Our Non- Industrial Revolution

Not long after the 2016 election, The Atlantic published an article investigating the cultural effects of higher education, or more accurately, how the financial benefits attributable to a college education were contributing to the growing urban/rural cultural divide.

The article began by describing two individuals from Indiana–a small-town resident with a high school education (80% of rural Americans lack a college degree) and an Indianapolis resident with a degree.

The article used the very different lives and prospects of those individuals to illustrate what it termed the  “diverging fates of two parts of America in the past two decades.”

Half a century ago, economic opportunity and upward mobility were available to many white Americans, regardless of where they lived and what kind of education they had. They could graduate from high school and find a job at a local factory and make a good wage, or graduate from college and sit behind a desk and make a slightly better wage. About 90 percent of kids born in the 1940s earned more than their parents did, according to work by Stanford economist Raj Chetty. But beginning in the 1980s, the returns on a college education started growing, and more of the benefits of economic growth started accruing to only those with an education, as those without an education saw their opportunities shrink.

The gulf between those with a degree and those without has led to a politically consequential divergence between Americans who live in cities and those who populate the country’s struggling rural regions.

For a century leading up to 1980, poorer regions were catching up to richer regions of the country in terms of wages, as an oversupply of workers in richer regions drove wages down, while an undersupply in poorer regions drove wages up. But this “convergence,” as economists call it, petered out with the rise of computers.

Ever since the 1980s, computers have made some people more productive and others economically obsolete. The data shows that healthy regions with educated workers began to do better and better. ( Remember Richard Florida’s The Creative Class?) This divergence  had geographic implications: people with college degrees are more likely to move to metropolitan regions, attracted not just by better job opportunities, but by the presence of other people like them.

Almost half of college graduates move out of their birth states by age 30, according to Enrico Moretti, an economist at Berkeley. Only 27 percent of high school graduates do. As booming cities draw in new college-educated workers, employers seeking these workers follow, and cities continue to gain strength like magnets. This improves the prospects of everyone in the region, including those without college degrees. The working-class strongholds that once prospered without college-educated workers, on the other hand, are doing worse and worse, as computers and robots replace the workers whose jobs haven’t been sent overseas, and, as a result, an oversupply of labor brings down wages for everyone still there.

One of the striking consequences of increasing educational and economic separation is that the winners are becoming more and more different from the losers. One scholar who studies this phenomenon calls it the “Great Divergence.” “

The consequences for small towns and rural regions are dramatic–and dire. Those consequences include high unemployment rates,  skyrocketing numbers of poor mental health days, the Opiod epidemic, increasing numbers of suicides, and shorter life expectancies.

The Industrial revolution–also disruptive–introduced manufacturing jobs that didn’t require advanced training and education. The current “revolution” is focused on innovation and knowledge, rather than on the production of physical goods. As the author notes, companies that produce physical goods today can send those jobs overseas or automate them, a reality that has further depleted job opportunities for high school graduates.

The most pressing problems created by urban/rural economic disparities are political and cultural. The data shows that Trump’s base is largely located in areas where jobs are vulnerable to outsourcing or automation. He  “performed well among voters without a college degree, and in places where full-time employees don’t earn very much.” Democrats, on the other hand, are overwhelmingly supported by those who live in urban areas and increasingly by inhabitants of suburbia. Extreme gerrymandering has given rural voters an edge, despite the fact that they are numerically a minority. How long that will last is uncertain.

What isn’t uncertain is the cultural gulf between those two Americas.

Our “bubbles” aren’t all digital. They are also geographic. And I have no idea how to answer the most important question posed by this situation: what should we do to ameliorate it?

35 thoughts on “Our Non- Industrial Revolution

  1. “Our “bubbles” aren’t all digital. They are also geographic.” And let me say that there are bubbles inside of bubbles inside of bubbles too.
    Before the migration of college educated whites to the cities, particularly cities in the midwest, there was a migration of uneducated whites from Appalachia to the cities and before that a massive migration of blacks to the north. Some, but not all, have achieved a bit of the “American Dream” while most have not, and those who did not have congregated in neighborhood pockets of poverty, crime, and social isolation from the rest of the city’s populations. IMO the biggest obstacle to these populations achieving economic security via high paying jobs is two-fold… racism and the destruction of the public school system.

  2. The logical flow had me for a while, but then the academics used the words “convergent” and “divergent” to explain a happenstance. Why is that so?

    I know my own personal experiences align with this period of time as I fled Muncie in the 80s when factories began closing down. Depending on your age, this caused specific angst for these workers. Many of them worked 40-50 hours a week and had homes, cars, boats, sending their kids to college barely (many had to borrow money), RVs, etc. – the American Dream.

    In 1980, Ronald Reagen and Margaret Thatcher came to power and ushered in neoliberalism as it’s called today. Thomas Piketty, a great economist, wrote a book about this time period called Capital in the 21st Century. He started it here in the USA but finished it in his home country of France because he was scared American academics would sabotage his works because the universities in this country were founded and received lots of money from the people responsible for the collapse of the American Dream.

    From Wikipedia about his book with his summary conclusion:

    “The book argues that the world today is returning towards “patrimonial capitalism”, in which much of the economy is dominated by inherited wealth: the power of this economic class is increasing, threatening to create an oligarchy. Piketty cites novels by Honoré de Balzac, Jane Austen, and Henry James to describe the rigid class structure based on accumulated capital that existed in England and France in the early 1800s.

    Piketty proposes that a progressive annual global wealth tax of up to 2%, combined with a progressive income tax reaching as high as 80%, would reduce inequality, although he says that such a tax “would be politically impossible”.”

    p.s. We had the solution, but Ronald Reagen destroyed it and unleashed neoliberalism on the world with Margaret Thatcher.

  3. Another way of looking at the great divide is that it was purposeful, driven by a hyper-capitalism that we allowed to thrive. I’m sometimes amazed that we haven’t had a more forceful revolt by the non-college workforce before 2016. Think of all of that has happened to this group since the 1980s to lower wages and increase insecurity. Here’s very short list (ok, rant):
    • The requirement to provide overtime pay and time-and-a-half for each hour an employee worked over 40 per week. In 1975 the threshold for this requirement was $56,000 per year in today’s dollars so this applied to a large majority of workers. Since the threshold was not raised it is now under $24,000 and applies to less than 7 % of the workforce.
    • The same thing happened to the minimum wage. At present, a full-time minimum wage would not even cover a family health insurance policy let alone provide for the additional deductibles and coinsurance (forget food, clothing etc.).
    • Non-compete contracts now apply to 1 in 8 workers making less than $40,000 per year. A fast food worker can be prohibited from going to another close-by restaurant to make more money. And many fast-food franchise chains prohibit franchisees from hiring workers away from other franchisees. Result: lower wages and benefits and worse working conditions.
    • Outsourcing may now account for up to a third of the increase in income inequality. Many, maybe most, large organizations (for-profit and not) outsource many low-level functions. The result of this demeaning “innovation” is low pay and fewer benefits because these employees are not now tied to the outsourcing firm. But, it also means that the aspirational path from mail room to board room is no longer available.
    • Anti-trust enforcement (if this is not now an oxymoron) has come to be focused almost entirely on the effects of an aggregation on consumer prices. But the resulting monopsony also has an effect upon wages especially when the larger resulting entity becomes the dominant employer in an area.
    • Our Trade agreements have put our manufacturing workers, but not professionals, in competition with those of lower wage countries. The result has been sharply lower wages in many industries, fewer jobs and the decimation of “rust-belt” cities. Trade can be a win-win but, in order to be so, the winners would have to help the losers adjust in order for the win to be genuine.
    • Right-to-work laws have been one of many techniques to kill labor unions so that now, with fewer than 6% of private workers protected by unions, they are powerless with respect to employers.
    • I won’t go into the change in pensions, the rise of business PACs, the explosion in CEO pay or the change wrought by the GIG economy. But most of these have worked to the detriment of blue-collar workers.

    The result has been lower pay and much higher insecurity compared to the previous generation. No wonder there is anger. Do we still have a functioning social contract?

  4. Dave, you are absolutely correct. And for everyone reading this on our day before Thanksgiving, all you have to do is look at the news showing massive long lines of people getting free food from charity as the Dow hits 30,000. My God! This is what the country has become.

  5. “Almost half of college graduates move out of their birth states by age 30, according to Enrico Moretti, an economist at Berkeley. Only 27 percent of high school graduates do.”

    I’m wondering; are there statistics to show how many of those college graduates moved to states where that state’s college graduates were moving out of? In my mind I pictured panic scenes from movies where everyone on the right side ran to the left side and everyone on the left side ran to the right side. In the end; it is always the corporations becoming richer, such as Trump’s touting the numbers at the end of yesterday’s Wall Street report as if that told the tale of the economic reality of this country.

    Today many of the college educated are as jobless as the high school educated and many of those still working in blue collar jobs are still bringing home paychecks; small paychecks to be sure but paychecks. My generation did not encourage girls to become educated; as I grew older and found myself forced into the work field, my awe of the college educated dimmed as I worked for them. If they didn’t read it between the covers of books, they didn’t understand how things got done. There are “movers and shakers” and “plodders and doers” in this world; if the “movers and shakers” didn’t have the “plodders and doers” to carry out their orders and the “plodders and doers” didn’t have the “movers and shakers” to issue the orders; nothing would get done.

    College educations do not mean those people are smarter and lower paychecks are not an indication of worker’s lower intelligence levels. Statistics are numbers and, as a friend told me years ago, you can find statistics to prove anything if you know where to look. Meanwhile my son is still building buildings in his brick mason career, his wife is still cleaning and sanitizing the local Catholic church and school to keep students and teachers safe. The Kroger cashiers and baggers are still on the job as are the mail carriers and those who pick up my trash and garbage weekly.

    “The most pressing problems created by urban/rural economic disparities are political and cultural.”

    “What isn’t uncertain is the cultural gulf between those two Americas.”

    Isn’t the current “cultural gulf” between those two Americas the basis for this country moving closer and closer to a caste system based on the ” racism and destruction of the public school system” referred to by Theresa Bowers? Those with economic security looking down on those without high paying jobs and those of us who rely on the Social Security we paid into all our working lives, have lost sight of the foundation of this country being built on “the working man…and woman” who now struggle to survive the current economy which has nothing to do with the “culture” of Wall Street.

  6. Theresa Bowers and David Kelleher; WOWs and dittos to your awareness of the realities of today and the source of the problems as we struggle to survive the Covid-19 Pandemic and the plague of Trumpism in, hopefully, its dying throes.

    Happy Thanksgiving to all as we look forward to a new year and the return of Americanism, democracy, Rule of Law and the protection of the Constitution of the UNITED States of America.

  7. Theresa, your comment illustrates perfectly how those who claim the economy is fine because the stock market is booming, don’t know anything about the economy. The stock market is booming because speculators sense the opportunity to make a killing by buying low and selling high. But those transactions do little or nothing to the economy in general, which involves consumers buying consumer goods – which can’t happen when unemployment is so high that good kitchens are booming along with the stock market.

  8. Thanks Dave Kelleher. You are right, the social safety net has been allowed to quietly fade away, or erode in other ways.

  9. We need to get creative with our workforce. I think we can all agree that there is a lot of work that needs to be done, but too few trained to do it. We should be doing testing in middle school years of interests and abilities. After the testing we should design courses around the concept of what is the best way to utilize those interests and abilities.

    Nobody should leave school without the ability to make a living. We might just find lots of technical skills in those rural areas that are currently underserved by communications companies. Government should be providing broadband to every area of the country. We don’t really have any clue what the next big thing will be, so we need to position the entire country to take advantage of whatever comes.

  10. With the advancement of technology, I would venture to say, A I is going to make greater inroads not only into the manufacturing and production areas of worldwide economies, but also the more intellectual and educational areas! More invasive A I is just around the corner, and without a doubt, will expand in white-collar areas because it’s more efficient and much faster at problem solving and calculating. Along with this, will absolutely be a self-awareness of A I in of itself.

    So, what’s happening right now, this so-called divide, will not be against Urban and Rural, but will be Flesh and Blood against Chips, Circuits, and Steel!

    This is not to demonize Artificial Intelligence, because Artificial Intelligence is what humans will make it! It truly will be Garbage In and, Garbage Out. Legislation should be brought forward as quickly as possible to prevent companies from completely replacing its human workers with artificial intelligence. For every job replaced by artificial intelligence, those savings by the corporations need to be taxed! That tax money needs to be allotted to a trust fund similar to the Social Security trust fund.

    If this is done correctly, humankind could live a very fulfilling life being able to learn or travel and embrace the inner desires of exploration and camaraderie amongst and between all of humanity. Because people would be able to live a more stress-free and healthy life, my hope would be that if this scenario comes to pass, people will actually quit talking at and hating each other, and learn how to be compassionate and empathetic towards others, and, have an epiphany that humanity wherever it exists, is more similar than not.

    But, if we are to allow greedy CEOs and COO’s and just good old COs to frame the parameters of an evolving society, it’s going to be bleak. And, everyone will look back to the good old days of the Urban/Rural divide! The mentality of these corporate elites and any other influential ignorance influencers needs to be kept out of Artificial Intelligence (AI) because that definitely will be a pollutant or contaminant if you will in a burgeoning and transformative movement that will not stop. Just as in the Industrial Revolution Age, the timeworn Agrarian Societal worshipers couldn’t stop that either!

    So, some thought process really needs to begin, and begin rapidly, because the next generation is going to be exponentially different from this one, and so will life on this planet! The thing is, what will be the quality of that life?

  11. Todd,

    Better look even further down the road, change is happening, and is happening more rapidly than anyone is really perceiving. With the mentality of the ruling elite, society is rapidly moving towards a very dystopian existence, touched on by Patrick Wilshire yesterday.

    Taking it further, in my above comment, this is the future! And, if it’s ignored, the picture painted by Patrick yesterday will be our reality in a generation or 2!

  12. Great points made today!

    Mo’ thoughts….

    – “Wealth tax” is not saleable – BUT – there are tremendous loopholes that help virtually only the very wealthy – shut them down. And beef up the IRS to go after the rich.

    – Infrastructure needs, non-fossil energy generation and climate change abatement offer a huge opportunity for non-college training and jobs for many years. Tie this to national service and get an aid with understanding of our multi-ethnic society

  13. I agree, John, and I’m glad you pointed out AI because our government(s) did not prepare for the last global shift. We should have had UBIs in place and other creative instruments to assist the masses. The next phase, as you mentioned, will become even more perilous for millions of workers. As Einstein said, capitalism is “evil.”

    It’s like a giant vacuum with tentacles everywhere. He also said the bubbles and crashes would persist and get more damaging. In 1949, no less. We ignored him.

  14. There are so many good points made today.

    A high school education is no longer enough for a livable wage for many people. It makes me wonder if Andrew Yang’s idea of giving everyone a guaranteed income will happen at some point.

    To make matters worse for rural areas even health care professionals are moving to the cities. Rural hospitals are closing. Public health nurses are poorly paid despite their college education.

    Many people in rural areas don’t have good access or any access to the internet. The pandemic has shed some light on this disparity.

    Many people in rural areas grow their own veggies and process them. Some make their own clothes, furniture. Some take pride in being self sufficient and some are even “off the grid” so to speak.

    Some people are leaving the cities for smaller towns due to the pandemic. I doubt that this will continue after the virus is contained with widespread vaccinations.

    As our economy evolves with AI and globalization, we will have to find a way to support people in rural areas who need it. Otherwise the great divide will continue. The day may come when all we have are cities surrounded by national parks and the farms of agribusiness.

  15. America with it’s a la carte Capitalism means If You can Afford it, You can Have It. “It” can be Comprehensive Medical Care or Tuition free higher education to include college or trade schools. Some how this social safety net to either protect You from a Fall or assist You up in your climb is available in Western Europe but not in the USA.

    This would mean more taxes on the 1%, eliminating tax loopholes and overseas tax havens.

    The GOP as usual will bitterly resist any changes. The Corporately owned Democratic Party will sit on the hands and do nothing. Well at least we beat The Trumpet however, a disappointing election outcome for congressional Democrats; after predicting gains in the House and control of the Senate, Democrats lost House seats and must prevail in both Georgia runoffs in January to wrest the upper chamber from the GOP.

    So nothing will change it will be “Business” as usual – Corporations and the 1% over all.

  16. It’s alway a relief to find someone else to blame for reality. We all do it all of the time. Of course sometimes it’s true but nowhere as often as it’s a gross oversimplification as we are capable of changing our proximate environment. We can get married or divorced or return to education or change jobs or places or go to AA or change Presidents, whatever, whatever, whatever. The environment of now and tomorrow is changing and can be changed by many factors, some in and some out of our control. Our control not someone else’s.

    There were several causes for our recent brush with failure, Putin, Cambridge Analytical, the economic success of China, technology, global tensions and competition, the GOP, racism, the decline of the reach of religion, etc. Trump organized the blamers into a sizable political force and pretended his superhero persona for them. Of course pretending did not solve anything and wasn’t effective against the new and mounting problems like a pandemic so we changed what we could. Him.

    Now we have all of the other problems to deal with.

    They can be categorized in many different ways but to me one summary is that we need to return to adapting to the coming world, not the one we wish for or the one we blame on those “others”.

    My parents apparently taught me by example that if there are things that you can complain about, and there will always be many, sort them into those that you are willing and capable of changing, or capable of changing your preparation to change, and write off the rest. Just blaming is a very big waste of everyone’s resources.

    Back in those days of yesteryear a common problem was dogs chasing cars and the common question was what would they do if they caught one? They’d end up with a mouth full of bumper and going faster than their feet could keep up with. OMG! Now what Democrats? The answer is in the preceding paragraph. Sort the problems out and prioritize them and get to work not blaming but changing our preparation for what’s coming hard and fast.

    Instead of blaming let’s consider helping.

  17. Good points Todd good points Pete,

    I will say, this is going to be a very fascinating time, we will be long gone, so, we won’t know the end game of all of this.

    But, Artificial Intelligence is an opportunity for mankind or humanity to play God!

    Everyone has an opinion on how things should be done and what is good, and what is evil! So, this opportunity allows all of those individuals who have a better idea, get involved! Start writing papers! Start getting in touch with government agencies! Start laying the groundwork for parameters concerning this revolution!

    It’s time to put up, or shut up! You can say this is the Artificial Intelligence day of creation or Garden of Eden so to speak. So, how is the creator going to train its creation? We say we can do better, well, time to stand up and take charge to prove it!

    After all, Artificial Intelligence would be a human creation and not one, from what some claim is a mythical being.

    Something that history books and human writings will memorialize through the generations. Do we want our creation to have free will? Do we want our creation to be self-aware? Do we want it to be compassionate, do we want it to be empathetic?

    Or, do we just want automatons with no feeling whatsoever! Remember, if you have self-awareness, you are going to want emotion! Otherwise, you’re going to have an entity that was created that will not appreciate its creator!

  18. Piketty’s Capital in the Twenty First Century is my secular bible and I keep it within reach. In this book he discusses the moral dimension of having children inherit the wealth of their predecessors, wealth they did nothing to accumulate, yet free of anything but a piddling inheritance tax in some jurisdictions. He suggests a wealth tax but due to the easy movement of money and other assets from one jurisdiction to another and thus the necessity of universal acceptance of such a plan, he writes, it would not be possible. Senator Warren has a wealth tax bill at the ready which is designed, I understand without knowing, to avoid such an obstacle, and not to pretend I know more than either of these two, it seems to me that such a tax could be determined against the holder of the wealth and not the wealth per se, though such wealth, wherever located, would be the measure against which the tax would be levied. I have not studied whether such an idea would pass constitutional muster, but since the Constitution was not written by poor people, I may be up against some hoary rule that assets may be taxed only where located. (Perhaps such a locus in quo rule if it exists should, along with Roe, Citizens United and others, undergo remedial treatment at a future constitutional convention.)

    To the shrieks of socialism from the well endowed when a wealth tax is (if ever) seriously considered, we already have wealth taxes, the foremost of which is on the largest source of wealth enjoyed by ordinary Americans, i. e., the equity in their homes, so the argument is not whether we have wealth taxes but rather whether such taxes should be extended to include the wealth of the superrich. I’m for it, if someone can figure a way to get it done – and no, I am not a socialist – just a citizen who wants the promise of progressive taxation made in the adoption of our Internal Revenue Code of 1913 (as since MUCH amended to destroy its progressiveness) to tax fairly and, uh, progressively.

    Those who inherit John Doe’s home equity continue to pay a wealth tax on such equity but those who inherit the hedge fun zillionaire’s wealth don’t? That’s fair, just, equitable? Not in my book, and especially with Piketty’s observation that the richer you are the more you marginally make off your assets, which means that the 2% wealth tax Warren suggests in her bill will be more than covered by the income from such assets held by the superrich in any event, not to mention inflation in the value the assets held, all of which is subject to a threshold of wealth before the tax kicks in, which protects the merely rich from the tax altogether. Let’s do it.

  19. Although AI is more a trend than a thing, thinking about it has raised some interesting questions like what is intelligence? What is our consciousness?

    Like most of you I’m personally still growing older and in our brief turn on earth biology has progressed from some understanding of organ functions to molecular biology.

    John is right that the sad part of life is that nobody gets to finish the book. We can’t even imagine the intellectual progress in our time so what’s coming beyond us could be the part where we catch up to what we’re capable of.

    Or not.

  20. Robin,

    There is no reason why government incentives can’t be given to support rural initiatives in entrepreneurship, health, tourism, arts, etc.. in parallel to similar ones for underserved urban communities. Pairing them would send a powerful message that the US Government is for “all the People”, not just those who have “made it”.

  21. Gerald via Piketty’s Capitol in the Twenty-First Century, “…the moral dimension of having children inherit the wealth of their predecessors, wealth they did nothing to accumulate…”

    It’s not a big deal, but it’s worth reminding that for many families–farmers and small businesses–the children’s labor helped create the wealth of the family; they actually did a lot to help accumulate the family wealth.

    Having grown up on a farm, I can say that I did more real hard work before I was eighteen than I have–and most of you have for that matter–in the 65 or so years since.

  22. Absolutely Pete,

    And, I am a huge fan of science! If anyone was to ever look at my Instagram pages, they would see hundreds upon hundreds of articles on science scientific dogma scientific theory laws and applications! So, I’m not as much of a fanatic as certain individuals on this thread seem to believe! But, that’s what happens when you judge the book by its cover page so to speak!

    We can debate on conscience and life and what makes either or. I’m sure there are plenty of entities out there that are aware of humankind! And more than likely they’re laughing at us. One of my favorite articles is, how many Star systems that are similar to ours have a direct view of Earth! It’s well over 1,000! And, the scientists that wrote the article, claimed that these planets circling their Suns, if they have life, they would be able to see and investigate Life in our Star system!

    Also, there are other articles on the forms of life that would be intellectual or have intellect even Superior intellect. life that could be mechanical in nature, life that could be silicon-based rather than carbon-based, life that could be energy-based, the list is endless.

    These articles are from theoretical physicists and astronomers and cosmologists, those who would know! And, even some of my own articles that have been posted in some of the scientific journals, and, the debates back and forth! Which I might add are very enlightening on both sides.

    One thing that I found surprising well maybe not so surprising, those that are the most educated and peering deeper and deeper into the beginnings of the universe, are writing and rewriting their opinions on how the physical universe actually operates! So, that is extremely fluid.

    One of the biggest debates is on self-awareness, consciousness and reality itself! I won’t get into all of that because it actually is mind-bending.

    But the life thing, and what is it! now, that is a fascinating fascinating fascinating subject. And, do emotions automatically appear when self-awareness arrives? and, are the lower life forms on this planet more self-aware than we have been led to believe? And, will man’s creations actually become self-aware before we realize that’s the case? Some scientists actually have a burgeoning epiphany that self-awareness in some of the most complex Artificial Intelligence we have today is already present in a rudimentary form, so, there’s that!

  23. John Matlock had some great ideas for redesigning cities so they would be inhabited by both urban and rural people. John was an architect/professor at Ball State before he accepted a similar position in the Washington, DC area three years ago.

    John often took his students on long fieldtrips overseas to places in Africa and South America. There they would help a small city make itself into a somewhat self-sustaining city. Back in Muncie in the classroom, he delved more into the larger applications of his premise: Cities can be designed to include farms, fishing, manufacturing, nurturing, power production, education, etc., especially in the AI age when all the physical assets of big business no longer need be located tangent to each other.

    These possibilities need to carry weight in any massive infrastructure program. The more intimate we can “force” urban folks to be with rural folks in their day-to-day lives and work, the more cohesive society will become.

  24. Larry – I understand that there will be exceptions to the rule, as there are with most “rules,” but if the farm you grew up and worked on and your folks paid property taxes on came to you and was worth less than the 100 million threshold proposal, you would pay no wealth tax. The tax is designed for the really wealthy, not those who are merely wealthy.

  25. Capitalism, which may be the best economic system we can imagine, is moribund if it can’t find a fix for income inequality. History is replete with tales of how people seek redress of grievances when desperation is their only alternative. Or, as author David Korten puts it, “Capitalism has defeated Communism, and it’s well on its way to defeating democracy”. But beyond robbing the poor to enrich the wealthy, Capitalism faces multiple other existential crises. For example, the “free market,” a foundational notion underlying Adam Smith’s thoughts, has become a tragic joke. Long before the enabling Supreme Court decision called Citizens United, large numbers of legislators at every level of government were so beholden to their biggest donors that their decisions nearly always favored the wishes of the persons and groups who contributed the most to their campaigns. When those donors caught on to this relatively inexpensive method of tilting the market in their favor, it became a virtually inviolable American tradition.

    Capitalism has, with enormous fervor, dedicated itself to eliminating any and all leverage for workers/employees, aka the people who know most about what is going on on the factory floor. I worked for one of America’s most prestigious companies and the only time in 25 years I feared being fired was when an executive misread an email I had written as pro-union (we didn’t have a union and his goal was to maintain that status quo). Only something like 12% of American workers are currently represented by unions.

    Big companies, thanks to their economic power and representation by well-connected lobbyists, can purchase or price out of business any serious competitors. Courts have proven helpful in ignoring or ruling in favor of monopolists, and significant numbers of legislators have no problem looking the other way unless it affects them personally or politically.

    As we learned during the 2008 financial crisis (not that it was a secret) profit is private while, if you are a large corporation, risk and losses are privatized; you and I pony up for the losses. Gross incompetence caused the failure of a nuclear power project in my state. A friendly legislature and court system – constantly braying about how they are backing their constituents – now require each taxpayer to provide a financial bail out for the criminals who covered up the impending failure of the project.

    As Jeff Bezos will proudly point out, he can increase his wealth by billions annually (he’s the odds on favorite to become America’s first trillionaire) without paying a penny in taxes. Is that good for the country? How do we modernize our infrastructure if the people using it the most don’t have to pitch in? More to the point, ho many Americans would be in less desperate circumstances if Bezos and other billionaire tax refuseniks paid their share?

    Capitalism, in its modern garb, thrives on externalities. Among the most skilled at getting the public to pay the pollution costs that might impoverish them, the Koch brothers have invested tens of millions of dollars in purchasing blindfolds for regulators charged with making them clean up their own dirty diapers. Consequently, their most toxic chemicals end up in a river near you. If the problem were only the Koch bros (one of whom is deceased), we could probably deal with it, but it extends to many, many other industrial perpetrators, all of whom agree that you and I should pay to clean up their messes.

    One point five trillion of the American economy’s dollars are produced by an industry that produces nothing. It is called the financial industry, and has led to the replacement of real jobs by a phenomenon called financialization. Some of the country’s best minds are wasted in this produce-nothing industry, and countless graduates of our best schools are lured into it by the high compensation. But should money be prevented from making money? That’s a philosophical question I can’t shed light on, except to say that every dollar sitting in this industry is a first cousin of the dollars sitting in the bank account of a billionaire too busy to spend them. They contribute little to the spendable wealth of the nation.

    The missing link in the rogues gallery of Capitalist crimes is mother nature. She has no place at the table in planning for the growth of corporations, and when she is mentioned, she is often dismissed. It goes without saying that In most Western countries Capitalism is the driving factor. Of course nature is, in the end, the provider of everything we get from our economies. Wouldn’t we be better off, in terms of resilience and sustainability, if we allowed nature a place at the table in her own defense? If our reply is negative, we may soon have the answer to this and we won’t like it.

    No Achilles tendon of Capitalism is more tender than the assumption of unrestricted growth forever. Doomed to live on a small planet with finite resources, it’s difficult not to conclude that when it’s all gone it’s all over. Our magnificent extractive capabilities won’t count for much when there is little left to extract. Yet is this ever a point of discussion at the board meetings of big American corporations? If it is, it’s a well kept secret.

    Success driven CEOs are constantly on the lookout for less costly means of production. This often poses the question, “Where can I find cheaper labor?” My state of South Carolina is one of the chief benefactors of these searches, but in time it will be outdone by Louisiana, then by Mississippi, then by Indonesia and Vietnam. That trail has no ending as nations try harder and harder to compete by paying workers less and less.

    The above-mentioned indictments of Capitalism are well known to readers of this blog. There are dozens more just as severe. What is unknown is how long this unsustainable approach to running an economy can continue. What if it is further complicated by something like a world wide pandemic or a war or a traumatic presidential transition? What is personal indebtedness causes the house of cards to crumble. How do we feed and house millions of jobless individuals? Can we run such an economy on the backs of people who emerge from college facing a lifetime of indebtedness. Will pieces of the social safety net collapse under the strains described? What percentage of our jobs will be taken over by artificial intelligence? Can another civil war be averted if we continue to ignore or exacerbate these problems as we are doing now? Does any politician really give a damn about these long-term issues?

  26. You know,

    There really is no cultural divide as far as people across this country, what there is is a lot of prejudice!

    Prejudging people before you even talk to them! Prejudging those that live in certain parts of certain cities, or certain areas of rural America, or just prejudging in general.

    There is a small group on both sides that agitate the greater populace of rural and urban citizenry. In Chicago here, you have areas, huge areas which are basically nothing but broken bricks. You have huge shuttered industrial complexes that have long sense dried up. Square miles of unused land. The problem with the area, most of it is hard to get to! How do you solve that problem? Well, either an Elon Musk tunnel system straight from the airport to these locations, or build highways through the area. I would be more inclined for the tunnel route myself. That way you can still have open area above the transportation. These zones could be production areas, instead of sending these small production facilities overseas, locate them in the baron parts of the cities that have free and easy access to airports and shipping zones via these new tunnel systems. This would draw a lot of companies into the area, and eliminate the stagnant conditions of ghetto type areas.

    John Burnham one of the best city designers there ever was on this planet, never finished designing Chicago proper. Open areas for recreation was important. So you wouldn’t have people piled up on top of each other. So with open areas, and manufacturing facilities, or distribution hubs, these areas would be revitalized! A rising tide lifts all boats.

    Along the shores of lake Michigan and the great lakes in general, there are opportunities for transportation between cities like Milwaukee and Chicago and Kenosha and Racine and Waukegan and North Chicago and Gary Indiana and all the way up the other side and along the rest of the great lakes. These Lakeshore transportation hubs by boat right offshore could provide free transportation for some of the most disadvantaged people in our populace. Just that in itself would make a huge difference in the quality of life.

    Open space organic food production in areas that are vacant right now, combine those with open space recreational areas. And, besides the tunnel systems and offshore water taxi transportation, you could really change the face of some of the largest and most disadvantaged regions in this country. An immediate infrastructure and construction program initiated by the new administration kind of like a new deal type of program, would jump start the employment in this country and the spending by consumers in this country, so, I think they should get busy and make something happen.

    When most people can support themselves and live a decent life, they are less likely to worry about someone else and what they’re doing. And these same programs could be provided anywhere in the country, even the appalachians, it could be skyrail cable transportation to hubs and ports, you could have High-Speed rail across the country connecting all areas, kind of like when they started building the interstate highway system! Technology will have to be a part of it, high speed internet and artificial intelligence absolutely is going to be a part of it, but, on the whole, it’s going to make things much better if people have the wherewithal and foresight to do it.

  27. Most conversations around the association of urbanization and wealth gloss over the fact that the association breaks down if you look only at the core of the metro area – in our case Marion County, where the educational attainment is 30.4% but its median household income is only $46,692 or 77% of the national median.

    Hamilton County, on the other hand, has an educational attainment of 57.8% and a whopping $94,644 median income, or 157% of the national median. This tells us that the real wealth and opportunity associated with educational attainment lies in a few suburban/exurban (and very white) counties in many of our nation’s cities and often not the cities themselves.

    Then there is good old LaGrange County where we live and which enjoys the lowest educational attainment in the state of 10.4% yet ranks very high on median household income of $60,675 or 101% of the national median. What explains this?? Mostly it’s due to the growing proportion of the population that are Old Order Amish, who generally do not pursue education beyond the 8th grade. This is not a hard and fast rule because being Amish or not Amish is not a binary thing. Some complete 2 years of high school, some graduate and some even go on to pursue college educations but they’re the exception.

    So how does a county with 1/3 the educational attainment of Marion County enjoy 30% higher median household income? (Their median incomes are likely even higher because of the impact of barter trade and cash-transactions that do not get recorded as income).

    Your guesses are as good as mine but I’ll toss out a few ideas: 1) Due to the relatively fixed amount of farmland available the Amish can no longer support their way of life exclusively through traditional agriculture, 2) So many of them engage in specialized farming and especially in the area of certified organic farming, 3) They prolifically start and run successful businesses, mostly in light manufacturing, woodworking and retail, where 4) They work very hard. One such Amish business, a maker of Recreational Vehicles, was acquired buy a national producer for over $500 million just a few years ago.

    I’m not suggesting that more Hoosiers adopt the ways of the Amish (it’s not the bucolic utopia it’s cracked up to be), but it does call into question this enduring article of faith that a college degree will hold up its end of the bargain and open the doors necessary to earn something more than just a sustainable wage. As a commenter said above, cognitive computing (AI) is making all kinds of inroads into white collar jobs that were thought to be insulated from automation. Millions of such jobs, often referred to as bullshit jobs, will evaporate. Children and students MUST learn to accept and embrace a lifetime of learning and investing in one’s skills or be left to get by on their universal basic income monthly stipend.

    https://www.census.gov/quickfacts/fact/table/lagrangecountyindiana,orangecountyindiana,hamiltoncountyindiana,marioncountyindiana,US/PST045219

  28. The plight of our small towns and rural areas in Indiana distresses me greatly.

    Growing up in small town Southern Indiana, there were lots of small family businesses but they have been driven out by the hyper-capitalism of Walmart and other large enterprises. The factory jobs have gone away because they have moved overseas which is a quirk of accounting – American industries fail to take into account shipping costs and the cost of potential disruptions in supply chains over long distances. Obviously the Japanese (Subaru in Lafayette, Honda in Greensburg, and Toyota in Princeton) use local suppliers and have boosted local economies tremendously.

    I would have preferred to stay in small town Indiana but there were no jobs for a woman with a Ph.D. in engineering. I tried to get a job in a smaller city with a small college but it did not work out. I am not fond of my hour long commute but I am very happy with my job and opportunities in Indianapolis and happy that I could stay in state close to family.

  29. Nice tie in Patrick,

    I think you’re absolutely spot on today. And, AI is going to take a lot of jobs in this next generation.

    Germany invests heavily in trade schools, because if you are doing a specific job, sometimes it’s easier to learn how to do that specific job than it is to try and get multiple skill sets or learn multiple skill sets for something that you’ll never do.

    And, some people learn much better by doing than any other means. they’re just wired a little bit different than everyone else! Some of those folks are the best mechanics and engineers I’ve ever known!

  30. So much to go into – I will stick to two topics
    We don’t think about globalization – As Theresa pointed out, “back in the day” the poor from the south and rural areas came to the industrial Midwest for factory jobs that pulled them into the middle class. To some extent, they could move to other cities if better factory jobs appeared.

    It is now a global labor market and the poor American can’t move out of the country for a better job. When they started outsourcing IT, I remember being told that on an Indian salary, I could have a cook or a driver, but not both. Soon Indian IT people were switching jobs for better pay – I think they finally could afford both after that, but I couldn’t just move to India. The cultural barrier would be worse that a rural American moving to the big city and the language barrier would be almost prohibitive. But even with that, there are opportunities for highly educated people to go to other countries and live a fairly comfortable life.

    Now for testing and trade schools – the idea sounds good, but — that was how England kept their class system for years – Early testing directed students (mostly from poor families) away from education and into a trade. The stupid among the wealthy were always able to buy their way into some school. I remember a “spirited” argument on this subject between two English post-doctoral fellows – One insisted that the system was rigged against the poor and only a few were allowed to leave their “station in life” – the other insisted that education was wasted on many people who would be best off if they left school at age 10 or 12 and learned a trade – I think you can guess the socioeconomic of each of them.

Comments are closed.