Ed, Your colors are not arriving!
Probably the fault of Bush, Cheney and Rummy.
Makes it difficult to find your bits.
Perhaps your name before each of your paragraphs would help.
Don't know why the colors fail to arrive. Is this red?
It says it's red, and the formatting declares the line is
red - yet it is still black (to me).
So, the problem is mine. I'll work on it.
Harry
*******************************
Henry George School of Social Science
of Los Angeles
Box 655 Tujunga CA 91042
818 352-4141
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From: Ed Weick [mailto:[EMAIL PROTECTED]
Sent: Monday, May 23, 2005 7:56 AM
To: Keith Hudson
Cc: 'Karen Watters Cole';
[email protected]; [EMAIL PROTECTED]
Subject: Re: [Futurework] NYT Series: Class
in America: shadowy linesthatstilldivide
In this colour.
Ed
----- Original Message -----
From: Keith Hudson
<mailto:[EMAIL PROTECTED]>
To: Ed Weick <mailto:[EMAIL PROTECTED]>
Cc: 'Karen Watters Cole'
<mailto:[EMAIL PROTECTED]> ;
[email protected] ; [EMAIL PROTECTED]
Sent: Monday, May 23, 2005 3:22 AM
Subject: Re: [Futurework] NYT Series: Class
in America: shadowy linesthatstilldivide
Ed,
This is becoming a fascinating discussion
and, if I can make a slight claim to having told it on FW
several years ago, the social and income divide that is now
becoming increasingly apparent is part of what I called the
"hour-glass" phenomenon in the modern job structure. This is
that the skills of the modern economy are increasingly
dividing between high skills and low skills. In the
high-skills lobe of the hour-glass we have the rich, the
technocrats, the CEOs and the self-identifying
intelligentsia. This portion of the population -- say about
20% -- are not all of one mind, of course, and they're not
always rich -- and they sometimes they have bitter things to
say against one another -- but they all have one thing in
common and this is that here is increasingly yawning gulf
between their values and ways of life and the general
population. In reality, the 20% tend to despise the general
values of the rest even though they are necessary to extract
revenue from.
I interpret this as being the way that the
rank-ordering instinct within primate and human groups is
now being projected onto a much larger and more complicated
scene. This is evolution in action in the human species. In
societies prior to the agricultural revolution of around
10,000BC, human evolution proceeded relatively simply.
Generally, the less competent didn't survive because life
was very rigorous and dangerous. A little more precisely
(and a phenomemon that modern evolutionary biologists are
increasingly thinking may be the most important factor) the
females choose the more competent males so the least-able
tended not to produce offspring. In the two recent centuries
this has been overlaid somewhat by the massive population
surge (until the last decade or two) of all parts of the
population in the developed countries -- the able and the
less able -- due to prosperity brought by fossil fuels. But
let me leave that for now and turn to some allied comments
on what you have written.
At 15:31 22/05/2005 -0400, you wrote:
Not really sure of what you are saying,
Harry. If you are telling me that the present situation has
been encountered many times in the past, I'd agree. Because
of their control over land or capital, the rich have always
been enormously better off than the poor. Except perhaps
during periods of great economic and social change, income
and class gaps have tended to widen instead of narrow.
However, I would argue that, in the past,
the poor had more ways of getting out of situations of
poverty than they have today. The 18th and 19th Centuries
were times of large-scale population movements, not only
from the country to the city, but from country to country.
Yes, during that period of rapidly growing
industrialisation there were many opportunities for the
brightest of the poor getting out of poverty -- most of the
great innovators and industralisiasts were orignally poor
people who taught themselves -- Telford, Brunel, Wedgewood,
Carnegie, etc. But their children and granchildren, once
they had broken through into great wealth and joined the
previous land-based ariocracy became "frozen" again. But
from about 1900 innovation then tended to come from the
middle-class of Western Europe and America, and that has
since become even more concentrated as the richer classes
were able to supply a far better education to their own
children than was available to those of the masses. Today,
in England (and in America, too) almost all the leading
scientists and public intellectuals come from private
schools (7% of the whole in England). However, within the
wider world of economic development, this picture is being
shattered again by China and India where, once again, even
the children of the poor -- by virtue of brains and hard
work -- can, and do, break into the upper class.
But what happened in the period before the
industrial revolution? Instead of, say, a 20%
meritocratic/aristocratic portion being required to run the
show, the numbers were far smaller. The opportunities for
the brainy sons of the peasantry were very remote. But it
happened -- usually via the all-powerful church and monastic
system where the monks would identify the occasional very
bright peasant child and recruit him into the system. At the
highest levels of the church and secular government,
individuals could easily slide between them -- they were one
society really.
Early in the 19th Century, one branch of
my ancestry was trapped in a part of Germany,
Baden-Wuertemburg, that had been ravaged by war and was
going absolutely nowhere economically. So they got out of
there by moving to another part of Germany, then to the
Ukraine and then to Canada. It took a hundred years or so,
but while each of the early moves paid-off in small ways,
the final move, to Canada, paid off rather handsomely. The
Irish left famine ravaged Ireland during and after the 1850s
in droves and headed to the US and Canada. That also paid
off, as did a mass exodus from the Ukraine early in this
century. One also thinks of the migration across the US and
Canada during the 19th and 20th Centuries. It paid off
hugely for Americans and Canadians of European extraction,
even if it played hell with native Americans.
My point is that moving to a place in which
you could find work and a livelihood was a real possibility
during recent times, but times that are now past. Now the
world is filled up. Relocating to a better place is far
less possible. Sure, techies still move to California, as
many from the Ottawa area did not long ago, but now it is
mainly the jobs that are moving. In the US, the movement of
jobs from the northeast in the 1960s produced the Rust
Belt, noted for its abandonment of factories as
manufacturers relocated to less costly places in the south,
overseas, and Mexico. The loss of jobs is currently
continuing with the outsourcing of hi-tech, manufacturing
and service jobs to developing countries in Asia. You can't
move Americans to where the jobs are going, but you can move
jobs and capital to places where labour is cheaper.
Yes, all the above is very accurate --
except right at the end. Please don't keep on the usual
refrain about cheap labour. That's a relatively small part
of the decision-making. As I frequently say on FW, why
hasn't American industry moved into Africa where labour must
be the cheapest of anywhere in the world? There are mental
and cultural factors, too. There are matters such as
reliability, quality of local management, the available
educational level and so on. It's only in the lowest skilled
sectors -- such as textiles -- where low labour costs are
significant. But in the production of a car, for example,
direct labour costs are today only about 15% of the total
cost -- and this is steadily decreasing due to automation.
In the production of modern electronic goods, the direct
labour costs are below 5%. (That's the criterion Japanese
industry uses in deciding whether to move their production
operations from Japan to China. If labour costs in Japan are
above 5%, they move.)
Not sure that I entirely accept your points
here. However, my experience is limited to a couple of
cases. I've been to Ireland a couple of times, in the 1970s
and again in 2000. What had happened to the country between
the two visits was phenomenal. In the 1970s, it was dark,
dreary and poor. It seemed that nothing was being looked
after. In 2000, everything was bright, new and seemingly
efficiently organized. Why? I was told it was because
Ireland had become part of the EU and had a well-educated
but relatively inexpensive labour force. Things could get
done more cheaply there than in Britain or on the continent.
My other case is Costa Rica. There is a huge Intel plant
just outside of San Jose, the capital. Why? A well
educated, well disciplined labour force willing to work much
more cheaply than Americans would. Another very important
factor in both the case of the Republic of Ireland and of
Costa Rica is stability. You can put your capital there
without being afraid that something dreadful is going to
happen to it. The problem with Africa is not its labour
force. It's that you could never be sure of what was going
to happen.
It is not only the fact that the world has
now filled up that has produced this situation. It is also
that there are huge wage disparities in wage costs between
rich lands and poor . Increasingly, the poor world produces
and the rich world consumes. This probably won't work as a
long run strategy. The productive world will get richer, as
China and India are, and the rich world will get poorer.
But not as a whole. This is the whole point.
The 20% sector in America (and Western Europe) is still
doing very well, thank you. In the distribution of income
chart from the NYT which you copied, note that the
histograms are rising geometricaly. The rich are now not
only getting richer, but they're getting richer at a faster
rate and the poor are losing out at a faster rate, too.
Not sure you can really say this. The chart
(which is not from the NYT) contains data for only one year.
It in itself does not tell you anything about whether income
in the quintiles are rising or falling. It only gives you
the distribution for that particular year. Other studies
refer to declining inter-class mobility (rich getting
richer, etc.) but I don't think one can infer geometric
progressions from this.
But what is happening isn't based on long
run thinking or strategizing. It's based on millions of
little decisions people take every day. Manufacturers or
people in the service industries think about where they can
get things done cheapest and consumers think about where
they can buy the cheapest products - why, Wal-Mart of
course, which gets a lot of the stuff it sells from China.
And while it's all happening, this filled-up world is
becoming more rigid in terms of its class structure and what
we can all expect out of life.
Yes. But there is now another factor. Look
at what is happening to American exports -- or, rather, what
is not happening. The value of the dollar has been declining
for several years now (30% against world currencies, 60%
against the European Union's euro), and yet America hasn't
been able to respond in the usual way by expanding its
household products-services exports to the rest of the
world. It did so all through the last century -- leading the
world, of course. As Greenspan tried to say the other day
(to teach Bush, Cheney and Snow some basic economics of
present-day reality) even if the renminbi of China was
revalued upwards, it would make little difference because
most of America's trade is with Europe and the rest of the
world.
If I were an American, I'd begin to worry
about China. It now makes and sells a lot of the
manufactured goods the US used to make and sell abroad. I
don't really think the depressed dollar makes much of a
difference because (a) the US no longer makes very much of
the stuff it used to and (b) China's currency is pegged to
the US dollar. A shrinking dollar means a shrinking
renminbi. Another reason to worry is that China acquiries
huge quantities of dollars via its international sales. One
thing it does with those dollars is buy US government bonds
- i.e. it helps fund the very large US government deficit.
Not sure of where this is taking things.
So although it's no part of my
evolutionary-economics hypothesis (that is, that all new
significant products are driven by consumer demand for
status reasons) this consumer satiation effect seems to be
coming upon us. Until about 1985-90 almost all the
populations of the developed countries were able to "enjoy"
much the same goods and services as the very rich --
tourism to exotic places, cars, TVs, health care, etc. Not
as much, or as frequently or as high quality as those enjyed
by the rich, of course, but by and large much the same. But
now it's changing. Since 1985-90 the average wage in America
has been going down, long-term unemployment has been rising,
no new significant export goods are being made, and the rich
are finding much more subtle ways of flaunting their wealth
-- second homes, make-overs, expensive nursery education for
their children (very important indeed -- amplifying the
effect of existing private schooling), private airplanes,
secure housing estates, advanced medical surgery, etc. All
these are not available for mass production as happened
broadly during the last century. All these are what the
economist Fred Hirsch called "positional goods" in his book
Social Limits to Growth 30 years ago. He was prescient and
it is sad that he died young -- otherwise he would have seen
his prophecies being fulfilled.
All in all I think we are now in for a
period of increasing social/wealth stratification. China
will catch up with America and then overtake it -- so most
economist say. Catch up, yes. I'm not so sure about
overtaking because, as said above, there now appears to be a
consumer satiation effect, and this will affect China in
just the same wasy as it's already affecting America, Japan
and Western Europe.. There seems to be nowhere further to
go, economically, as long as the present supply of fossil
fuels holds up and maintains the present sort of
"metal-bashing" industrial system. I see China and America
becoming increasingly interlinked with mutual investment and
so on (the present spats over textiles and other imports
from China are minor, considering the vast investments that
American firms already have in China). I see Western Europe
being increasingly isolated from fossil fuels resources.
I therefore see a sort of extreme social
stratification occurring in a sort of America-China
"dumbell" economy and the rest of the world can go hang. The
only possibility I see of escape from this is that there
might be a breakthrough in other forms of energy production
and household goods production. I am pretty certain in my
own mind that biology will be the key here. As regards
energy production I think it's likely that this will come
from bacterial-production of hydrogen (with an intermediate
period of hydrogen/ethanol production from sugar-cane,
maize, etc) from which a vast array of chemical feedstocks
can be made cheaply*, but all this lies probably in three or
four decades' time when fossil fuel prices start becoming
very high indeed. (Even now, fossil fuel prices are half of
those the 50s and 60s, so the baseline price rise since
about 1985 is still quite moderate.)
(*And this is probably main reason why
Western governments are not going overboard in building the
next wave of nuclear reactors [the first wave having been
built mainly for production of weapon-plutonium]. Yes,
they'll probably build some -- and there's a tremendously
powerful lobby in the civil engineering industry pushing
them -- but the experts know that electricity production is
only part of the story. Nuclear power stations can't supply
chemical feedstock -- via hydrogen via electrolysis of water
-- anywhere near cheaply enough. It simply doesn't compare
with the efficiency of chemical production from
solar-powered plant life.)
Keith
Ed
----- Original Message -----
From: Harry Pollard
<mailto:[EMAIL PROTECTED]>
To: 'Ed Weick'
<mailto:[EMAIL PROTECTED]> ; 'Karen Watters Cole'
<mailto:[EMAIL PROTECTED]> ;
[email protected]
Sent: Saturday, May 21, 2005 10:33
PM
Subject: RE: [Futurework] NYT
Series: Class in America: shadowy lines thatstilldivide
Ed,
Again, I must remind you that
Classical Political Economy forecast all this 200 years ago,
yet it's still a subject that invites guesswork from the
neo-Classicals. Such as:
"Globalization and technological
change have shuttered factories, killing jobs that were once
stepping-stones to the middle class. Now that manual labor
can be done in developing countries for $2 a day, skills and
education have become more essential than ever."
Would they like to calculate the
income gap in the 17th, 18th, and 19th centuries? The very
rich enjoyed god-like stature while the poor were crammed
into tiny leaky, smoky, dwellings that would not be allowed
for animals by today's Humane Society. Even in the period of
immense 'technological progress' of the Industrial
Revolution life was hellish. You'll recall my piece about
the Welsh coal mines and the 6 year old boys in pitch
blackness opening the doors for the coal trucks to come
through.
The big war interrupted the normal
course of events and ended with such 'technological
advances' as the GI Bill and Levittown. But, soon the
inevitable pressure downward began again.
So, it seems that rather adopt an
old-fashioned but supported analysis, the modern economist
tries to link the long-time problem to recent happenings. I
suppose it makes him feel more hip. To do this, they
furiously contrive relationships in a way not remarkably
different from the Bush/Blair machinations around Iraqi
intelligence.
Your points are well taken Ed, but
you are a scientist confronting a kind of non-science where
rigor is closer to mortis than to method.
Harry
Keith Hudson, Bath, England,
<www.evolutionary-economics.org
<http://www.evolutionary-economics.org/> >
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