A nice interactive graphic:
A lot of coastal pockets.
A nice interactive graphic:
A lot of coastal pockets.
So, by now, you have all probably read, or at least heard of, Joseph Stiglitz’s column in the New York Times as to how inequalities are stalling economic recovery:
“With inequality at its highest level since before the Depression, a robust recovery will be difficult in the short term, and the American dream — a good life in exchange for hard work — is slowly dying.”
In case you have forgotten how true this is, just remember this:
Stiglitz offers four main reasons for why inequalities are a threat to recovery:
“There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.
Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.
Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength.
Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s — the last time inequality of income and wealth in the United States was so high — ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven’t absorbed the lesson.”
And yes, lower mobility:
“Our skyrocketing inequality — so contrary to our meritocratic ideal of America as a place where anyone with hard work and talent can “make it” — means that those who are born to parents of limited means are likely never to live up to their potential. Children in other rich countries like Canada, France, Germany and Sweden have a better chance of doing better than their parents did than American kids have. More than a fifth of our children live in poverty — the second worst of all the advanced economies, putting us behind countries like Bulgaria, Latvia and Greece.”
And I especially like how Stiglitz points out the obvious: what is happening is the product not of impersonal market forces, but of very real, human and ideological decisions:
“There are all kinds of excuses for inequality. Some say it’s beyond our control, pointing to market forces like globalization, trade liberalization, the technological revolution, the “rise of the rest.” Others assert that doing anything about it would make us all worse off, by stifling our already sputtering economic engine. These are self-serving, ignorant falsehoods.
Market forces don’t exist in a vacuum — we shape them. Other countries, like fast-growing Brazil, have shaped them in ways that have lowered inequality while creating more opportunity and higher growth. Countries far poorer than ours have decided that all young people should have access to food, education and health care so they can fulfill their aspirations.
Our legal framework and the way we enforce it has provided more scope here for abuses by the financial sector; for perverse compensation for chief executives; for monopolies’ ability to take unjust advantage of their concentrated power.
Yes, the market values some skills more highly than others, and those who have those skills will do well. Yes, globalization and technological advances have led to the loss of good manufacturing jobs, which are not likely ever to come back. Global manufacturing employment is shrinking, simply because of enormous increases in productivity, and America is likely to get a shrinking share of the shrinking number of new jobs. If we do succeed in “saving” these jobs, it may be only by converting higher-paid jobs to lower-paid ones — hardly a long-term strategy.
Globalization, and the unbalanced way it has been pursued, has shifted bargaining power away from workers: firms can threaten to move elsewhere, especially when tax laws treat such overseas investments so favorably. This in turn has weakened unions, and though unions have sometimes been a source of rigidity, the countries that responded most effectively to the global financial crisis, like Germany and Sweden, have strong unions and strong systems of social protection.”
[I love how these rationalization mirror those about guns I debunked in an earlier post.]
Are things going to get better? According to three analysts that I like, the answer seems to be a resounding “NO!” because nothing has changed since the Depression of 2008.
“How they must bleed for us. In 2012, the world’s 100 richest people became $241 billion richer. They are now worth $1.9 trillion: just a little less than the entire output of the United Kingdom.
This is not the result of chance. The rise in the fortunes of the super-rich is the direct result of policies. Here are a few: the reduction of tax rates and tax enforcement; governments’ refusal to recoup a decent share of revenues from minerals and land; the privatisation of public assets and the creation of a toll-booth economy; wage liberalisation and the destruction of collective bargaining.
The policies that made the global monarchs so rich are the policies squeezing everyone else. This is not what the theory predicted. Friedrich Hayek, Milton Friedman and their disciples – in a thousand business schools, the IMF, the World Bank, the OECD and just about every modern government – have argued that the less governments tax the rich, defend workers and redistribute wealth, the more prosperous everyone will be. Any attempt to reduce inequality would damage the efficiency of the market, impeding the rising tide that lifts all boats. The apostles have conducted a 30-year global experiment, and the results are now in. Total failure.
The neoliberals also insisted that unrestrained inequality in incomes and flexible wages would reduce unemployment. But throughout the rich world both inequality and unemployment have soared. The recent jump in unemployment in most developed countries – worse than in any previous recession of the past three decades – was preceded by the lowest level of wages as a share of GDP since the second world war. Bang goes the theory. It failed for the same obvious reason: low wages suppress demand, which suppresses employment.
As wages stagnated, people supplemented their income with debt. Rising debt fed the deregulated banks, with consequences of which we are all aware. The greater inequality becomes, the UN report finds, the less stable the economy and the lower its rates of growth. The policies with which neoliberal governments seek to reduce their deficits and stimulate their economies are counter-productive.
Staring dumbfounded at the lessons unlearned in Britain, Europe and the US, it strikes me that the entire structure of neoliberal thought is a fraud. The demands of the ultra-rich have been dressed up as sophisticated economic theory and applied regardless of the outcome. The complete failure of this world-scale experiment is no impediment to its repetition. This has nothing to do with economics. It has everything to do with power.”
“In any case, for most of the business leaders attending Davos, the economic malaise is an abstraction. Profits as a share of GDP in almost all western countries are at record highs, along with executive pay. Meanwhile, real wages for the majority are stagnating, if not falling, justified by our economic leaders in Davos as the proper if sad consequence of “structural adjustment”. Goldman Sachs, for example, shamed from deferring its bonus payments into the next financial year so that its staff could enjoy the lower tax rate, has just enjoyed a bumper year. Davos men and women are prospering. No structural adjustment for them.
There will doubtless be the usual appeals for more free trade, more scientific research and more investment in skills as the expensively clad executives move from seminar and sonorous keynote speech to reception and back to the dinner table. But what there will not be at Davos is a willingness to countenance a sea change in the way capitalism is organised. It can do what it will and that is to continue to confer fortunes on those at the top, with little risk, while directing pain on to others.
The paradox is that the chief reason capitalism is in crisis is that without such challenges it has undermined its own dynamism and capacity for innovation. Instead, it merely offers enormous and unjustified self-enrichment for those at the top.
Nor does the malign impact of inequality stop there. I was stunned to read in a recent IMF working paper, with the hardly catchy title Income Inequality and Current Account Imbalances, that the whole – yes the whole – of the deterioration of the British current account deficit between the early 1970s and 2007 could be explained by the rise in British inequality. It is a similar, if less acute, story across the rest of the industrialised or, rather, deindustrialising west.
What the IMF team shows is that as the share of national income devoted to profits and top pay rises to its current levels, so a noxious economic dynamic is created. By definition, there is less of the pie available to the mass of wage earners, whose real wages become squeezed. To sustain their living standards, they borrow, which has been easier than ever over the past 40 years as banks take advantage of financial deregulation. Overall demand thus carries on growing, but at the price of sucking in imports and ever higher personal debt levels for ordinary wage earners.
Finally, the music stops, as it has now, as both debt and import levels become unsustainable. The state of play in Britain – crazy levels of private sector debt and a record trade deficit – can thus be explained by the rise of inequality. And one of the chief causes of that, the IMF believes, is the decline in trade union bargaining power!
I would argue there is a further twist to the story. Inequality driven by weaker unions and labour market deregulation hits investment and innovation. Executive teams do not need to invest and innovate dynamically to earn rich personal rewards. They just need to be in post, squeezing the workforces’ real wages to lift profits, now the fast and easy route to apparent better performance, and thus to increase their own remuneration. And even if they do invest and innovate, the capacity to scale up production fast is hit because there are ever fewer consumers with rising real wages to buy the new products. Inequality is a recipe for stagnation. If Davos wants “resilient dynamism”, the delegates should be discussing how to reduce profits as a share of GDP to more normal levels, while boosting the real incomes of the mass of their workforces. Be sure this will not be on the agenda. For what it implies – better wage bargaining, new arrangements to share profits across the whole workforce, smarter labour market regulation and executive pay keyed to long-term innovation rather than annual profits growth – is the antithesis of all that Davos and the international consensus believe.”
What is to be done?
“Davos is intellectually bankrupt. But the ideology it champions won’t fall just by itself. Capitalism’s dead end requires intellectual challengers, social movements and trade union leaders prepared to dare to reimagine their role. We need ferment and protest in civil society. Social democratic parties will move, but only when they can sense a change of popular mood. This is everyone’s problem – and the responsibility of us all to act as we can.”
Last but not least, Aditya Chakrabortty:
“I have an idea for a particularly mediocre film. The plot runs thus: a bunch of rich white men gather in an Alpine hamlet. There’s a schlubby bald Chicagoan, a Parisian banker in a suit lush enough to eat, and the obligatory Belarusian with a PhD in physics and a dentist keen on gold crowns. It’s an odd set-up, but apparently innocuous. With this much cash flying about, busted film stars and semi-retired pop singers swoop in. Journalists write amusing sketches about the post-prandial piano-man who plays Billy Joel for tipsy millionaires.
But away from the gluhwein and the gabfest, the real action is slowly revealed. The businessmen summon prime ministers and presidents to secret meetings in tiny rooms, where they order the lives of the billions consigned to the plains below – and so make themselves even richer. The title for this not-so-thriller? Well, I rather fancy Plutocrats’ Paradise.
Perhaps you think my scenario is too crass to be credible, yet a far cruder version is about to unfold: it’s called Davos.”
Read the whole rather snarky piece.
That’s the macro and ideological side of things. Then, there is the reality of what increased inequalities mean to people in the trenches (that is, the non-Cloud-Minders… I know I have used that reference before but I like it so much). First, this:
“The average Manhattan apartment, at $3,973 a month, costs almost $2,800 more than the average rental nationwide. The average sale price of a home in Manhattan last year was $1.46 million, according to a recent Douglas Elliman report, while the average sale price for a new home in the United States was just under $230,000. The middle class makes up a smaller proportion of the population in New York than elsewhere in the nation. New Yorkers also live in a notably unequal place. Household incomes in Manhattan are about as evenly distributed as they are in Bolivia or Sierra Leone — the wealthiest fifth of Manhattanites make 40 times more than the lowest fifth, according to 2010 census data.”
But class divisions and their markers are visible in every markets:
“In the 1970s, the receipt of a Fisher Price farm set on Christmas Day would have conferred nothing terribly distinctive about class, having come from a department store and having appeared just as probably under the tree of a white-shoe lawyer as it would have under the tree of a brick layer. But toys, like lettuces or chocolate, have long since become another manifestation of difference. (And this is even before we arrive at an absurdity like the $1,499.99 Etch-a-Sketch encased in Swarovski crystals, currently at F. A. O. Schwarz, something that would appear to have been created as an engagement offering for an 8-year-old Trump to give a 6 ½-year-old Kardashian.)
What finds its way off the shelves of the chains is not what disappears from stores like Boomerang in TriBeCa, or Mary Arnold, the 81-year-old toy store on the Upper East Side. At those stores, the best-selling product of recent years has been something called Magna-Tiles, geometrically shaped magnetic tiles that allow children to imaginatively build virtually anything but what, in my experience, often turns out looking like the Crystal Cathedral in Southern California. Last Christmas, a flood near the factory where the tiles are made in Asia caused a shortage and a rise in price, with boxes of tiles, which usually retail for roughly $1 a tile, going for hundreds of dollars on eBay. By Dec. 12 last year, Ezra Ishayik, the owner of Mary Arnold, told me, he’d sold $20,000 worth of tiles and had run out.
Magna-Tiles are not sold at Toys “R” Us. Uninterested in sharing company with licensed products rendered in offensive colors, manufacturers like these resist the taint of the mass market, selling instead in museum gift shops and small, aesthetically palatable shops that draw from a narrow slice of our demographics. At the same time, as Sean McGowan, a toy industry analyst at the investment bank Needham & Company explained it, the market for educational toys is never quite as big as we would like it to be. While a company like Toys “R” Us carries educational toys, over time its commitment to promoting them has eroded, he said.
In many parts of the city, though, beyond Manhattan and the various precincts of brownstone Brooklyn, something like Toys “R” Us is really all that exists. As I learned when I phoned recently, Castle Hill Toys and Games in the Bronx, for instance, doesn’t consider itself much of a toy store at all anymore, having transitioned into a focus on bikes and bike repairs when Toys “R” Us came to be common in the borough.
In the way that we have considered food deserts — those parts of the city in which stores seem to stock primarily the food groups Doritos and Pepsi — we might begin to think, in essence, about toy deserts and the implications of a commercial system in which the least-privileged children are choked off from the recreations most explicitly geared toward creativity and achievement.”
A lot of people are circulating this but it is of special interest to sociologists:
Can anyone say “redlining” and institutional discrimination?
It’s “serious” economists! (So, surely, someone will listen)
“But, beyond this, we cannot carry on with a system that allows so much of the national income and wealth to pile up in so few hands. Concerted redistribution of wealth and income has frequently been essential to the long-term survival of capitalism. We are about to learn that lesson again.”
Don’t be so sure. It’s austerity time, no matter how miserable it makes people.
“Greece used to have the lowest suicide rate in Europe. But suicides are rising rapidly, coinciding with Greece’s poor economy and crushing austerity cuts, according to the Greek Reporter. Public Order Minister Nikos Dendias has now issued a new report on suicide attempts in response to a request from the Coalition of the Radical Left lawmakers.
The latest figures show that there were 677 suicide attempts in Greece in 2009, 830 in 2010 and 927 in 2011, Press TV reported. Greeks planning suicide now often pick locations near banks, government or tax offices, such as an elderly Greek man in April who shot himself outside parliament. In a suicide note, he said his pensions had been wiped out.”
For those of you familiar with the Spirit Level, this is an alternative to the series of scatterplots using the same data, and showing, of course, the same results. The US, with its higher inequalities level, also produces worse outcomes on a series of social measures, from health, to political participation, to murder rates.
It is a neat way to replace a dozen scatterplots (which are pretty dry graphs even though they convey information pretty well) with one colorful infographic. But, as Alberto taught us in The Functional Art, the sphere thing is not great because the proportions are not really well represented. However, in this case, I did not find that too disturbing because you tend to pay attention not so much to the size of the disc but to the linear positioning.
Another issue is the screen real estate. The infographic is large, so, you have to scroll up and down and you quickly lose sight of which disc is which country, except for the US, because it’s always the one on the far right, with the worst outcomes. You kinda have to constantly scroll up and down to retrieve the legend.
Finally, I would have picked a more contrasted color scheme. On some measure, Sweden and Germany kinda look alike. I understand that there is a gradient thing going on with the graphic, but still. And with the sources, I would have added URLs and links to click to go to the sources straight from the infographic.
I am not sure how many ways there are to make highlight this. Part of the problem is the general attitude that inequalities are the “natural” effects of either individual tendencies or magical and impersonal economic forces, as Matt Vidal points out:
“Based on his interviews with economists, Leonhard lists the top two causes of “a decade of income stagnation” as automation and globalization. No one to blame here, just impersonal forces we can’t control!
Among a “second group” of forces, he notes rising health care costs and “shrinking” unions.
In contrast, neither Kalleberg nor any of his commenters highlight technology as playing an independent role in wage stagnation and growing inequality, unmediated by the decisions of managers and policymakers. Instead, Kalleberg focuses on the rise of low-wage work, driven by a shifting balance of power between employers and workers as employers, aided by policymakers, engaged in corporate restructuring to achieve flexibility.
Globalization is a key force here, indeed. But rather than viewing it as an impersonal force to which corporations respond, sociologists emphasize how globalization is actively created by American corporations through global outsourcing.
“My reading of several decades of labor market research is that the main source of America’s low-wage problem lies in domestic service industries not impacted by globalization, where the key driver of precariousness is the growing evasion and violation by employers of both legal and normative standards, facilitated by the withdrawal of government’s hand in the labor market.”
In his comment, Jeff Madrick highlights the role of deliberate government policy in the 1980s – “before the rise of very low-wage emerging markets like China’s” – such as the preference for maintaining low inflation, at the expense of allowing unemployment to rise.
Our own Steve Vallas and Chris Prener add that uncertainty in the labor market has been ideologically legitimated through a discourse that idealizes flexible employment and personal responsibility. Labor market uncertainty is portrayed in this cultural discourse as emancipatory.
These and other arguments by sociologists – in this symposium and elsewhere – present a more enlightening analysis of trends in living standards and inequality. According to the sociologists, these outcomes have been driven by the decisions of real managers and real policymakers.
All that I would add is that, as I have recently written here, these decisions in favor of employers at the expense of workers are decisions in favor of capital against labor. This is class struggle. Capital is winning.”
Incidentally, my review of Arne Kalleberg’s book is here.
On the economic side, Dean Baker shows the ways in which people higher on the social ladder, with more political power, were somehow able to protect themselves against the supposedly ineluctable effects of globalization, through protectionist measures:
“If we want to ensure that we enjoy same sort of free flow of professional services as we do of manufactured goods we would need to craft treaties designed by hospital administrators, major law firms, and university presidents that eliminated all the obstacles that made it difficult for them to hire foreign professionals.
While this move toward freer trade would offer enormous benefits to consumers and the economy by reducing the cost of health care, education, and a whole range of services, there have been few steps in this direction. In fact, in the 90s the United States deliberately restricted the inflow of foreign doctors out of a concern that they were depressing the wages of doctors in the United States (see, e.g., “Caught in the Middle,” by Lena H. Sun, Washington Post, 3/19/96,Health Section, page 10; “A.M.A. and Colleges Assert There is a Surfeit of Doctors,” by Robert Pear, New York Times, 3/1/97, page A7).
In short, the fact that globalization has led to downward pressure on the wages of less educated workers is the result of a policy decision. It is not the result of some natural process. If policy were controlled by people who care about inequality and increasing economic efficiency, then the globalization would be directed in a way that lowered the wages of the most highly paid workers.
There are other ways in which policy has almost certainly contributed to inequality. For example, if the minimum wage had kept pace with productivity growth since the late 60s (when the unemployment rate was less than 4.0 percent), it would be close to $18 an hour today. Also, the fact that unionization rates have plummeted is almost certainly due in part to policies that have made it more difficult to unionize. Canada, which has a very similar economy and culture, has not experienced a decline in unionization rates of the same magnitude.
There are other ways in which policies can be identified that have contributed to massive upward redistribution of the last three decades. (Read The End of Loser Liberalism: Making Markets Progressive for more on this topic [it’s free].) But it is far too simple and easy to just treat the surge in inequality as a natural phenomenon. It isn’t.”
And capital winning is not something that “just happened” either, as Paul Pierson and Jacob Hacker explain:
This increase in inequalities has been pretty clear not just in the US:
“Global inequalities in wealth are at their highest level for 20 years and are growing, according to a new report by Save The Children.
While the charity acknowledges progress has been made in goals such as reducing child mortality, the report says this has been uneven across income groups.
Continuing inequality could hinder further progress in improving living standards, the charity says.
The report comes ahead of a meeting of a high-level UN panel on poverty.
“In recent decades the world has made dramatic progress in cutting child deaths and improving opportunities for children; we are now reaching a tipping point where preventable child deaths could be eradicated in our lifetime,” Save the Children’s chief executive, Justin Forsyth, said.
“Unless inequality is addressed… any future development framework will simply not succeed in maintaining or accelerating progress. What’s more, it will hold individual countries – and the world – back from experiencing real growth and prosperity,” Mr Forsyth added.
Save The Children’s researchers found that in most of the 32 developing countries they looked at, the rich had increased their share of national income since the 1990s.
In a fifth of the countries, the incomes of the poorest had fallen over the same period.”
“The ongoing crisis of the major Western capitalist economies has citizens on both sides of the Atlantic asking why the incomes of the business elite keeps rising even as companies cut jobs, banks foreclose homes, and the threat of penury faces many families who thought they were solidly middle class.
In the United Kingdom, the High Pay Commission in its report last November stated that “pay at the top has spiraled alarmingly to stratospheric levels in some of our biggest companies.” At BP the pay of the chief executive was 16.5 times that of the average worker in 1979-80 but 63.2 times in 2009-2011. At Barclays this ratio more than quintupled from 14.5 to 75.0 over the same time period. The annual remuneration of the chief executives of both BP and Barclays in 2009-2011 was about £4.4 million. The Commission concluded that this high degree of income inequality manifested “a toxic form of free market capitalism” that undermines worker motivation and ultimately innovation.
This toxic form of capitalism is even more virulent in the United States. According to data for the largest corporations reported by the AFL-CIO, CEO:worker pay ratio was an excessive 42:1 in 1980, an extravagant 107:1 in 1990, an astonishing 525:1 in 2000, and an outrageous 343:1 in 2010. The average annual pay in 2010 dollars of the top 500 highest paid executives named in US corporate proxy statements has been as high as $40.5 million in 2000 and averaged $17.9 million in 2008-2010.
Most critics argue that this growth in income inequality is unfair, plain and simple. The problem, however, goes much deeper than that. As shown by our research from projects funded by the European Commission, the Ford Foundation, and Soros’ Institute for New Economic Thinking, these overpaid corporate executives are getting these huge bonanzas for not doing their jobs.”
It is kinda nice of journalists to finally notice what has been going on for the past thirty years. It took a major collapse to finally notice that these levels of inequalities were not sustainable. And some systemic explanations have begun to surface:
“There is growing evidence that since the late 1990s the US venture-capital model has become one in which impatient capitalists expect a quick return, even if the extraction of this return undermines the innovation process itself. In this, the Bush tax cuts have been a major boon. Ironically, as in the early 2000s US venture-capital model was turning from value creation to value extraction, the UK Labour Party embraced the US venture-capital model, reducing from ten years to two years the duration of time that private equity has remain invested in a company to be eligible for capital gains tax rates on its profits .
The growing concentration of income at the top in the United Kingdom is both unfair to workers and taxpayers, and damaging to the growth and competitiveness of the economy. The British need only look at what has happened in the United States over the past decade to see the economic stagnation, social decay, and political gridlock that results when this concentration of income at the top becomes ultra-extreme. It is time to put an end to it, now.”
And these trends have visual illustrations (data are for the UK):
And, of course, people have adapted to declining income, for instance, through increased women employment:
But that is not always an option and inequalities have increased also because of the disappearance of full-time jobs, pushing people into underemployment:
“While there have always been part-time workers, especially at restaurants and retailers, employers today rely on them far more than before as they seek to cut costs and align staffing to customer traffic. This trend has frustrated millions of Americans who want to work full-time, reducing their pay and benefits.
“Over the past two decades, many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry,” said Burt P. Flickinger III, managing director of the Strategic Resource Group, a retail consulting firm.
No one has collected detailed data on part-time workers at the nation’s major retailers. However, the Bureau of Labor Statistics has found that the retail and wholesale sector, with a total of 18.6 million jobs, has cut a million full-time jobs since 2006, while adding more than 500,000 part-time jobs.
Technology is speeding this transformation. In the past, part-timers might work the same schedule of four- or five-hour shifts every week. But workers’ schedules have become far less predictable and stable. Many retailers now use sophisticated software that tracks the flow of customers, allowing managers to assign just enough employees to handle the anticipated demand.
“Many employers now schedule shifts as short as two or three hours, while historically they may have scheduled eight-hour shifts,” said David Ossip, founder of Dayforce, a producer of scheduling software used by chains like Aéropostale and Pier One Imports.
Some employers even ask workers to come in at the last minute, and the workers risk losing their jobs or being assigned fewer hours in the future if they are unavailable.
The widening use of part-timers has been a bane to many workers, pushing many into poverty and forcing some onto food stamps and Medicaid. And with work schedules that change week to week, workers can find it hard to arrange child care, attend college or hold a second job, according to interviews with more than 40 part-time workers.
To be sure, many people prefer to work part time — for instance, college students eager for extra spending money and older people earning money for presents during the holiday season.
But in two leading industries — retailing and hospitality — the number of part-timers who would prefer to work full-time has jumped to 3.1 million, or two-and-a-half times the 2006 level, according to the Bureau of Labor Statistics. In retailing alone, nearly 30 percent of part-timers want full-time jobs, up from 10.6 percent in 2006. The agency found that in the retail and wholesale sector, which includes hundreds of thousands of small stores that rely heavily on full-time workers, about 3 in 10 employees work part-time.
Retailers and restaurants use so many part-timers not only because it gives them more flexibility, but because it significantly cuts payroll costs.”
Read the whole thing.
So, what is to be done? More equality, no way around that:
“Economists such as Paul Krugman, Robert Reich and Stewart Lansley have increasingly stressed that more equality is an essential precondition for more stable economies less prone to recession. The filthy rich don’t spend their money, while working people spend their money and increase demand.
Joseph Stiglitz, another Nobel prize winner, in his most recent book, The Price of Inequality, develops these arguments providing a powerful critique of free market ideas. He also links inequality to the argument that flexible labour markets contribute to economic strength, arguing instead that stronger worker protections correct an imbalance of power. Weakened unions have thus contributed to greater inequality – an important argument in support of fair laws for unions to replace current restrictive legislation.
The Spirit Level and the widespread dissemination of this pamphlet and the new popularity of the importance of equality may be compared to the publication in 1931 of R H Tawney’s Equality. Tawney, Beveridge and Keynes were all part of the ideological development that was to become dominant in the war years. A set of ideas that underpinned political development. Ideas that contributed to the Social democratic settlement of 1945, and ushered in the welfare state.”
“Lower tax rates have affected these donors in two opposing ways. On the positive side, they have supported higher consumption in the private sector. But on the downside, the resulting budget deficits have reduced the quantity and quality of public services. Compelling evidence suggests that the negatives have been much larger, and the positives considerably smaller, than many donors have expected.
Through private schools, gated communities, personal aircraft and other adaptations, the wealthy have been insulated from many costs of a decaying public sphere. But ill effects remain. Declining quality of public schools, for example, makes it harder for businesses to recruit productive workers, and a shrinking middle class makes it harder to sell their products in volume.
Many other effects of budget deficits also cut across the income divide. First, consider two extreme examples: When a poorly maintained bridge collapses, rich drivers are no less likely to die than poor ones. And if cutbacks in the Energy Department’s program for locking down loosely guarded nuclear materials in the former Soviet Union one day enable terrorists to detonate a dirty bomb in Manhattan, hedge fund managers and their families will suffer along with everyone else.
Let’s say that two societies differ only in their mixes of public and private spending. In one society, lower taxes on the wealthy allow them to drive very fine cars — say, $180,000 Bentleys. The streets and highways in this society, however, are riddled with foot-deep potholes.
In the other society, the wealthy pay higher taxes that support well-maintained roads, but drive $120,000 BMWs. Some car buffs will grumble, but for argument’s sake, let’s assume that all view the Bentley as the better car.
In which society would the wealthy be happier? Because product-quality improvements cost much more to achieve beyond some point, the absolute quality of a $180,000 car may be only slightly higher than one costing $120,000. And because not even the most sophisticated automotive suspensions can neutralize deep potholes, it’s little wonder that most people think the BMW drivers would be happier, not to mention safer.
That conclusion is reinforced by evidence that consumption standards are highly local. The BMW drivers in the second society don’t often mingle with the Bentley drivers in the first, and are thus unlikely to feel deprived for having less-expensive cars.
If the wealthy often overestimate the attractions of higher private spending, they’re also likely to overestimate the regulatory burden on their businesses. Compliance with regulations, of course, can be costly. And if only one company has to comply, its profits may indeed decline sharply. But regulation applies to all companies in an industry, which typically allows them to cover their costs by raising prices. So if regulation promotes a safer, cleaner environment whose benefits exceed those broadly shared costs, everyone — even a business owner — is ahead in the long run.”
And consuming differently, e.g., collaborative consumption (which sounds a lot like solidarity economics):
“Streetbank is one such collaborative consumption initiative that works to establish a broad-based network of online sharing communities in order to develop stronger, locally-rooted communities across the UK and ultimately worldwide. At its simplest, Streetbank is a website that allows you to see all the things and skills that neighbours are giving away, lending or sharing – a shared attic, garden shed, toolkit, fancy dress chest, DVD collection and skills bank all rolled into one. Its ultimate vision is a hyper-local one in which members are connected to everyone in their street, dramatically reducing consumption through sharing as a result.
From an economic perspective, it could also be argued that organisations such as Streetbank are adding to the output of the UK, if in a small and unmeasured way. GDP measures items bought rather than the use of the items/activity purchased. Take a simple example: the average drill is used for just 15 minutes in its lifetime. GDP measures the number of drills bought but in the case of a drill, this is a poor measure of a nation’s output when its usage is so low. While Government and policy makers obsess over GDP data, any serious economist should agree that an efficient economy is one in which the resources are deployed well, and where output is useful. To put it in Rachel Botsman’s terms – pioneer of the collaborative consumption movement – we need to be taking into account number of holes drilled rather than number of drills sold.
The need for projects like this is huge if we are to establish the rapid reduction in consumption and re-skilling of our communities as we deal with financial and environmental instability. The question is how to reach neighbourhoods where trust is less apparent and how to scale-up community-minded collaborative consumption initiatives in the process. This is the challenge that organisations such as Streetbank and fellow “coll cons” initatives are working to address, constantly testing their innovations as they go and supported by organisations such as NESTA, not to mention one another, embedding peer-to-peer learning in their progress.
So what can peer-to-peer activity bring to the twenty-first century table where the feast is rapidly diminishing and what’s left is meted out so unevenly? The answer is an economy based on collaboration rather than individual ownership, trust rather than status, adaptation rather than standardisation. The answer is a sharing economy. “
This is the one new thing: ever since the economy crashed and burned and the Occupy movements, at least, there has been talk about social inequalities in the past three years or so. Otherwise, look at the media of the past thirty, and inequalities was a non-existent topic: the poor were poor because of their own individual shortcomings or the culture of poverty, or government dependency, etc. So, sociologists were the lonely crowd of Cassandras warning that no, really, inequalities were growing and this is bad for society as a whole. But being a dominated academic profession, they suffered the fate of Cassandra: they were not listened to or not downright ignored and dismissed as a bunch of lefty whiners.
So, at least, that is less the case. At the same time, the evidence on the growth of inequalities and the deleterious impact of that growth on society as a whole is pretty much an open and shut case since the publication of the Spirit Level. Why then is it surprising to see articles that seem to discover this new thing that is widening stratification and its impact?
“Income inequality has soared to the highest levels since the Great Depression, and the recession has done little to reverse the trend, with the top 1 percent of earners taking 93 percentof the income gains in the first full year of the recovery.
The yawning gap between the haves and the have-nots — and the political questions that gap has raised about the plight of the middle class — has given rise to anti-Wall Street sentiment and animated the presidential campaign. Now, a growing body of economic research suggests that it might mean lower levels of economic growth and slower job creation in the years ahead, as well.
“Growth becomes more fragile” in countries with high levels of inequality like the United States, said Jonathan D. Ostry of the International Monetary Fund, whose research suggests that the widening disparity since the 1980s might shorten the nation’s economic expansions by as much as a third.
Reducing inequality and bolstering growth, in the long run, might be “two sides of the same coin,” research published last year by the I.M.F. concluded.”
Well, yeah, but this is an interesting shift for the IMF:
“For years, economists have thought of such inequality in part as a side effect of policies that fostered the country’s economic dynamism — its tax preferences for investment income, for instance. And organizations like the World Bank and the I.M.F., which is based in Washington, have generally not tackled inequality in the world head on.
But economists’ thinking has changed sharply in recent years. The Organization for Economic Cooperation and Development this year warned about the “negative consequences” of the country’s high levels of pay inequality, and suggested an aggressive series of changes to tax and spending programs to tackle it.
The I.M.F. has cautioned the United States, too. “Some dismiss inequality and focus instead on overall growth — arguing, in effect, that a rising tide lifts all boats,” a commentary by fund economists said. “When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss.”
The concentration of income in the hands of the rich might not just mean a more unequal society, economists believe. It might mean less stable economic expansions and sluggish growth.
That is the conclusion drawn by two economists at the fund, Mr. Ostry and Andrew G. Berg. They found that in rich countries and poor, inequality strongly correlated with shorter spells of economic expansion and thus less growth over time.
And inequality seems to have a stronger effect on growth than several other factors, including foreign investment, trade openness, exchange rate competitiveness and the strength of political institutions.
For developing economies, the channels through which inequality might drag down growth seem clear. Inequality might foster political instability and lead to violence and economic destruction, for instance, a theme that fits for Arab Spring countries, like Egypt and Syria.
For the United States, such channels are now the subject of intense research interest, with economists examining whether and how the gap between the rich and the poor fueled the recession and what it might mean.”
How did this increase inequalities happen? By redistribution… to the top:
The rise in inequalities is not new then but it has finally become an acceptable topic of discussion although not as much as one would hope considering its importance ans we know why: because it questions the system that created these income and wealth gaps that even the IMF says we should pay attention to.
Chrystia Freeland’s quick take on class warfare as ideological construct and rhetorical device to shut down discussion on inequalities.
And a longer discussion between Chrystia Freeland and Matt Taibbi on Moyers’s program on the same topic (take the time to listen to and watch the whole thing, it is worth it):
So what is to be done? Mark Thoma suggests empowerment of the working class as a partial path through employment:
“Why doesn’t the unemployment problem get more attention? Why have other worries such as inflation and debt reduction dominated the conversation instead? As I noted at the end of my last column, the increased concentration of political power at the top of the income distribution provides much of the explanation.
Consider the Federal Reserve. Again and again we hear Federal Reserve officials say that an outbreak of inflation could undermine the Fed’s hard-earned credibility and threaten its independence from Congress. But why is the Fed only worried about inflation? Why aren’t officials at the Fed just as worried about Congress reducing the Fed’s independence because of high and persistent unemployment?
Similar questions can be asked about fiscal policy. Why is most of the discussion in Congress focused on the national debt rather than the unemployed? Is it because the wealthy fear that they will be the ones asked to pay for monetary and fiscal policies that mostly benefit others, and since they have the most political power their interests – keeping inflation low, cutting spending, and lowering tax burdens – dominate policy discussions? There was, of course, a stimulus program at the beginning of Obama’s presidency, but it was much too small and relied far more on tax cuts than most people realize. The need to shape the package in a way that satisfied the politically powerful, especially the interests that have captured the Republican Party, made it far less effective than it might have been. In the end, it had no chance of fully meeting the challenge posed by such a severe recession, and when it became clear that additional help was needed, those same interests stood in the way of doing more.
The imbalance in political power, obstructionism from Republicans designed to improve their election chances, and attempts by Republicans to implement a small government ideology are a large part of the explanation for why the unemployed aren’t getting the help they deserve. But Democrats aren’t completely off the hook either. Centrist Democrats beholden to big money interests are definitely a problem, and Democrats in general have utterly failed to bring enough attention to the unemployment problem. Would these things happen if workers had more political power?”
It boils down to class.
And more recently, Tim Noah makes a related case, arguing for stronger labor unions:
“The simplest thing government could do to reverse the 33-year growth in income inequality is to make it easier to start and maintain a union.
Although income inequality is growing in comparable nations around the world, it is more extreme and growing more rapidly here. A big reason is that labor unions, which have faced rough times everywhere with the rise of globalization, have declined much more in the United States.
Private-sector union density peaked in the early 1950s at almost 40 percent. Today it’s down to 7 percent, which is about where it was when Franklin Roosevelt entered office. It’s as if the New Deal, which made possible the rise of America’s labor movement, never happened.
Revitalizing labor is not a popular cause nowadays, even among liberals, but there’s little point in even discussing how to solve the inequality problem if you won’t consider ways the government could help rebuild — really, stop suppressing — unions. If you graph a line charting the decline in union membership and then superimpose another line charting the decline in middle-class income share, the lines will be nearly identical. That is not a coincidence.”
Of course, none of this is going to happen and for now, we are stuck in the vicious cycle of weak growth and inequalities deplored by Joseph Stiglitz.
But ultimately, it’s the inequalities, stupid.
I read Paolo Bacigalupi‘s Ship Breaker as part of my never-ending quest to find good science-fiction books for my sociology classes. I have to go with young adult materials as my students’ reading skills vary widely (from absolutely college-ready to students who are not regular readers and might need some developmental reading). Right now, I am using The Hunger Games but the shelf life of this book is fast expiring so, I need a replacement or replacements. Hence Ship Breaker.
The setting is a dystopian future where climate change has run its course and drowned parts of the Earth and civilization has run out of oil. It is an environmental and social mess of a world with extreme stratification. At the bottom of the social ladder are the ship breakers, who dismantle old oil tankers – remnants of what people call the Accelerated Age, our age – to scrap for whatever is valuable for larger scavenging firms like Lawson & Carlson.
In addition, the opening of new maritime shipping routes creates social changes and new conflicts:
“Pole Star was a trading vessel but also a warship, accustomed to fighting Siberian and Inuit pirates as it made the icy Pole Run to Nippon. The pirates were bitter enemies of the trading fleets and perfectly willing to kill or sink an entire cargo as revenge for the drowning of their own ancestral lands. There were no polar bears now, and seals were few and far between, but with the opening of the northern passage a new fat animal had appeared in the polar regions: the northern traders, making the short hop to Europe and Russia, or over to Nippon and the wide Pacific via the top of the melted pole.
With the disappearance of the ice, the Siberians and the Inuit became sea people. They pursued their new prey the way they had once hunted seals and bears in the frozen north, and they hunted with an implacable appetite.” (Loc. 3321)
The ship breakers themselves are divided between heavy and light crews (mostly kids small enough to crawl through pipes and small spaces). This is work highly reminiscent of The Devil’s Miner. The main characters of the book are kids from one such light crew, mainly Nailer and his friend Pima.
Nailer’s world is one that is dangerous for poor kids like him, subjected to violence at the hands of a variety of adults, including his father and his crew employer. The work itself would never lift anyone out of poverty and is highly dangerous. At the same time, to be part of a crew means to have taken a blood oath and involves some mechanical solidarity and Gemeinschaft-type bonds between crew members (“Ship breaking was too dangerous to not have trust.” Loc. 634). There are strong sanctions imposed on those who break these loyalty bonds, as one of Nailer’s crew learns the hard way after leaving Nailer to die in an oil tank still full of oil.
“They all looked down the beach to where Sloth had been dumped. She’d be hungry soon, and needing someone to protect her. Someone to share scavenge with, to cover her back when she couldn’t work. The beach was a hard place to survive without crew.” (Loc. 534)
This ship breaking world is composed of motley crews of half-men (genetically modified mix of men and dogs), smelter clans, life cults, organ harvesters, and medical buyers all at the bottom of the social ladder (of whatever is left of it). This is a society based on accumulation by dispossession that looks a lot like the core / periphery of Wallerstein’s theory. After a “city killer” storm passes through Nailer’s beach, the entire economic ecosystem gets disrupted:
“All the scrap and rust buyers who contracted with Lawson & Carlson had fled inland to wait out the storm. With no companies like GE buying scrap for their manufacturing operations, or shipping companies like Patel Global Transit looking to buy scavenge to sell overseas, the ship-breaking yards were idle. The accountants and assayers and corporate guards who weighed and purchased the raw materials that came off the wrecks had left, and with no one around to buy their product, the ship breakers used their days cutting and renewing their shacks, scavenging the jungle, and fishing for food in the ocean. Until things got organized, people were on their own.” (Loc. 904)
Geographically, the story takes place mainly in the Gulf Coast. New Orleans has disappeared under water and in its place is a bunch of slums where people eke out a living. This is where Nailer ends after he and Pima rescue a “swank” girl (one of the über-wealthy few that manage to make tons of money through maritime freight using clippers). She and Nailer become crew and he calls her ‘lucky girl”. She herself is the victim of a corporate conspiracy to overthrow her family’s control of a giant shipping corporation. This is what the action in the book revolves around: getting Lucky Girl back to a ship whose crew is still loyal to her father. It does not turn out that way and the adventure begins, as they say.
This book has a loose companion volume: The Drowned Cities (which I have not read). I may have to check it out because, unfortunately, Ship Breaker does not have enough social content to be of use in my class. I liked the story. Nailer and Pima are attaching and interesting characters and unlikely heroes. But, and this is not the first time, I wish the author had provided more background in terms of history (what exactly happened) and the current social structure of the society as a whole beyond Bright Sands Beach and Orleans II.
It does not mean that book is not good and not worth reading but for college students, several things might not work: even though the reading level would be fine but the characters are a bit too young and there is too much action and not enough society.
I might actually try The Wind Up Girl as well. Since Bacigalupi writes pretty clearly (something that prevents me from ever using China Mieville’s work), it might be a book that would work.
[I will cop to a shamefully link-baiting title, but it is this category of people that is under discussion and affected by this trend, no? FSM knows much is made of their unhealthy lifestyle for our entertainment and our feeling of smug superiority.]
So, this trend seems to disturb the New York Times, after all, it is not good news to record a lowering life expectancy, especially in a rich country:
As the article states:
“The reasons for the decline remain unclear, but researchers offered possible explanations, including a spike in prescription drug overdoses among young whites, higher rates of smoking among less educated white women, rising obesity, and a steady increase in the number of the least educated Americans who lack health insurance.
The five-year decline for white women rivals the catastrophic seven-year drop for Russian men in the years after the collapse of the Soviet Union, said Michael Marmot, director of the Institute of Health Equity in London.
The decline among the least educated non-Hispanic whites, who make up a shrinking share of the population, widened an already troubling gap. The latest estimate shows life expectancy for white women without a high school diploma was 73.5 years, compared with 83.9 years for white women with a college degree or more. For white men, the gap was even bigger: 67.5 years for the least educated white men compared with 80.4 for those with a college degree or better.
The dropping life expectancies have helped weigh down the United States in international life expectancy rankings, particularly for women. In 2010, American women fell to 41st place, down from 14th place in 1985, in the United Nations rankings.”
Jared Bernstein has the data:
As the blog post notes (emphasis mine):
“The figure shows pre-transfer and post-transfer poverty rates among OECD countries (mostly the advanced economies). The former (pre-transfer) are the market-driven poverty rates, before the tax and transfer systems kick in.
Though there is variation across countries on the pre-transfer, or market poverty rates, they’re fairly close, and their average, excluding the US, happens to be the same as ours. After the tax and transfer system kicks in, however, the US has the highest poverty rate of all the countries in the sample. Our post-transfer poverty rate is 1.7 times that of the non-US average (17.1%/9.8%).
Now, there are as many different models for dealing with poverty and as many different cultural and religious proclivities as there are countries. But they all generate roughly similar shares of market poverty.
That suggests that what determines poverty differences across countries may not have much to do with the poor themselves or the disincentive effects of the safety net. And what determines the post-tax and transfer rates are of course, the taxes and transfers.
Obviously, poverty is a complex and multifaceted phenomenon. And no question, people engage in behaviors that contribute to their poverty. But simplistic explanations that largely implicate the poor themselves are woefully incomplete.”
That would be the conclusion from the new Pew Research Center Report on the middle class in the United States, which contains a ton of nifty graphs for those of us who will be teaching social stratification soon.
First, a summary video:
And below follow my favorite graphs.
Over time changes in income and wealth:
The impact of the 2008 recession is quite obvious.
This graph perfectly illustrates the concept of “lost decade”:
This one perfectly shows who has been gaining or losing ground or flatlined over time:
I call this on “the big squeeze”:
All this, of course, took place in the context of the ideological triumph of hiding this reality:
And when one asks what Americans think would be fair:
How do we know Americans want a more equal distribution? Consider this little experiment from the Atlantic article:
“We understood that setting up an ideal wealth distribution is a rather difficult proposition, so in another task, we made things simpler (see Figure 5) and asked people to choose between two unidentified distributions (again under the veil of ignorance). The first option, unbeknownst to participants, reflected the distribution of wealth in America. For the second option we modified the distribution found in Sweden, making it substantially more equal (we referred to this fictional nation as “Equalden”).
The results? Most respondents, Democrats and Republicans vastly preferred Equalden. As the article notes,
“Social justice and optimal wealth distribution are highly complex topics, and it’s hard to imagine that any study could dramatically change opinions about education, welfare, or tax reform. But consider this. When we ran the same basic experiment in Australia, we found Australians did not differ much from Americans in their views of the ideal distribution. When we ran another version of it with NPR listeners, and then readers of Forbes Magazine, the results were still basically the same. And most likely, if you participated in one of our tests, your response too would have fallen in line with these findings.
So whatever you think the current state of wealth distribution is, and whatever you believe the ideal level of wealth distribution to be under the veil of ignorance, there probably is a gap, and a large one, between the two. Awareness of the disparity between what we have and what we want implies that, ultimately, we as a society need to face the problem and find a solution.”
Indeed. There is also the major issue of the shaping of public opinion through the mass media, which is a vast problem in itself when it leads to ignorance of the way things are.
Back in January, I reviewed Philippe Couleangeon’s book on the metamorphoses of distinction, a book in which he examines the changes in the concept of cultural capital and distinction in the context of mass education and multiculturalism. In the review, I noted,
“Regarding this configuration of the meaning of cultural legitimacy, Coulangeon notes that the upper classes’ cultural practices, rather than being exclusionary, have trended towards eclecticism, a phenomenon captured under the metaphore of the omnivore, as opposed to the parochial working classes, univores. Therefore, cultural stratification would now look like an inverted pyramid where the upper classes are characterized by the diversity of their cultural repertoires and the lower classes by their limited ones. The definition of the cultural omnivore covers both quantity and quality (greater practice across a more varied repertoire that includes both high and mass cultural products, with a global / cosmopolitan outlook). Here again, of course, one should note that such eclecticism is facilitated by economic resources.
However, this does not mean that there is absolutely no exclusionary element to this eclecticism. Certain popular genres are still excluded (such as hip hop or heavy metal) from this more diversified repertoire that is defined more by its aversion to certain products and practices, than by its inclusion. Therefore, another distinction in cultural capital is between the active aversion of upper classes for certain practices and products as opposed to the passive ignorance of popular classes of the more traditional high culture. The lines of exclusion may have shifted but they are still present.
Coulangeon also associates this cultural eclecticism of the dominant classes to contemporary management practices, based on human capital and diversity, and in which some sort of multicultural communicative capital may be useful. But it is also connected to globalization as the cultural (and economic and political and social) elites have become more globalized (the transnational capitalist class, in all its components). Therefore, the possession of such multicultural capital is clear class marker as it reflects exposure to, and possession of, the cultural resources of globalization. This is where the profits of distinction now are located, and no longer in the classical humanities. And the acquisition of such multicultural capital is built through world travel, exchange and therefore a symbolic and material domination of space, beyond the “old” forms of distinction and cultural capital, more marked by a domination of time.
So, where does this leave us? It is rather clear that we should no bury the cultural dimension of class too quickly. This symbolic dominance attached to cultural capital is alive and well, but in reconfigured dimensions that take into account greater access to higher education, globalization, a decline in the traditional prestige of education as social institution, and the rise of new forms of cultural legitimacy, no less symbolically violent than their predecessors.”
Today, in a New York Times column, Shamus Khan produces a similar argument regarding elitism:
“Omnivorousness is part of a much broader trend in the behavior of our elite, one that embraces diversity. Barriers that were once a mainstay of elite cultural and educational institutions have been demolished. Gone are the quotas that kept Jews out of elite high schools and colleges; inclusion is now the norm. Diverse and populist programming is a mainstay of every museum. Elites seem more likely to confront snobbish exclusion than they are to embrace it.”
Khan notes the new character of this development in the context of rising cosmopolitan individualism and self-cultivation (the self as individual project, a theme upon which I have touched many times). In the process, the class-based nature of cultural is nicely made to disappear:
“Whereas the old elites used their culture to make explicit the differences between themselves and the rest, if you were to talk to members of the elite today, many would tell you that their culture is simply an expression of their open-minded, creative, ready-to-pounce-on-any-opportunity ethic. Others would object to the idea that they were part of an elite in the first place.”
And Khan makes a point similar to Couleangeon’s mixed with some culture of poverty-as-justification:
“Instead of liking things like opera because that’s what people of your class are supposed to like, the omnivore likes what he likes because it is an expression of a distinct self. Perhaps liking a range of things explains why elites are elite, and not the other way around.
By contrast, those who have exclusive tastes today — middle-class and poorer Americans — are subject to disdain. If the world is open and you don’t take advantage of it, then you’re simply limited and closed-minded. Perhaps it’s these attributes that explain your incapacity to succeed.
And so if elites have a culture today, it is a culture of individual self-cultivation. Their rhetoric emphasizes such individualism and the talents required to “make it.” Yet there is something pernicious about this self-presentation. The narrative of openness and talent obscures the bitter truth of the American experience. Talents are costly to develop, and we refuse to socialize these costs. To be an outstanding student requires not just smarts and dedication but a well-supported school, a safe, comfortable home and leisure time to cultivate the self. These are not widely available. When some students struggle, they can later tell the story of their triumph over adversity, often without mentioning the helping hand of a tutor. Other students simply fail without such expensive aids.”
And cultural openness becomes another tool for symbolic violence and a justification for social inequalities as reflection personal defects rather than products of class dynamics that are hidden and the Khan neatly highlights:
“Look at who makes up the most “talented” members of society: the children of the already advantaged. Today America has less intergenerational economic mobility than almost any country in the industrialized world; one of the best predictors of being a member of the elite today is whether your parents were in the elite. The elite story about the triumph of the omnivorous individual with diverse talents is a myth. In suggesting that it is their work and not their wealth, that it is their talents and not their lineage, elites effectively blame inequality on those whom our democratic promise has failed.
Elites today must recognize that they are very much like the Gilded Age elites of old. Paradoxically the very openness and capaciousness that they so warmly embrace — their omnivorousness — helps define them as culturally different from the rest. And they deploy that cultural difference to suggest that the inequality and immobility in our society is deserved rather than inherited. But if they can recognize the class basis of their success, then perhaps they will also recognize their class responsibility. They owe a debt to others for their fortunes, and seeing this may also help elites realize that the poor are ruled by a similar dynamic: their present position is most often bound to a history not of their own choosing or responsibility.”
Welcome to the world of the cosmopolitan ethics and the spirit of 21st century capitalism.
Read the whole column, it’s great.
In chapter 3 of Rebel Cities, David Harvey discusses the commons in the context of the right to the city for marginalized populations. In the process, he challenges the left for its fetishism of the local (a pet peeve of mine) and the horizontal (the deliberate absence of hierarchy, much cherished, for instance, by the Occupy movement) as he reviews Elinor Ostrom‘s arguments on the tragedy of the commons.
“The city is the site where people of all sorts and classes mingle, however reluctantly and agonistically, to produce a common if perpetually changing and transitory life. The commonality of that life has long been a matter of commentary by urbanists of all stripes, and the compelling subject of a wide range of evocative writings and representations (in novels, films, painting, videos, and the like) that attempt to pin down the character of that life (or the particular character of life in a particular city in a given place and time) and its deeper meanings. And in the long history of urban utopianism, we have a record of all manner of human aspirations to make the city in a different image, more “after our heart’s desire” as Park would put it. The recent revival of emphasis upon the supposed loss of urban commonalities reflects the seemingly profound impacts of the recent wave of privatizations, enclosures, spatial controls, policing, and surveillance upon the qualities of urban life in general, and in particular upon the potentiality to build or inhibit new forms of social relations (a new commons) within an urban process influenced if not dominated by capitalist class interests.” (67)
For instance, as she debunks arguments in favor of privatization and enclosure as a response to the tragedy of the commons (the orthodox view), the counter-examples she uses always involve relatively small-scale solutions and projects. How does one scale the argument for megalopolis? For Harvey, no one has provided adequate arguments for this:
“This implies that nested, and therefore in some sense “hierarchical” forms of organization are needed to address large-scale problems such as global warming. Unfortunately the term “hierarchy” is anathema in conventional thinking (Ostrom avoids it), and virulently unpopular with much of the left these days. The only politically correct form of organization in many radical circles is non-state, non-hierarchical, and horizontal. To avoid the implication that some sorts of nested hierarchical arrangements might be necessary, the question of how to manage the commons at large as opposed to small and local scales (for example, the global population problem that was Hardin’s concern) tends to be evaded. There is, clearly, an analytically difficult “scale problem” at work here that needs (but does not receive) careful evaluation. The possibilities for sensible management of common property resources that exist at one scale (such as shared water rights between one hundred farmers in a small river basin) do not and cannot carry over to problems such as global warming, or even to the regional diffusion of acid deposition from power stations. As we “jump scales” (as geographers like to put it), so the whole nature of the commons problem and the prospects of finding a solution change dramatically. What looks like a good way to resolve problems at one scale does not hold at another scale. Even worse, patently good solutions at one scale (the “local,” say) do not necessarily aggregate up (or cascade down) to make for good solutions at another scale (the global, for example). This is why Hardin’s metaphor is so misleading: he uses a small-scale example of private capital operating on a common pasture to explicate a global problem, as if there is no problem whatsoever in shifting scales. This is also, incidentally, why the valuable lessons gained from the collective organization of small-scale solidarity economies along common-property lines cannot translate into global solutions without resort to “nested” and therefore hierarchical organizational forms. Unfortunately, as already noted, the idea of hierarchy is anathema to many segments of the oppositional left these days. A fetishism of organizational preference (pure horizontality, for example) all too often stands in the way of exploring appropriate and effective solutions. Just to be clear, I am not saying horizontality is bad—indeed, I think it an excellent objective—but that we should acknowledge its limits as a hegemonic organizational principle, and be prepared to go far beyond it when necessary.
In the grander scheme of things (and particularly at the global level), some sort of enclosure is often the best way to preserve certain kinds of valued commons. That sounds like, and is, a contradictory statement, but it reflects a truly contradictory situation. It will take a draconian act of enclosure in Amazonia, for example, to protect both biodiversity and the cultures of indigenous populations as part of our global natural and cultural commons. It will almost certainly require state authority to protect those commons against the philistine democracy of short-term moneyed interests ravaging the land with soy bean plantations and cattle ranching. So not all forms of enclosure can be dismissed as bad by definition. The production and enclosure of non-commodified spaces in a ruthlessly commodifying world is surely a good thing.
The idea of protecting the commons through enclosures is not always easily broached, however, when it needs to be actively explored as an anti-capitalist strategy. In fact a common demand on the left for “local autonomy” is actually a demand for some kind of enclosure.” (68 – 70)
Part of the issue, for Harvey, also has to do with a conceptual confusion between public goods / public spaces on the one hand and commons on the other.
“Public spaces and public goods in the city have always been a matter of state power and public administration, and such spaces and goods do not necessarily a commons make. Throughout the history of urbanization, the provision of public spaces and public goods (such as sanitation, public health, education, and the like) by either public or private means has been crucial for capitalist development. To the degree that cities have been sites of vigorous class conflicts and struggles, so urban administrations have often been forced to supply public goods (such as affordable public housing, health care, education, paved streets, sanitation, and water) to an urbanized working class.
Syntagma Square in Athens, Tahrir Square in Cairo, and the Plaza de Catalunya in Barcelona were public spaces that became an urban commons as people assembled there to express their political views and make demands. The street is a public space that has historically often been transformed by social action into the common of revolutionary movement, as well as into a site of bloody suppression. There is always a struggle over how the production of and access to public space and public goods is to be regulated, by whom, and in whose interests. The struggle to appropriate the public spaces and public goods in the city for a common purpose is ongoing. But in order to protect the common it is often vital to protect the flow of public goods that underpin the qualities of the common. As neoliberal politics diminishes the financing of public goods, so it diminishes the available common, forcing social groups to find other ways to support that common (education, for example).
The common is not to be construed, therefore, as a particular kind of thing, asset or even social process, but as an unstable and malleable social relation between a particular self-defined social group and those aspects of its actually existing or yet-to-be-created social and/or physical environment deemed crucial to its life and livelihood.” (72 – 3)
The process of “commoning” (as Harvey puts it) then consists in the extraction of this relation from market mechanisms and valuation. But as it stands, commons are constantly being enclosed and reintegrated with markets, commodified and monetized by private interests.
How does this relate to the right to the city?
“The struggle for the right to the city is against the powers of capital that ruthlessly feed upon and extract rents from the common life that others have produced. This reminds us that the real problem lies with the private character of property rights and the power these rights confer to appropriate not only the labor but also the collective products of others. Put another way, the problem is not the common per se, but the relations between those who produce or capture it at a variety of scales and those who appropriate it for private gain. Much of the corruption that attaches to urban politics relates to how public investments are allocated to produce something that looks like a common but which promotes gains in private asset values for privileged property owners. The distinction between urban public goods and urban commons is both fluid and dangerously porous. How often are developmental projects subsidized by the state in the name of the common interest when the true beneficiaries are a few landholders, financiers, and developers?” (78)
By definition, capitalist urbanization destroys the commons by raiding and appropriating them through predatory practices.
And again, for Harvey, the problem is that the left only offer local fetishism as alternative.
“Traditionally, questions of the commons at the metropolitan level have been handled through mechanisms of state regional and urban planning, in recognition of the fact that the common resources required for urban populations to function effectively, such as water provision, transportation, sewage disposal, and open space for recreation, have to be provided at a metropolitan, regional scale. But when it comes to bundling together issues of this kind, left-analysis typically becomes vague, gesturing hopefully towards some magical concordance of local actions that will be effective at a regional or global level, or simply noting this as an important problem before moving back to that scale—usually the micro and the local—at which they feel most comfortable.” (80)
Why is this problematic?
“Decentralization and autonomy are primary vehicles for producing greater inequality through neoliberalization. Thus, in New York State, the unequal provision of public education services across jurisdictions with radically different financial resources has been deemed by the courts as unconstitutional, and the state is under court order to move towards greater equalization of educational provision. It has failed to do so, and now uses the fiscal emergency as a further excuse to delay action. But note well, it is the higher-order and hierarchically determined mandate of the state courts that is crucial in mandating greater equality of treatment as a constitutional right.
How can radical decentralization—surely a worthwhile objective—work without constituting some higher-order hierarchical authority? It is simply naïve to believe that polycentrism or any other form of decentralization can work without strong hierarchical constraints and active enforcement. Much of the radical left—particularly of an anarchist and autonomist persuasion—has no answer to this problem. State interventions (to say nothing of state enforcement and policing) are unacceptable, and the legitimacy of bourgeois constitutionality is generally denied. Instead there is the vague and naïve hope that social groups who have organized their relations to their local commons satisfactorily will do the right thing or converge upon some satisfactory inter-group practices through negotiation and interaction. For this to occur, local groups would have to be untroubled by any externality effects that their actions might have on the rest of the world, and to give up accrued advantages, democratically distributed within the social group, in order to rescue or supplement the well-being of near (let alone distant) others, who as a result of either bad decisions or misfortune have fallen into a state of starvation and misery. History provides us with very little evidence that such redistributions can work on anything other than an occasional or one-off basis. There is, therefore, nothing whatsoever to prevent escalating social inequalities between communities. This accords all too well with the neoliberal project of not only protecting but further privileging structures of class power.” (83 – 4)
There is urgency though, for Harvey, in the process of commoning and in finding solutions to the scale problem because of the culmination of thirty years of neoliberal assault that resulted in a crisis that is triggering more raiding and dispossession.
“Capital has long preferred to treat the costs of social reproduction as an externality—a cost for which it bears no market responsibility—but the social-democratic movement and the active threat of a communist alternative forced capital to internalize some of those costs, along with some of the externality costs attributable to environmental degradation, up until the 1970s in the advanced capitalist world. The aim of neoliberal policies since 1980 or so has been to dump these costs into the global commons of social reproduction and the environment, creating, as it were, a negative commons in which whole populations are forced now to dwell. Questions of social reproduction, gender, and the commons are interlinked.
The response on the part of capital to the global crisis conditions after 2007 has been to implement a draconian global austerity plan that diminishes the supply of public goods to support both social reproduction and environmental amelioration, thereby diminishing the qualities of the commons in both instances. It has also used the crisis to facilitate even more predatory activity in the private appropriation of the commons as a necessary precondition for the revival of growth.
From California to Greece, the crisis produced losses in urban asset values, rights, and entitlements for the mass of the population, coupled with the extension of predatory capitalist power over low-income and hitherto marginalized populations. It was, in short, a wholesale attack upon the reproductive and environmental commons. Living on less than $2 a day, a global population of more than 2 billion or so is now being taken in by microfinance as the “subprime of all subprime forms of lending,” so as to extract wealth from them (as happened in US housing markets through sub-prime predatory lending followed by foreclosures) to gild the MacMansions of the rich. The environmental commons are no less threatened, while the proposed answers (such as carbon trading and new environmental technologies) merely propose that we seek to exit the impasse using the same tools of capital accumulation and speculative market exchange that got us into the difficulties in the first place. It is unsurprising, therefore, not only that the poor are still with us, but that their numbers grow rather than diminish over time. While India has been racking up a respectable record of growth throughout this crisis, for example, the number of billionaires has leapt from 26 to 69 in the last three years, while the number of slum-dwellers has nearly doubled over the last decade. The urban impacts are quite stunning, as luxurious air-conditioned condominiums arise in the midst of uncared-for urban squalor, out of which impoverished people struggle mightily to make some sort of acceptable existence for themselves.” (84 – 5)
So, the solutions are going to have to be hierarchical to some extent and avoid the local fetishism I have been railing against before, whether it is called localism, local democracy or resilient communities (which looks often like right-wing survivalism to me).
For Harvey, time for new commons.
“The political recognition that the commons can be produced, protected, and used for social benefit becomes a framework for resisting capitalist power and rethinking the politics of an anti-capitalist transition.” (86)
“When New Labour started banging on about “lifting children out of poverty”, I knew in my heart that its “project” was a dud. Widespread deprivation – among the adults who have the children, not the children themselves – is a signal of a systemic failure, not an unfortunate by-product of an otherwise healthy economy. New Labour tried to cure smallpox by putting makeup over the rash. Now, the coalition is suggesting the problem is that people simply won’t take responsibility for putting the makeup over the rash themselves.
Actually, it is all pretty simple. Capitalism is supposed to create wealth in which everyone can share – not equally, but at least to the acceptable benefit of all. When capitalist societies start featuring widespread unemployment (as happened in the 1970s), or widespread instances of wages that don’t cover basic needs (which accelerated in the 1980s), or simply increasing inequality (which started galloping in the 1990s), then it isn’t doing what its champions expect it to do, and the state has to step in.”
There is so much more to be done with 21st century peasants than just making them poorer and more precarious. The following is just sample of stories collected over the last few weeks.
Consider it my own, much less smart, version of Gans’s functions of poverty – the functions of the precariat.
1. Gives the upper classes feelings of righteousness and moral outrage that bolster one’s sense of moral superiority:
“We all know that single mothers are immoral scroungers, right? That impression was cemented by last Wednesday’s Newsnight, when Allegra Stratton interviewed young single mother Shanene Thorpe.
Stratton demands to know why Thorpe has chosen to move out of her mother’s two-bedroom flat, since she required housing benefit to do so.
After the interview, Stratton says directly to camera: “The government is thinking of saying to young people: if you don’t have work, don’t leave home.”
Except, Thorpe is not unemployed. As you may have read by now, she works full time for Tower Hamlets council, but claims housing benefits to help cover the cost of rent. In a series of statements on Twitter (collated byLiberal Conspiracy), Thorpe attempted to tackle the inaccurate portrayal of her situation: “To set the record straight, I work for tower hamlets council, I’ve worked since 16 and I only get help towards my rent because it is so high.”
It is difficult to see how the BBC – which has yet to comment – will justify the coverage. It breaks basic journalistic tenets of accuracy and fairness, by heavily implying that Thorpe is unemployed when she is not.
More widely, it raises some troubling questions about the way that the media and politicians talk about poverty and benefit claimants. While outrage has, rightly, been focused on the fact that Thorpe was misrepresented since she is not unemployed, that is not the only problem with the interview. It perpetrates lazy assumptions about single mothers: scroungers who should hide themselves away and not ask for anything. On Twitter, Thorpe says that in the full interview, Stratton asked her why she chose to keep her child. Is that ever an acceptable question to ask someone, particularly when the reasoning behind it is so clearly class-based? Stratton is clearly pushing an agenda, and has no interest in the fact that in this case, the issue is the extortionate rents charged by private landlords.”
2. The precariat provides easy targets for predatory lending and other extortionist activities:
“Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month’s rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But as Business Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.
The trick is to rob them in ways that are systematic, impersonal, and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up 30 minutes or more before the time clock starts ticking.
Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600% a year, which is perfectly legal in many states.
It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.
You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc. — How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.
These are not, of course, trivial amounts. They are on the same order of magnitude as major public programs for the poor. The government distributeshttp://www.taxpolicycenter.org/brie… about $55 billion a year, for example, through the largest single cash-transfer program for the poor, theEarned Income Tax Credit; at the same time, employers are siphoning off twice that amount, if not more, through wage theft.”
3. The precariat can be pushed out of the way to reclaim desirable space for wealthier denizens in need of better Lebensraum:
“The world’s largest private yacht looms over the old port of Barcelona – its six-deck, 163m profile offering proof of the love of Russian billionaireRoman Abramovich for a city he will visit again this week as his football team, Chelsea, tries to secure a place in the Champions League final.
But the superyacht, equipped with its own mini-submarine and anti-paparazzi shield, is a symbol of what neighbours in the traditional fishermen’s neighbourhood of La Barceloneta fear will bring about the demise of one of the few city centre barrios to have maintained its traditional working-class character. Old Barcelona is under threat. A British private investment fund has taken control of much of the port area and has asked for an extended licence so that it can turn the Marina Port Vell into the Mediterranean’s prime home for superyachts. Sources close to the group said it wanted the licence to run until 2036.
The Mayfair-based Salamanca Group intends to make the marina home to yachts up to 180 metres long, bringing the planet’s growing club of mega-rich to a marina that it says “dominates the heart of Barcelona”. But Barceloneta residents say the boats will dwarf the neighbourhood’s famously narrow, four- or five-storey blocks of flats, where working-class families live in tiny homes and colourful outdoor washing lines leave the neighbourhood’s laundry on public display.
“I’ve lived here all my life and the barrio has a special identity, precisely because so many working-class people have always lived here,” said 68-year-old pensioner Antonio García, of the L’Ostia neighbourhood group. “But this will price us out, turning the port into a place only for the very rich and changing things for ever.”
Neighbours fear that a huge wall may go up around part of the port to ensure the privacy of a handful of wealthy people, creating a fortress-like billionaires’ ghetto on their doorstep. Protesters have already taken to Barceloneta’s narrow streets, demanding that speculators be kept away from an area renowned for its cheap seafood restaurants and proximity to Barcelona’s colourful urban beach.”
4. The low status of the precariat makes it easier to exploit with impunity and complete illegality:
“The housing charity Shelter says it has seen more evidence of landlords acting unscrupulously and evicting people illegally.
One estate agent said properties typically rented for £350 per week were being marketed for £6,000 per week.
Shelter fears the problem will get worse as the Games approach.
The BBC’s Michael Buchanan says: “The potential profits are leading to some private landlords telling their tenants they have to leave their homes, with little notice.”
Housing Minister Grant Shapps said: “Landlords should be under no doubt that it is a criminal offence for them to evict a tenant without giving proper notice, and that anyone found guilty of doing this – or of harassing a tenant – could lead to a custodial sentence of up to two years.””
Right, I expect all this will be diligently prosecuted.
5. The precariat constitutes the bulk of neocolonial labor army, easy to exploit out of sight, in conditions of quasi-slavery:
“Coca-Cola is facing questions about its links to orange harvesting in southern Italy, which campaigners say relies on the cheap labour of African migrants living in squalid conditions.
An investigation into citrus fruit growing in Calabria has revealed how thousands of African workers, many of whom have made the treacherous voyage across the Mediterranean in search of a new life, are earning as little as €25 (£21) for a day’s picking in orange groves in a region that supplies juice concentrates to several multinational companies.
Evidence gathered by The Ecologist shows that many migrants, some of whom are in Italy illegally, live in slum conditions in makeshift camps without power or sanitation and fall prey to gangmasters who in some cases charge a “fee” from their workers’ wages for organising their picking shifts.
Coca-Cola, whose global profits in 2010 stood at $11.8bn (£7.5bn), is one of a number of major buyers of concentrated orange juice in Calabria which it uses for its Fanta brand in Italy. The company said its Calabrian supplier had been given a clean bill of health by an independent auditor as recently as last May but admitted that the length of its supply chain meant it was unable to verify the practices on every farm or consortium whose juice is used in Fanta.”
See also this.
6. The precariat can be made to work at will on anything, as needed, for free:
“A group of long-term unemployed jobseekers were bussed into London to work as unpaid stewards during the diamond jubilee celebrations and told to sleep under London Bridge before working on the river pageant.
Up to 30 jobseekers and another 50 people on apprentice wages were taken to London by coach from Bristol, Bath and Plymouth as part of the government’s Work Programme.
Two jobseekers, who did not want to be identified in case they lost their benefits, said they had to camp under London Bridge the night before the pageant. They told the Guardian they had to change into security gear in public, had no access to toilets for 24 hours, and were taken to a swampy campsite outside London after working a 14-hour shift in the pouring rain on the banks of the Thames on Sunday.”
If they refuse, there is often the threat of benefit loss. Who would not volunteer?
7. And if they get too troublesome, they can be killed without consequences:
“Brazilian police are investigating whether the fatal shooting of three rural activists was linked to their effort to win rights to land also contested by owners of a sugar mill.
The activists were shot on Saturday as they got out of a car near a landless workers’ camp in the south-western Minas Gerais state.
A five-year-old girl, the granddaughter of two of those who were killed, survived the attack. No one has been arrested, a police spokesman said.
Watchdog groups said police were questioning land activists about the possibility the killings could have resulted from an internal conflict within their movement. The groups rejected that idea and accused landowners of paying gunmen to shoot the activists.
Carlos Calazans, head of the Minas Gerais branch of the federal department of land reform, known as Incra, said police were looking into the land dispute as a possible motive.
“It’s definitely one of the theories for the motive behind this barbarous crime,” he said. “I’ve no doubt these activists were summarily executed. But police have to follow all leads until they find the truth.”
Calazans said the killed couple approached Incra last year seeking support in various land conflicts in the region, including the one with the mill owners. He said Incra tried to get the owners and activists to agree on the issue a few weeks ago, but the effort was unsuccessful.
Killings over land in Brazil are common, and people rarely face trial for the crimes.
The watchdog group Catholic Land Pastoral says more than 1,150 rural activists have been murdered in Brazil over the past 20 years. The killings are mostly carried out by gunmen hired by loggers, ranchers and farmers to silence protests over illegal logging and land rights, it says. Most of the killings happen in the Amazon region.”
“The study by Boston Consulting Group (BCG) identifies a shift from “owning a luxury to experiencing a luxury” with bespoke treats now accounting for more than half of the $1.4tn spent on luxury goods and services last year.
Luxury sales have boomed in the last two years as the industry recovered from the hiatus caused by 2008 global financial crisis, which provoked a sharp fall in conspicuous consumption.
The sector has also been buoyed by the growing number of millionaire shoppers in markets such as China and Brazil, who are picking up the slack as consumers in traditionally important luxury markets such as western Europe, Japan and the US continue to spend more cautiously.
“The gap in income inequality is growing, which is unfortunate, but there are more and more millionaires every year,” said Jean-Marc Bellaiche, a BCG senior partner who heads the firm’s luxury practice.
Bellaiche said sales of luxury experiences grew 50% faster than demand for physical goods last year. The trend is explained, in part, by demographics – as the consumers who drove the luxury boom in the 1990s start to retire, he said.
“They do not want to own new things, so are the primary customers for experiential luxury offerings,” he said. Their options are not limited to exclusive safaris and spas, they can book themselves in for a five-star hospital stay where they will be waited on by a butler and the en suite facilities include a marble bath.
The attitude to luxury is also apparent among their children who, the report says, now want more than the latest designer fashions. “Members of Generation Y tend to define themselves more by what they’ve done and experienced than by what they own,” said Bellaiche.
“They are drawn to instant pleasure and lavish experiences – helicopter snowboarding in Alaska or a weekend shopping spree in Paris.”
The shift is evident “even in brand-obsessed China” where personal luxury goods serve as a strong badge of status and success, he added.
The business of providing luxury experiences – from art auctions to exclusive travel packages – is now worth $770bn, according to the study. BCG predicts a 7% increase in luxury spending this year, albeit at a slower rate than the industry has enjoyed in the last two years.”
What is interesting is that none of these things actually involve really doing anything (like being pampered in a five-star hotel). Natural spaces will be tamed and customized so that luxury services can be delivered there (as in luxury safari lodges, with complete staff). These “experiences” look more like badges that people accumulate as forms of capital.
The other thing is that the poor are often blamed for their supposed lack of deferred gratification, seen as a defect that keeps them in poverty, as opposed to the middle-class and its Weberian puritan habits.