . . Their numbers are rising remorselessly; they are a badge of shame on society.

Prof. Standing’s unique contribution to the conversation about work, happiness, and meaning is his identification of the new social strata. The balance of his analysis is not unique — as he says above, it has been reported “all over the world.” In the coming weeks, we’ll look at various implications of these findings:

The old job market’s last stand — “bullshit jobs”;

Whether the middle class is truly vanishing;

Whether a rising tide truly does float all boats;

Why this might be a good time for a new vision of utopia; and

Why your next associate hire might be a robot.

And much more. Stay tuned.

 

Kevin Rhodes left a successful long-term law practice to scratch a creative itch and lived to tell about it… barely. Since then, he has been on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. He has also blogged extensively and written several books about his unique journey to wellness, including how he deals with primary progressive MS through an aggressive regime of exercise, diet, and mental conditioning.

Whatever Happened to Working For a Living?

“Politically, every transformation has begun
with a repudiation of the certainties of the previous age.”

– Economist Guy Standing

Guy Standing is a research professor at the University of London and a prolific author and world-traveling speaker. In his book, The Corruption of Capitalism (2016), he analyzes how the concept of working for a living has fared under the two economic models we looked at last time (the Fabian Society’s social democratic model and the Mt. Pelerin Society’s free market). I can add little to his analysis by rephrasing it, therefore I’ll quote excerpts at length in this post and the next.

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

[T]he model that underpinned the Great Transformation made “labour,” not all forms of work. Socialists, communists and social democrats all subscribed to “labourism.” Those in full-time jobs obtained rising real wages, a growing array of ‘contributory’ non-wage benefits, and entitlements to social security for themselves and their family. Those who did not fit this model were left behind.

The essence of labourism was that labour rights — more correctly , entitlements — should be provided to those (mostly men) who performed labour and to their spouses and children. As workers previously had little security, this was a progressive step.

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

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

Labour and social democratic parties everywhere became ‘reactionary’ — reacting to events rather than forging the future — and regressive, allowing or even fostering inequality.

Around 1980 saw the beginnings of a Global Transformation — the construction of a global market system. As with the Great Transformation, the initial phase may be called ‘dis-embedded’ because the emerging economic system rendered old forms of regulation, social protection and redistribution obsolete or ineffectual.

Politically, every transformation has begun with a repudiation of the certainties of the previous age. This time the attack was on labour-based security, previously the objective of governments or both left and right. Now it was seen as an impediment to growth. Once again, policy changes were dominated by financial capital. Intellectual justification came from the so-called ‘Chicago school’ of law and economics at the University of Chicago, whose leading lights went on to receive Nobel Prizes. Their agenda, honed in the Mont Pelerin Society set up by Friedrich Hayek and thirty-eight like-minded intellectuals in 1947, evolved into what is now called neo-liberalism.

This meant the liberalization of markets, the commodification and privatization of everything that could be commodified and privatized and the systematic dismantling of all institutions of social solidarity that protected people from ‘market forces.’ Regulations were justifiable only if they promised economic growth; if not, they had to go.

As a consequence of these developments, ‘in-work poverty’ has rocketed. In some OECD[1] countries, including Britain, the USA, Spain and Poland, a majority of those in poverty live in households where at least one person has a job. The mantra that ‘work is the best route out of poverty’ is simply false.

I.e., according to Prof Standing, historical and contemporary adherence to the Fabian and Mt. Pelerin ideals has skewed and will continue to skew the notion of working for a living in ways that are unsustainable in current economic reality.

Ironically, Lenin’s dictum that “If any man does not work, neither let him eat” was first articulated two thousand years ago by none other than St. Paul. 2 Thessalonians 3:10. Thus the idea of “working for a living” has long persisted as a cornerstone belief in communist, socialist, and capitalist economic theory, giving it nearly universal sacred status. To question this ideal is truly to trample on hallowed ground.

More next time.

[1] The Organization for Economic Cooperation and Development has 34 mainly industrialized countries as members.

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

Ideas and Economics

Yes, ideas matter. In economics, they matter a lot.

Three key economics ideas have shaped academic debates and national policies about economics for the past 240 years. Communism was the latecomer: Karl Marx wrote The Communist Manifesto in 1848 and Das Kapital in 1867, and his ideas took their place in the triumvirate in the 20th Century. Meanwhile, Scotsman Adam Smith articulated capitalistic economics in The Wealth of Nations (1776), which subsequently split into two key versions.

The first was championed by the Fabian Society, formed in London in 1884 in part as a counter to the growing interest in Marxism. The Fabians’ ranks included H. G. Wells and George Bernard Shaw, and their agenda was democratic socialism, which became Europe’s dominant model. The Fabians advocated nationalized industry, centralized banking, and social welfare through “state-protected trade unionism and other state interventions such as social security and unemployment insurance. And [they] did so by claiming that capitalism worsens inequality and exploitation, that it is rife with robber barons and virtueless inheritors.” A History of the Mont Pelerin Society (1996), The Foundation for Economic Education.[1]

The second major version of capitalism got its most significant boost in 1947 when Austrian-British economist and philosopher F. A. Hayek invited a group of intellectuals to meet in Mont Pèlerin, Switzerland to chart the Western world’s recovery from WWII, and specifically to counter Marxism and Keynesian economics. The group became known as the Mount Pelerin Society. Its original gathering included luminaries such as Hayek, Karl Popper, and Lionel Robbins of the London School of Economics, and Milton Friedman and George Stigler of the University of Chicago. The MPS agenda came to be known as neoliberalism, and advocated private enterprise and limits on government regulation of the kind that — despite the word “liberalism” in its label — have become associated with conservative politics.

Thus the lines between economic ideas were drawn, and debates among them persist to this day. Of the three, Communism’s Soviet version tanked in the late 80s. but persists in China, albeit in vastly altered form. Meanwhile allegiances to the competing schools of capitalism are today more polarized than ever.

But do any of these models support current realities? A whole new generation of economists don’t think so, and believe it’s time policy-makers heeded some advice articulated by John Maynard Keynes:

Harvard Law professor Lawrence Lessig wrote this in The Future of Ideas: The Fate of the Commons in a Connected World (2001):

A time is marked not so much by ideas argued about as by ideas that are taken for granted. The character of an era hangs upon what needs no defense. Power runs with ideas that only the crazy would draw into doubt. The “taken for granted” is the test of sanity, “what everyone knows” is the line between us and them.

This means that sometimes a society gets stuck. Sometimes these unquestioned ideas interfere, as the cost of questioning becomes too great. In these times, the hardest task for social or political activists is to find a way to get people to wonder again about what we all believe is true. The challenge is to sow doubt.

Psychologist Scott Barry Kaufman and journalist Carolyn Gregoire expressed a similar sentiment in Wired To Create (2015):

While experience is an important aspect of excellence in any creative discipline, one risk of being a seasoned pro is that we become so entrenched in our own point of view that we have trouble seeing other solutions. Experts may have trouble being flexible and adapting to change because they are so highly accustomed to seeing things in a particular way. For this reason, the newcomers to a field are sometimes the ones who come up with the ideas that truly innovate and shift paradigms.

In the coming posts, we’ll examine some of today’s paradigm-shifting economic ideas and their impact on the contemporary working world.


[1] For another excellent review of this history lesson, see The Mont Pèlerin Society: The ultimate neoliberal Trojan horse (2012), The Daily Knell.

 

Kevin Rhodes left a successful long-term law practice to scratch a creative itch and lived to tell about it… barely. Since then, he has been on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. He has also blogged extensively and written several books about his unique journey to wellness, including how he deals with primary progressive MS through an aggressive regime of exercise, diet, and mental conditioning.

The TED Inequality All-Stars

Economic inequality is so important to a thorough look at happiness on and off the job that, before we leave the topic, I decided to provide an all-star lineup of TED talks on the subject, from a variety of perspectives. We’ve heard from the first two before, but not the last three.

This is Chrystia Freeland, journalist turned politician. We’ve heard a lot from her book Plutocrats already. Her political biases are evident in this talk.

Thomas Piketty, economist and professor at the Paris School of Economics, literally wrote the book on the subject — a 600-page runaway bestseller Capital in the Twenty-first Century. He talks fast enough to get through much of his book in this talk. I’ve quoted him before, too.

Paul Tudor Jones II is the billionaire founder of hedge fund Tudor Investment Corporation and a philanthropist. Here’s a sample:

[Capitalism is] a system I love because of the successes and opportunities it’s afforded me and millions of others.

Higher profit margins do not increase societal wealth. What they actually do is they exacerbate income inequality, and that’s not a good thing.

This next chart, made by The Equality Trust, shows 21 countries from Austria to Japan to New Zealand. On the horizontal axis is income inequality. The further to the right you go, the greater the income inequality. On the vertical axis are nine social and health metrics. The more you go up that, the worse the problems are, and those metrics include life expectancy, teenage pregnancy, literacy, social mobility, just to name a few. Now, those of you in the audience who are Americans may wonder, well, where does the United States rank? … Yes, that’s us, with the greatest income inequality and the greatest social problems, according to those metrics.

Now, capitalism has been responsible for every major innovation that’s made this world a more inspiring and wonderful place to live in. Capitalism has to be based on justice. It has to be, and now more than ever, with economic divisions growing wider every day.

I’m not against progress. I want the driverless car and the jet pack just like everyone else. But I’m pleading for recognition that with increased wealth and profits has to come greater corporate social responsibility.

‘If justice is removed,’ said Adam Smith, the father of capitalism, ‘the great, the immense fabric of human society must in a moment crumble into atoms.’

Public health researcher Richard Wilkinson studies the social and health effects of income inequality. In his writing and in this talk, he offers piles of statistical evidence from worldwide studies on a wide variety of social issues including life expectancy, social mobility, math scores, literacy rates, infant mortality, homicide and incarceration rates, teenage pregnancies, levels of trust, obesity, mental illness, drug and alcohol addiction, mental illness, school bullying, violence, high school drop-out rates, and more. In this talk, he returns often to three points that seem to be commonly cited in inequality research and commentary:

  1. There is a strong statistical link between these social issues and economic inequality.
  2. Conventional economic measurements such as GNP per capita, gross national income, and national income per person fail to recognize this link; and
  3. The problem of inequality at its core revolves around relative inequality (the human trait of comparing what I have to what you have).

Nick Hanauer is another plutocrat — a “proud and unapologetic capitalist” — who has founded and funded 30+ companies across a range of industries, including aQuantive, which Microsoft bought for $6.4 billion. He openly loves his yacht and private jet, but fears for the future if economic inequality is left unaddressed:

What do I see in our future today, you ask? I see pitchforks, as in angry mobs with pitchforks, because while people like us plutocrats are living beyond the dreams of avarice, the other 99 percent of our fellow citizens are falling farther and farther behind. In 1980, the top one percent of Americans shared about eight percent of national [income], while the bottom 50 percent of Americans shared 18 percent. Thirty years later, today, the top one percent shares over 20 percent of national [income], while the bottom 50 percent of Americans share 12 or 13. If the trend continues, the top one percent will share over 30 percent of national [income] in another 30 years, while the bottom 50 percent of Americans will share just six.

You see, the problem isn’t that we have some inequality. Some inequality is necessary for a high-functioning capitalist democracy. The problem is that inequality is at historic highs today and it’s getting worse every day. And if wealth, power, and income continue to concentrate at the very tippy top, our society will change from a capitalist democracy to a neo-feudalist rentier society like 18th-century France. That was France before the revolution and the mobs with the pitchforks.

Fellow plutocrats, I think it may be time for us to recommit to our country, to commit to a new kind of capitalism which is both more inclusive and more effective, a capitalism that will ensure that America’s economy remains the most dynamic and prosperous in the world. Let’s secure the future for ourselves, our children and their children. Or alternatively, we could do nothing, hide in our gated communities and private schools, enjoy our planes and yachts — they’re fun — and wait for the pitchforks.

Next time we’ll look at the complex nature of real economics for real people in the real world.

Kevin Rhodes left a successful long-term law practice to scratch a creative itch and lived to tell about it… barely. Since then, he has been on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. He has also blogged extensively and written several books about his unique journey to wellness, including how he deals with primary progressive MS through an aggressive regime of exercise, diet, and mental conditioning.

Meet the New Boss

Same as the old boss.

– The Who[1]

Commentary about economic inequality often compares the situation today to America’s Gilded Age.[2] Back then they had the Robber Barons. Now we have the Robber Nerds. Same dif? It depends who you ask.

A quick check of a list of the Robber Barons on Wikipedia reveals the names of several household brand names that still endure, plus numerous key universities and charities. And this article from a European source — “The Truth About the Robber Barons,” from the Mises Institute (“30 Years of Austrian Economics, Freedom, & Peace”) — says don’t be too hasty to condemn:

The late nineteenth and early twentieth centuries are often referred to as the time of the ‘robber barons.’ It is a staple of history books to attach this derogatory phrase to such figures as John D. Rockefeller, Cornelius Vanderbilt, and the great nineteenth-century railroad operators — Grenville Dodge, Leland Stanford, Henry Villard, James J. Hill, and others. To most historians writing on this period, these entrepreneurs committed thinly veiled acts of larceny to enrich themselves at the expense of their customers. Once again we see the image of the greedy, exploitative capitalist, but in many cases this is a distortion of the truth.

For more, consider the following articles, whose titles telegraph whose side they’re on. but they’re all worth reading:

Seven Myths about the Great Philanthropists: The Turn of the 20th Century was a Golden Age of American Philanthropy. It Deserves to be Better Understood,” The Philanthropy Roundtable (2011).

The Robber Barons Weren’t Robbers. Here’s Why,” The Learn Liberty project of George Mason University (2017).

Robber Barons,Economists View (2007, reprinting a 1998 article).

The Dark Side of the Gilded Age,” The Atlantic (2007)

The Myth of America’s Golden Age,” Politico Magazine (2014)

On the lighter side, see P.J. O’Rourke’s “Up To a Point: Robber Barons Make Way For Robber Nerds:” “Rockefeller, Carnegie, J.P. Morgan: This country used to produce impressive if immoral captains of industry. Now we’re stuck with unrefined geeks like Mark Zuckerberg.” The Daily Beast (2014).

One thing seems to be consistent in all these commentaries: both then and now, soaring wealth for the haves and a commensurate decline for the have-nots occurred in a capitalistic, market-based economy. A second key point gets less consensus: whether the Barons benefited then and the Nerds are benefiting now from government policy and financial subsidies (including tax breaks in our day) — i.e., whether the economy was then and is now truly a free market.

Satisfy yourself, but at this point, after examining far more sources than I can cite in a blog post of this length, and having interviewed a couple free market champion friends of mine, I can comfortably say, as they did, “There never has been a free market.” Instead, what we had then and what we have now was and is a skewed version of capitalism — a perfect political and economic storm that made economic inequality possible back in the Gilded Age and makes it possible again today. This is the missing piece that Econ 101 and its simplistic supply/demand curves doesn’t provide.

The result in both eras has been a new class system that morphs the Horatio Alger ideal into a Great Gatsby reality. When the new class system hits the job marketplace, the result is a vast worldwide demographic of the Angry Left Behind — unhappy, disillusioned, dissatisfied, depressed, and even suicidal workers suffering from meaning malaise. What bothers them is often equated to the same anger that has fueled worldwide political shifts such as Brexit, Trumpism, the move to the right in Germany and France, and a whole lot more. (See for example No Job Left Behind and Back to Work, and countless more initiatives and opinions like them.)

When the subject of economic inequality invokes those kinds of inflammatory developments, it’s no wonder it’s so hard to talk about. Which is precisely what we’ll continue to do, right here.  Stay tuned.


[1] Here’s the original music video of We Won’t Get Fooled Again. Watching it draws you all the way back into the turbulent, polarizing 60’s — if you remember them, that is — and the tone feels eerily similar to what we’re living with today. By the way, who said, “If you remember the 60’s, you really weren’t there”? Find out here.

[2] And who first called it the “Gilded Age”? Find out here.

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

Economic Inequality Stats

My research on economic inequality consistently turns up three key points: (1) since the 80’s, there has been an ever-widening gap in incomes and capital ownership between the rich and poor, (2) the gap has been growing at an accelerating rate, especially since the year 2000, and (3) this phenomenon is worldwide.

So what?

As I’ve mentioned before, many U.S. economists and policy-makers greet those findings either with indifference or as a clarion call to defend endangered capitalism, while their international counterparts find them alarming. We’re talking about them here because it turns out that economic inequality has a lot to do with happiness and meaning at work. (Stay with me — we’ll get there, we’re just taking the scenic route.)

We all know that it’s easy to mold statistics to fit opinions — here’s a neurologist’s take on Why People Can’t Agree on Basic Facts. Any stats we look at here will have been pre-sorted, pre-analyzed, and pre-interpreted. My goal today was to provide a sampling of statistics from a variety of global sources — starting with a quote about how the new global super-rich are a bunch of economic data curve busters, which makes finding honest data even harder.

The skew toward the very top is so pronounced that you can’t understand overall economic growth figures without taking it into account. As in a school whose improved test scores are due largely to the stellar performance of a few students, the surging fortunes at the very top can mask stagnation lower down the income distribution.

Consider America’s economic recovery in 2009-2010. Overall incomes in that period grew by 2.3 percent — tepid growth, to be sure, but a lot stronger than you might have guessed from the general gloom of the period. Look more closely at the data, though . . . and it turns out that average Americans were right to doubt the economic comeback. That’s because for 99 percent of Americans, incomes increased by 0.2 percent. Meanwhile, the incomes of the top I percent jumped by 11.6 percent.

Plutocrats (2012), by Canadian journalist and politician Chrystia Freeland.

Across the developed world, vast fortunes are again ascendant. In the United States, the top 1 percent take home a larger share of total income than at any time except the late 1920’s. The total wealth of the world’s billionaires has quadrupled in the past two decades (even when the definition of “billionaire” is adjusted for inflation).

In the 1950’s, a typical CEO of a large company took home as much money as twenty average employees; today he makes as much as two hundred workers.

Economism (2017), by UConn law professor James Kwak.

In 2014, the inflation-adjusted income of the typical American household was just 7 per cent higher than it was in 1979. By contrast, the income of a household in the 95th percentile of the income distribution grew 45 per cent over that period.

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century (2016), by Ryan Avent,  a thoroughly Anglicized American who works as a senior editor and economic columnist for The Economist.

[C]ompare Detroit in 1990 . . . with Silicon Valley in 2014. In 1990, the three biggest companies in Detroit had a combined market capitalization of $36 billion, revenues of $250 billion, and 1.2 million employees. In 2014, the three biggest companies in Silicon Valley had a considerably higher market capitalization ($1.09 trillion), generated roughly the same revenues ($247 billion), but with about 10 times fewer employees (137,000).

The Fourth Industrial Revolution (2016), by German engineer and economist Klaus Schwab, Founder and Chairman of the World Economic Forum (WEF).

Prior to the 2017 WEF annual meeting of world leaders last winter, U.K.-based Oxfam International issued a report that offers a fascinating slant on Schwab’s comments. According to the report:

Eight men now control as much wealth as the world’s poorest 3.6 billion people . . . The men — Bill Gates, Warren Buffett, Carlos Slim, Jeff Bezos, Mark Zuckerberg, Amancio Ortega, Larry Ellison and Michael Bloomberg — are collectively worth $426 billion.

As reported by CNN.

By contrast, half the planet’s population, some 3.6 billion people, have a combined wealth of $409 billion.

As reported by The Mirror Online (the U.K.’s “intelligent tabloid”).

Not only are the Elite Eight collectively worth more than the lower half of the world’s entire population, each individual member of the group is worth more than the combined market capitalization of Detroit’s three largest companies 27 years ago. The Mirror also noted this about the study:

The report found that between 1988 and 2011 the incomes of the poorest 10% increased by just $65, while the incomes of the richest 1% grew by $11,800 – 182 times as much.

A couple years ago, Credit Suisse’s “Global Wealth Report 2015” reported that half of the world’s assets were controlled by the top 1% of the global population, while the lower half owned less than 1%.

There’s plenty more where all of that came from. In fact, there’s such an abundance of global data and opinion on the topic that, if nothing else, it’s probably safe to conclude that economic inequality either really is a problem or, even if it’s not, a whole lot of people around the world sure seem to think it is.

We’ll continue our economic inquiries next time.

 

Kevin Rhodes left a successful long-term law practice to scratch a creative itch and lived to tell about it… barely. Since then, he has been on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. He has also blogged extensively and written several books about his unique journey to wellness, including how he deals with primary progressive MS through an aggressive regime of exercise, diet, and mental conditioning.

Why We Can’t Talk About Economic Inequality

It is not just the super-rich who don’t like to talk about rising income inequality. It can be an ideologically uncomfortable conversation for many of the rest of us, too. That’s because even — or perhaps particularly — in the view of its most ardent supporters, global capitalism wasn’t supposed to work quite this way.

That’s from Plutocrats: The Rise of the new Global Super Rich and the Fall of Everyone Else, Chrystia Freeland (2012). The book reads like an extended academic version of People Magazine meets CNN meets The New York Times, and could only have been written by someone who logged years on the insider track and took lots of notes.

Turns out that’s precisely who Chrystia Freeland is. She’s a Canadian writer, journalist, and politician. She worked in a variety of editorial positions at the Financial Times, The Globe and Mail, and Thomson Reuters, was elected to the Canadian Parliament in 2013 (the year after the book came out), and was appointed Canada’s Minister of Foreign Affairs earlier this year. She’s a Harvard grad, a Rhodes Scholar, and was named one of Toronto’s 50 most influential people by Toronto Life Magazine in 2015.

The book takes names and tells stories, and is awash in dates and times and statistics. Reading it all the way through can be a bit of a slog, and I wonder how many people actually do — I confess, I skimmed a lot. I quote it here because it does a great job of capturing the lessons of my last two posts: 1) most of us haven’t updated our understanding of economics since Econ 101, and 2) we don’t like talking about economic inequality. Beginning with the quote above, the book provides a useful overview of how those two things are related. (These quotes are particularly re: income inequality, but apply to capital inequality as well.)

Until the past few decades, the received wisdom among economists was that income inequality would be fairly low in the preindustrial era—overall wealth and productivity fairly small, so there wasn’t that much for the elite to capture— then spike during industrialization, as the industrialists and industrial workers outstripped farmers (think of China today). Finally, in fully industrialized or postindustrial societies, income inequality would again decrease as education became more widespread and the state played a bigger, more redistributive role.

(This theory was articulated by Nobel Prize winning economist Simon Kuzmets, and can be plotted in what has become known as the Kuzmets curve. According to Wikipedia, Kuzmets won the award in 1971 “for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development.”)

Continuing with Plutocrats:

Until the 1970’s, the United States… was also an embodiment of the Kuzmets curve. The great postwar expansion was also the period of what economists have dubbed the Great Compression, when inequality shrank, and most Americans came to think of themselves as the middle class.

But in the late 1970’s, things started to change. The income of the middle class started to stagnate and those at the top began to pull away from everyone else. The shift was most pronounced in the United States, but by the twenty-first century, surging income inequality had become a worldwide phenomenon, visible in most of the developed Western economies, as well as in the rising emerging markets.

The switch from the America of the Great Compression to the America of the 1 percent is still so recent that our intuitive beliefs about how capitalism works haven’t caught up with the reality. In fact, surging income inequality is such a strong violation of our expectations that most of us don’t realize it is happening.

We’ll look at some inequality stats next time.

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.