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Class, Not Race
In New Geography, Joel Kotkin proposes a better way to look at what’s happening in America:
Today America’s class structure is increasingly ossified, and this affects not only minorities, who are hit disproportionately, but also many whites, who constitute more than 40 percent of the nation’s poor. Upward mobility has stalled under both Bush and Obama, not only for minorities but for vast swaths of working class and middle class Americans. Increasingly, it’s not the color of one’s skin that determines one’s place in society, but access to education and capital, often the inherited variety.
Worries about upward mobility have been mounting for a generation, and according to Pew, only one-third of Americans currently believe the next generation will do better than them. Indeed, in some surveys pessimism about the next generation stands at an all-time high.
But race is not the main determinant in looking to the future. The greatest dismay, in fact, is felt among working class and middle class whites, who are generally much more pessimistic about the future for themselves than are either African-Americans or Hispanics.
So it’s not race, but class — that word that Americans recoil from, reflexively — that’s behind the current uneasiness, pessimism, and even anger in the American electorate. The idea that the system is stacked against you if you’re not born into the right social class is incredibly powerful: it’s as if all our anxieties about taxes, government spending, crony capitalism, and wealthy, lefty social preferences all converge and ripple out of the same place.
Conservatives don’t like to talk about class:
Republicans, particularly those closest to Wall Street, also seem to have a problem even admitting the existence of the class issue. Conservatives economists repeatedly downplay ever greater insecurity about jobs, the affordability of decent housing and generally lower net worths for all but the highly affluent. Convinced that any discussion about these issues constitutes unseemly “class warfare,” the right’s intellectual leadership seems incapable of addressing these concerns.
But also because the way to really address the inequities in the current system seem to require that conservatives and Republicans be willing to look at things like the tax code, at the way capital gains taxes are calculated and imposed, and maybe at the way the government spends money, which right now seems to favor either gigantic corporations with long arms in DC or insane progressive leftist commies and government employee unions. It’s easy to see why nobody’s itching to do that.
Here’s what worries me: we already know that the American voter is easily persuaded that government spending is an acceptable solution. They proved it twice when they voted for Obama; yes, yes, I know he’s currently unpopular, but anyone who thinks that this means that Big Government spending is on the wane is living in Fantasyland. So if the American voter is still wobbly when it comes to spending, what kind of spending should we be engaging in?
(And I’m going to duck quickly because I know some of my Ricochet friends are about to throw a chair at me… But still: a thought experiment.)
Kotkin goes out on a limb, here, which will probably raise the hackles of solid small-government folk:
Ultimately, the best way to address class concerns, as well as those of minorities, would be to spark strong economic growth, particularly in the energy, manufacturing, and construction sectors, which tend to offer higher wage employment for them. Both Latinos and African-American made their biggest economic strides when the economy was booming under Presidents Reagan and Clinton, both of whom have been criticized for “trickle down” policies.
In the old Democratic Party, from Truman to Clinton, this approach would be an easy sell. A policy that encouraged building new water facilities, expanding domestic energy, manufacturing and construction, particularly single family homes, would have widespread appeal to working and middle class voters. But a growth agenda likely would face much opposition from the president’s green gentry base, who seem perfectly content with an economy that rewards insiders, venture capitalists, and companies that employ few people, largely the best educated and positioned.
I’ll crawl a little bit out on that same limb, along with Kotkin and a few others. If we assume, from a practical standpoint, that the federal government is going to spend money, that the American people who voted for Reagan and Obama still harbor a soft spot for a Big Federal Program, then what?
What would you say about an unapologetic pro-American government, focused on economic growth, middle class income, an end to crony capitalism, border security, a robust military, higher tariffs, and energy independence? It would have been, not too long ago, the Pat Buchanan administration. I’m not saying I agree with it, or would advocate its positions, but — looking at the politics, it makes a certain sense.
Published in General
Personal Responsibility and Work Opportunity Reconciliation Act of 1996?
It’s interesting that you should say that – I was listening to EconTalk and a couple of months ago this topic came up. Russ Roberts’ guest pointed out that one of the unique things that’s happened in the past 30 years is that service jobs which used to be boutique or limited to the very rich (such as getting a massage) have come down in price to the point where most people can actually afford them. The reason this has happened is that the human capital which used to be employed toiling away in factories or farms has been freed up to work in the service economy. The size of the service economy has exploded as a result of the increase in labor-saving devices.
There is plenty of employment there, if we can convince people to take those jobs.
Is anyone proposing welfare reform today? In fact, Obama has deliberately rolled back the 1996 law’s central provisions, believing them to be draconian. They didn’t last even 20 years. And at the time, the central criticism of the law was that people’s benefits would be cut off after a time certain, while their job prospects would be uncertain — exactly the tradeoff I’ve described. You can expect the same opposition if anyone proposes reinstating the 1996 law.
And if they can get past the licensing.
That’s because Republicans pass laws, pat each other on the back, put their papers in their briefcases, and go home.
It’s interesting that you should say that [what to do when only 20% of the working-age population needs to work to fulfill consumer demand]– I was listening to EconTalk and a couple of months ago this topic came up. Russ Roberts’ guest pointed out that one of the unique things that’s happened in the past 30 years is that service jobs which used to be boutique or limited to the very rich (such as getting a massage) have come down in price to the point where most people can actually afford them. The reason this has happened is that the human capital which used to be employed toiling away in factories or farms will now cobble together two or three part-time jobs massaging the rich, driving gypsy cabs (Uber) and renting out spare rooms (AirBnB).
I fixed that for you. In italics.
I expect more out of an alleged first-world nation.
Why would you denigrate people who are utilizing their resources in a fashion that improves not only their, but other peoples lives as well? That entrepreneurial spirit is what fuels this nation.
If we didn’t have the technological advances which the internet is allowing through services like Uber and AirBnB that would just mean that previously underutilized resources would remain underutilized.
A first world nation also has first-world mechanization – which means we don’t have fingerless urchins climbing through dingy factories or even high-school educated midwesterners pressing buttons on an assembly line anymore. This is exactly what I expect from a first world nation.
I see you’re an acolyte of Patrick J Buchanan. Your protectionist instincts and longing for the “nifty fifties” model of employment are well understood now.
Why should we buy into the liberal upper-middle-class notion that America’s class problems are the fault of a few hundred thousand billionaires/millionaires? That’s completely absurd. The liberal upper middle class is the problem. Ask yourself, which class is insisting every American go to college? Wealthy college drop-outs like Bill Gates?
The affluent left is made up of aristocratic wannabes whose very existence is dedicated to épater le bourgeoisie, who strive to live free of repressive bourgeois values like being a good role model or fulfilling one’s civic duty to society. In an upper-middle-class liberal’s mind, the super-rich and the vast unwashed masses are equally contemptible, one for being above the obviously-superior-and-deserving liberal, the other for being below—an offense in its own right.
Majestyk, KarlUB has a point here; productivity growth has virtually disappeared for large swathes of America’s population. The pre-Reagan model of forcing the productivity of all labor to rise via inflationary wage pressure really did have a lot of merit (it also led to the economic crises of the 70s).
Post-Carter American presidents haven’t had the luxury of driving productivity this way, which is why they invented the trickle-down method (i.e. let a thousand Googles, Facebooks and Wal-Marts flourish). This hasn’t been working terribly well in recent years, so people feel nostalgia for the prior model.
There is an alternative to both the prior, state-driven inflationary model and the presence malaise, and that alternative is immigration restrictions (plus fiscal surpluses). Tight labor markets do a much better job of raising nominal wages than unions or minimum wage laws (the higher wages of unionized workers are “paid for” by lower wages elsewhere, while the minimum wage is “paid for” by unemployment).
Of course higher wages by themselves simply lead to inflation; that’s what the fiscal surpluses are for (greater private sector investment).
Welcome back. You’re the only other person I’ve ever run across here who saw any downside to this so-called free trade, so I’m especially glad to see you again.
Pardon me, but you didn’t actually refute anything he said.
You just repeated a mantra I’ve seen often, like Dorothy did in The Wizard of Oz.
Instead of “There’s no place like home,” it’s “Free trade makes everyone richer!!”
This is an assertion, not an argument. Having lived in the US for many years I find it false in practice regardless of theory.
Excuse me, but it seems to me that no reasonable person would read what he wrote and conclude that he was denigrating the people stringing part time jobs together to pay their rent.
And about first world nations, it also seems me that they should be able to make their own spare parts, so they don’t have to wait weeks for them to be shipped from China, Europe, or elsewhere, with expensive machinery sitting idle. They shouldn’t have entire cities fallen into ruin because their industry went overseas, because the government saw no difference between a job in Japan and a job in America.
First world nation indeed.
You have a fascinating way to describe mass unemployment.
The human capital which used be employed working at jobs which paid enough to live off are now employed as servants. The size of the service economy has exploded as the rest of the economy collapsed.
There is plenty of employment there, if only we can convince people to accept living off welfare, but also needing to work as a servant.
Go ahead. Win elections on that platform.
I’ll add this, in general.
The problem here is that the global population and labor force has exploded beyond what the global economy can successfully integrate, at this instant.
Due to demographics, this may well be only temporary- but that absolutely does not mean it is not a problem.
It is especially a problem for the United States, as governed by the free trade open borders lovin’ political class.
Because myriad Americans make their living by selling their labor by the hour, and other myriads of foreigners are willing work for less, we have a problem.
Wages must fall, if you want Americans compete with Chinese subsistence farmers who get the fabulous opportunity to make iPhones. Globalization is absolutely fabulous for them, not so much for the Americans who don’t get the jobs that aren’t here.
And if you believe in open borders, then wages must also fall, because foreigners are willing to work for less than Americans, which is still much more than they could get at home.
This isn’t a warm and wonderful manifestation of the free market.
This is a grim and existential problem for the Republic, which it may not survive.
Don’t you just love stumbling on a thread a day or two late? So many things I want to reply to.
We’re employing less people in manufacturing, but it isn’t the fault of technology. The problem is that government makes it more expensive to hire people at every turn. Forget wages. Every safety regulation, every environmental regulation, every employer-provided insurance mandate and so on makes it more expensive to hire people. Automation is a diminishing returns question; if it’s cheaper to hire someone to do the work than to build a robot to do it, they’ll hire someone every time.
Concrete example: My company offers $80 compensation every six months for employees to buy steel toed shoes. State regulations. Multiply that by 250 people and that’s $40,000 a year. I like cheaper shoes, but I could afford to buy my own shoes if it meant someone else got a job. And the shoes are probably one of the more useful and directly related to the task at hand regulations.
Are your wages sticky? Mine aren’t. Since the housing market collapsed I’ve lost wages multiple times due to reductions in work hours and layoffs. After that job I went back for a 2 year degree, and am making significantly more because I’m worth more to my new company. Who promptly cut my working hours. It’s a fun job though, I’m willing to do the work at that rate.
To address the broader question, I don’t know how you sell this. I am really not good at selling anything.
Specifically, I don’t think there is anything we can do which will strengthen the economy without pissing off *some* constituency. The suggestion of “spend more” on some programs will inevitably–Inevitably!–fail, because we can’t have a program without a bureaucracy, bureaucracies are always self perpetuating and self aggrandizing, and because by the nature of the programs the guy using it has to go through government hoops to use it, which necessarily limits the positive impact.
I don’t think it’s possible to cut government in any way without the democrats and the media (but, as the saying goes, I repeat myself) screaming to high heaven about us being mean. More generally, I don’t think there’s any permanent solution without *everyone* getting screwed in some way. And I know that the politician who tells us to suck it up and take it like a man won’t be popular.
Thanks for the welcome! I remember our tag-teams fondly. Unsure if we’re ever going to make any progress, but I think it is important to ensure our friendly colleagues are aware there is a strain of conservatism that doesn’t view the gutting of the American middle class to be a positive feature of the post-scarcity economy.