BY ANAND GIRIDHARADAS author of Winners Take All: The Elite Charade of Changing the World, The True American and India Calling. Time Editor At Large and also a political analyst for NBC News and teaches writing at NYU. NOVEMBER 21, 2019
How America’s Elite Lost Their Grip
On March 29, 2003, at a wedding reception in the Harvard Faculty Club, Lawrence W. Reed gave a toast in honor of the friend whom he was serving as best man—one Joseph P. Overton. Overton had worked at Dow Chemical; he had since become an executive at a free-market, small–government think tank in central Michigan. Among his duties at the Mackinac Center for Public Policy was raising money, and in doing so, he had made a brochure that would become his legacy. Overton was trying to describe the role of think tanks in a society, and he posited an idea that would come to be called the Overton window. In a given society, at a given moment, there is a range of policies politically acceptable to the mainstream. (A 70% top tax rate and a 20% top tax rate are both within this window in America today; abolishing taxes is not.) Generally, the theory went, politicians will only propose ideas that fall within the window. It falls to think tanks (and others) to propose unpopular things outside of the window in the hope of shifting the window and making the previously unthinkable achievable.
Overton was an ardent libertarian who pushed ideas like school choice—and, according to Reed’s wedding toast, he had on occasion resorted to more extreme methods of moving the window of the possible, “including the time,” Reed recounted that day, “we flew in a Cessna 172 in broad daylight at treetop level 150 miles into war-torn Mozambique to assist armed rebels fighting the Marxist regime there.” Overton died just weeks after his wedding.
Were Overton still alive, he would be pushing 60—and might be aghast to learn that his “window,” having become famous after his death, is now invoked to describe America’s great, unlikely backlash against the system he defended so ardently: capitalism.
Art by Delcan & Company for TIME, photographed by Jamie Chung
A democratic socialist—Bernie Sanders—is among the top contenders to be the next Democratic nominee for U.S. President. His rival and fellow Senator, Elizabeth Warren, is also among the top tier of candidates, declaring herself a capitalist who wishes to transform American capitalism as we know it, with a wealth tax, a Green New Deal and the elimination of private health insurance. A more centrist candidate, Mayor Pete Buttigieg of South Bend, Ind., illustrated the shifting winds when he recently declared that “neo-liberalism is the political–economic consensus that has governed the last 40 years of policy in the U.S. and U.K. Its failure helped to produce the Trump moment. Now we have to replace it with something better.” In 2016, the Democratic Socialists of America (DSA) had 5,000 members; since then, its dues-paying membership has multiplied more than tenfold.
This new energy on the left terrifies chief executives and billionaires, and yet many of them have been voicing similar alarms about a crisis of capitalism. Ray Dalio, the billionaire co-chairman of the investment firm Bridgewater Associates, warned in April that America faced a “national emergency” in capitalism’s failure to benefit more people, and he pronounced the American Dream lost. The anti-capitalist impulse has some purchase on the right too. Before he pushed a tax cut that lined the capitalists’ pockets, Donald Trump ran, most improbably, as a Republican skeptical of the financial elite’s loyalty to Americans. On Fox News, Tucker Carlson has entertained a surprising skepticism of capitalist doctrines and said positive things about Warren.
America loves a capitalist reckoning the way the NFL loves Colin Kaepernick. But it is having one anyway. And if this year that reckoning seemed to reach new intensity, it was because the economic precariousness, stalled mobility and gaping social divides that have for years fueled the backlash now had an improbable sidekick: plutocracy itself and the win-win ideology that has governed the past few decades. This year, America’s ultra-elites seemed to bend over backward to lend support to the idea that maybe the system they superintend needs gut renovating. As a political movement bubbled up to challenge their wealth and power, the elite’s own misbehavior trickled down. And where the two met, ideas that once seemed unutterable started, to many, to sound like the future.
History is the story of conditions that long seem reasonable until they begin to seem ridiculous. So it is with America’s present manic hyper-capitalism.
Until recently, it seemed normal that a technological revolution that began with promises of leveled playing fields had culminated in an age of platform monopolies. Normal that businesspeople should try to make as much money as possible by paying as little as possible in taxes and wages, then donate a fraction of the spoils to PR-friendly social causes. Normal that economic security for most Americans was becoming a relic of the past. Normal that people in the street-level marijuana business go to prison while people in the business of selling ads to Russian intelligence go on magazine covers. Normal that bankers could shatter the world economy with their speculating, and that they would be among the few to be made whole after the crisis.
For years, there have been voices trying to denormalize this state. There were protests in Seattle in 1999, there was Occupy in 2011, there was the DSA, there was the World Social Forum to rival the World Economic Forum, there was, eternally, Bernie Sanders saying the exact stuff he is still saying today, there were civic groups trying to organize workers and poor communities, there were outcasts in Silicon Valley warning that Mark Zuckerberg wasn’t really about human connection. But America was in the grips of the ideological consensus that Buttigieg described. Hyper-capitalism was the intellectual stadium in which the country played. There was a left side of the field, more wary of capitalism’s extremes, and a right side of the field, prone to capitalist boosting. But the stadium, as Overton understood, demarcated the boundaries of the debate for most people: Capitalism, more or less as we practice it, is our system, and it is the best system, so how do we tweak it to make it better?
Illustration by Shout for TIME
Then, in 2016, something happened. Sanders ran for President. He built a formidable national movement, powered by small donations, and won 22 states—mind you, as a democratic socialist in the United States of America. Sometimes the thing that could never happen happens, and it makes people doubt their sense of reality. And in that election cycle, if Sanders discredited capitalism as a conscious project, his cause received unexpected, unintentional help from the man who would become President. Trump ran as a flamboyant capitalist, wary of certain aspects of capitalism, but promising that his capitalist mind and his capitalist fortune would make him a uniquely gifted, uniquely incorruptible President. When that turned out not to be the case, Trump not only damaged himself but the idea of the selfless billionaire savior too.HISTORY
The Overton window was moving. Then came the 2018 midterms and a new wave of Democratic -candidates—most prominently, Representative Alexandria Ocasio-Cortez of New York—questioning capitalism–as–capitalism in a way that seemed unfamiliar and fresh. As the 2020 campaign approached, Warren jumped into the race, a beneficiary of the opening Sanders had helped carve for capitalist–critical aspirants to America’s highest office. With her now famous litany of “plans,” Warren detailed an agenda that would put American business in a headlock. That she and Sanders, both veritable enemies of Big Business, are among the top candidates shows how much the politics of capitalism has changed.
But, politics can be abstract; it can be complicated; people are busy living. Politics often benefits from scandal, from prominent misbehavior, from a dramatization of the discourse. And this was what was so remarkable about 2019: because of the coming election in these populist times, it was already a year potentially full of trouble for the plutocrats—or plutes, as I like to call them (to save space and, thus, paper and, therefore, trees). But, almost as if to assist the cause, the plutes seemed this year to put on an extended exhibit of performance art whose plain, if unstated, thesis is that plutocracy is maybe a bad idea.
Exhibit A: Early in the year, Amazon, run by one of the world’s richest people, Jeff Bezos, announced it was pulling out of its planned Hydra-like “second headquarters” in New York City. It seemed to come as a surprise to Bezos that in a city where a significant number of people struggle to keep up with rising costs and stagnant pay, many weren’t excited by the idea of the state and city giving his company a few billion dollars in tax breaks that wouldn’t be available to a regular Joe starting a business. In the debate that erupted, the conventional wisdom that it is always better to attract jobs, even by offering companies major incentives, came to be questioned.HISTORY
Exhibit B: The college-bribery scandal. Wealth and privilege are already great guarantors of securing a spot in a university. What the scandal unearthed by federal prosecutors illustrated is that many very rich people are not satisfied with the general advantage of hyper-privilege, nor even with the specific advantage of donations to universities that give you an edge but not a guarantee. The ascendant critics of capitalism in American politics have called the system “rigged” for years. But here was a biopsy of the rigging. The most revealing subplot of the college scandal was the arrest of Bill McGlashan. Many others ensnared in the scheme had bolder-faced names, but McGlashan was significant because he had become a symbol of the hope, promoted by so many of the winners of our age, that they would lead the charge toward a fairer society. McGlashan, through the Rise Fund that he helped create and is managed by his private-equity firm, TPG Growth, had helped popularize the growing field of “impact investing”—in which a fund pursues not only economic returns but also the betterment of the world. He was charged with—and pleaded not guilty to—trying to bribe his son into the University of Southern California, thus depriving the people whom he supposedly helped for a living of a fair shot at that college seat.
Exhibit C: In July, Facebook, on account of just one of the scandals hovering over it, this one involving privacy violations, received a $5 billion fine from the Federal Trade Commission. Now, for you, that may be a big fine. For Facebook, it was such a feathery tickle that the company’s stock surged on the news, reaching its highest price in nearly a year. Facebook’s massive market power, its dubious behavior in the face of Russian intelligence activities, its fueling of polarization and its enabling of mis-information and even violence were unaffected by the FTC fine—a penalty that, if anything, left the impression that companies like Facebook enjoy near total impunity.IDEAS
Still, in response to these scandals and outrages, many in the business world declared themselves newly interested in reform. The most prominent and heralded instance this past year was a statement by the Business Roundtable, an umbrella organization whose members are the chief executives of many of America’s largest companies. For decades, the roundtable has clung to a particular interpretation of the purpose of a business—that it is solely to make money for shareholders. With its new statement, issued in August, the roundtable updated its view: “Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans.’”
It was inspiring, limited stuff. What it really revealed was how hard it will be for the old-guard capitalists to change at all. The statement was a call for every corporate signatory to decide, voluntarily, to behave in ways more supportive of people and the planet. As far as I know, no company, because of the statement, announced the cessation of practices in lobbying, tax avoidance, employment or other realms. When I publicly questioned the teeth of a pledge that reminded me of my own pledges not to eat fries, Jamie Dimon, the chief executive of JPMorgan Chase and chairman of the roundtable, contacted me. We talked on the phone for half an hour. He was incredulous that I didn’t trust that the pledge would mean action. I challenged him to give the pledge teeth. Why not begin to lobby for proposals in Congress that would make “stakeholder capitalism” the law, not just an airy promise? Why not excommunicate companies that lobby for things contrary to the stated values of the roundtable? He said the roundtable wasn’t a “police force.” When I put to him that many signatories of this pledge to treat people better were known to be fairly exploitative of workers, he pushed back with words that illustrate that self-reformed capitalism is a lot like unreformed capitalism, but with better public relations. He said that he knew the chief executives I was talking about, and that he liked them; they were good people; he was sure they were kind to employees. Plus, he said, “A lot of people just don’t like to work.” (A spokes-person for Dimon later said to the Washington Post, “These quotes don’t reflect the conversation.”)
In public relations, an important term of art is “getting out ahead of the story.” If bad news about you is coming, pre-empt it by telling the story on your terms. The Business Roundtable’s move, long on rhetoric, short on support for any actual reforms with teeth, seemed very much in that tradition: get out in front of the backlash to extreme capitalism by proposing an optional Capitalism Lite. Then there is the other classic way in which the plutes get out in front of such backlashes: philanthropy. If you’re Goldman Sachs, contribute to a financial crisis that costs millions of men and women their homes and livelihoods, then give back (and scrub your name) through something like the “10,000 Women” program to mentor entrepreneurs.
Yet this year more people seemed to see through this take-and-give playbook. A striking moment came in late March when New York State, led by its new attorney general, Letitia James, filed a lawsuit against members of the Sackler family and others whom it accused of abetting the opioid crisis. In addition to alleging malfeasance in selling the drugs, the complaint made a claim about the use of philanthropy to lubricate wrongdoing. “Ultimately, the Sacklers used their ill-gotten wealth to cover up their misconduct with a philanthropic campaign to whitewash their decades-long success in profiting at New Yorkers’ expense.” The suit cited donations to many arts institutions, resulting in Sackler wings and institutes and centers, while also serving to cleanse their name in a way that allowed the grim machinery of drug peddling to grind on for years.
A protest group holds up signs of Jeffrey Epstein in front of the federal courthouse in New York City, July 8, 2019 Stephanie Keith—Getty Images
Then there was the Jeffrey Epstein case. Epstein, the late sexual predator and maybe tycoon, gave endless ammunition to plutocracy’s critics. Here was a man who had allegedly trafficked and raped children; who had been convicted of serious offenses; and who managed, through deftly arranged philanthropy and social climbing, to re-establish himself in high society. Epstein ingratiated himself with Harvard. He gave money to the Massachusetts Institute of Technology and was given the chance to meddle in its research—a phenomenon that one writer aptly called “sugar-daddy science.” He even spent a surprising amount of time with Bill Gates, a children’s advocate who has since apologized for his lapse in judgment. Yet what Epstein revealed was less individual lapses than systemic rot in our culture—especially at our universities, which have become drive-through reputational laundromats.
As the chances have increased that a candidate outside the neoliberal consensus will win the nomination, we have begun to see the Great Plute Freakout of 2019. A wave of plutes have weighed in about the dangers of a Sanders or Warren presidency. Although their obvious motivation is clear—not wanting to lose their money to the federal government—that’s seldom how they argue it. Instead, they engage in economic concern trolling—framing their self–preservational worries as being, in fact, worries about you and yours. Zuckerberg of Facebook warned us that taxing wealth would limit the diversity of philanthropic efforts in medical research. Leon Cooperman, a hedge-fund billionaire, warned us that taxing wealth would curb the good works that he and his friends do. And then, in the cherry on top, Michael Bloomberg, the former New York City mayor and media billionaire, made moves to launch his own bid for the Democratic nomination. Peak billionaire may be a billionaire deciding to possibly attempt to purchase a party nomination because of his fear that some candidates in the race aren’t plutophilic enough—and then running against a maybe–billionaire who promised that being a billionaire would make him specially incorruptible and now is in impeachment proceedings over his alleged corruption.
America’s crisis of capitalism has cousins abroad. In Chile, an increase in subway fares triggered massive antigovernment, pro-reform protests in recent months, killing at least 20 and injuring more than 1,000. A slogan of the protests has been “Neoliberalism was born in Chile and will die in Chile.” The protesters have been demanding that education and health care be established as rights under the Chilean constitution. Argentina has also been rocked by protests, as it grapples with an economic crisis, rising hunger, and the angry fallout from an International Monetary Fund bailout last year. In Britain, the chaos of Brexit drags on, fueled by feelings that the economy wasn’t working for enough people and questions about whether billionaires should exist.
The mercy of all this elite failure and backlash is this: the ongoing collapse of any pretense of selflessness among the winners of our new Gilded Age.
If a single cultural idea has upheld the disproportionate power of this class, it has been the idea of the “win-win.” They could get rich and then “give back” to you: win-win. They could run a fund that made them sizable returns and offered you social returns too: win-win. They could sell sugary drinks to children in schools and work on public-private partnerships to improve children’s health: win-win. They could build cutthroat technology monopolies and get credit for serving to connect humanity and foster community: win-win.
As this seductive idea fizzles out, it raises the possibility that this age of capital, in which money was the ultimate organizing principle of American life, could actually end. Something could actually replace it. After all, a century ago, America was firmly planted in the first Gilded Age—and then it found its way into the Progressive Era and the New Deal, an era of great public ambition. Business didn’t go away; it wasn’t abolished; capitalists didn’t go into gulags. It was just that the emphasis of the society shifted. Money was no longer the lodestar of all pursuits.
The choice facing Americans is whether we want to be a society organized around money’s thirsts, a playground for the whims of billionaires, or whether we wish to be a democracy. The second Gilded Age will end at some point. The question is what comes next: What Trump offers is tribal nationalism, strongman politics and plutocrat–friendly policy greased by populist rhetoric. The other possibility is that, as occurred a century ago, a gilded age collapses into an age of reform: an era defined culturally by renewed public purpose and politically by the restoration of the state in areas where people are too powerless to solve problems of their own—defined by the use of shared institutions to solve shared problems. You can already see glimpses of how an age of reform is being dreamed up. Higher taxes on the very fortunate, to be sure; more regulation and worker protections and the like. An attack on climate change almost as dramatic as climate change itself. Programs to give workers greater security. It would be an age in which it was cooler, more thrilling, more admired, more viable to change the world democratically.
If there is one thing that could hasten the end of the age of capital and accelerate the coming of an age of reform, it is a vigorous new culture of joining in American life. Not clicking, not liking, not retweeting, not TikTokking, not screaming at MSNBC/Fox, but actually joining: political movements and civic organizations with memberships so vast that politicians cannot ignore them. The age of capital has been facilitated by a remarkable solidarity among the ultra-fortunate. Putting that period in the museum will take other, broader solidarities.
Giridharadas is a TIME editor at large and the author of Winners Take All: The Elite Charade of Changing the World
THE AMERICAN DREAM IS KILLING US: By almost every major statistical measurement, the average American is worse off than they were a generation ago. By Mark Manson, 2016:
Imagine this: you’re a kid again, and you want to sell lemonade in your neighborhood. So you set up your little lemonade stand with your cardboard sign written in crayon and get to work.
The first day, one person comes and buys some lemonade. Then the second day, two people come. Then the third, three. And the fourth, four. Within a month, you’re serving dozens of people lemonade every day and the demand just keeps growing.
But it gets better. Not only does the whole neighborhood want a taste of your sweet, citrus squeeze, but the price of lemons just seems to keep getting cheaper. At first, you can get five lemons for a dollar. Then the next week you can get eight for a dollar. Then the next you can get twelve. And on and on. Within a few months, you’re a lemonade money-making machine.
Of course, news gets out about your magical lemonade neighborhood. And pretty soon other kids are setting up their lemonade stands all around you.
But it doesn’t matter, the demand just keeps growing. So you welcome these other kids. You tell them, “This is the neighborhood of opportunity, where anyone can sell lemonade and make money.” Meanwhile, as if by magic, more people show up every day for lemonade, and the price of lemons just keep getting cheaper.
You and the other kids realize something: it is impossible to not make money in this neighborhood. The only way not to make money is to be either lazy or completely incompetent.1 Your lemonade opportunities are only limited by the time and energy you’re willing to put into it. The sky is the limit, and the only thing standing between you and your dreams of lemonade riches is yourself.
Unsurprisingly, a culture starts to develop around the neighborhood. Narratives are formed about certain kids who sell lots of lemonade and other kids who don’t. This kid is a genius and sells lemonade 20 hours a day. This kid is a loser who couldn’t sell ice water in a desert, not to mention he probably drinks half of his own stash.
Kids come to see life in a pretty simple way: people get what they deserve. Or put similarly: people deserve whatever they get. And if they want something better, they should have been smarter and/or worked harder for it.
Time goes by. And news of this magical lemonade neighborhood — now serving lemonade to thousands of customers daily — starts to spread widely. Kids start bussing in from faraway neighborhoods to try their hand at making it in the lemonade world. They take the worst jobs squeezing lemons and throwing out garbage because they know that with the boundless opportunity in the lemonade neighborhood, it’s merely a matter of time before they move up and start making good money themselves.
This goes on for months, and the kids in the neighborhood begin to realize something else: that their neighborhood is special. It seems to be chosen by God. After all, if kids are bussing in from all over town just to sell drops of lemonade here, there must be something truly special about the opportunities present. The kids here have far more money. And they work twice as hard as kids anywhere else. This really must be an exceptional place.
But then one day, things begin to change. First, you hear that the Japanese kids across town have figured out how to produce twice the lemonade for half the price, making it impossible for you to compete. Then, there are rumors that the massive influx of poor Chinese kids are undercutting your prices and stealing away your customers.
But secondly, some of the more successful lemonade vendors have gone around and bought up the less successful lemonade stands. So instead of hundreds of independent lemonade vendor kids, you have about a dozen uber-rich kids controlling the majority of the lemonade market. And to cut costs and bring in good returns for their investors, they start paying workers less for the same work. But instead of telling the kids this, they tell them to simply work harder. After all, people deserve whatever they earn, right?
It happens slowly at first. But then the reality becomes unavoidable: kids in the neighborhood are now making less money even though they are working harder and longer than ever before.
Photo by Nina Frazier
But beliefs lag behind reality. People who lose massive amounts of weight still see themselves as overweight and unattractive for years. People who used to get bullied when they were young grow up to be unassuming adults who constantly underestimate others’ ability to accept them.
And culture is no different. The economic reality of the lemonade stands has now shifted, and it’s not a bright outlook. But the children’s beliefs persist: the underlying culture stays the same.
As a result, the blame game begins. After all, it can’t be the beliefs that are wrong, it must be someone else who is screwing things all up.
The educated kids who had taken the time and money to earn degrees in lemonade squeezing and street vending looked at the kids without credentials as weak-minded and inferior simpletons who brought their misfortune upon themselves. The hardworking kids who started with nothing looked at the more fortunate kids who were handed their first lemonade jobs and blamed them for being entitled and unprepared for setbacks. Soon, the neighborhood turned in upon itself and began to devour itself. Battle lines were drawn. Factions were born. Factions that were political and extreme and fervent and contradictory. Yet the underlying assumption remained. The world changed, but the assumption remained.
In no other time in world history has a group of relatively well-educated and industrious people been essentially handed a sparsely-populated continent replete with natural resources, wreathed by two vast oceans on each side protecting it from any potential invaders.4
Yes, for the first 300 years of its history, the US was the lemonade stand where more and more customers magically showed up. Whereas civilizations in Europe and Asia grew, peaked, and died many times over, the people of the US never had to deal with such limiting factors. Economic opportunity and progress appeared to be god given — such a constant that generations of people came and went without knowing life without it.
The United States’ meteoric rise to world superpower happened because of the confluence of four unique factors that it benefitted from greatly:
- Unlimited Land – From the very beginning, the US enjoyed a constant state of expansion. It took over 100 years from the country’s inception for it to stretch itself from ‘sea to shining sea.’ In the 20th century, the US added territories in the Caribbean and Pacific, most notably Hawaii and Alaska. Cheap and fertile farmland was always plentiful. And natural resources appeared to be endless, with massive reserves of oil, coal, timber, and precious metals that are still being discovered today.5
- Unlimited Cheap Labor – The vast majority of the United States has remained sparsely populated throughout its history. In fact, it was a real concern of the founding fathers and they believed they needed to attract a steady flow of immigrants from all over the world to develop a robust and self-sustaining economy. To do so, they created a democratic system that promoted entrepreneurialism and attracted talent. This generated an endless influx of cheap, industrious labor that still continues to this day.And that’s not even mentioning that little thing we had for a while called ‘slavery.’
- Unlimited Innovation – Perhaps the one thing the US system got right more than anything else is that it is set up to reward ingenuity and innovation. If you come up with the latest, greatest idea, it’s here, more than anywhere else, that you’ll get rewarded for it. As such, many of the great technological advances in the last few centuries came from brilliant immigrants that the US attracted to its soil.
- Geographic Isolation – Civilizations in Europe and Asia were invaded, conquered, invaded again, conquered again, back and forth with the tides of history wiping cultures and peoples from the map over and over again. Each time, the destruction set society back, forcing them to reconsider themselves as they rebuilt.But not the United States. It was just too bloody far away. I mean, if you’re Napoleon, why load up a bunch of expensive ships and sail for weeks, when you can just invade Italy, like, tomorrow?As a result, the US developed a sense of being isolated from the world. With the exception of Pearl Harbor (which took a lot of fucking effort from Imperial Japan), we’ve just been impossible to get to.Americans take this for granted. But its effect cannot be overstated. As recently as a couple decades ago, much of Europe feared an imminent invasion from the east. Hell, some European countries still fear that invasion.6
It’s from this intersection of good fortune, plentiful resources, massive amounts of land, and creative ingenuity drawn from around the world that the idea of the American Dream was born.7
The American Dream is simple: it’s the unwavering belief that anybody — you, me, your friends, your neighbors, grandma Verna — can become exceedingly successful, and all it takes is the right amount of work, ingenuity, and determination. Nothing else matters. No external force. No bout of bad luck. All one needs is a steady dosage of grit and ass-grinding hard work. And you too can own a McMansion with a three-car garage… you lazy sack of shit.
And in a country with constantly increasing lemonade customers, endlessly expanding land ownership, endlessly expanding labor pool, endlessly expanding innovation, this was true.
The Stagnating American Dream
In the future, people will probably point to the 9/11 terrorist attacks as the inflection point where the US began its slow descent away from global dominance. But the truth is that the deteriorating forces have been at work within the country for decades.
By almost every major statistical measurement, the average American is worse off than they were a generation ago. Some pundits have taken to blaming the younger generations, saying that they’re entitled, self-centered, too absorbed in their smartphones to work,8 and while some of those complaints may have a grain of truth to them, the data suggests that the kids are not the problem.
Generally speaking, Americans today, especially young Americans, are the most educated and productive generation in US history:
The US population comprises more college graduates than at any other time point in history. Source: Census.gov
US worker productivity has steadily increased over the past 65 years. Source: Trading Economics
But they are also incredibly underemployed or unemployed:
Underemployment and unemployment of young college graduates still lags far behind pre-recession levels. Source: Economic Policy Institute
This is for the simple reason that there are no jobs, especially middle-class jobs. Despite Obama’s impressive proclamation that he’s halved the unemployment rate since he took office, most of the drop in unemployment since the 2008 crisis has come from part-time or low-skilled jobs, and from people leaving the workforce altogether.
Most jobs created since the recovery began have been low-wage jobs followed by high-wage jobs. The recovery of middle-wage jobs has been lackluster, however. Source: NYTimes via National Employment Law Project
Today, approximately 25% of people with college degrees don’t have a job and aren’t even looking.9
Hipster or underemployed millennial? Or wait, is there a difference?
But why? What happened? Where did we go wrong or did we even go wrong? Who can we blame in angry Twitter rants or at cocktail parties?
Well, there’s actually no one to blame. It’s just that the strategies and beliefs that the country were founded upon have finally bumped up against their limitations:
- No More Land. Fact is, we ran out of land around 1900. So we conquered Cuba and the Philippines and like, Guam, and stuff. But after the World Wars happened we realized something the English never did: that is, why spend all of your time and money actually invading a poor country when you can just lend them money and tell them to sell you stuff for really cheap?That’s essentially what we did throughout the Cold War. We called it a global hegemony, and it was basically like this low-level form of extortion of the third world: either open up trade for us, let our corporations come in and use your land and cheap labor, or get shut out and continue to wallow in poverty.And it worked. Dozens of markets around the globe opened up to us, and in return, we promised that our military would protect them from communism.But that too has dried up. Most of the poor economies have developed enough that they aren’t so cheap and easy to exploit anymore. Or at least not as much as they used to be. In fact, some of them may soon become our competitors.
- No More Cheap Labor. Yeah, that all got outsourced. I mean, why employ a bunch of local laborers when you can build a factory in China and get the stuff made for ¼ of the cost? RIP, Detroit. Oh, and there was this whole thing called “slavery” you might have heard of. It ended.
- Innovation is Now Creating Fewer Jobs, Not More. This may be the biggest and scariest one of all. With the rise of information technology, automation, and artificial intelligence, the fact is that we don’t need as many people as we used to.10 You know when you walk into CVS and that computer screen yells at you to put your shit in the bag and then you just swipe your card and walk out? Yeah, the whole world is going to be like that soon. Accountants. Pharmacists. Even taxi cabs and truck drivers. That’s potentially tens of millions of people out of work. With no opportunity for those jobs to ever come back.But this isn’t just going to hit the service sector. This is also largely responsible for the manufacturing sector getting hosed. Despite what Trump may yammer on about, US manufacturing output has doubled in the past 30 years and is still the biggest sector in the US economy.11 The problem is that it’s done that while only employing about 75% of the workers that it used to.12 That’s not the Chinese stealing those jobs. That’s improved technology. You know, robots and shit.
In other words: the lemonade party is over. The customers have stopped coming. The market is contracting. The easy money for anybody who wanted it is now gone.
Doesn’t matter who you elect, these jobs ain’t coming back.
In fact, it’s now the opposite: now there are millions of hardworking, intelligent people who are living from paycheck-to-paycheck and are stuck in jobs with few opportunities for advancement and little hope for the future.13 And many of these people are pissed.
The sad truth is that fewer people today are getting ahead than before.14,15 And they’re getting ahead not due to their hard work or their education as much as their connections, their family’s socioeconomic status, and of course, just the plain luck of not getting horribly sick or getting into a serious accident.16
Not only is this not the American Dream, it’s the antithesis of the American Dream. It’s the old feudal order where you’re born into your privilege (or lack thereof) and forced to just hope things don’t get any worse.
In fact, economic mobility is lower in the US than almost every other developed country, and somewhere on par with Slovenia and Chile — not exactly the gold standards of economic opportunity in the world (no offense to my Slovenian and Chilean readers). And other Anglo countries such as Australia and Canada have far more economic mobility, as well as those icky socialist countries like Denmark, Sweden, and Finland.
The intergenerational correlation of wealth between fathers and son’s shows how closely a male’s wealth matches his father’s wealth and is used as a measure of economic mobility. Note that the higher the intergenerational correlation, the lower the economic mobility. Source: Economic Policy Institute
“So the American Dream is dead. Big whoop? What’s your point, Manson?”
Well, I’ll tell you my point. It’s the last part of The Tragedy of the Lemonade Stands that is so dangerous. See, the kids developed a belief system around “success = hard work = deserving great things” and “failure = laziness = deserving shitty things.” And those heuristics work great in a society where there’s boundless opportunity, infinite resources, and constantly expanding markets.
But when the tides turn, and those opportunities are simply no longer there, well, these same beliefs become quite dangerous and even destructive.
- The American Dream causes people to believe that people always get what they deserve. The American Dream is essentially just another form of what psychologists call “The Just World Hypothesis.”The Just World Hypothesis says that people get what’s coming to them — bad stuff happens to bad people and good stuff happens to good people. Bad stuff rarely (if ever) happens to good people and vice-versa.There are a couple problems with the Just World Hypothesis though: a) it’s wrong, and b) believing it kind of turns you into an unsympathetic asshole.17He’s got a point, you know.All of us get fucked at some point in our life in a very major way. Whether it’s a car accident, cancer, being robbed at gunpoint, or developing a crippling fear of peanut butter, we all get shit on in our own little special snowflake way in life.We all understand that on some level. But over 25% of Americans have no savings. Zero. I know what you’re saying, “They shouldn’t have spent so much money on flat screen TVs!” And maybe there’s something to that. But the labor market is at an all-time low. Real wages have been stagnating for 50 years straight.18 The point is: the jobs just suck. The lemonade customers have stopped coming, and that changes everything. Because it means people can work just as hard as they did before (or even harder) and end up in a worse place.Here’s a stat that will knock your socks off: 45% of homeless people have a job. You know that guy that sleeps on the bench in your favorite park and smells like cat piss and when he asks you for a dollar, you scream, “Get a fucking job!” at him? Yeah, chances are, he already has one. Asshole.
- The American Dream causes us to believe that people are only worth what they achieve. If everybody gets what they deserve, then we should treat people based on what happens to them. Therefore, success makes you into some kind of saint, a role model that everyone else should follow. Failure turns you into a pariah, an example of what everyone else should try not to be.This creates an extremely shallow and superficial culture where people like the Kardashians are celebrated for no other reason than they have fame and money, and people like war veterans, 9/11 first responders, and life-changing school teachers are more or less ignored and in some cases, left to die. The unspoken assumption is that if they were so great, where the hell is their money to take care of themselves?It feels good to believe we all get what we deserve when the gravy train is rolling and there are new jobs and industries sprouting up like hairs in a dog’s ass crack. A rising tide raises all ships, as they say. And if our ship is rising, it feels pretty good to assume that it’s because we’re a bunch of big-balled badasses.But the truth is that people don’t always get what they deserve. Bad things do happen to good people. We all screw up and make mistakes. Each of us suffers from some vice or tick or failure. And that same belief that makes us feel so good when times are great, is the same one that causes us to shame and demonize ourselves when things aren’t so great.
- The American Dream indirectly encourages people to feel justified in exploiting others. A couple years ago, a friend of mine was accused of a serious crime that he did not commit. He hired a lawyer, went to court, and was found not guilty.About six months later he received a letter from a legal office threatening to sue him for the exact same offense he was just found “not guilty” of in criminal court. After consulting his lawyer, the lawyer said that this was basically just a scare tactic, probably an automated letter, designed to scare people into paying a settlement rather than going back to court again.So think about this a second. There is a lawyer out there (or team of lawyers), who go down to city hall and look through the registry of people who have been acquitted of major crimes. These lawyers then, without even knowing anything about the people involved, send a letter to the acquitted person, threatening to sue them on the victim’s behalf, hoping that maybe, one out of ten or one out of twenty will be scared enough to pay up some money so that the lawyer will go away.This is pure exploitation. And the sick thing is, it’s perfectly legal. In fact, the lawyers who do this probably make decent money and have nice cars and live in nice neighborhoods and seem like nice fucking guys as they fetch their newspaper and pet your dog and comment on the latest sports scores.But they’re total scumbags. Scumbags to the point where I’m getting angry typing this right now.But in a culture where your worth as a human being is tied with your level of socioeconomic success, there will arise a kind of “might makes right” principle — i.e., if I do something that gets money out of you, well, it’s your fault for not knowing any better.Now that the Tragedy of the Lemonade Stands has hit, and the opportunities are drying up, and people are running harder just to stay in place, more and more people are turning to skimming a little bit off the top from the next guy over, to make it appear as though they are a success in which they’re not.19 Whether it’s selling penis pills on the internet or creating bogus websites that trick you into clicking on ads, or you’re a lawyer who tries to scare recent defendants into giving you money not to sue them, it all becomes not only more justifiable, but it becomes more necessary to maintain the same cultural belief that hard work always wins out.Or as it was once said on The Wire:“You know what the trouble is, Bruce? We used to make shit in this country—build shit. Now we just put our hand in the next guy’s pocket.”
When you’re a kid, you believe everything is right in the world. You go to school, you do what your parents say, you believe what people tell you, and you assume everything is going to work out.
But when you’re a teenager, you come to realize that a lot of this is bullshit. By the time you reach adolescence, you are subjected to life’s first traumas and failures. You recognize that the world isn’t fair. Things go wrong sometimes. Bad things happen to good people and vice-versa. And in many ways, you’re not as great as you had always thought or realized.
Some teenagers handle this realization well and with maturity. They accept it and cater themselves to it.
Other teenagers, particularly teenagers who are pampered and learn most of what they know about the world through TV or internet, don’t handle it so well. The world doesn’t conform to their small-minded belief system and instead of blaming the belief system, they blame the world. And that blaming doesn’t turn out well for anybody.
The US is a young country. Culturally, we are teenagers — just a couple generations out of our golden years of innocence. And as a country, we are coming to realize that our young idealism has its worldly limits. That we are not exceptions. That things are not just. That we cannot fully control our destiny.
The question is how well we will adapt and mature to this new reality. Will we accept it and modify our ethos to match the 21st century? Or will we become petulant and angry and scapegoat our cognitive dissonance of our national consciousness away?
Perhaps the best thing about the United States is that we get to decide.
- Or a woman. Or black. Or Native American. But we’ll get to that a little bit later.↵
- Yes, I know technically, ‘Americans’ means everyone in the western hemisphere. But colloquially, people in the United States (and most of Europe and the world) refer to people in the US as ‘Americans’. Call us arrogant and self-centered. You’d be right. But for the sake of simplicity, I’m sticking with it.↵
- John Winthrop’s 1630 speech, “A City Upon the Hill” called for the New England colonies to become an example for the rest of the world to follow. Alexis De Tocqueville coined and commented on this “American Exceptionalism” in his famous book Democracy in America.↵
- The Spanish and Portuguese saw their New World territories as something to be exploited and pillaged. As a result, they did not invest any energy into generating an infrastructure for a sustainable civilization in South or Central America. In fact, they did the opposite. They intentionally kept their populations impoverished and helpless. The British, on the other hand, wanted to build up self-sustaining colonies that it could add to its global network of commerce. The residue of these two European approaches goes a long way to explaining the difference between the North and South that continue today.↵
- As I write this, there’s news that they believe they just discovered a massive new oil reserve in Alaska. Sorry nature.↵
- I’m looking at you, Putin.↵
- The American Dream itself was coined in the 1930s, but US history is riddled with similar concepts dating back to the 18th century and the Declaration of Independence itself.↵
- Stein, J. (2013, May 20). Millennials: The Me Me Me Generation. Time.↵
- Bureau of Labor and Statistics (2015) Employment status of the civilian noninstitutional population 25 years and over by educational attainment, sex, race, and Hispanic or Latino ethnicity.↵
- Hilsenrath, J., & Davis, B. (2016, October 12). America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs. Wall Street Journal.↵
- Nutting, R. (2016, March 28). Think nothing is made in America? Output has doubled in three decades. MarketWatch.↵
- Long, H. (2016, March 29). U.S. has lost 5 million manufacturing jobs since 2000. CNNMoney. Retrieved from↵
- Johnson, A. (2013, June 24). 76% of Americans are living paycheck-to-paycheck. CNNMoney.↵
- Casselman, B. (2015, October 8). It’s Getting Harder To Move Beyond A Minimum-Wage Job. FiveThirtyEight.↵
- V. S. toristilwell. (2015, December 10). Here’s How Much the U.S. Middle Class Has Changed in 45 Years. Bloomberg.com.↵
- Khazan, O. (2014, October 8). Why Americans Are Drowning in Medical Debt. The Atlantic.↵
- Those who strongly believe people get what they deserve — that good things happen to good people and bad things happen to bad people — are more likely to blame victims of things like violence, poverty, and disease, even when it’s abundantly clear that the victims have little to no control over their circumstances. See: Furnham, A. (2003). Belief in a just world: research progress over the past decade. Personality and Individual Differences, 34(5), 795–817.↵
- D. Desilver. (2014, October 9). For most workers, real wages have barely budged for decades.↵
- This is especially true in a performance-based society where setting and achieving goals is seen as some sort of perverted religion. The thing is, if you don’t have the right goals, you can turn into a real asshole, where the ends of achieving said goals justifies any means you used to get there. See: Schweitzer, M. E., Ordóñez, L., & Douma, B. (2004). Goal setting as a motivator of unethical behavior. Academy of Management Journal, 47(3), 422–432.↵
This article was originally published on October 27, 2016, by Mark Manson