Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
The Great Sort and the Rise of Populism
Over the course of a generation, American politics has increasingly been shaped by a series of forces which are only now beginning to be understood. This phenomenon has created effects as divergent and seemingly disconnected from each other as the inflation of real estate prices in California’s Silicon Valley to the election of Donald Trump and the rise of populism. Trying to understand the underlying forces which animate these disparate occurrences requires traveling back in time to track both their origins and how they’ve progressed over time.
Let’s start in 1976 with Jimmy Carter winning the Presidential election with 50.1% of the popular vote. He does so with just 26.8% of counties voting for him with a margin in excess of 20%. After Carter’s inauguration in 1977, Steve Wozniak and Steve Jobs found the Apple Computer Corporation in April. Later that year, Paul Allen and Bill Gates found Microsoft. The median price of a home in the US is $33,000. The median price of a home in Cupertino, CA — where Apple will ultimately place its headquarters — is slightly higher, as California Real Estate tends to be.
I’ve picked this moment in time as a baseline. There was it seems, a much greater sense of interconnectedness between people throughout the country at the local level. The numbers bear this out. The still relatively small number of people who attended college mainly returned home and went to work, married a high school acquaintance (the even smaller number of women who attended college then practically guaranteed this) and lived their lives. People were far more likely to live next to a person of differing ideological persuasion or even a different income stratum.
Charles Murray discusses this phenomenon and how it came to be in his book Coming Apart. The forces that led to this change were only beginning to make their first appearance in 1976 — namely, the dawn of personal computers and other labor-saving devices which disproportionately benefited those with high IQs and advanced technical knowledge, which provided them the means to capitalize upon the coming boom in automation.
Fast forward to 1994. The Soviet Union lies dead, slain by its own hand. Bill Clinton is President, having won just a plurality in 1992’s three-way election due largely to a brushfire rebellion on the Right against George H.W. Bush. That fall, a landslide election happens, sweeping Republicans into control of both the House and Senate for the first time in living memory. Apple, meanwhile, is mired in a lawsuit against Microsoft for the theft of intellectual property regarding the Lisa operating system and languishes financially after several failed product launches. The median price of a home in the US is $130,000. Median housing prices in CA have begun to sharply diverge from the national mean however, closing in on $200,000. San Francisco’s prices are even higher; somewhere around $250,000.
1994 is one of the first very data points with a footprint large enough to see from the perspective of the national stage hinting at the underlying, large-scale changes that were happening behind the scenes. That change, of course, is a thing that demographers now identify as “The Big Sort” and its effects were many and varied. For starters, whereas prior to 1994 there was considerable ideological overlap between the parties, this election began in earnest the process of wiping out the ideologically marginal members of each party. Conservative Southern Democrats and Liberal Northern Republicans alike should probably recognize 1994 as the meteor that heralded their eventual extinction.
It’s hard to determine which came first in the chicken/egg problem of the parties’ subsequent ideological divergence. Did the parties’ centers begin to move away from each other first, which led to the defeat of their moderates or did the defeat of the moderates allow the parties to separate? But what is certain is that by the time that George W. Bush was elected in 2000, the number of counties that he won by >20% was 45.3%, in comparison to Carter’s 26.8% in 1976. Polarization seemingly created its own demographic weather, reinforcing and accelerating itself in some fashion.
What’s more likely however is that The Big Sort was beginning to cluster like-minded people more closely than ever with other people who reflected their own opinions and beliefs. But the Sort’s work was only beginning, and ideology wasn’t the only axis upon which these forces were operating.
Fast forward to 2016. Donald Trump wins the Presidency (barely) with an even greater number of highly polarized counties than President Bush. Apple, Google, Microsoft, and Amazon are now four out of the top five largest American companies by market capitalization. Exxon-Mobil, formerly the globe-bestriding titan is practically a dwarf all the way down at number 6. Median Home Price in the US is $315,000. Meanwhile, Median Home price in Cupertino is $1.7 Million, five or six times the national median, driven mostly by a combination of restrictive land-use regulations, huge demand, and gobs of tech money.
But the election of 2016 turned out very differently from 1994 in both tone and result — as different in some ways as the housing prices from 1976 compared with today. The leader of the Republicans 23 years ago was Newt Gingrich, whose Contract with America electrified the nation and ultimately dragged an entire presidency to the right. Riding the crest of a clear ideological wave, the Republicans promised a popular but by no means easy-to-accomplish set of policy goals — and then found the political will to execute them. Contrast this with the election of 2016, where ideology took a backseat to sloganeering, personal insults, and grievance-mongering, with very little focus on specific policies that would produce measurable outcomes. What had changed so dramatically in the intervening 22 years?
The Big Sort, whose existence became obvious in 1994, didn’t stop but continued apace, taking the form of further dividing the country, not merely along ideological cleavages, but along lines of “urban and rural” and even “educated versus not.”
2016’s outcome is where we see its most recent manifestation: the rise of populism. But how did it take us from the previous political order and lead us to where we are today? Its effects on politics are reflected in what’s happened in places like Cupertino and replicated in a variety of locations across the country. The Sort, which delivered such staggering political victories to the right in the ’90s was, it seems, always doing one other thing with particular and ruthless efficiency: skimming the the highest echelon of cognitively elite students from the across the country, and then transplanting them to one of the various technological powerhouse locations in the nation with the promise of earning extraordinary salaries. In the past, the high school valedictorian in Spokane, WA or some other mid-sized city would attend college and return home to work at a local company or begin their own business.
Now, they go to work at Apple.
With a market value value of $700 billion, Apple has a very different set of requirements for employment than GM or Ford did in 1976, with a gaggle of job descriptions straight out of that earlier era’s science fiction. The pay is even more fantastical. With Apple-like companies occupying four out of the top five slots of the nation’s most valuable corporations and those companies’ headquarters being in Cupertino and Santa Clara, CA and Redmond and Seattle, WA, respectively, there’s precious little an average person in Pine Bluff, AR will have in common with people in those spheres, either culturally or intellectually.
The effect that this has had upon rural America has turned out to be nothing short of catastrophic; as institutions of higher learning (aided by national standardized testing systems geared towards finding such talent) systematically denuded rural areas of most of its best and brightest, those areas of the country have been left barren and devoid of their most intelligent and entrepreneurial residents.
This “brain drain” is precisely what is speculated about by Philip Auerswold on Russ Roberts’ recent episode of EconTalk — which explains why there has been explosive growth in the value of real estate in Cupertino and its other, tech-driven urban enclaves, while Americans in rural areas increasingly struggle to make ends meet. The rise of the opioid epidemic and the sense of hopelessness that precipitated it are mere reactions to the destruction of the previous order at the hands of this impersonal force.
This in turn explains the rise of populism. Populism is a reaction is not solely due to the fact that some people are making immense sums of money; indeed, Americans have always had remarkable tolerance for and even invited inequality, considering it to be a feature, not a bug. What’s different now is that unlike in the past, where the immense wealth wrought by new technology was a harbinger of a tide that would lift all boats, this newest iteration of the Gilded Age doesn’t seem to have egalitarian powers of vitalization. On the contrary, this revolution has had the paradoxical effect of destroying many of the jobs and occupations upon which the less cognitively able once relied to provide themselves with a chance at a better life.
Toss in a dose of these newly wealthy urbanites scoffing at and scolding their rural neighbors for being poor — or worse, poor racists and bigots of every stripe — from the heights of the popular culture, and you have a recipe for backlash spelled with a capital “T.”
History it seems, is not without a sense of irony. If you ask most Americans whether people basically get what they earn in this country, the answer is likely to be “yes.” In some sense, the class of cognitive elites who inhabit the Googles and Apples of the world are simply riding the meritocratic wave. Having educated themselves, built up their human capital and created products and services that people in 1976 didn’t even know they wanted, they’re now reaping the rewards of having changed the world in the well-worn fashion of previous American entrepreneurs and companies.
But the new, populist consensus has awoken the nation to the reality of what meritocracy can create, and discovered that all of its fruits aren’t sweet.
Published in Economics
< devil’s advocate mode = on >
Your thesis reminds me an awful lot of climate change statistics. Where one sets the baseline is incredibly important.
1977 may be an appropriate baseline for current social change, but at the same time the period ending in 1977 may have been an anomaly.
Yes, the period between 1946 and 1977 saw a lot of stable communities. As you write, people returned from college to settle in their home town and marry their high school sweetheart.
But was that true prior to, say, 1940?
During the Great Depression, was there not much more geographical mobility as people travelled to find work?
During the “roaring 20s”, was there not much more geographical mobility, as people left farms to work in the booming cities?
Prior to World War One, was there not much more geographical mobility as immigration levels were so high, and people moved to where industry was growing?
Etc. Etc.
Perhaps the era of geographical/cultural stability in the mid-century wasn’t a norm, but rather a anomalous spike. Perhaps, also, it was an unhealthy social development if it encouraged fealty to economically-non-viable localities.
< devil’s advocate mode = off >
I appreciate the Devil in the details. :)
In all seriousness however, my understanding is that we’re actually at something of a local minimum in terms of geographic mobility. This makes a certain sense though, because as people get older they tend to move less. It also conforms with my thesis that young people (who are more likely to move) are the ones who are abandoning smaller town/rural environments and heading for cities.
Certain areas have seen disproportionate growth in housing prices while others have suffered. It’s no surprise that the areas that have gone through the roof correlate with the mega tech firms and their activities.
You mean the best and the brightest weren’t being cherry picked to go to work for IBM, at AT&T labs, for XEROX, for Hewlitt-Packard before 1976? That IBM didn’t really stand for I’ve Been Moved? That real estate prices in Manhattan, which was and is an international financial hub then and now weren’t equally inflated above the national figure?
What has changed is that the borders have been porous, there are international trade agreements allowing cheap imports from extractive nations such as China and Mexico using technology developed elsewhere giving them an artificial boost, the elites of extractive nations are allowed to come here and set up shop and influence policy in an extractive direction. Those are the things that are different. I wouldn’t expect economists to see that because they are dogmatically in favor of free labor and goods movement.
While I find the essay reasonable, reality is so complex a number of generalizations work. The generalizations of the left, in contrast almost always do not because they’re extracted from some abstractions important to them, not attempts to grasp underlying truths. My take on Trump at the very beginning, when he was being dismissed as a buffoon was “take him seriously because he’s a man on horseback.” I still prefer that interpretation to populist, possibly because I’m not sure what populist means or how it differs from anyone elected because of a set of sound bites that work. Men on horse back come forward when systems cease functioning and corruption gets so bad everyone recognizes it and look for leaders to fix things. Men on horseback must appear tough, rough, different, determined and they must carry a broad sword and look ready to use it. I saw Trump as a threat because men on horseback are part of the problem not the solution and can’t deliver. I feared he’d show progressives how to approach their goals in a post Soviet World. I still feel that way, but he’s appointed people who are serious and that is what we need and he’s working within the system.
Another thought in this vein: I picked ’76 mainly because I was trying to figure out at what point real estate (which is a crude proxy for the separatism of elites) really started to diverge in certain parts of the country from the overall median. I was already looking at around that time as a baseline when I stumbled into remembering that the big extant tech firms that occupy our attention today really got rolling at exactly that moment.
How strange, right? Probably not.
That’s actually pretty easy to explain. Of course, real estate prices in Manhattan have been inflated relative to the median for some time, but it’s for the exact reason that you say: The technology that drove the economy was financial in nature, so if you wanted to be in on that technological boom – high finance – you basically had to go to New York.
Whoa, hold on there. I think that it’s true that the benefits of trade are huge to both parties in the aggregate. It may look like one side in the transaction benefited disproportionately, but that’s only because the Chinese economy was starting out at the baseline of the 1800’s and ours was a fully developed industrial one.
Certain classes of people have been hurt in this country – lower IQ, unskilled laborers, certainly. But trade policy isn’t what hurt them. Unless we were willing to legislate against Moore’s Law and attempt to limit the amount of automation that we would allow to occur in our economy (AKA, “Economic Suicide”) I think the results would have been potentially worse.
There was an inevitability to this situation. Once the technological genie was let out of the bottle, certain jobs and job descriptions were always going the way of the dodo. Trade policy has very little to do with that.
The seventies also “benefited” from the rise of exclusionary zoning under the guise of environmental protection.
Sure, but I also think that before it was an incredibly narrow slice. It’s gotten broader as time has gone by and cadged the best people and promised them immensely better salaries to live in one of the tech centers than to go home and be one of their region’s cognitive elites.
The irony of the situation is that the very technology that allows you to teleconference in to a meeting across the country seems to be created by group collaboration by people clustered in relatively small geographic areas. There’s a relative decrease in the friction of problem-solving and the ease with which firms can overcome technical challenges by having all of their people in one location.
In short, more work gets done and problems get solved at happy hour than during the working day.
The entire point is that those benefits of Moore’s Law and increased productivity would have occurred within the boundaries of this country as they were earlier. They no longer are.
Housing policy might have –
I’ll stop quoting myself now, but it seems worth noting that some have argued that overvaluing home ownership may affect mobility at either end of the move.
One of the lessons of history is that technology basically doesn’t have borders. With limited exception (highly classified military technology) almost every invention that’s been made has been smuggled in one form or another out of its country of origin to where it can be put to use productively.
It’s insanely chauvinistic to think that the only country that should have benefited from the wide distribution of personal computers and its attendant technological improvement was this one. As a result of this development, the absolute poverty of the broader world has crashed to the point where less than a billion people on the planet live on less than a dollar a day. That number used to be more than half, IIRC.
The problem with this thesis is that you simply can’t pick up, move to Cupertino and get a job at Apple unless you’re a member of the cognitive elite. The relatively small cohort of those who sweep up at the end of the day don’t represent a significant fraction of Apple’s economic power.
The attendant industries that follow behind these titans like restaurants, shops and the like simply exist at a higher price point, so it’s not like zoning laws have prevented people from opening stores. They’re just more expensive stores.
I basically agree. Teleconferencing technology still ain’t all that great. Sound quality, being able to read body language, people seem to be artificially stiff, I could go on and on. Not a fan. So I see the point of face-to-face meeting.
The other point is that the top five companies pre-1976 had many more employees than now.
Right – but that’s because workers are immensely more efficient today than they were then. A GM with around 100,000 employees today builds as many cars as it did with twice that many years ago.
How many skilled typists and administrative assistants are there today relative to yesterday? I remember when my Dad would dictate memos to his Department Secretary – but now, you are your own typographer and basic office software knowledge is expected in any competent worker.
But it’s also true that on the lower end there has been an explosion in services that used to be considered “luxury” with people getting their nails and hair done or massages for relatively inexpensive rates. The market does adjust and as people exit one particular industry they find things to do.
It’s not a matter of chauvinism, it’s a matter of how things were previously. It’s descriptive. Just because technology is known doesn’t mean it will necessarily be adapted. Have you read Why Nations Fail?
But they’re all imported from Vietnam and the Philippines – at least around here. It’s not Americans who are doing that.
Yes, but that round of cherry picking yielded a few thousand elite tech workers in a workforce of tens of millions, and the tools used in those labs were not widely available to individuals or even most businesses.
Now, tools based on computing are in the hands of the entire population and any business that can use them. The ‘cherry picking’ yields a top tier of tens to small hundreds of thousands into the platform companies (Apple, Google, Facebook, Amazon etc.) but millions in companies that employ the tech. And the cream is skimmed from India, China, Korea to further build that elite.
I worked 30 years in Silicon Valley, from 1984 to 2014, except a couple years elsewhere on executive reloc. In 1993 (leaving Apple as it appeared to be foundering) I sold a 3/2 1800 ft home in Sunnyvale, a couple streets over from Cupertino. Since you had to park your real estate money to avoid taxes back then, I used the proceeds to buy a 5/3 4500 ft (plus full basement) home in the Columbus, OH area – never entirely filled the place before we moved again.
In 2000, back in the Bay Area, I finished construction on a 3000 ft home on 1.6 (mostly unbuildable, kinda vertical) acres on the Peninsula. After weathering the real estate crash, we sold it in 2014 and retired to Idaho. 40% of the proceeds bought – for cash – a 2400 ft home plus large barn on 2 flat, arable acres, the rest went into my retirement fund.
There’s more to the story than Majestyk’s analysis, but the thrust of it is right on. I saw it, I was there.
No, but I have listened to EconTalk and heard Acemoglu talk about it.
In the summer of 1978, I had just finished my first year in college as a math/comp.sci major. My summer job was in a lumberyard warehouse, making $3.15/hr (50 cents above min wage!).
I subscribed to “Personal Computing” magazine, which was about 60-80 pages per issue. I remember ogling the new Apple computer in the back pages—it came with 1k of memory (yes, one kilobyte), expandable to 4k, for $1000.
I just priced an Apple MacBook Air 13.3″, i5 core, 8GB memory, 128GB flash – $900.
I changed major to engineering the next year, but I have been intimately involved with computers—mainframes, supercomputers, Unix boxes, PCs, Macs—for 40 years, and used them on a daily basis since the early 80s.
Looking back over those years, it seems like the rise of computing technology can be likened to the rise of the automobile in the early 20th century: from rudimentary beginnings, it grew and spread and improved, and became indispensable. It is now virtually impossible to imagine life without the automobile. The rise of computers has been even faster, and more pervasive.
All I’m going to say about that is: Rural Americans have to realize that they are not merely competing against their neighbor Bob or the guy across town anymore. The market for labor is global, and opportunities for people in this country exist if they’re entrepreneurial.
Do you think those Asian people are here legally, and if so, are they displaying what we might consider to be good, American work ethic? Are multi-generation Americans of a certain stripe demonstrating it?
I’m reading it now (about 60% through). I think you would enjoy it.
My entire point was that the process hasn’t changed. It was done before. It is being done now. The numbers have changed.
The point with real estate was that there were in fact places with equally inflated real estate prices pre-1976. It happened in other areas but for similar reasons – economic development reasons. The places have changed, the process hasn’t.
The virtues that make one likely to be a successful Silicon Valley/DC/Manhattan employee – since at least the Second World War – are primarily bureaucratic. (This is, I think, what IQ primarily measures: the sorts of aptitudes necessary to shuffle paper/bits while sitting in an office/cube and playing by and with organisational rules.) One of those virtues is the capacity to believe what the organisation needs you to believe. What has changed is that the great coastal bureaucratic organisations – driven by the feedback of the media/entertainment complex and ‘higher’ ‘education’ – are demanding a pretty extreme form of belief.
That may be one way in which intelligence manifests itself – but the problem with that thesis is that at the end of the day if that’s the only thing intelligence creates you end up with only an impressive bureaucracy.
Instead, we have a pretty impressive set of accomplishments which could only have been created by a highly intelligent cohort of people. I think about my jobs (I have a day job and a side job) and the day job has the characteristics that you describe… but my night-job requires a high degree of mathematical and scientific knowledge in combination with personal motivation (I don’t have a supervisor) and experience.
I earn more money at the second job per hour than the first, and it isn’t particularly close.
Dead wrong, at least as far as bureaucracy and Silicon Valley elites in its heyday. I was a hiring manager at Apple for quite a few years. Yes, you had to ‘believe’ in the sense that you needed to have some sense of mission both to accept the pace and to be recognized and hired. Then and there, that belief was something about ‘computing and personal empowerment’. But we not hiring for paper pushing ability, we were screening for people with creativity and mental agility combined with raw intelligence. A PITA to manage (I’ve been on both ends of that), but pure rocket fuel when combined with a good product idea and a world class marketing and distribution operation.
You could, however, without being part of the cognitive elite, maybe move to Austin or Houston, whose tech industries, while not at Silicon-valley levels, do exist. Is the Big Sort just about IQ, or is it also about geographical homogeneity? I tend to think it’s also about the latter, and that just being in a locale where you rub shoulders with those different from “your kind” leaves you more likely to still be able to see them as human, as not some sort of nefarious martian enemy.
Yabbut, they’re the ones who trumpet the virtues of thinking outside the box, intellectually rebelliousness, and innovation!
This appears to illustrate a paradox.
How can conservatives lament the decline of communities while also promoting the virtue of geographic mobility?
Community doesn’t only mean one set of people in one place at one time, does it?
Now, I agree with what you’re saying here, but the problem seems to be that some people mistake “ossification” for “community.” If your community is riddled with meth and opiate addiction and 60% of the people are on some form of public assistance, is this really a community that you want to be a part of? Is it one that you want to stay in?
It’s arguable that you are going to stay because you want to improve conditions, but that doesn’t seem to be getting at the root causes of the problem. This isn’t really the way life works. People aren’t for fixing and what’s more likely is that when you look into the void, the void will look back into you.