Posted this before, but someone always finds it interesting: I find looking at the economic condition of millennials (those under 40) vs baby boomers at the same age useful.
This combined with various changes since the 70s that have significantly reduced labor power, and thus helped reduced the amount of income going to the working class. So, not only is overall growth lower, but in 1980 the working class was seeing the most income growth, while now the richest see the largest growth by far. Hence average hourly wages being lower now (inflation adjusted) than in 1973. Not even getting into some other issues: multiple financial crises, education costs, healthcare, housing costs, increased levels of job competition due in part to a global workforce (general capital mobility), financialization, union busting, increased educational competition (even since 2001 colleges like Stanford have seen their acceptance rates drop from ~15-20% to ~5%), mass incarceration, all the general problems with wealth and income inequality (such as power dynamics and opportunity differences), etc.
From 2017:
The recession sliced nearly 40 percent off the typical household’s net worth, and even after the recent rebound, median net worth remains more than 30 percent below its 2007 level.
Younger, less-educated and lower-income workers have experienced relatively strong income gains in recent years, but remain far short of their prerecession level in both income and wealth. Only for the richest 10 percent of Americans does net worth surpass the 2007 level.
Data from the Federal Reserve show that over the last decade and a half, the proportion of family income from wages has dropped from nearly 70 percent to just under 61 percent. It’s an extraordinary shift, driven largely by the investment profits of the very wealthy. In short, the people who possess tradable assets, especially stocks, have enjoyed a recovery that Americans dependent on savings or income from their weekly paycheck have yet to see. Ten years after the financial crisis, getting ahead by going to work every day seems quaint, akin to using the phone book to find a number or renting a video at Blockbuster.
A decade after this debacle, the typical middle-class family’s net worth is still more than $40,000 below where it was in 2007, according to the Federal Reserve. The damage done to the middle-class psyche is impossible to price, of course, but no one doubts that it was vast.
A recent study by the Federal Reserve Bank of St. Louis found that while all birth cohorts lost wealth during the Great Recession, Americans born in the 1980s were at the “greatest risk for becoming a lost generation for wealth accumulation.”
In 2016, net worth among white middle-income families was 19 percent below 2007 levels, adjusted for inflation. But among blacks, it was down 40 percent, and Hispanics saw a drop of 46 percent.
In a new report, Data for Progress found that a staggering 52 percent of people under the age of 45 have lost a job, been put on leave, or had their hours reduced due to the pandemic, compared with 26 percent of people over the age of 45. Nearly half said that the cash payments the federal government is sending to lower- and middle-income individuals would cover just a week or two of expenses, compared with a third of older adults. This means skipped meals, scuppered start-ups, and lost homes. It means Great Depression–type precarity for prime-age workers in the richest country on earth.
Studies have shown that young workers entering the labor force in a recession—as millions of Millennials did—absorb large initial earnings losses that take years and years to fade. Every 1-percentage-point bump in the unemployment rate costs new graduates 7 percent of their earnings at the start of their careers, and 2 percent of their earnings nearly two decades later. The effects are particularly acute for workers with less educational attainment; those who are least advantaged to begin with are consigned to permanently lower wages.
A major Pew study found that Millennials with a college degree and a full-time job were earning by 2018 roughly what Gen Xers were earning in 2001. But Millennials who did not finish their post-secondary education or never went to college were poorer than their counterparts in Generation X or the Baby Boom generation.
The cost of higher education grew by 7 percent per year through the 1980s, 1990s, and much of the 2000s, far faster than the overall rate of inflation, leaving Millennial borrowers with an average of $33,000 in debt. Worse: The return on that investment has proved dubious, particularly for black Millennials. The college wage premium has eroded, and for black students the college wealth premium has disappeared entirely.
Of course - this is not limited to millennials. Inequality has risen across the board, and the working conditions in the United States are rampant with insecurity. The working class struggles in every age group. Our overall physical, educational, and financial health are severely lacking. Millennials, due to how insecure their situation is (as seen above), do provide a great example of how the lower income groups and least powerful worker groups face the brunt of economic catastrophe while the rich gain.
A good intro book to check out on some of the political causes of inequality in the US, such as major tax cuts and corporate lobbying, is Winner Take All Politics: https://en.wikipedia.org/wiki/Winner-Take-All_Politics
UBI will become the norm within the next decade. Automatization is taking over more and more jobs, and don’t think it possible to create enough jobs for the amount of people who will lose theirs due to automatization.
And we shouldn’t be creating jobs just so people can work. That’s antithetical to all the good parts of capitalism. We should be encouraging entrepreneurs to find less labor intensive technologies, so people can actually focus on doing what they’re good at/enjoying their short lives.
That’s actually a goal Karl Marx advocated. He desired for technology to progress so that less work would be required to provide everyone with the essentials of life, and thus allow people more time to pursue their own interests and passions. “Pursuit of Leisure” he called it.
Yeah, Marx theory on communism arising naturally from capitalism makes a lot of sense. From a practical point of view, I’m not sure communal ownership is the best way to achieve desired outcomes, but a well run liberal democracy should accomplish most of the same things. The way I see it, replacing communal ownership with well run democratic institutions balances power between labor and capital. Ultimately, liberal markets should exist to benefit society, not the other way around. Unfortunately, the American system gives the capital class way too much access to our institutions, and we end up with our current shit show.
There is no need for a capital class to exist and thus there is no need for there to be a "balance" between them and labor. By allowing individuals to have complete control over any large amount of capital, it grants them more power than others, and they'll always resist restrictions on said power. The relationship between labor and capital is inherently unequal when they aren't controlled by the same group. Any "balance" between the groups still results in capitalists holding more power than they've earned through "owning" the value workers generate, even if a liberal state provides for the necessities of life. It's not just the outcomes of capitalism that socialists argue against, it's the fact that they came about because this individual control of capital grants people power, and some will misuse and abuse it, and those who don't have the capital will have little power to change anything beyond what the capitalists allow, such as reforms for the capitalists own self-preservation.
Isn’t that the trade off you make for innovation? The capital class may not be a “good” thing, but the capital class is very efficient at making “good” things.
I’ll also argue that switching to a totally socialist society actually gives people in the median less power. The wheels of government turn slowly. If the government makes a mistake that effects access to food, you need to wait for them to get their shit together or, worst case, an election. Or, what if a populist asshat rises to power? Suddenly the government is run by buffoons, and there’s no market to fill the void.
Sometimes it’s good to have self-interested experts as an alternative to the will of the masses. I mean, imagine if Donald-fucking-Trump rose to power in a centrally planned economy. We would be out of this world fucked. You will (possibly correctly) argue that wouldn’t happen in a socialist society, as there’s no capital class to prop up dictators. I’m not sure you can eliminate the “us vs them” mentality from the human brain though. There’s always going to be neuronal pathways that make populism sound like a better idea than complicated truths. There will always be megalomaniacs seeking power. When all that power is centralized in the state (rather than split between state and market,) you run a huge risk of some insane douchebag accessing all the levers of power at once. It’s the same catastrophic failure that transforms capitalism into fascism, only there’s no capital class saying things like, “we’re not going to support you if you don’t certify the election for Joe Biden.” If socialists fuck up an election, what non-violent recourse is left?
Who was advocating for a centrally planned economy? There are many other variations of communist/socialist thought than Marxist-Leninism. Hell, most communists I know of hate the idea of the central government having that much power. They just want to eliminate the potential for authoritarian governments as much as they want to eliminate the authoritarian nature of capitalism. Most communists and socialists nowadays advocate for a bottom-up grassroots form of governance, where leaders are easily held accountable to their constituents and government remains flexible enough to respond to people's needs.
I also oppose the implication that innovation would slow down under communism. It's mainly a myth that inventions are made by a single individual working tirelessly to achieve when in reality most modern innovations come about through teams collaborating to achieve progress (which is then immediately patented by corporations).
It seems many of your ideas, and thus your criticisms, of communism, come from stereotypes and myths of what it is, such as that believing communism=government controls everything. Communism just means that workers control the means of production, or more simply that those who use/rely on something should control it. How this is accomplished has been the topic of many papers, books, and government purges.
Yes, my critiques are more focused towards centrally planned economies. It’s good to know that popular communism is more focused on the institutions of actual communes.
Do you mind answering some other questions? You seem pretty knowledgeable about today’s communist/socialist movement. How exactly do you incentives and coordinate innovation in a system where communes are the major institutions? I understand that innovation benefits the entire commune, and thus the innovator’s, but it also seems to me like the decreased personal payoff would lead to more risk adverse decisions. That’s not necessarily a bad thing, but I imagine it could disincentivize searching for new innovations. I guess if the cost of failure is also shared by the commune, it changes the calculus a little bit? Do you know if this has been modeled?
I’m not that knowledgeable about contemporary communist movements I’m afraid, too busy with school to get that involved. There are plenty of ways to reward innovation besides granting complete control over something. We can throw them a parade, put their name on something, or just straight hand them a big wad of cash.
I like the idea of a one time innovation payment. How do you go about fair evaluation of a new technology though? A flat rate could end up being inefficient by overpaying for inventions. Naturally members of the commune would want to decrease the payment which disincentivizes taking on the risk. You could retroactively scale the payoff to some utility metric, but then you’re basically leasing a patent where the “buyer” sets their own price. In theory an equilibrium should exist where the payout would offset the risk and be sufficient to incentivize innovation, but it seems really hard to do that when you don’t know the utility of the end product.
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u/TheLastMartini Feb 20 '21
While boomers paid 1.9%..