An author should be pleased to see his thesis bolstered by events. Yet since writing The Coming of Neo-Feudalism in 2020, I have not found any joy in the continued growth of the West’s class divides, as wealth becomes increasingly concentrated in ever fewer hands. The good news is that the working and middle classes are not yet out for the count, and are showing welcome signs of pushback against both state and corporate power.
Just a year ago California Governor Gavin Newsom could, and did, brag about the state’s estimated $100 billion surplus. Flush with cash, the preening presidential hopeful was able to hand out thousands of dollars of goodies to households while financing an elaborate multi-billion dollar climate change agenda. Read more
One of the enduring mysteries of contemporary society centers on the seeming disassociation of so much of the labor force from the economy. This became particularly evident during the pandemic Read more
“From the Beginning, California promised much. While yet barely a name on the map, it entered American awareness as a symbol of renewal. It was a final frontier: of geography and of expectation.”
— Kevin Starr, “Americans and the California Dream, 1850-1915” (1973)
On the surface, California’s job story seems positive. The “headline” unemployment number for December 2022 is low (4.1%). Payroll jobs continue to bounce back to close to pre-pandemic levels. https://edd.ca.gov/en/about_edd/news_releases_and_announcements/unemployment-november-2022/. As Mad Magazine’s Alfred E. Newman would say, “What? Me worry?”
But a closer look at the longer-term, 20-year statistics shows a state with some very worrisome issues related to jobs, some of which are unique to California’s set of past policy choices. Read more
For Americans, California once looked like the future. It was a state defined by risk-taking and utopian dreaming. Yet for most Californians today, the upward mobility so central to the state’s ethos is rapidly disappearing. For decades, California was the primary destination for both other Americans and for foreign immigrants. Now, this trend has gone into reverse Read more
The much-celebrated California boom is facing a harsh reality.
Everything was looking good, based on enormous growth in capital gains in tech stocks and property, and some in Sacramento assumed the bounty would last — until it didn’t. The latest bad news is the evaporation of the state budget surplus that is now rapidly turning into a deficit that could run as high as $22 billion to $40 billion, particularly if there’s a recession. Read more
In recent decades, progressive politics has been underwritten by the ascendant economic titans of capital, technology, and communication. Big Tech and financial firms have long financed Democratic causes, led by those such as George Soros and the now-disgraced crypto-master Sam Bankman-Fried, who was released last month on a $250 million bail deal.
In The Communist Manifesto, Marx and Engels warned that the ‘spectre’ of class war loomed over a rapidly industrialising capitalist world. Today, the neoliberal world is increasingly haunted by a similar spectre, this time of a global class conflict.
‘Capitalists will sell us the rope with which we will hang them.’ This colourful quote, sometimes attributed to Lenin, could well apply to the many free-market ideologues and tech oligarchs in the US, who are now pushing for increased welfare payouts and even a universal basic income (UBI). Through the expansion of welfarism at the expense of work, these capitalists could well be hastening the decline of the very economic system they profess to support.
Even devoted free-market advocates, like former senator Phil Gramm and economist John Early, now argue that increased welfare payouts, or ‘income transfer payments’, should be championed to reduce inequality in the US.
The welfarist solution may reduce income inequality on paper. But it does nothing to address the far more pernicious problems caused by the rapid concentration of assets in ever fewer hands. The top one per cent in the US has increased its share of assets by roughly 26 per cent since 2002.
There are further consequences to the expansion of welfare and the devaluation of work. It changes people’s character. The income you earn is empowering, whereas the dole nurtures dependence. Increasingly, the aspirational side of capitalism is being squelched by the rollout of ever more benefits.
Supporters of welfarism can point to the experience of Covid-19, when emergency pandemic aid cut poverty substantially in the US. But the Covid subsidy regime has not been a rollicking success for most. Indeed, for the past year, wages have grown, but not nearly as much as inflation.
One widely cited reason for the recent labour shortages relates to a post-pandemic reluctance to take low wages, or jobs in the ‘gig’ economy, where pay and hours are often uncertain. Indeed, according to one UK account, self-employment and gig work do not provide sustenance for anything like a middle-class lifestyle. Many jobs that could support families have disappeared, and so too has the motivation to work.
Under such conditions, what Karl Marx called the ‘reserve army of the unemployed’ is simply disengaging from the economy. Male labour-participation rates have fallen from over 80 per cent in 1950 to 68 per cent today. Almost one-third of American working-age males are not in the labour force, and are suffering from high rates of incarceration, drug, alcohol and other health issues.
This withdrawal from the labour force is happening amid a demographic downturn in the high-income world. The proportion of the US population aged between 16 and 64 grew by 21 per cent during the 1980s. During the 2010s, it grew by less than five per cent. The EU and East Asia are suffering even stronger declines in their working-age populations.
Read the rest of this piece at Spiked.
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.
Photo: Chart developed using data from ACS poverty statistics, via Wikimedia under CC by SA 4.0 License.
America’s narrow escape last week from a major rail-worker strike brought home an important truth: people who make and ship real things – let’s call them material workers – now hold the whip hand over our supposedly ‘post-industrial’ economy. Firms trading non-tangibles – currency, bits and bots – may still hoard the most cash. But when it comes to eating, staying warm and, for many, making a living, the material economy is what matters most.
Join the conversation at Twitter
or Facebook. Visit our YouTube
channel or subscribe to RSS
to read our latest articles.
