"This Century is Broken" and "Our Miserable 21st Century"

Parent Cafe
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https://www.nytimes.com/2017/02/21/opinion/this-century-is-broken.html
https://www.commentarymagazine.com/articles/our-miserable-21st-century/

Note that the first refers to the second, which refers to a bunch of other things.

Basically, the idea is that the macroeconomic shifts toward slower economic growth, greater economic inequality, and less dynamism (changing jobs, moving around the country, starting new businesses) leads to (according to David Brooks) “less opportunity, less optimism and more of the sort of zero-sum, grab-what-you-can thinking” that produces a nastier social and political environment.

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Without getting into the current environment, for the obvious reason it broaches on politics, what we are seeing today has happened time and again when major shifts are happening.

At the turn of the 20th century, there was all kinds of ferment, in Europe they were worried about the arms race then going on (especially in naval affairs), in the US there was a populist movement roughly analagous to what you see today (William Jennings Bryan et al), that decried the power of the banks and monetary interests (the whole silver versus gold standard, where a silver standard would make debt cheap for people like farmers and the like due to inflation). In Europe among the ruling class they were worried about anarchism. At the turn of the 20th century there was a raging debate about immigration in the US, about whether we should be allowing all those millions of people in…Economically the turn of the 20th century came off with some fear, there were several brutal recessions in the 1890’s, and and as a result there was a lot of antagonism towards the concentration of power in big companies (the trusts), and at the turn of the 20th century labor unrest and the growth of labor organizing, where working people were looking for a better standard of living.

The mid to late 19th century the industrial revolution was breaking up the old craft system and was causing the start of the decline of rural areas over city areas, and that caused concern and consternation.

Then we had the cold war, especially in the 1950’s and through the 1960’s,. when people were scared of so much, the red scare that caused so much overreaction was not dissimilar to the fears of immigration today, where real worries (soviet expansion, the iron curtain, and of course nuclear anihilation, today terrorism, the loss of good paying jobs) turns into a much broader reaction that creates a climate of distrust that translates into fear of those who are different, etc.

In other words, this is nothing new, it happens when societal shifts happen. While it was pop sociology, Alvin Toffler in 'Future Shock" and “The Third Wave” touched on this, Jacques Barzun in his “From Dawn To Decadence” did so in a more academic way, and Barzun especially talks about the reactions to these changes, what fear drives, and also how politically these fears are used.

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Not the best Op/ed I have read. I get his angle/agenda and that of his employer…but not sure he did a great job on his spin.

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One historical note of difference from that period of US history and now is the fact that between the 1860’s and the 1890s, there was a deflationary climate with some “economic panics”(economic depressions) in that interval including one in the 1890’s.

All of which heavily factored into William Jennings Bryan and his supporters among farmers…especially those out west.

This is much more like the decade plus long recession Japan went through from the end of the '80s into the early '00s or the Great Depression here in the US when deflationary pressures were such that I recalled an account where an all-inclusive steak dinner at a top 5-star NYC restaurant decreased to 35 cents. A price which was unusually low even for the late 1920’s before the crash.

This is one reason why many argue imposing extreme austerity measures during periods of economic slowdowns is actually counterproductive and would actually aggravate the effects of a given economic crisis…especially among those who are poor/low-income as it further encourages layoffs and closure of businesses.

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@cobrat:
We really haven’t had deflation, just little to no inflation. Some of the shocks were are seeing today are the lingering effects of the 2008 crash, but much of it is structural, the loss of good paying jobs that aren’t coming back, offshoring and automation being the prime candidates. The period post the civil war also saw the US explode in the industrial revolution, it is when the mega steel mills and other manufacturing basically took over, and a lot of people were displaced, craftsmen who once made good livings were out of work, and the working class working those factories faced terrible wages, long hours, 7 day work weeks and those wages often were cut simply so the owners and their shareholders made more money, and that also fed into Bryan’s populism as well, it is why Morgan, Carnegie and Rockefeller basically bought the 1896 election that got McKinley elected.

Austerity and balancing budgets are the worse thing you can do during downturns. In 1936-1937 FDR, at the advice of Andrew Mellon, cut back government spending to try and balance the budget, and the US slipped into recession again after finally starting to grow a bit, the myth that balancing budgets is a way to growth in the middle of a severe downturn is the worst thing to do.

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^ ^

I should clarify that I meant the period between the 1860’s and 1890’s leading up to the free silver movement of WIlliam Jennings Bryan’s supporters resembled the decade-plus long deflationary economic recession Japan went through from the end of the '80s till the early 00’s.

This was one of the key reasons why the “free silver” movement was so appealing to many farmers and working/middle-classes, especially out west whereas the wealthy banking elites who were mostly based back east and the “Bourbon Democrats” like Grover Cleveland favored maintaining the effective gold standard and rejected the return to a bi-metallic monetary system which existed in the 1860’s and before.

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@cobrat:
Gotcha. Free silver is basically an inflationary measure, because silver is less expensive than gold it would mean de facto devaluing the currency, so that would be a means to fight deflation. The reason for the deflation was complicated, a lot of it was the industrial revolution devaluing wages, very much like today corporate profits (outside the ‘panics’) were soaring and stock prices were yielding rewards on the rich and the gap between the well off and everyone else was growing rapidly. It was a time when employers like Carnegie and Pullman and the like would cut wages 20%, and there was no recourse for the workers, if they striked the government would call out troops to suppress it, and they had a constant flow of people, including immigrants, willing to work for those kind of wages.

Free silver also helped debtors, since they end up paying back loans with devalued dollars.

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I hate this excuse. I am guessing offshoring and automation brought in enormous profits to corporations. Why not distribute the profits to wider society? Corporations could use the profit to increase worker’s pay, reduce their working hours, hire more people, limit displacing workers. I hear in net we make more money through globalization and automation. So use it for betterment of larger society. Use it to educate workers more sophisticated skills, Use it to increase workers’ compensation so that they don’t have to work 80 hours a week. Use it to hire more people. Don’t allow big corporations and mega wealthy people get bigger and richer. If you are taking away people’s jobs, you have to have a plan on what to do with displaced workers.

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In theory, eliminating lower end jobs through automation frees up workers to do more higher end jobs, enriching both themselves and the economy as a whole. In practice, retraining for higher end jobs is now much more expensive (e.g. see college costs now compared to a generation ago), and corporations are more focused on shorter term earnings to satisfy Wall Street* than longer term investments in potential future employees’ skills for higher end jobs**.

Getting on Wall Street’s bad side is not good for a public company, since then activist investors are more likely to try hostile takeovers, or gain board seats, or something like that, with pressure to cut costs (i.e. cut jobs) along with other actions to reorganize the business (which may or may not be effective).
*Investing in employee skills is often considered less worth it for employers these days, due to less perceived mutual loyalty between employer and employee.

More money means more political power, so it is not surprising that such entities and people use their power to ensure that the laws and regulations help them further enrich themselves, rather than distributing the gains more widely. That may be short sighted, since extremely unequal economies may be poorer overall (after all, if almost everyone is poor, who will buy the goods and services that your business is selling?) as well as encouraging populist political movements that are not friendly to the wealthy (or many others).

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^What you say is all true. And they are all structural not real(?) issues, in my speak, meaning malleable.

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All great societies fall. The USA will be no different. I think in many ways the period of the 1950’s to 1970 will be considered the golden years of America. A time when many enjoyed the benefits of the growing society. That all began to crack in the 1970’s and forward. Today the wealth is becoming too concentrated in the top and it is only getting worse. This does not bode well for the USA over the next few centuries. Can we do what America did back in the days of Rockefeller, Vanderbilt, ect and correct course? Only time will tell.

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In theory, they are malleable, but that requires politics. However, politics often requires money, which can mean dependence on the wealthy donors and other influencers.

Indeed, there is a general trend through history that economic inequality increases, other than during major disruptions like deep economic depressions, major wars, some types of extremist politics, or revolutions, all of which tend to bring lots of other effects, many undesirable.

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Also, when wealth was increasing and such gains were more widely distributed, people felt that they could afford to make some types of social advances, like reducing racial discrimination. People were also beginning to think about environmental issues like air pollution.

Will it take a great depression and a world war? Except that a future world war will be more catastrophic due to much greater destructive power of today’s weapons.

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“I hate this excuse. I am guessing offshoring and automation brought in enormous profits to corporations. Why not distribute the profits to wider society?”

You have to look at why these things happen, and it is that labor is the biggest part of a cost to a company, so they obviously do everything they can to cut costs. In theory, larger corporate profits would translate into better wages and jobs, but that is where things have fundamentally changed IMO. What has happened is that stock price has become an outsize value that is driving things, and therein lies the rub. Many jobs were outsourced, not because the company wasn’t profitable, but that they were driven to do so because investors like hedge funds demand things like double digit growth in profits to fit their operating model. 40 years ago a CEO or executive made most of their compensation from cash bonus and salary, these days that it a tiny percentage of their compensation (I had to laugh at one unnamed news network, that had some guy saying “CEO pay hasn’t gone it, it is the same as it was 30 years ago”…what he left out was the cash bonus and salary hadn’t changed, but 40 years ago there was little or no stock based compensation, these days it is 90% of their comp)…and it has left many people behind. I heard one commentator saying that offshoring and automation has led to cheap tvs, and how that benefits people, what that left out was that the cheaper prices from offshore goods has been even more offset by the loss in wages at the working class end of things.

The real problem to me is one no one is addressing, the idea that you can train displaced workers for higher level jobs basically is a smokescreen, because those higher level jobs we are talking about, like let’s say a CNC operator, are not as plentiful as the jobs they replaced. What people aren’t asking is what do we do in a world where more and more jobs are going to disappear, as not only manufacturing, but white collar jobs, fall to things like AI? Even if we assume that 20% of all jobs cannot be automated or otherwise run by computers, what happens with those who aren’t in that 20%? Kurt Vonnegut addressed that in his novel “Player Piano”, in his world you were either a manager, or you worked for a giant PWA kind of program or were in the military, and he was prescient in that…is that the world of tomorrow? I don’t have any answers, but the idea that offshoring and automation will create new and better jobs they replace isn’t true. Yep, there will be jobs in maintaining robots and computer systems and networks, but even that is changing, large advances have been made in self repairing robots, computer networks that can control themselves, and so forth, so even that won’t be true…I haven’t heard anyone address this, I have heard the 10 point plans for job retraining, I have heard “of course there will be jobs for those who are good enough”, but I haven’t heard anyone other than idealistic dreamers come up with any real solutions, the ‘real’ solutions I see proposed are basically based on flawed concepts from the get go.

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Put simply, no competent manager would ever unilaterally say, “Let’s spend our stockholder’s money on automation, and give the benefits of that spending to our workers.”

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First, that “golden age” didn’t benefit all Americans equally due to the effects of de jure and de facto racial discrimination…especially against non-Whites.

Also, @ucbalumnus, the reduction of racial discrimination was not benignly bestowed by the dominant White majority of that period as you seemingly imply in the quote above.

Instead, the Civil Rights movement was a long culmination of adversarial protests and contestation going back decades against that resistant White majority…especially in the south. And even then, there was a backlash from unreconstructed segregationists both in '68(Nixon’s Southern Strategy which attracted many Southern Whites precisely because they resented LBJ’s support for Civil Rights*) and in the last several years as recent history and current events have shown.

*LBJ himself was quoted as predicting that by supporting the Civil Rights Act and Civil Rights, his party will lose the majority of the Southern White vote for at least one generation. And that’s exactly what happened and its effects still manifest to the present day.

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@cobrat:
Good analysis, and as you point out the civil rights era may have gotten rid of de jure segregation, but it certainly didn’t change all that many people’s minds, the GOP and its Southern Strategy, then during the 80’s the Lee Atwater Willie Horton kind of strategy (anyone remember Reagan and his comment on welfare queens driving Cadillacs to collect welfare benefits and food stamps…and before anyone says that isn’t coded racism, ask anyone who was an adult at the time about the supposed attraction of black drivers to Cadillacs).

Yes, the 50’s to 70’s is seen as a Golden age, it probably was the one time in US or world history where the working class, even relatively unskilled workers, could afford a comfortable middle class lifestyle, hope to have their kids go to college and the like, a combination of the strength of organized labor, which hit its peak during this time, the US for a decade or more having basically no competition, and also the GI bill that allowed so many men to go to college who otherwise wouldn’t be able to, or gain skills, and it all added up. And yep, that has been turned into the myth of the ‘golden 50’s’ where everything was great, everyone were these solid nuclear families all going to church every Sunday,all the crap people claim; it was an economic boom time for many, but only if you happened to be a straight, white Christian male, it still wasn’t all that great for women (that wouldn’t happen until the 70’s really), certainly wasn’t as much for blacks and hispanics, and forget if you were different and in the 1950’s, if you happened to be liberal, a freethinker, you could get a lot of crap dumped on you by the government thanks to the red scare and McCarthy.

The irony of the 1950’s, of course, is that it was the height of organized labor, it was a time when the income tax rates on the well off were near 90%, both of which later on were blamed for a moribund economy…it was a time when the gap between a well off executive and a typical worker was roughly 25 to 1, when the gap between the top 1% and everyone else was at its smallest, and a lot of that had to do with the strength of organized labor and tax policy, it isn’t a coincidence that the lost influence of organized labor has caused worker pay to suffer, and it isn’t a coincidence that the concentration of wealth and income has gone to the top 1% after huge tax cuts since the 1980’s, including favorable tax policy towards stock based compensation.

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Not saying or implying that it was benignly bestowed or done so without considerable protesting and political action. But it is likely that the resistance to reducing racial discrimination would have been greater if the economy was generally stagnant or declining at the time, since that tends to cause people to think that anyone else’s gain is their loss, instead of being somewhat more willing to let everyone share some of the gains.

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Somehow, that (much higher top marginal income tax rates, more unions, less executive pay relative to typical employees, etc.) does not seem to be what some people want being back to make America great again.

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People always bring up the 90% tax rates in place after WWII, but they alway conveniently ignore the fact that the 90 percent marginal tax rate came into effect only on incomes of more than $2,500,000 in today’s dollars. A tiny sliver of people would pay that amount of tax, and there were plenty of loopholes to hide income with.

Here is a pretty good debunking of the 90% tax rate nonsense.

https://www.aei.org/publication/why-we-cant-go-back-to-sky-high-1950s-tax-rates/