Everyone seems to be California dreaming these days. Much of America, particularly its red parts, see California as a hopeless dystopia best understood as everything the nation should avoid. Meanwhile, for the progressive Left and many around Joe Biden, California is the Mecca, a great role model being attacked by jealous reactionaries.
As in so many cases, both sides have a piece of the truth.
With the seeming deconstruction of the Biden Administration proceeding at a rapid clip, many on the right hope for an end to the conscious stoking of class resentments that has characterized progressive politics. Yet despite the political meltdown, America’s class divides have become so wide, and so bitter, that Biden’s presidency may prove more a prelude than a denouement for the future of class warfare.
We bemoan autocracies in Latin America, the Middle East, Africa, Russia and China but largely ignore the more subtle authoritarian trend in the West. Don’t expect a crudely effective dictatorship out of Orwell’s Nineteen Eighty-Four: we may remain, as we are now, nominally democratic, but be ruled by a technocratic class empowered by greater powers of surveillance than those enjoyed by even the nosiest of dictatorships.
The new autocracy rises from a relentless economic concentration which has engendered a new and fabulously wealthy elite. Five years ago, around four hundred billionaires owned as much as half of the world’s assets. Today, only one hundred billionaires own that share, and Oxfam reduces that number to a mere twenty-six. In avowedly socialist China, the top one percent of the population holds about one-third of the country’s wealth, up from 20 percent two decades ago. Since 1978, China’s Gini coefficient, which measures inequality of wealth distribution, has tripled.
An OECD report issued before the Covid pandemic finds that almost everywhere, the non-rich share of national wealth has declined. These trends can be seen even in social democracies like Sweden and Germany. In the United States, as the conservative economist John Michaelson put it succinctly in 2018, the economic legacy of the last decade is “excessive corporate consolidation, a massive transfer of wealth to the top 1 percent from the middle class.”
This process has developed both in the tangible and digital economies. In Great Britain, where land prices have risen dramatically over the past decade, less than one percent of the population owns half of all the land. On the European continent overall, farmland has fallen increasingly into the hands of a small cadre of corporate owners and the mega-wealthy. In America, the largest farmland holder is Bill Gates, with over 200,000 acres, while Ted Turner and John Malone preside over lordly estates of over two million acres each — larger than several American states.
As property has concentrated, small-holders have come under increased pressure. Australia historically has enjoyed high rates of homeownership, but the rate among twenty-five to thirty-four year-olds dropped from more than 60 percent in 1981 to only 45 percent in 2016. The proportion of owner-occupied housing in once-egalitarian Australia has dropped by 10 percent in the last twenty-five years. Morgan Stanley predicts that the US will soon become primarily a “rentership society” where Wall Street firms seek to turn homes, furniture and other necessities into rental products.
The digital economy is similarly dominated by a small group of giant firms. These overlords together exercise control of up to 90 percent of critical markets such as basic computer operating systems, social media, online search advertising and book sales. No longer satisfied with controlling the pipelines, the tech oligarchy increasing buys up old news outlets and “curates” the news to its tastes. It increasingly dominates mainstream entertainment too: the pending sale of MGM to Amazon is just the most recent example of its conquest and consolidation of the means of communication.
Like the barbarian princes who shaped the Middle Ages, the new oligarchs have been able to seize their fiefdoms with little resistance from weak central governments. The pandemic accelerated this process; its lockdowns and restraints on mobility proved a bonanza for tech companies like Google, whose profits doubled during the period. In this highly regulated environment, the tech-rich have simply gotten richer: seven of the ten richest Americans come from the tech sector. Apple, by some calculations, is now worth more than the entire oil and gas industry. The already obscenely rich have become richer still. Jeff Bezos alone saw his net worth jump by an estimated $34.6 billion in the first two months of the pandemic, while his company has enjoyed continued revenue and profit growth.
As executive compensation reached the stratosphere in Big Tech and finance, small businesses face what the Harvard Business Review calls “an existential threat.” Experts now warn that one third of small businesses, which comprise the majority of US companies and employ nearly half of all workers, could ultimately shut down for good. Hundreds of thousands have already disappeared, including nearly half of all black-owned businesses. Particularly damaged have been the small merchants along Main Street and those working for them, such as restaurant and hospitality workers.
Read the rest of this piece at The Spectator World.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Homepage photo: Chris Devers, via Flickr under CC 2.0 License.
Joel and Marshall discuss how we can restore the California dream, stopping the outflow of millennials and families headed for states that now offer better opportunity than California.
On this episode of Feudal Future, hosts Joel Kotkin and Marshall Toplansky talk with Cullum Clark and Austin Williams about the future of cities and what it will take to build the new world.
America has only a limited feudal past, the plantation aristocracy of the antebellum South and the enormous class chasms of the Gilded Age being pretty much our only examples. Yet today—after decades of social mobility, a digital revolution that was supposed to empower individuals everywhere, and the construction of a vigorous anti-discrimination apparatus that putatively ensures equal rights and status—a rigid new social order with feudal elements has come into view.
This emerging class structure reprises, albeit with far less starvation, the patterns of the Middle Ages, with each class performing distinct social functions and defined economic roles. In this new order, there are two ascendant classes: the oligarchs and the clerisy. And there are two classes struggling to serve the ascendant classes, and to maintain for themselves a decent standard of living: the yeomanry and the new serfs.
The old feudal order evolved gradually, as the last structures of Roman republicanism first weakened, then totally collapsed due to the barbarian invasions. The seizure of Europe by the barbarian hordes upended an entire civilization, including its class structures. The collapse was due as much to the weakness of Roman institutions as to the ruthlessness of barbarian leaders. The feudalism that ensued would simplify society under the rule of two classes, the military aristocracy and the clerical class, while most people lived essentially in bondage to one or the other.
This historical precedent can help us make sense of the socioeconomic trends of America’s last half-century. Since the 1970s, the wealth differential between middle-income and upper-income households in the United States has grown. Data from the Census Bureau show that the share of national income going to the middle 60 percent of households has fallen to a record low. Wealth gains in recent decades have been made overwhelmingly by the top 1 percent of households, especially the top 0.5 percent. In 1945–73, the top 1 percent in America captured just 4.9 percent of total U.S. income growth; in the following two decades, this super-rich cohort gobbled up the majority of it. The combined wealth of the richest four hundred Americans now exceeds the total wealth of 185 million of their fellow citizens. Over the past three decades, the share of household wealth owned by the top 0.1 percent has increased from 7 percent to 22 percent.
This pattern has been accelerated by the pandemic. The number of millionaires around the world jumped to 56.1 million in 2021, with 5.2 million joining the group last year, according to the 2021 Credit Suisse Global Wealth Report. The number of ultra-high net worth individuals—those with a net worth above $50 million—grew by 24 percent, to 215,030. Last year, Amazon tripled its profits and Jeff Bezos made $70 billion; billionaires overall have earned more than $1 trillion since March. Alphabet, Amazon, Apple, Facebook, and Microsoft now make up 20 percent of the American stock market’s total value. As one Silicon Valley wag put it, America increasingly resembles “feudalism with better marketing.”
The similarities are not just material. In the Middle Ages, the aristocracy shared common views. Kings and chieftains fought over land and gold, but rarely (until the Reformation) ideas and truths. The ideals of a pluralistic society wouldn’t have meant anything to them, nor would John Stuart Mill’s marketplace of ideas. Now, after two centuries of an Enlightenment-influenced public square hot with dissent and debate, we observe the emergence of a singular mindset among the academy and the media—today’s clerisy—and the oligarchic elite. In the past, political views, religious beliefs, and special interests divided the elite and forced different factions to persuade and cajole and convince the masses of their respective sanctions. Every major city had multiple newspapers with distinct lines on current events, serving as organs for rival powers. Pro-slavery versus anti-slavery, labor versus management, Wall Street versus the farmers, interventionists versus isolationists: It’s a history of ideological conflict.
No such broad conflict exists among today’s nobility. They are unified in their progressive outlook on all things social and cultural. In the Middle Ages, the aristocracy often found allies among the Catholic clergy, who were willing to back the great landowners’ laws and swords with doctrines and rationales. There is a twenty-first-century clerisy, though it is rarely religious and operates in a secular consumer society. Its members aren’t priests. They are journalists, entertainers, credentialed professionals, and teachers. They provide the images, narratives, arguments, and artworks that reinforce the binding outlook, and they police dissenters as vigilantly as did the Inquisitors of old (though fortunately, so far, less lethally).
As society becomes more regulated and more dependent on expertise, the clerisy grows. Michael Lind estimates that this “overclass” constitutes some 15 percent of the American workforce, a far larger portion than the membership of the old First Estate (closer to 1 percent of the French population). Charles Murray describes them more narrowly as the top echelons in law, government, university, and media—roughly 2.4 million people in a country of more than 320 million.
Until the last four decades, the yeoman class—James Madison’s small proprietors—were America’s ascendant socioeconomic group. A study covering the United Kingdom, the Netherlands, and the United States shows that all three saw a rapid decline in the concentration of wealth from the 1820s through the 1970s. Never before had so much prosperity and relative security been so widely enjoyed.
Now, the numbers and influence of the yeomanry are declining. They still represent close to 50 percent of the population, notes Pew—a drop from 61 percent in 1971. Globalization has savaged many middle-class jobs, whether in factories or in services, transferring employment to China, India, and other developing countries. In many countries, immigration, much of it from poor countries, has undermined wage rates, particularly for lower-skilled workers, but now for professionals as well. Much of the global middle class is heavily in debt, mainly because of high housing costs.
In the United States, long known as the land of opportunity, the chance of middle-class earners’ moving to the top rungs of the earnings ladder has dropped by approximately 20 percent since the early 1980s. The pandemic has been particularly hard on this class. Though large chains have reported record sales during the lockdowns, more than 160,000 small businesses have closed. A survey by the advocacy group Main Street America predicts that as many as 7.5 million small businesses will go out of business by the time the crisis is over. By some estimates, upwards of one-third of small businesses will close down permanently.
The fall of the yeomanry poses a major threat to representative democracy. Once again, history provides a precedent. In Imperial Rome, small farmers and artisans were steadily displaced by slaves imported from the far ends of the expanding empire. Increasingly, occupations and social status came to be determined by heredity. By the end of the Republic, more than 75 percent of all property was owned by roughly 3 percent of the population, while more than four-fifths owned no property at all. Inequality paved the way for the feudal future.
The great social achievement of the mid- to late twentieth century lay in the movement of working-class, propertyless people, including minorities, into the ranks of business owners and homeowners. Today the flow runs in the opposite direction, as prospects for joining the middle class have declined and opportunities for advancement have dried up for everyone outside the professional and elite capitalist classes.
Working-class people, of whatever race, suffer the worst health-related impacts and have paid the most in lives during the pandemic. The same holds economically. In the U.S., roughly half of all job losses last April were in such low-paying fields as restaurants, hotels, and amusement parks; information and finance jobs were barely touched. Almost 40 percent of Americans making less than $40,000 a year lost their jobs in the pandemic, as the wage gains made during the first two years of the Trump Administration have largely evaporated.
Read the rest of this piece at First Things.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Homepage photo: ILO Asia-Pacific Flickr under CC 3.0 License.
From the ancient world to modern times, the class of small property owners have constituted the sine qua non of democratic self-government. But today this class is under attack by what Aristotle described as an oligarchia, an unelected power elite that controls the political economy for its own purposes. In contrast, the rise of small holders were critical to the re-emergence and growth of democracy first in the Netherlands, followed by North America, Australia, and much of Europe.
To some in the Biden Administration, the supply chain crisis can be dismissed as a loss of East Asian-made consumer trinkets that, as Vox tells us, we could all be better off without—or as White House spokesperson Jen Psaki suggested, amounts to little more than “the tragedy of the delayed treadmill.” Yet, in reality, a broken supply chain is hardly a rich man’s problem—global bankers are having their best year ever—but mostly impacts ordinary folks suffering from rising prices for everything from soybeans to natural gas. The crisis is now expected to last for at least a year.
The chaos on the ground level may not much hurt the elites of Manhattan or Palo Alto, but inflation, which is now expected to continue apace for at least the next year, has wiped out wage gains in the U.S., the UK, and Germany. Low-income groups are the most threatened, struggling to pay energy costs, surging rents, and higher food prices. All this is also eroding President Biden’s already weak poll numbers.
Our vulnerability to supply chain disruption clearly predates the Biden Administration, forged by the abandonment of the production economy over the past 50 years by American business and government, encouraged and applauded by the clerisy of business consultants. The result has been massive trade deficits that now extend to high-tech products, and even components for military goods, many of which are now produced in China. When companies move production abroad, they often follow up by shifting research and development as well. All we are left with is advertising the products, and ringing up the sales, assuming they arrive.
Unable to stock shelves, procure parts, power your home, or even protect your own country without waiting for your ship to come in, Americans are now unusually vulnerable to shipping rates shooting up to ten times higher than before the pandemic. Not surprisingly, pessimism about America’s direction, after a brief improvement Biden’s election, has risen by 20 points. The shipping crisis is now projected to last through 2023.
Not everyone loses here. For years the American establishment saw China as more of an opportunity than a danger. High-tech firms, entertainment companies, and investment banks profit, or hope to, from our dependency, becoming in essence the new “China lobby.” Behind the scenes these representatives of enlightened capital often work to prevent condemnation for the Middle Kingdom’s mercantilist policy, and its joint repression of democracy and ethnic minorities.
After all, the pain is not felt in elite coastal enclaves, but in Youngstown, south Los Angeles, and myriad other decaying locales. Meanwhile, by enabling China’s focus on production, and the conquest of technologies related to making goods, we have devastated large parts of our country. This shift has cost us 3.7 million jobs since 2000. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese inputs doubled, even as our dependence on Japan and Germany shrank.
Yet perhaps even more debilitating has been our drift towards what British historian Martin Weiner has called “psychological de-industrialization.” Weiner was referring to the lack of interest in productive enterprise during late Victorian and Edwardian England, but he could just as easily be describing contemporary America’s corporate and financial elite.
Fortunately, America is not England, now a shadow of itself as an industrial country, living off its imperial connections to bolster its media, finance, and tourism sectors. It is a small country, at the edge of a fading continent in seemingly permanent decline. It lacks our vast expanse with its agricultural, energy, and other resources, not to mention our still considerable entrepreneurial spirit. As a huge continental country with enormous resources, lots of arable land and a large, traditionally hard-working population, the United States should be ideally suited to survive the retreat of the global economy, so evident in the supply chain crisis, and be able to shift to a more autarchic model.
Read the rest of this piece at American Mind.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Homepage photo: Don Shall via Flickr under CC 2.0 License.
On this episode of Feudal Future, hosts Joel Kotkin and Marshall Toplansky sit down with…themselves! Joel and Marshall share the purpose behind the podcast as well as memorable moments and learning lessons along the way.
On this episode of Feudal Future, Marshall Toplansky hosts a discussion of the global future after COVID with Richard Florida, Joel Kotkin, Bheki Mahlobo, Li Sun, and Laure Mandeville.
Join the conversation at Twitter
or Facebook. Visit our YouTube
channel or subscribe to RSS
to read our latest articles.
