Inequality makes a nation poorer

Originally published at: https://boingboing.net/2019/06/07/socially-useless-guard-labor.html

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Epidemiological ProTip: Inequality makes a nation less healthy. Way less healthy.

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That’s the thing: at a basic level, the economy doesn’t work as well when the benefits of productivity improvements are not shared with the workers as well as the owners. Recognizing that and doing something about that are not steps toward some communist revolution. Raising the minimum wage, ensuring healthcare is available to everyone, and raising the taxes on capital gains is not the end of capitalism, they are a way of saving capitalism from rentiers.

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Pharaoh he sits in his tower of steel
The dogs of money all at his heel
Magicians cry, Oh Truth! Oh Real
We’re all working for the Pharaoh

A thousand eyes, a thousand ears
He feeds us all, he feeds our fears
Don’t stir in your sleep tonight, my dears
We’re all working for the Pharaoh

Egypt Land, Egypt Land
We’re all living in Egypt land
Tell me, brother, don’t you understand
We’re all working for the Pharaoh

Hidden from the eye of chance
The men of shadow dance a dance
And we’re all struck into a trance
We’re all working for the Pharaoh

Idols rise into the sky
Pyramids soar, Sphinxes lie
Head of dog, Osiris eye
We’re all working for the Pharaoh

Egypt Land, Egypt Land
We’re all living in Egypt land
Tell me, brother, don’t you understand
We’re all working for the Pharaoh

I dig a ditch, I shape a stone
Another battlement for his throne
Another day on earth is flown
We’re all working for the Pharaoh

Call it England, call it Spain
Egypt rules with the whip and chain
Moses free my people again
We’re all working for the Pharaoh

Egypt Land, Egypt Land
We’re all living in Egypt land
Tell me, brother, don’t you understand
We’re all working for the Pharaoh

Pharaoh he sits in his tower of steel
Around his feet the princes kneel
Far beneath we shoulder the wheel
We’re all working for the Pharaoh

–Richard Thompson

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Somebody has to be able to buy those products.

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THIS!

IMHO the signal attribute of late-stage (end-stage?) capitalism is that it utterly fails to understand this, and thus proceeds towards its own doom.

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I see this even at my educational nonprofit. We have a large project with a huge field team of education professionals, and a core group strictly trained in budget/administrative.

I’ve been building software for the past year to try to satisfy the workflow and data needs of both groups. I don’t have to tell you which group has engaged and given me enthusiastic and rich feedback, and which only multiple attempts to shut the whole project down. (They’re currently threatening to shut down my Discourse forum I set up to facilitate the project, because they don’t see the value in me directly connecting with the field staff about the process…)

The incentives seem very different for management and labor

labor is generally incentivized to want the field to thrive and grow, as they know they’re disposable to an individual corp and want a wide field to rely on, and don’t benefit as directly from the growth of an individual company.

CEOs on the other see their compensation and power grow as they concentrate the market and their specific org grows. Their incentive is the narrowing of the field and domination. If they kill the field getting the golden eggs, they can either parachute out or just switch industries.

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It’s this old chart, yet again, isn’t it?

In other words, the economy stopped working properly beginning in 1972.

(This is part of why I get pissed at commentators who mock millennials and gen-y who point out how economically screwed they are. Everyone post gen-x was born into an economy that was fundamentally fucked well before they were born.)

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Shuck, I like the cut of yer jib.

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A good list, and the author is limiting himself to traditional economic measures of performance and outcomes. In addition, there are negative impacts on happiness and quality of life for everyone in an unequal society. It’s great to have money, but it’s harder to enjoy it if your gated enclave is a small island in an ever-growing sea of poverty, squalor and crime that you have to sail on for a significant amount of time each week (see Brazil, S. Africa).

Yes. Gen X just saw the screwing-over take place in real time, allowing some of us to escape it (mainly due to good luck). The avenues for escape for younger people are far more limited, especially when you add in the effects of climate change (which is now a big part of the inequality story).

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Yeah, 1972 is at the halfway point of the period that encompasses gen X, but although half of us of that generation were born before that point, none were in the job market. But that disparity really took a while to get going, and subsequent generations have had all the other crap to deal with that were the results of Reagan era and post-Reagan economic changes - loss of social safety nets, loss of union jobs (and whole unionized industries), massive increases in education costs…

It’s interesting how much that period, the 20-odd years of the post-war to 1970s economy, became cemented as the standard notion of not just how the American economy/society should be, but the notion of what America “is,” even - perhaps especially - when it stopped being that. (Certainly America hadn’t been that way, previous to the war - the depression, before that the first few decades of the 20th century when progressive changes to labor laws were being implemented in response to the excesses and deprivations of the Gilded Age…)

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A lot of it comes down to media portrayals of the post-war American middle class (an historically anamolous middle class to match the anamolous prosperity), especially on the new medium of television. In the early days of TV, the characters and situations are still very working-class (think “The Honeymooners”), with a lot of carry-over from radio dramas about working-class people and immigrants. But very quickly things switch to the aspirational vision of the new middle class: suburban, car-owning, nuclear family, white collar (and white) middle management. That stayed in place for a long time. Norman Lear’s shows twigged onto what happened in 1972 early on, but they were an exception. I’d say that the original “Roseanne” show, started in 1988 as the effects of Reaganism truly took hold, marked the real return of the more realistic work-class family to TV, but most imitators that followed still portrayed working-class people as living middle-class lives.

The pre-war American middle class was very different, smaller in size and closer to the British version. For most Americans in the pre-war period, life was rough. Even when inequality was reduced due to the leveling effects of the Depression, the New Deal response, and then the war, it was more a case of the vast majority of people “enjoying” the same misery and privation than getting richer like they did post-war.

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Coincidentally, watching the trailer for that racing movie jlw posted made me think about Lee Iococca and the worship of leaders. Aside from the fact that leadership is just a skill/talent like any other, it got me thinking about how we treat leadership as “rare” (and thus worthy of outsized compensation) But we can only find leadership through trial and error. It’s not like other talents where you can just do it, you have to have an opportunity.

If we think good leaders are rare, it may just be that we aren’t giving enough people a chance (monpolization and concentration of power) are filtering wrong (nepotism and social reproduction) or just plain still don’t know what we’re lookig for.

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And add to that the taxes of the time. Those upper management and company bosses didn’t make an insane amount of money in salary. Last time I ran the numbers it was something like $500k give or take at the current dollars because it was taxed at 70%+ if they earned more. Mind you even today one could live quite comfy on 30% of that but you would not have multiple houses, a private jet, etc. Nor did they back then.

Oh the company paid for a nicer car for commuting, membership at the country club for connections, and other perks but still nothing that comes close what our current captains of industry rake in.

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Thanks for that song, j9c. I’ll remember it next time Pesakh comes around!

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Saw this song performed live by Thompson, years ago (not that particular concert in the video).

Just about ripped my heart outta my chest.

Since then, I feel as though I have passed through several lifetimes, several incarnations, each more unrecognizable than the one before it.

Richard Thompson is an extremely accomplished musician, with his guitarwork to cry for, to die for… his lyrics can be very bitter medicine… a medicine that can be hard to appreciate until you have either accepted Thompson on his own terms, or, heavens forbid, you come to the very place he describes in words and music.

And then, filled with a kind of terrible knowledge, you know. You just… know…

In April 2020, may we all be experiencing better times. Sooner, even.
I wish you and yours the best, and thank you for a high compliment indeed.

ETA: grammar

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Actually, it’s pretty easy for me to enjoy my gated enclave containing 0.5% of the population in an ever-growing sea of poverty, squalor and crime. It’s called Canada.

Aside from that, the reasons in the original article and from Gracchus are solid. Equality is social welfare improving.

However, from an economic perspective, it’s really tough. Trying to make wage-earning more equal (which is far superior to redistribution) is a bit like trying to make water run up-hill. It can be done, but you have to be aware that everything is fighting against it.

There’s a reason that it usually takes a disaster like the Black Death or WWII to increase equality.

And if we didn’t have enough challenges, we have technology reaching a level that it can replace more jobs at a cost that becomes comparable to higher wages. I only have to witness the massive proliferation of selve-serve kiosks that appeared when we started moving the minimum wage around here to decent levels (~$15).

As well, the trend towards larger companies almost inevitably means larger compensation and political influence for those running the show. And the fact that these companies are often new and thus the founders hold a lot of stock only inflates this trend.

And speaking as a Canadian, I am well aware that smaller, more equal firms are simply fodder for the larger firms, so forcing firms to remain small can simply mean resigning your country to become a branch plant economy of foreign companies.

Which tends to lead me back to the less ideal solution - redistribution. In such a mechanism, you lose many of the benefits of equal salaries: pride and self-esteem, etc. But at least you avoid many of the worst pitfalls.

I flirt with the idea of a $15K basic income financed by a 80% tax rate above $40K. I suspect it wouldn’t work as too many incentives are lost for the labour that makes businesses competitive with international competitors, but I’d be very happy if I was proven wrong.

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“Guard labor” is my takeaway here…

Our local transit network in Seattle is subsidized, such we pay only about 30% of the fare (your $2.50 bus fare buys you $8 in travel, roughly). But how much do we pay in fare enforcement — the cards we buy and refill with subsidized fares, the enforcement officers, the manpower to handle fareboxes — that we could just get rid of by making transit free at the point of use?

You’d then pay for it with land rents/land value taxes on the overheated real estate values to get aound the state-mandated 1% property tax that starves local government…

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Don’t get too complacent, though. Canada has a whole bunch of right-wing populist jerks (e.g. Faith Goldy, Ezra Levant, Steven Crowder), prominent gateways to the alt-right (Jordaddy), and the usual group of fossil-fuel boosters blocking serious action on climate-change (Alberta Conservatives) and “free”-market fundies (Conservative establishment) and Know-Nothing knuckleheads (like Doug Ford).* As other countries including Germany have demonstrated, it takes a lot of work to remain a last bastion of liberal democracy, let alone one of social democracy.

It’s a matter of political will. In the U.S., two prominent Presidential candidates (Warren and Sanders) and one popular and charismatic Congressperson (Ocasio-Cortez) have proposed measures to roll back the policy failures known as “billionaires” (while still keeping them ridiculously comfortable financially). Those same politicians are also talking seriously about implementing single-payer universal health insurance, subsidised college tuition, and other programmes present to one degree or another in Canada and the rest of the OECD countries. A large percentage of the American electorate wants all this.

But yes, UHNWIs and “slow AIs” are busy buying other politicians and “independent” research institutes to counter it, some billionaires are foolishly allying themselves with fascists, and there are still too many temporarily embarrassed millionaires too ignorant or stupid to know they’re voting against their own interests.

A die-off in the global south and of dark-skinned people is the unspoken right-wing “solution” for the ravages of climate change, and not just outright Nazis are considering it.

We could take the opportunity of automation to start moving to a (with any luck non-neoliberal) UBI, but the eliminationist option again seems to be the “solution” being considered by right-wingers.

I’m not interested in seeing either a die-off or guillotines, but that means we need to make an effort and support leaders who have real solutions rather than whinging about how hard it all is.

[* ETA: and bigoted nationalists making laws in Quebec and right-wing yellow-vest protestersy

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Sorry, my meaning wasn’t clear. I was trying to make clear that ethically, I am barely different from the folks I’m tempted to decry. I live like a king (way in the global 1%) surrounded by poverty, protected by armed guards used to keep out the poor and the desperate.

In other words, for me, this is not a moral argument, this is a welfare improvement argument, where I am unwilling to take the measures that would result in real welfare improvement because they endanger my wealth.

Now, that aside, I think we both agree that the billionaire economy is a problem, but it’s a fairly tractable one involving thousands and only requires political will. As for right-wing policy, it’s convenient to hang it on billionaires, but its success requires votes, and while the right tilts the electoral scales with a variety of vile measures, the fundamental problem is that we on the left have failed to convince others who don’t intrinsically share our values to vote our policies.

The fundamental problem I was talking about in my post above, and involves workplace day-to-day operations is inequality somewhat down the curve. That is the inequality that we deal with each and every day in almost every work place.

If we set a maximum multiplier of 3 between the lowest and highest paid employee. Then perhaps the custodial staff earns $30K, the professional staff earn $60K and the president earns $90K. That is workplace equality in a more meaningful measure than a bunch of billionaires I’ve never met.

Now come the real challenges that aren’t met with a little political will. How do you convince the professionals and executives to work for that sort of salary, if the competition is less equal?

If you solve that problem nationally (say salary caps or super-high taxes), how do you prevent your talented young people from lighting out for countries that better reward their talents.

What about out-sourcing? Deny the poor the ability to earn a living (I’d say 90% of the employees at my company started in the tech industry in less developed nations, and then moved here based on their skills)? Denying the millions their way out of poverty would be an ethical crime even I can’t contemplate, even for higher equality’s sake.

Those are the challenges I was talking about. That’s the inequality that involves every one of us every day.

A ‘light’ version of this is what Canada faces living next to the U.S. The U.S. inequality (and I’m not talking about the .001%, I’m talking about the 10%) leaks into us because we don’t exist in isolation. And a more equal US faces the same challenge vis-a-vis the world.

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