Some Thoughts on the Economy27 March, 2016
I have an app on my phone called Pocket. It allows you to save webpages for future viewing. It is an app that was probably inevitable, given our steady consumption of web content. While you can see the numbers of tabs growing on your web browser when things get out of hand, Pocket functions as a convenient "To Read" list that, likely, never decreases in size.
I don't recall ever actually using it, but since signing up I have received digest emails every few days that contain the most saved articles across all users of the app. You can probably come up with a decent profile of the average Pocket user just by looking at the titles and publications that are most frequently saved. Here's the list from the last two emails I received:
"Here are Google, Amazon and Facebook’s Secrets to Hiring the Best People," The Cooper Review; "Why Are Our Kids so Miserable?," Quartz; "Andrew S. Grove, Longtime Chief of Intel, Dies at 79," The New York Times; "Death by Gentrification: The Killing That Shamed San Francisco," The Guardian; "How to Start a Business With (Almost) No Money," Entrepreneur; "Owning Up to Torture," The New York Times; "Personal Finance Has Everything and Nothing to Do With Money," Lifehacker; "Addicts for Sale," Buzzfeed; "Molenbeek Broke My Heart," Politico "The Hidden Psychology of Failure," BBC; "Love Is in the Armpit at New York's Smell Dating," Reuters; "Bezos Prime," Fortune; "People Want Power Because They Want Autonomy," The Atlantic; "Dune Can't Capture the Novel's Incalculable Brilliance," A.V. Club; "Learning Larry Page's Alphabet," Fast Company; "The Silicon Valley Boys Aren't Just Brilliant--They're Part of a Comedy Revolution," Wired; "The Problem with Profits," The Economist; "In Hindsight, an 'American Psycho' Looks a Lot Like Us," The New York Times; "The Scariest Thing About Brussels Is Our Reaction to It," The Guardian; "12 Powerful Habits I have Stolen From Ultra-Successful People," Observer
I've been reading more and more about the economy and how it is changing. I have some thoughts about it. I have no education in the subject. I just have concerns.
(1) What does it mean when the economy is structured such that a larger share of the gains accrue to a smaller percentage of people? The Economist recently devoted its cover story to "Why high profits are a problem for America." Government plays a role in ensuring a well-functioning market, but lobbying, antiquated antirust law (2015 was a record-setting year for mergers), and globalization is undermining its ability to enforce rules and maintain a sound system. Consequently, we have a distorted system that appears to provide undue benefit to the winners. It's no wonder populism is taking off.
The fact that only the monopoly-power story can convincingly account for the divergence between the profit rate and the behavior of real interest rates and investment, along with the suggestive evidence of increases in monopoly power, makes me think that the issue of growing market power deserves increased attention from economists and especially from macroeconomists.
I do not think that a "winner take all" economy is necessarily a bad thing. I just don't want inequality to come at the expense of social mobility. Even though many companies are booming employee wages are suppressed, career advancement is dim, and debts from higher education pile up.
(2) What does it mean when the economy no longer operates, in terms of social good, the way in which we've grown accustomed? Work is an integral part of our identity: my behavior has not changed markedly over the last few years, but in that period my conception of self has changed significantly. The person I felt I was as a paralegal, compared to a wine retail worker, compared to a tech worker, are all very different. This is a function of the primacy of work.
Andy Grove, founder of Intel, wrote in 2010 that "all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted." This was not said that long ago. I wonder if he still believes it?
If the advance of new technologies and efficiencies displaces workers, how do we replace the social good jobs once provided?
(3) I am a young, well-positioned tech worker. Given the rules of the game, how should I behave? Louis Menand, in a review of self-help books in the New Yorker, writes the following:
One striking thing about the exemplary tales in “Self-Help” is the all-consuming nature of the careers they document. There is no separation between work life and private life. Personal prosperity and professional success coincide, and this elision became a staple of the genre. The secrets of success in business are the secrets of success in life. The reason that the nature of the secrets changes is that the nature of work changes. Different modes of work call for different types of people.
I have often thought about how I have just about every (professional) incentive to spend all my time working, short of burning myself out. If our economy were ordered differently, would this still be the case? Probably--there is still much to be gained from working harder than just about everyone else, but at least fewer people would need to worry about their economic security.
That anxiety about economic security explains the popularity of self-help books:
They try to sum up current thinking in the business world about "human resources" and transmute it into a manual for self-improvement. People don’t read these books to find out how to be better human beings. People read them to figure out how to become the kind of human being the workplace is looking for.
I think that the same could be said about the Pocket emails I receive--lifehack your way to achievement and happiness!
"The Career Advice No One Tells You," Quartz; "How to Learn About Software Development Without Writing a Single Line of Code," The Next Web; "Harvard Researchers Discovered the One Thing Everyone Needs for Happier, Healthier Lives," The Washington Post).
They bear signs of the concern lurking for every information age worker: what can I do to safeguard my economic security?
In a piece called "Why Do We Work So Hard?", Ryan Avent writes about two friends who moved from Washington, DC, to Charlottesville, Virginia, "an idyllic little place, nestled in the Appalachian foothills, surrounded by horse farms and vineyards, with cheap, charming homes." He thought about doing the same, "to enjoy the fresh air, and the peace and quiet," but he had grown too accustomed to the velocity of modern life:
I could anticipate with perfect clarity how the rhythm of life would slow as we left the city, how the external pressure to keep moving would diminish. I didn’t want more time to myself; I wanted to feel pushed to be better and achieve more. It wasn’t the stress of being on the fast track that caused my chest to tighten and my heart rate to rise, but the thought of being left behind by those still on it.
For Avent, who counts himself a member of the "relatively small class of people" who "works very long hours and earns good money for its efforts," it's doubly imperative he not get left behind. His friends moved back less than a year later, as they "had found themselves bored and lonely." Avent and his wife "were glad, and relieved as well: their return justified our decision to stay in the city."
Perhaps more interesting is what he addresses next:
One reason the treadmill is so hard to walk away from is that life off it is not what it once was. When I was a child, our neighbourhood was rich with social interaction. My father played on the church softball team until his back got too bad. My mother helped with charity food-and-toy drives. They both taught classes and chaperoned youth choir trips. They socialised with neighbours who did these things too. Those elements of life persist, of course, but they are somewhat diminished...
A world that encourages me to advance my career at the expense of everything else cannot provide the social good Avent writes about. These are the same forces that propel corporations to record profits and piles of cash reserves. Maybe things are not so absolute, but that's how it seems to me.
Rebecca Solnit wrote at length about the death of a San Francisco native in the Guardian and the community she describes is one that is not being nurtured by the current economic order:
What I felt strongly at the funeral was the vital force of real community: people who experienced where they lived as a fabric woven from memory, ritual and habit, affection and love. This was a measure of place that had nothing to do with money and ownership and everything to do with connection. Adriana and I turned around in our pew and met Oscar Salinas, a big man who was native to the Mission. He told us that when someone in the community is hurt, the Mission comes together. “We take care of each other.” To him, the Mission meant the people who shared Latino identity and a commitment to a set of values, and to each other, all held together by place. The sense of community people were trying to hang on to was about the things that money cannot buy. It was about home as a whole neighbourhood and the neighbours in it, not just the real estate you held title to or paid rent on. It was not only the treasure of Latinos; white, black, Asian and Native American residents of San Francisco had long-term relationships with people, institutions, traditions, particular locations. “Disruptive” has been a favourite word of the new tech economy, but old-timers saw communities, traditions, and relationships being disrupted. Many of the people being evicted and priced out were the people who held us all together: teachers, nurses, counsellors, social workers, carpenters and mechanics, volunteers and activists. When, for example, someone who worked with gang kids got driven out, those kids were abandoned. How many threads could you pull out before the social fabric disintegrated?
When I read callous comments regarding gentrification, and how the economics of it are simple, and that people need to wise up and deal with the reality of life, I am reminded of the famous Thucydides passage: "Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must."
A recent book titled "Evicted: Poverty and Profit in the American City" by sociologist Matthew Desmond reveals the social discord that results from evictions. Jason DeParle summarizes, in a review:
Evictions destabilize neighborhoods. The more people come and go, the less chance there is for cohesion. A case in point is the Hinkston family—Doreen, four kids, and three grandkids—who were neighborhood fixtures on a block where they lived for seven years. Doreen was a porch sitter who knew everyone and kept her eyes on the street. When an eviction notice forced them to move in a hurry, they quickly settled for a run-down house on a block where they knew no one and kept inside. “With Doreen’s eviction, Thirty-Second Street lost a steadying presence,” Desmond writes, “but Wright Street didn’t gain one.”
There are significant costs to letting our least well-off suffer, both to the individual and the community they reside in. We're overdue for a reckoning.
Desmond ends Evicted with the following:
This degree of inequality, this withdrawal of opportunity, this cold denial of basic needs, this endorsement of pointless suffering – by no American value is this situation justified. No moral code or ethical principle, no piece of scripture or holy teaching, can be summoned to defend what we have allowed our country to become.
Here's the Pocket email digest I received shortly after publishing this piece:
"The Only Way to Achieve Anything Is to Become Comfortable with Rejection. Here's How.," The Guardian; "The Cities on the Sunny Side of the American Economy," The New York Times; "How To Design Happiness," Fast Company Design; "How to Hack an Election," Bloomberg Businessweek; "The Loophole in the Hedonic Treadmill," Nautilus; "You Need to Practice Being Your Future Self," Harvard Business Review; "On the American Front Line Against ISIS," The New Yorker; A" $700 Juice Box for the Kitchen That Caught Silicon Valley’s Eye," The New York Times; "The Seas Will Save Us: How an Army of Ocean Farmers are Starting an Economic Revolution," Invironment; "Why A New Generation Of On-Demand Businesses Rejected The Uber Model," Fast Company