And a bit more on logic and consistency of principle. I see one person after another bemoan the following news:
Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream, and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age. In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age, they found. In 2014, that number fell to 51%.
If everybody who believes this is bad news is a climate change denialist, then OK, I get that. I obviously don’t agree with the position that can be summed up as “Climate change is a hoax, so let’s go on consuming like crazy because resources are limitless” but it’s a logically consistent and honest position. These are people you can argue with and hope to convince because they don’t deny the very existence of cause and effect.
If, however, you care even a bit about the environment, the quoted piece can’t be anything but very good news. By gosh, Americans are already devouring half the planet. Do we really need to consume more? Do we really need to see our consumption levels explode in EVERY generation? And if that doesn’t happen, then the dream is dead? Because that’s what the dream is? Gobbling up increasing quantities of stuff while bemoaning the destruction of the environment by unbridled consumption?
It’s like those people who say they are huge environmentalists and then throw a fit when the local grocery store stops giving out plastic bags. You can’t talk to them about anything because the connections in their brains seem not function the way they should.
One of the huge houses in the neighborhood is inhabited by Mom, Dad, and toddler. The house has 4 garages. My question is: when the toddler grows up, will his parents consider their lives to have been a failure if he can’t afford a house with 5 garages? Is that a reasonable position to have? Or will there come a point when we can start measuring success in different currency than dumb, senseless consumption?
Clarissa's Blog 
Unfortunately I think you’re preaching to the choir for your blog readers. With one or two notable exceptions, I think we’re doing pretty well on logical consistency.
It’s like the whole appeal to electoral college thing in order to have them flip their votes to not vote Trump. While I understand that historically this was one of the intended purposes of the electoral college, it’s not a system that I can ethically get behind because I do think President should be a majority vote issue (small states get enough representation through the Senate, in my opinion) and not decided by a bunch of random appointees… As much as I loath Drumpf, I have huge reservations about actually using the electoral college beyond it being a formality. I want to see the EC abandoned, but we also can’t change the rules like that mid-stream. Because where would these stop and what prevents people I disagree with from breaking them in the future?
Anyway. Many awkward conversation were had with friends who were shocked that someone they considered much more radically liberal than themselves would not get on bored with this plan. Yay for the logically consistent crowd!
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Yes, I’m ranting at my blogroll and not at my readers here. 🙂
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Yep, I’m all for logic, consistency, care for the environment (& global warming is real), and I have a general distaste for overconsumption.
But. You’re missing a larger point. The working family of the 1960s and ’70s was (often) able to use the income of one wage earner to provide a decent, modest, living for an American family. Many families could purchase a house, a car or two, take a vacation once or twice a year, and send the kids to state college or university without taking on college loan debt (at all). Our expectation was that this would continue and—for progressively minded folk—that these middle-class expectations would expand to cover previously excluded Americans, especially people of color.
These days, even with the now-expected and customary dual-earner American household, that is less likely to happen. That is the “loss of the American dream” that resonates with a lot of us.
Are there over-consuming idiots that by uselessly large houses and SUVs and waste money on stuff? Sure. (And apparently some live near you.)
But there are a lot of us heading into our 50s and 60s for whom the house is not all that big (and probably won’t be paid off before we are too old to work), the cars are 10-20 years old (and not very reliable anymore) and, even though the kids excelled academically and earned nice scholarships, their college loans will follow and hobble them well into their first decades of work and, possibly, family life.
And at the same time, we see an enormous concentration of wealth at the very top of the individual and corporate economic heap. The economy has been trending in this direction for decades and we’ve now reached, perhaps, a second Gilded Age. It’s not illogical or inconsistent for many Americans to observe this be unhappy about it.
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“The working family of the 1960s and ’70s was (often) able to use the income of one wage earner to provide a decent, modest, living for an American family. Many families could purchase a house, a car or two, take a vacation once or twice a year, and send the kids to state college or university without taking on college loan debt (at all).”
This was an unsustainable aberration that has destroyed half the planet in order to allow a small number of people to have access to undeserved opulence. It is becoming clear that there are no more resources, no more places in the world left that can be plundered to allow this aberration to continue. But instead of saying, “Good, let’s move on and live more sustainably,” we are throwing hissy fits and electing Trump because he peddles the fantasy that the aberration can be continued in spite of all objective evidence to the contrary. Isn’t it time to move on and re-articulate the dream not as “more consumption for every generation” but as “there are other ways of measuring a successful life than consumption”?
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Maybe a decent wage for a decent day’s work wasn’t the aberration.
Consider the current ratio of CEO to median-worker salary. One estimate is that—in the largest firms—it is now over 300-to-1: “The US’s top 500 chief executive officers earned 340 times the average worker’s wage last year, taking home $12.4m on average, according to a new report.” (https://www.theguardian.com/us-news/2016/may/17/ceo-pay-ratio-average-worker-afl-cio)
Or how about this: “But pay increases and ratios only tell part of the story. The stark differences are made concrete when translated into dollars and cents. In 1965, CEOs earned an average of $832,000 annually compared to $40,200 for workers. In 2014, CEO pay had risen to an average of $16,316,000 compared to only $53,200 for workers.” (http://fortune.com/2015/06/22/ceo-vs-worker-pay/)
And why is it that when a company screws up, or even fails, the workers have to “recognize our new economic realities” as they suffer a “reduction in force,” but the C-suite crowd gets the Golden Parachute? e.g. “The Wells Fargo executive who oversaw a unit that created almost 2 million unauthorized customer accounts is set to retire from the company with a nearly $125 million payday, and reports say the bank isn’t likely to cut the strings on her golden parachute as she walks out the door.” (http://www.foxnews.com/us/2016/09/13/wells-fargo-exec-who-headed-unit-involved-in-scandal-due-125-million-in-retirement.html)
And I don’t need to remind you how the states have dialed back their investment in primary, secondary and post-secondary education funding over the last 30 or more years.
On the one hand, I agree with you about America’s post-War baby boom economy being an unusual and, in some ways, unsustainable and unrepeatable phenomenon.
But there is a lot of capital out there that is being hoarded by those at the top. It’s not just CEO salaries and stock options, but investment banking’s over emphasis on short-term ROI, large corporations sitting on piles of cash rather than expanding and reinvesting in their businesses, and a general increase in shameless greed by those at the top of the financial heap. And—alas—they are enabled by a complacent press and compliant (voting) public.
Should we reduce consumption and adapt to new economic realities? Yes, of course. But how about a return to some kind of equitable distribution of wealth among those that work for a living, too?
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Economists and sociologists from Stanford, Harvard and the University of California set out to measure the strength of what they define as the American Dream, and found the dream was fading. They identified the income of 30-year-olds starting in 1970, using tax and census data, and compared it with the earnings of their parents when they were about the same age. In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age, they found. In 2014, that number fell to 51%.
If, however, you care even a bit about the environment, the quoted piece can’t be anything but very good news.
Does taxable income track with consumption? These stats say nothing about the percentage of income devoted to consumption.
And how much of those stats would change if you looked at having the same income as your parents at the same age? If I have to make three times the income needed to sustain myself in order to self insure against old age, having children, illness, etc and that multiple increases to to 4x, or 5x isn’t that a problem?
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“Does taxable income track with consumption? These stats say nothing about the percentage of income devoted to consumption.”
We have all heard the studies that an overwhelming number of Americans doesn’t consider it necessary to put even a sad 1,000 aside as savings. Actually, I think most people said they wouldn’t even be able to come up with a smaller amount in cash if needed. Plus, almost everybody carries credit card debt on top of this lack of savings. So let’s not pretend that we don’t know where all the income goes.
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We have all heard the studies that an overwhelming number of Americans doesn’t consider it necessary to put even a sad 1,000 aside as savings.
Do they consider it unnecessary or are they unable?
And how much of this consumption is fixed expenses and how much of it optional?
When people buy expensive houses in expensive parts of town, it’s not just about “showing off”. It’s about buying access to the school district. I know someone who moved houses just so their kid could stop attending a bad high school. If, as you say, localities are going to be more important than nations, being in the “good” part of town in a “good” town in “good” state is going to mean everything.
If you associate wealth with moral virtue and adulthood making less than your parents is seen as a spiritual crisis.
Being able to display less is a moral failing. 
Hence this horrible distress and this weird assumption that Donald Trump was a virtuous zygote.
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One can justify any expenditure. If I have only 5 garages if everybody has six, my kid will suffer from low self-esteem, develop psychological problems, become depressed, and will end up living under the bridge. If everybody has a new Hummer and I drive an old sedan, everybody will despise us, we will not make any friends, we will lose our jobs, our kid will be bullied, we will all end up under the bridge. If everybody accepts the plastic bags at the grocery store and I come there with my handmade tote bags, everybody will think I’m poor, we will be despised, shunned, and end up under the bridge. And so on. The result is a devastated environment.
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f I have only 5 garages if everybody has six, my kid will suffer from low self-esteem, develop psychological problems, become depressed, and will end up living under the bridge
I’m not sure it quite goes to through that depressive catastrophic chain of thought.
But then again, relative status and signaling seems to count for quite a bit.
The Logic of Stupid Poor People
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“If you associate wealth with moral virtue and adulthood making less than your parents is seen as a spiritual crisis.:-/ Being able to display less is a moral failing”
It is a personal choice to adopt that worldview. Everybody should be responsible for their choices. I, for instance, chose not to be a homophobe even as I grew up in a culture of outlandish homophobia. But even as a teenager back in Ukraine I decided that it was disgusting to be that way and didn’t join in collective joys of gay-hatred.
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If you associate wealth with moral virtue and adulthood making less than your parents is seen as a spiritual crisis.:-/ Being able to display less is a moral failing”
It is a personal choice to adopt that worldview
Of course it is. I can believe all I want that wealth isn’t a moral virtue. But I still have to deal with people who have these values and act accordingly.
I’m not saying that endless expansion & increasing consumption is necessary or good. I’m trying to explain why declining or steady income levels is framed as a problem. There’s no model for dealing with steady or declining consumption and endlessly expanding consumption is baked into so many institutions it’s a real problem.
Once I punched in information for this “If everyone lived like you did, how many earths would it take for everyone to live this way”” widget. No matter what environmentally conscious choices I punched in, I still consumed more energy by virtue of living in North America. It hardly matters if I drive a Prius, if everyone else is driving Hummer. My personal consumption choices by themselves have no effect on this problem. My personal choice to have a kid or not (which apparently is a huge driver of resource consumption) makes no difference to the planet if everyone else is having children in some resource consuming way.
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I do not think it is only about psychology and cultural stuff a la to what extent wealth is conflated with virtue. Think of it this way – by refusing to buy another car (for Klara) and another garage to put it in, you are (partially) denying an opportunity to earn a decent living to a car factory worker in Detroit, and to your local contractors, and to the workers of an oil refinery and a gas station, and to the neighborhood car mechanic, and to the bank employee who will provide you with a loan, etc. Some serious reduction of consumption expectations by the masses will be detrimental to the capitalist system as we know it. Conscious reduction of consumption not justified by circumstances outside of one’s control should be treated as a subversive act ten times worse than voting for Bernie.
Suppose such a reduction of consumption does happen – even if the process is gradual and major upheavals are avoided, this process will lead to the increase of the percentage of “superfluous people” with all that this increase entails.
Of course there is another solution… I remember a SciFi story about a society where production and purchasing of lasting things were forbidden by law (in order to ensure continued consumption and continued employment) and people went to the black market to buy a real chair.
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The manufacturing economy is dead anyway. All the consumption of manufacturing goods is benefiting the folks who invested into robots and not any actual industrial workers. Now it’s the knowledge economy. Let’s shift our consumption into the realm of the knowledge economy. It’s less bad for the environment. And the superfluous people should be integrated into the new economy. Because buying even 15 cars per person will not help them.
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“Now it’s the knowledge economy.”
So what do you do wih the less smart people?
If you believe that intelligence is variable between people (all the evidence suggests this) then a knowledge economy is going to be bad for at least half the population of less than average intelligence….
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A similar revolution already happened. The world went from predominantly rural illiterate small communities to literate, urban, manufacturing, large ones. The task now should be to avoid the upheavals, wars and revolutions that accompanied the process the first time around. It’s doable, especially in societies that are already ahead. For instance, compare the relative painlessness of the process in the US and the horrors that accompanied it in the backwards Russia at the beginning of the 20th century.
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I agree with you in theory, but in practice I have a hard time imagining any functional “knowledge-based economy”. It sounds awfully similar to some sort of a Communist utopia; in similar ways the people’s psyche will not be ready for that for generations, if ever.
If you ever need a suggestion for a topic of an extended post – here it is.
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We already live in it. What’s the smartest way to start a business? Selling intangible goods, of course. They don’t require supplies, manufacturing, warehousing. You don’t have to worry about patents, turnover, skews. You don’t need capital or investors. Of course, this kind of business requires you to possess extreme intellectual mobility but the gains are huge with no risk because you don’t carry debt.
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\ Selling intangible goods, of course.
Which? I can think of translations and tutoring.
Btw, even the industry of private lessons to school students may collapse completely very soon because of websites with videos explaining everything and solving every exercise in a textbook.
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People who can be autodidacts are one in a million. This is why MOOCS were such an abject failure and why online courses are pathetic.
As for intangible goods, my sister has a recruitment company and has now opened a coding boot camp. A reader of my blog is editing my book. I write blog posts. Etc.
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“What’s the smartest way to start a business? Selling intangible goods,”
That’s not a knowledge economy, that’s a fantasy unicon economy and/or a pimp economy (which is my new term for uber/facebook/airbnb et al).
Welcome to the Pimp Economy everyone!
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Aren’t you a teacher making a living from selling knowledge? 🙂
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I can’t even think of anybody on this blog who creates and sells physical objects.
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I’m a hired hand (like you). I would be terrible at starting a business or trying to run one.
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In the manufacturing economy almost everybody worked for others, too. But it doesn’t matter. The important part is that robotization is killing manufacturing jobs. So reducing the consumption of physical objects will not impoverish millions of people.
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This was not addressed to me, but I’ll answer:
In order for me to successfully sell my knowledge as a teacher and researcher, there have to be people willing and able to pay for my services. People should be able to earn money in ways other than teaching to pay tuition. Or it gets one step removed and I get paid with taxpayers money, but these taxpayers still have to earn money somehow to pay taxes on it. As we all know, in Canada the wealth ultimately comes from very traditional sources… And even in places where it comes from something more high-tech… the ever-improving gadgets are just the new-age version of the third garage, IMHO. For vast majority of people these high-tech gadgets play exactly the same role – of objects being consumed – and there is nothing fundamentally “knowledge-based” about it.
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And how many of your students earn tuition money in manufacturing jobs?
My uncle in Halifax is a life-long fisherman. He and his entire region exists on subsidies that come from the taxes of the educated highly paid citizens who sell their knowledge.
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Most of the students are making money in service jobs, which have very little to do with anything knowledge-based. Or at least are not more knowledge-based than similar service jobs 30 years ago. This is what I am trying to get out of you – what is fundamentally new in whatever it is you are calling “knowledge-based”…
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What is fundamentally new is that manufacturing is dead and the knowledge provided by a high school dooms one to living on welfare. And the knowledge gained even from a very good Bachelor’s degree dooms one to the same fate if one doesn’t continue learning pretty much forever.
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OK, I’ll try approaching it from the other end… I agree with you and I do know the official/regular/etc definition of the “knowledge-based economy” – we dissect some shiny gadget and conclude that 90% of its price was paid for the services of people who designed it (engineer, programmer, recruiter who helped hire the first two, etc) and 5% were paid for the salaries of the factory workers who produced the physical object and another 5% for the materials… But frankly, to me this sounds like quantitative difference with respect to the previous stages. Same old thing, just on the next level of technology. I still would like to hear how this knowledge-based economy is going to deal with people who are unable to contribute to this modified supply chain? Will there be more movement towards universal and free higher education (to equalize starting conditions)? What will be done about the fact that the less gifted ones of this universally highly-educated cohort will still have great difficulties finding some ways to contribute? Dealing with the last two issues requires some socialist measures… And the other issue that is not getting addressed here is the one from which we started – all this 90% contribution of knowledge to the final price of the gadget means absolutely nothing if nobody will buy that gadget. What if people are either forced (by lack of money) or consciously decide to reduce consumption? Not buy a new gadget because the previous one works just fine and satisfies their needs?.. How will the “knowledge-based economy” deal with that? (One can reasonably speculate that better-educated people will be less likely duped into buying unnecessary things.)
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Look, it was your decision to introduce gadgets in the conversation. I’m not talking about them at all. My work or the work of pretty much everybody I know in the knowledge economy (meaning, literally, selling knowledge) has nothing to do with gadgets. I use the wordreference app and Google Books in my work but they are entirely non-essential. And I don’t contribute to the creation of gadgets in any way. Do you?
As to what will happen with people like my Nova Scotia uncle, I don’t know. Right now, the movement is, unfortunately, towards displacing them out of sight and onto the margins with some form of GUI. In the US, that takes the form of disability insurance. In some formerly industrial regions, 60% people are on disability. And we are talking about people who are dis-abled from participating in the new economy. I believe it’s unfortunate and I’d like to see that changed. But there is zero movement in that direction. The main battle between progressives and conservatives is whether to marginalize such people openly with a GUI or covertly with disability insurance. That’s the extent of the ideological disagreement. Instead of discussing this seriously we will now be distracted by endless Trump theatrics. Time for serious change is running out but nobody is trying to do anything. That is very frustrating and sad.
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Forget the gadget if you like, this was a physics teacher in me speaking – sometimes it is useful to attach some abstract concept to an object that is easier to imagine and explain… But I guess I got my answer – you are not aware of a meaningful way to mix “knowledge economy”, capitalism and human dignity…
And, unfortunately, this is not the end. At the next stage some white-collar workers will be displaced by the artificial intelligence. For instance, engineers solving typical problems, and similar scenarios. Guess I have to add this argument to my speech on “why should I choose physics over engineering”…
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There is clearly a lot more space for human dignity in developed countries right now than at any preceding stage in the development of humanity. Yes, dedicating one’s life to consumption and not production is not ideal but it’s not nearly as tragic as the fate of the industrial workers throughout the 19th century. The industrial model was in every way inferior to anything existing now.
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“I can’t even think of anybody on this blog who creates and sells physical objects.”
True, but we’re not really an economy (and an economy based on us would end up living in grass huts and/or starving to death).
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Well, making as much in real dollars as my parents did would be good. Right now for instance my father is 92 and in assisted living. He is fine but needs more assistance than I can give, and also needs certain safety features, and likes living in a community. So his pension is enough to cover the cost of the assisted living, and social security enough to cover additional costs like clothes, car insurance, insurance premiums and c0-payments, and so on. I will not have this kind of situation since I have a 403(b) but that is mutual funds and not a pension, so it is limited, and it is pegged to the financial markets so is not necessarily stable, and also since I don’t make that much, not that much is contributed to it. So I am looking at a rather precarious old age and it is not because of having under-worked, over-consumed, and so on, although I’d be richer if I had made certain choices and if I had it to do over again I would make those choices. Even though I was exhorted as a child and young person that one should not think of money first, a look at what happens without it convinces me otherwise.
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What is fundamentally new is that manufacturing is dead
What manufacturing? My hometown hadn’t been a manufacturing center for as long as I’ve been alive. Ronald Reagan broke the air controllers’ union strike in the 1980s. NAFTA was passed over twenty years ago.
and the knowledge provided by a high school dooms one to living on welfare. And the knowledge gained even from a very good Bachelor’s degree dooms one to the same fate if one doesn’t continue learning pretty much forever.
This is new for whom?
All of my life my father kept saying “College is the new high school” and that you have to keep continually learning. Part of it might be my father’s profession and how he immigrated. But in my community the only people who don’t have at least a college degree are 1)non genius children, 2)the severely and profoundly learning disabled and 3)women from a generation in which it was common not to educate girls. The guy who works at the gas station at the corner let me know within five minutes his kid is going to college and wants to be a doctor. The owner of an eco-friendly dry cleaning business was an engineer and his children certainly never work in this business. I met an adjunct professor who was simply amazed at all of these black government employees who went back to school to get master’s degrees on the state of Georgia’s dime.
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Here is a good article on just one such dying County: http://reason.com/archives/2016/12/10/stuck
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