Friday, May 20, 2016
Fascinating to Watch, Scary to Live Through
The twenty-first century is hurtling through change. Implemented with the rapidity of an invading army, change is ripping through our lives with explosive force. We are seeing seismic shifts in technology – now beyond the Web, including driverless cars and hyperloops threatening to replace trains – as new armed insurrection and conquests morph into clashes between civilizations… redrawing boundaries, rebellion accelerated by massive and serious alterations global climate patterns, desertifying once fertile farms, flooding other lands into inhabitability. Superpowers struggle for supremacy, almost always accompanied by significant upgrades and expansions of military capacity… and a new willingness to use these, generally through surrogates.
In the West, there is this sinking feeling that economics for most of us will never return our nations to the glory days we enjoyed a few decades ago; as total societies, we do not expect to enjoy the true relative earning power our parents did. Whether it is generated by the Malthusian reality of too many people on this planet scrambling to access dwindling resources or a value shift from legacy practices weighing down older nations, the greatest losses in the West are suffered from the middle classes on down. Those in the West with wealth and super-earning power have more money than ever, enjoying off-shore income manipulations and the benefits of productive asset ownership. As the West falls, Asia rises.
Populism, from the left and right, are tearing at the seams of the European Union, challenging the viability of the open borders inherent in the EU Schengen Agreement and questioning the functionality of a single currency. As Britain contemplates Brexit, other EU countries question why they too do not have the ability to vote to opt out. In the United States, lashing out at incumbent and entrenched power players has torn through both major political parties. This has lead the Republicans to the edge of nominating a candidate who has challenged some of that party’s most basic elitist policies. Establishment Democrats feel the fierce bites of an unrelenting socialist bulldog, unwilling to accept the likely legacy candidate as their likely nominee.
Internal labor laws within some of the most powerful EU economic players – Germany and France at the fore in a world where firing a worker is close to impossible – illustrate the growing battles between social benefits and competitive economic realities. The French believe that having a job is a basic constitutional right. The near impossibility of discharging an employee has led too many potential employers to avoid hiring young-entering-the-job-market workers for fear of not being able to let them go should business go bad or such workers not proving themselves. While the overall jobless rate in France is an unacceptable 10%, that number really reflects a 24% unemployment rate among the youngest potential workers.
French employers often resort to questionable tactics (like moving an executive from a plush office to what the French call “le placard” – the closet) to force the unwanted to quit. It’s not pretty. “While many other European countries have revamped their workplace rules, France has barely budged. [A] new labor bill — weakened after long negotiations — wouldn’t alter the bifurcated system, in which workers either get a permanent contract called a ‘contrat à durée indéterminée,’ known as a C.D.I., or a short-term contract that can be renewed only once or twice. Almost all new jobs have the latter.
“And yet it isn’t just unions that oppose the bill. So do more than 60 percent of the population, who fear the bill would strip workers of protections without fixing the problem. Young people took to the streets to oppose it, demanding C.D.I.s, too… Why are the French so wedded to a failing system?... For starters, they believe that a job is a basic right — guaranteed in the preamble to their Constitution — and that making it easier to fire people is an affront to that. Without a C.D.I., you’re considered naked before the indifferent forces of capitalism.
“At one demonstration in Paris, young protesters held a banner warning that they were the ‘génération précaire.’ [precarious/insecure generation] They were agitating for the right to grow up. As Jean-Benoît Nadeau and Julie Barlow point out in their new book, ‘The Bonjour Effect,’ getting a permanent work contract is a rite of adulthood. Without one, it’s hard to get a mortgage or car loan, or rent an apartment.
“Mainstream economic arguments can’t compete. ‘Basic facts of economic science are completely dismissed,’ said Étienne Wasmer, a labor economist at Sciences Po. ‘People don’t see that if you let employers take risks, they’ll hire more people.’ Instead, many French people view the workplace as a zero-sum battle between workers and bosses… Economic debates are also framed as political showdowns.” New York Times, May 11th. Folks are looking around them, sensing the new “middle class” insecurity and reacting with whatever tools they can find, usually political rebellion. Like the new populism developing everywhere in the West, most surprising to those of us in the “capitalism headquarters,” the United States of America
Democratic presidential-wannabee Bernie Sanders openly uses the word “socialism” – which would have sealed his fate a decade ago – and joins luminaries like Bill Gates and Elon Musk in fretting about what happens when artificial-intelligence-automation decimates the job market in the coming years. Indeed, as politicians promise to return manufacturing jobs to U.S. shores, the reality is that most of that re-imported manufacturing capacity has returned will return to highly automated plants where those who really make the big bucks are the owners of the machines and not the workers who have long-since lost their jobs. Just looking at what’s happening to the American middle class tells us that the United States is in for a very bumpy future as well, perhaps more violent and disruptive than even Europe.
“The great shrinking of the middle class that has captured the attention of the nation is not only playing out in troubled regions like the Rust Belt, Appalachia and the Deep South, but in just about every metropolitan area in America, according to a major new analysis by the Pew Research Center.
“Pew reported in December that a clear majority of American adults no longer live in the middle class, a demographic reality shaped by decades of widening inequality, declining industry and the erosion of financial stability and family-wage jobs. But while much of the attention has focused on communities hardest hit by economic declines, the new Pew data, based on metro-level income data since 2000, show that middle-class stagnation is a far broader phenomenon.
“The share of adults living in middle-income households has also dwindled in Washington, New York, San Francisco, Atlanta and Denver. It's fallen in smaller Midwestern metros where the middle class has long made up an overwhelming majority of the population. It's withering in coastal tech hubs, in military towns, in college communities, in Sun Belt cities.
“The decline of the American middle class is ‘a pervasive local phenomenon,’ according to Pew, which analyzed census and American Community Survey data in 229 metros across the country, encompassing about three-quarters of the U.S. population. In 203 of those metros, the share of adults in middle-income households fell from 2000 to 2014.” The Washington Post, May 11th. The world obviously and continuously redefines itself, revolution and evolution. How we address the obvious dissatisfaction of the majority of “us” will determine which nations survive… and which find themselves relegated to the trash-heap of history.
I’m Peter Dekom, and as I said, these times are fascinating to watch but scary to live through.