A Second Great Depression?
My earlier post, Mapping the Road to American Disunion, discussed the apparent high likelihood of increased social and political unrest in America in the coming years – a process which, with the ongoing partisan stand-off in Washington, might well be under way. This was based on the work of Peter Turchin and his field cliodynamics.
The political disarray speaks to the increased conflict between the distinct American Nations, as discussed by David Hackett Fischer and Colin Woodard. Both Turchin and Woodard noted that increased tension between the distinct American nations was likely in the coming years, of which perhaps we are getting a taste of today.
Many readers accordingly seem to have taken from my post that this internecine strife is the main problem that awaits the country in the coming years. However, I don’t think that’s the case, not by a long shot. I suspect that a far greater problem looms over the horizon. That is economic collapse.
In this post I will discuss why I think this problem looms, what I think will happen, how to get through it, and how to possibly mitigate it:
1. Setting the Economic Stage: Inequality
2. The Reasons: Mass Immigration Pressure
3. The Reasons: Natural population Increase and the Population Cycle
4. The Reasons: Automation
5. Fallout
6. How to Survive
7. Resolution
1. Setting the Economic Stage: Inequality
One of the defining conditions of our day is rising economic inequality. The wealthiest Americans are pulling away from the rest of us. The staggering scale of this inequality is illustrated by this clip, which was featured on Steve Hsu’s blog.
What’s the reason for this? There are two overarching reasons, those are labor oversupply (which stems from immigration and natural population increase) and labor obsolescence (which stems from automation and globalization).
2. The Reasons: Mass Immigration Pressure
The first cause of economic inequality is perfectly captured by this venerable set of graphs (featured at Mangan’s):
This is a juxtaposition of graphs comparing the portion of wealth held with the top 1% wealthiest of the population with the share of the U.S. population composed of immigrants. As we see, there’s a tight correlation.
Peter Turchin explored why this correlation exists (see the posts linked here, at my HBD Fundamentals page, in the section “On the economic impact of demographic changes (particularly immigration and the Baby Boom in the United States)”). In short, the wage an average worker can earn is a function of the demand for labor relative to its supply. When labor is tight, workers are in a position to command a higher salary (and considerably better working conditions/benefits) – and hence a higher share of the total pie. When labor is plentiful – as it is today – there are many possible workers for any given position. Any given worker is easily replaceable, and hence not worth much. It’s basic supply and demand.
This situation greatly contributed to the first Great Depression. This piece from economist Robert Reich explains why (emphasis added):
Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.
It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.
The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.
What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.
Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.
The economy is “weak” – and remains so – because middle-income earners (the people whose spending drives the economy) don’t have the money to spend. This is why “consumer spending” – which ultimately drives everything else in the economy – is weak. The average consumer is broke.
Mainstream pundits and politicians talk about the need to foster economic recovery, and all the standard rubbish solutions to accomplish this, but none are addressing the root problem: the oversupply of labor, which is primarily caused and exacerbated by ongoing mass immigration.
In fact, the standard conventional wisdom solution to the problem, more immigration (on the rationale that it’s “good for the economy” – ignoring the key question of “whose economy?”) merely serves to fuel the fire of economic malaise. Indeed, this is reflected by the fact that during the “recovery” periods following the two recessions in this century, the “economic” gains went mostly to the immigrants themselves, and, more telling, all of the income gains went to the wealthiest. See Top 1 Percent of Americans Reaped Two-Thirds of Income Gains in Last Economic Expansion (since 2001) and 95% Of Income Gains Since 2009 Went To The Top 1%.
This was the type of condition that presaged the Great Depression of the 1930s. Wealth was so concentrated at the top that the economy collapsed. Unfortunately, and most unsettlingly, we are right back at that point.
3. The Reasons: Natural Population Increase and the Population Cycle
While immigration contributes significantly to the labor supply, the cyclical pattern as detailed by Turchin captures another factor behind this oversupply: natural population growth. During good economic times, fertility rates shoot up. These good times typically occur in periods of relatively scarce labor. The increased wealth of the average family allows them to pour more of their energies into reproduction. However, unless population growth is accompanied by geographic expansion, this partly undoes the condition of labor scarcity that spawned it. Wages fall, and with them, so does fertility. Relatively lean and quite competitive times ensue, only to be reversed by the next period of labor scarcity brought on by the previous era’s lowered birth rates. Fundamentally, this appears to be engine driving Turchin’s cliodynamic cycles, as he explains in his masterful piece in Aeon magazine:
Another reason why the labour supply in the US went up in the 19th century is, not to put too fine a point on it, sex. The native-born population was growing at what were, at the time, unprecedented rates: a 2.9 per cent growth per year in the 1800s, only gradually declining after that. By 1850 there was no available farmland in Eastern Seaboard states. Many from that ‘population surplus’ moved west, but others ended up in eastern cities where, of course, they competed for jobs with new immigrants.
This connection between the oversupply of labour and plummeting living standards for the poor is one of the more robust generalisations in history. Consider the case of medieval England. The population of England doubled between 1150 and 1300. There was little possibility of overseas emigration, so the ‘surplus’ peasants flocked to the cities, causing the population of London to balloon from 20,000 to 80,000. Too many hungry mouths and too many idle hands resulted in a fourfold increase in food prices and a halving of real wages. Then, when a series of horrible epidemics, starting with the Black Death of 1348, carried away more than half of the population, the same dynamic ran in reverse. The catastrophe, paradoxically, introduced a Golden Age for common people. Real wages tripled and living standards went up, both quantitatively and qualitatively. Common people relied less on bread, gorging themselves instead on meat, fish, and dairy products.
So, unfortunately, it appears that good times sow the seeds of their own undoing. They do so mainly by swelling the population, which forces individuals to compete with each other – sometimes tooth and nail – for a little piece of the pie.
This, is, by the way, why people calling for ways to reverse sub-replacement fertility are fundamentally wrong-headed. Unless you’re going to open up new frontiers for colonization, you don’t want fertility rates to get too high, because population growth without geographic growth inevitably leads to falling standards of living for the people and more strife. But such is the problem with people who can’t see beyond their own small little academic worlds.
Add immigration on top of natural population growth and you have a recipe for economic disaster. It took many decades of mass immigration to drive the U.S. economy into the first Great Depression. However, the current wave of mass immigration has been going on for many decades, and it has helped drive inequality to where it was in 1929.
4. The Reasons: Automation
Labor oversupply, via natural population increase and via immigration, is the first big factor contributing to severe inequality. The second big factor is labor obsolescence, both through globalization (essentially overseas labor competing with domestic labor) and, perhaps far more importantly, automation.
As previously discussed in my post Human Labor Becoming Obsolete?, robotic advancement continues at a steady and impressive rate. Previously, many have argued that automation merely freed up humans from drudge work and allowed them concentrate their efforts elsewhere. These speakers are unconcerned because they believe that this process can continue indefinitely. However, it can’t. The big reason for this is simple, as I noted previously:
But one oft-quoted maxim about automation and technology is that while they may make some jobs obsolete (e.g. the switchboard operator), they open up new jobs in other fields. This line of reasoning ignores the reality of IQ. The fruit picker displaced by a robot isn’t going to get a job fixing those robots. Indeed, in general, and as was Half Sigma’s main point, the low-IQ are the ones that have the fewest options in any Brave New Economy, for the range of jobs they can do is the most limited. This means that the IQ threshold for economic viability rises as labor becomes more automated.
This has been driven home by several recent developments:
From HBD Chick, strawberry-picking robot
Meet the Robot That Makes 360 Gourmet Burgers Per Hour
“No human hand touched this hamburger. It was made entirely by robots.”
Researchers claim many jobs at risk for automation
In “The Future of Employment: How Susceptible Are Jobs to Computerisation?,” Frey and Osborne estimate that 47 percent of U.S. jobs are “at risk” of being automated in the next 20 years. This does not mean that they necessarily will be automated (despite the way the study has been portrayed in somemediaoutlets)—rather, the authors argue, it is plausible over the next two decades that existing and foreseeable AI technologies could be used to cost-effectively automate those jobs out of existence.
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What do the authors predict will happen to those whose jobs are automated out of existence? “Our findings thus imply that as technology races ahead, low-skill workers will reallocate to tasks that are non-susceptible to computerisation–i.e., tasks requiring creative and social intelligence. For workers to win the race, however, they will have to acquire creative and social skills.”
Their paper can be found here. Frey and Osboune recommend that workers acquire “creative and social skills” – as if workers have unlimited ability to do so. This limitation is why increased automation posses an ever-increasing threat to workers, especially to those on the left side of the IQ bell curve.
The combined result of these two forces – labor oversupply and labor obsolescence – can be seen in the distribution of income in American households. The TechCrunch article America Has Hit “Peak Jobs” featured a graph from Wikipedia (also discussed by Steve Hsu) which illustrates this:
Think all those job losses over the last five years were just caused by the recession? No: “Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market,” according to an AP report on how technology is killing middle-class jobs.
When I was growing up in Canada, I was taught that income distribution should and did look like a bell curve, with the middle class being the bulge in the middle. Oh, how naïve my teachers were. This is how income distribution looks in America today:
That big bulge up above? It’s moving up and to the left. America is well on the way towards having a small, highly skilled and/or highly fortunate elite, with lucrative jobs; a vast underclass with casual, occasional, minimum-wage service work, if they’re lucky; and very little in between.
But it won’t be 19th century capitalism redux, there’ll be no place for neo-Marxism. That underclass won’t control the means of production. They’ll simply be irrelevant.
Why? Technology. Especially robots.
5. Fallout
All these factors, acting together, leads me to suspect that a second Great Depression is likely, if not inevitable, especially if current policies and government dysfunction remain in place. The collapse could indeed be imminent, perhaps within a few years to a decade at most.
Should this occur, this will dwarf all other concerns, as the Great Recession did.
However, there are very important differences between today and the 1930s. Positively, for one, today there is a considerable social safety net in place, in part a result of the previous Depression. As well, we have a government – as bumbling as it is – that actively guards against economic malaise, and will try to combat at least the acute problem with measures designed to alleviate it (such as economic stimuli), as opposed to what they did back in the 1930s. These could help to prevent the Depression from reaching the depths the 1930s collapse did.
On the on the hand, a key negative difference between this time and the 1930s is this: back during the Depression, immigration restriction was passed a few years earlier. The seeds of economic recovery were in place even as things tumbled out of control. Today, immigration continues unabated – currently standing at well over one million legal immigrants per year. Indeed, its pace may even be doubled. That coupled with automation, might leave us without the foundation for recovery.
Should this occur, it’s hard to overstate its impact on America – and the world (the effect of the Great Depression in Germany gave us the Nazis, and thus, World War II). The social toll of the Depression isn’t fully appreciated today. This includes, aside from the previously featured demographic contraction (see Who’s Having the Babies? and 100 Blog Posts – A Reflection on HBD Blogging And What Lies Ahead: Fertility), but the impact on the psyche of citizens, as discussed in The Atlantic article Suicide and the Economy:
“We never spoke of them. Why would we?” Learning the the truth about my great-grandfather, and 40,000 Americans during the Great Depression.
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Roy was one of at least 40,000 Americans who took their own lives that year and the next, the two-year span that suicide rate spiked to its highest recorded level ever: more than 150 per 1 million annually.
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In the modern era, for every 1 percent increase in the unemployment rate, there has typically been an increase of about 1 percent in the number of suicides
Beyond the economic impact, what effect would another Depression have on societal stability, such as rates of violence, as Turchin’s cycles predict? That’s harder to say. If the flare ups in societal violence are driven by racial tension, then there are mixed signs on that front. While there is higher fraction of clannish peoples in America, particularly non-Whites, than there was during previous flare-ups, there is no large-scale migratory patterns in place that previously brought the different groups into contact, and hence conflict. Also, as commenter Greying Wanderer notes, surges in violence may be led by an excess of young men in a society. While Peter Frost has commented on this, it’s not quite clear that this problem is pretty acute today. As such, a large surge in violence might not occur, other than perhaps some limited intensification of clashes at current tense racial boundaries.
And what about the American nations themselves? Are they primed to fly apart? That too is unclear. I can picture two broad scenarios. Perhaps as the new Depression slogs on, partisan bickering – with each nation blaming the others for causing and/or prolonging the Depression – will ensue. In such a scenario, little this is productive will take place and tensions between the various American nations will rise.
The other scenario – as was the case from the 1920s to the 1950s – would be for the American nations to come together and unite in their common interest. It is this sentiment that allowed the passage of the 1920s immigration restriction. World War II further served to tighten this alliance.
Which of these is more likely? Well, one key difference between today and the previous Depression is that previously, “social Darwinism” (i.e., hereditarianism with truly racist overtones) was the norm. The WASP elements of the various American nations were able to unite in their suspicion of “subversives”, that is non-WASPs, especially non-Whites. This may have allowed the various nations to work together, but they did so at the expense of minorities.
Today, on the other hand, as the “underground” nature of the HBD-sphere indicates, there is no such sentiment, especially in the Northern nations. P.C., for all of its ills, protects non-Whites from hostile White sentiment – even if that comes to some degree at White expense (see my thoughts over at this post of HBD Chick’s, hbd fallout). Further, there is no World War to unite the American nations to combat another Depression. Perhaps, unfortunately, it never rains but it pours. Sane, moderate sentiment in national interest – wise policy decisions to help combat the situation (such as restricting immigration or instituting some protectionist trade policies) might not fly. Rather, we might be stuck with the current open-door universalism or rabid racism against non-Whites.
6. How to survive
So if another Depression is coming, what can one do about it? Well, higher-skilled workers in occupations that are hard to outsource or replace are in the best shape. Those who can depend on being supported, directly or indirectly, by government subsidies should also be OK. This means many practitioners in the health care field, especially doctors. In the worst shape are low-skilled workers (who will be competing with each other as well as displaced higher skilled workers), and those who work in the sale/production of frivolous goods.
City dwellers are in trouble, since they are completely dependent on support from the outside. A recent post titled On Being Independent over the Artisanal Toad’s Hall described one strategy for getting through lean times:
in a declining or depressed economy people don’t have money to buy toys, they buy necessities … This is one of the reasons our current economy is floundering: what do people really need at this point? The market for toys is really, really depressed.
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Nobody ever went broke selling things that meet basic needs or addictions. Basic needs are things like food and clothing … Everybody has to have food and in a declining economy, anybody who can provide quality food at a lower price will have all the business they can handle. It’s simply a matter of staying in business long enough to develop a customer base. The customer base is automatically a customer base of repeat customers because food is consumed and there is always a need for more.
Lots of people talk about the collapse that’s coming. Most of them talk about stockpiling guns and ammo. Those are good to have, but better is the ability to produce EXCESS food that can be sold, bartered or used to sustain others who can help produce other things or simply add to your defense capability. Is it worthwhile today? Absolutely. The average suburban homeowner could put up a 200 square-foot greenhouse and produce enough food on a year-round basis to cut their food budget by well over 50%. Combine that with chickens and rabbits and the food bill can be chopped by over 75%. Think about that. We’re talking about hundreds of dollars each month in un-taxable production that is consumed and never leaves the home.
Someone with a few acres could do much, much more. Portable chicken pens that are moved each day allow the chickens to consume bugs and pasturage and cuts the feed expense by 25% or more. The result is healthy, organic free-range chicken at minimal cost. Add a milk cow to that and you’ve got eggs, chicken, milk, cheese and an 800 lb steer to slaughter every year for beef. Modern homesteading has come a long way.
In short, subsistence living (or even producing excess to help others) may be a wise strategy to pursue. People who live in fertile rural areas are at a distinct advantage over everyone else here, at least for a time.
7. Resolution
The best hope is that I’m completely wrong, and the economy will slug along with only perhaps relatively minor upheavals like another “ordinary” recession. One can then hope that at some point in the coming years, practical steps undo the deleterious policies in place – such as unchecked mass immigration and easy outsourcing – will be enacted. Unfortunately, the signs I’ve seen point to my not being wrong, and that a major economic calamity lies in the wings.
Even then, one can only hope that such a massive societal shock might be the thing jar the fractious American nations out of their pointless squabbling and finally force us to address the demographic problems that plague us. If so, recovery will follow after a few years, with perhaps a new era of economic prosperity after that. It may seem that only some major crisis might wake the Western nations out of their current self-destructive policies. Indeed, perhaps even stronger social welfare systems might emerge, as they did during the previous Depression, particularly in response to the pressure from automation.
Worse would be no correction to the current problems that face us, particularly immigration. We can only hope that at least that won’t be the case.
This seems quite fitting:
JayMan's Blog 
You are absolutely correct about automation, I’m reminded of Kurt Vonnegut’s ‘Player Piano’. In my mind the greatest folly of our age is the very idea that technology itself will cure each and every ill that besets the human species. People starving in the third world? Why, we’ll just develop new ways to increase food so those people can eat to their heart’s content and make even more children. You used to build cars with your hands, well now you can use those hands to knit custom scarves for rich ladies on Etsy! And If you’ve got a vice we’ve got an app to exploit it! Only good can come of it of course and If you don’t agree you’re an ignorant luddite. It speaks to a society led by those with great heads for numbers and mechanical solutions but little understanding of how actual people live, work, and love.
There isn’t much love around the HBD sphere for Jared Diamond but I enjoyed his Collapse immensely. This is what we do. As a species we seem to sow the seeds of our own destruction so easily and thoughtlessly it would be a joke if it were not so tragic.
~S
@Sisyphean:
I think technology is a great thing. I mean, technology is what we as humans do – we are utterly dependent on it. That said, a key problem is that our social/economic organization hasn’t fully adapted to accommodate the changes wrought by technology, yet. That’s a problem we’re still working on (indeed, this is a continual process), especially with regards to automation.
I don’t know if you can solve that problem though. You introduce huge change very quickly with technology, much of it arguably for the better, but as learning organisms have a limited ability to adapt in real-time and basically zero ability to do so through evolution given the speed of the change. What we end up doing is creating new technology to solve the problems created by previous technologies. I’m not saying it’s all bad just that it’s a bit of a trap that the most mechanistic among us seem to revel in. There’s a whole lot of short term thinking going on. Or I might just be being contrarian, we live in the age of wireless micro-transactions and the herd is going with the flow and I just can’t do that for better or for worse. The funniest part being that my day job is enterprise IT development. Eh, back to painting monsters by candle light.
~S
@Sisyphean:
I don’t think I have much to add. 😉
It is a mistake to think that automation only replaces manual labor. Intellectual labor is in many ways easier to replace because many kinds of intellectual work like medical diagnosis has a fairly logical structure that is easy to code. In engineering, computer aided design (CAD) has made major inroads into the engineering labor market. And GPS and CAD have reduced survey parties that used to consist of at least 3 to 4 surveyors to one-man operations. Financial analysis programs have likewise reduced the need for financial analysts, and low level law jobs are giving way to text search and analysis programs. Medicine, especially diagnosis and surgery, is well on its way to full automation.
@bob but what do those people do when they can no longer shuffle paper? The art world is already awash in boring 2D painters, angel sculptors, and flower/sunset photographers. Only so many people can make a semblance of a living hocking other people’s castoff crap on ebay/craig’s list. So far our society has responded by ignoring it or denying that it’s a problem. This will continue until it can’t.
~S
A depression also requires a massive credit bubble that leads to malinvestment. Imagine someone goes deep into debt to build a buggy factory as the automobile comes out; obviously a bad idea. It doesn’t need to be that clear cut though, it is enough if someone calculates that a new widget factory is profitable at 2% interest rates, but not at 10% interest rates. There is only so much real savings in an economy (in other words delayed consumption), but the central bank and banks can create “excess” credit that is unbacked by real goods and services. If that credit is used to build a profitable factory that can repay the debt, then there is no inflation and the debt is retired. If credit continues to build in the system though, it means the credit is being used for less and less viable ventures. If a credit bubble pushes interest rates low enough, you get an artificial boom cycle filled with malinvestments that leads to a bust. (Student debt is another bubble. Wiping out the debts is a solution, but remember that all those debts are someone’s assets. This is why real interest rates go very high during a depression: there is too little real savings and all the fake assets are destroyed.)
The credit boom cycle, driven by inflation of the currency, delivers more gains to owners of capital. This is why inequality goes hand in hand with a credit boom. Under the economy’s natural rate of mild deflation, any idiot can earn a positive return on his savings by putting cash under the mattress. Today, you must invest, and that takes some intelligence (not a lot, but consider who is at the very bottom of the economic pyramid).
In sum, everything you say is true, but there would be no major depression if there was no credit bubble because there would be far less volatility. The economy would under perform for a time and then recover. Today, the massive debts in the economy increase the costs in the economy and creates a situation where more and more firms and individuals cannot pay their debts. If everyone was debt free, this vicious cycle would not happen.
Finally, consider that the credit/inflation boom from about 1980-2008 also paid for a lot of bad behavior. Single parent homes, for example, are expensive, but the massive credit bubble provides tax money to subsidize it. When this crash comes, it’s not just going to be economic, but societal. People who currently require subsidies to maintain their standard of living, be it from government or other Americans (so divorced women with kids are included) are going to lose their subsidies and have nothing. People won’t starve, but they will internalize the true costs of their lifestyles (as will over consuming Americans driving gas guzzling cars).
@Orthodox:
Great points! Thanks for fleshing this out for us.
One thing though:
I don’t expect government subsidies to disappear. In fact, should a collapse start to get really bad, I expect more subsidies, more stimulus by government in an attempt to pull us out of it (even the development of more social welfare programs). This attempt will eventually be partially successful.
One can hope that they also enact real efforts to reduce some of the labor surplus that is dragging us all down.
Excellent post.
@Greying Wanderer:
Thank you! Notice the nod to your earlier comment.
yes, real simple – Income inequality. Less disposable income now than ever as the top gains wealth the lower working class erode!
“In short, subsistence living (or even producing excess to help others) may be a wise strategy to pursue. People who live in fertile rural areas are at a distinct advantage over everyone else here, at least for a time.”
indeed. if the only work one can do is demeaning and unnecessary, not real work at all, which has become the lot of at least half the population it would be better to live like ted kaczynski. his manifesto makes many of the points your post has made. (he was a terrorist, but he wasn’t crazy at all. he is the most famous living Cynic.)
the poor in the developed world aren’t exploited; they are irrelevant, but middle class engineers are exploited. the expropriation of surplus value is real. dividend recapitalization is an egregious example practiced by lbo funds.
the only solution is eugenics and forced sterilizations. when the useless can’t be said to be inferior, there will be no shame in being idle.
Dude, first of all, no sock puppetry. Stick with a name, even it’s anonymous.
Forced sterilizations are wrong as a matter of course. We don’t need coercive eugenics.
“dude”, i’m one of hsu’s subjects, and i’d be the first to stand in line for sterilization if i were selected according to some reasonable criteria.
what’s wrong is that people with a very high likelihood to bring into this world other people who will live in miserable poverty their entire lives and even worse be laughed and hated by their betters.
the only way. THE ONLY WAY to put an end to class is coercive eugenics. because only then can the excuse of “you know those people. what do you expect.” become impossible.
you’re not much of a liberal after all.
and you know jayman you can be irriligious and even anti-religion without being an atheist. read being and time.
@Jorge Videla:
That’s good for you. I wouldn’t want to impose this decision on anyone, nor should we as a society do so.
No. It wouldn’t make class go away. Coercive eugenics is wrong, and unacceptable. That is my official position. Please, do not make additional references to it, or I will have to subject your comments to moderation.
jayman, sorry for the misspellings and incomplete sentence. i juast type looking at th keyboard and press post.
you’re an infantile leftist.
class is so much less obtrusive in scandinavia and japan precisely because these countries are so homogeneous. class is ignored in les etats-unis merdeux because race pops up to obscure it.
when the state vets all births there is class is no longer viable.
THE DEEP reason why population control has never caught on is that any govt powerful enough to carry it out, like that iof the prc, wopuld be more powerful than CAPITAL could tolerate.
grow up. there is an AUFHEBUNG between the far left and far right. it’s eugenics.
@Jorge Videla:
Look, no personal attacks. Last warning before moderation.
Fortunately, that’s never going to happen. Nor should it.
Great post Jayman. I don’t live in the States but everything you wrote makes perfect sense to me. Many of these points could apply equally to the UK. The USA and the UK both favour the Keynesian economic approach, with the Bank of England and the Federal Reserve pursuing economic growth at all costs, including zero interest rates and massive economic stimulus. Here in the UK David Cameron is implementing state-backed mortgages. Nothing has been learned from the 2008 crisis. And mass immigration still continues. Our economy is the emperor’s new clothes. All manufacturing jobs exported. An economy based on debt-fuelled government spending, consumer spending. and house price inflation. Everything imported and very little exported. Domestic companies being taken over by Chinese state-backed companies, or Arab sovereign wealth funds. Worse still in my opinion is the drive towards a ‘gender-neutral’ society in western countries. If women are earning the same as men, or out-earning men, and in fact no longer need men except for creating children, what effect would that have on male incentives to be hard-working, productive, or create companies and jobs? Can a female-driven economy work? Can it compete with more traditional, patriarchal economies in other countries? Western civilisation and capitalism was male-led. If we transition from a ‘K-selected’ society to an ‘r-selected’ one, whether via feminism and the pursuit of a ‘gender neutral’ society, or through immigration, or both, the long-term effect in my opinion could well be economic collapse. And as far as I can tell the governments and institutions of most western countries, eg USA, Canada, UK, Western European countries, Australia, are totally committed to achieving gender equality or gender-neutral societies.
and now median household income is higher in statist france than in the uk.
the anglosphere ascendancy is over. it died from ideology and upper class windbags like your cameron.
it’s now quite obvious that the wrong side won the world wars.
germany still makes stuff. lots of stuff. germany has much lower inequality than the uk, and much higher mobility. germany is a great county. the uk is not.
but unfortunately the anglo-saxon poison of neoliberalism germany says is good enough for greece and spain, yet germany would never practice it at home.
One of the defining conditions of our day is rising economic inequality. The wealthiest Americans are pulling away from the rest of us. The staggering scale of this inequality… What’s the reason for this? There are two overarching reasons, those are labor oversupply (which stems from immigration and natural population increase) and labor obsolescence (which stems from automation and globalization).
I don’t think those are reasons: those are mechanisms whereby the elite enriches itself and impoverishes the historic American nation, i.e. European whites. The reasons for the growing inequality are the greed of the elite and its hatred for the historic American nation. The elite is greedy and hate-filled for genetic and cultural reasons. To understand what is happening in America, you have to look at Europe and European history. Europe is undergoing the same process for the same reasons.
And while American and European whites are being impoverished and reducing the number of children they have, they’re funding the population growth of non-whites, and particularly non-whites who are not suited to liberal democracies.
@Dante’s Ascendancy:
Regardless of the role the elite play, how do you think it happens? As I’ve explain in this post.
Regardless of the role the elite play, how do you think it happens? As I’ve explain in this post.
Yes and explained v. well. But there was no point in saying “Yay 4 Jay!” You can take that as read.
Regardless of the role the elite play…
IOW, regardless of the role the HBD plays. This is a HBD blog. Writing about the effects of HBD without mentioning the HBD is an interesting exercise. But then one other effect of the HBD in question is fear of mentioning the HBD in question. It’s perfectly rational fear too: that HBD would like to take away the First Amendment, but for the time being it has to be satisfied with destroying reputations and careers. Elsewhere in the world, it has already got the thought-crime laws it would like to enact in the US.
You could also have written about the looting of Russia after communism. The “reasons” for the looting were asset-stripping, crooked auctions and collaboration between ex-communist officials in Russia and economists in the U.S. But behind those reasons lay, once again, HBD. And it was the same HBD:
http://isteve.blogspot.co.uk/2013/06/marc-rich.html
“In short, subsistence living (or even producing excess to help others) may be a wise strategy to pursue. People who live in fertile rural areas are at a distinct advantage over everyone else here, at least for a time”
I don’t agree. This seems barely more sensible than the ‘guns & ammo’ guys. Consider this:
a) Food can be taken into cities and distributed cheaply. Rural areas are highly dependant on gasoline, especially in the USA. Petrol supplies to rural areas are far more vulneable than food supplies to urban areas.
b) The USA is the world’s breadbasket, a massive exporter. Before the USA ceased to produce and distribute enough food to feed itself, much of the rest of the world, especially Africa, would be literally starving and dying.
I agree that the US (and much of the ROW) is in a second Great Depression, and will be there a long time. But that does not mean significant food shortages. Want food? Go to Walmart, buy the cheap stuff. Even working a low paid service job will generate money for food much more efficiently than growing your own. If you want to grow your own food as a hobby, great. But don’t think that moving to the countryside and starting a greenhouse is a survival-maximising strategy.
The problem wouldn’t be a shortage of food so much as a shortage of money, on the individual’s part.
The idea that your average suburbanite can actually grow a fair amount of food on a standard home lot implies to me that many folks can cut their food budget and dependence on food that’s being shipped via oil, while still working regular jobs if they have one, without moving.
Great Post! Although I’m a little late to the party, I’d like to add my 2 cents about another issue facing American workers: The high marginal cost of being employed.
A personal anecdote: After graduating from college over a year and a half ago, I was, for almost six months, unemployed and living with my parents. Basically, a NEET. However, I did help out at home, by minding my younger siblings, fixing things on my parents’ property that need maintenance, weeding the garden, cleaning house and running errands, so I wasn’t a complete leech. I took up very little space, ate pretty frugally, and maybe added extra household expenses of about $300/month. This ended after I found a job with a company in another city. What has struck me about my situation since then is how much it costs simply to have a job these days. Now, my case isn’t perfectly representative, since I had to change cities to find employment, but that is a situation which still applies to many workers, especially in the younger generation.
First of all, I had to find an apartment in my new city. There is low-cost housing, unfortunately it’s all in the “bad part” of town. It’s also pretty far from where I work. The cheapest place I could find costs $7,000 a year before utilities, which are about $1,000 a year. Utilities would be higher, but I’m the kind of guy who lets the temp get up to 85 Fahrenheit in the summer and down to 60 in the winter, while taking 2-minute showers and rarely turning on the lights.
Secondly, I had to find a car, since public transit in this city (like most American cities) is not very well-funded, and unreliable. I bought a used Honda Civic for about $12K. My car loan payments, with interest, amount to $4,300 a year for the next three years. In addition, I have to pay for collision (because of my car loan) and liability, of course, so my total insurance bill comes to about $2,200 a year (though that should drop in a year and a half when I turn twenty-five). I rarely drive anywhere except my job, and usually plan my trips to the grocery store so that they can be made on a beeline from work to home. Regardless, gasoline plus maintenance comes to about $1,200 a year.
So overall, the extra cost that I have to incur, simply to have a job, is, per annum, $7000(housing) + $1000(utilities) + $4,300(car payments) + $2,200(insurance) + $1,200(gas and maintenance) – $3,600 (the household costs my parents saved when I moved out, counterbalanced on my end by not having to do as many chores), for a marginal cost of working of a little more than $12,000. I deliberately included only costs that I incurred specifically so that I can have a job in the field I trained for, since others (like food and healthcare) I have to pay for regardless of employment. Subtracted from an after-tax income of about $28K/year, out of a gross of $38K, I make a net income after taxes of $16k/year. Divided by roughly 2,000 hours a year (40 hours a week times fifty weeks, ignoring commute of about 40 minutes a day, and unpaid overtime), I make about $8/hour after my costs of employment. So I’m not really much better off, currently, than when I was a NEET.
The upshot of all this is not to complain about my life. I recognize that, compared to most Americans, my situation is pretty good. Rather, it’s to show the large disincentives that exist to working, for many Americans. My cost total didn’t even include the cost of my education, since I got scholarships for most of it, but if I didn’t have scholarships, the cost of me having the job I have now would be even higher. While I expect the situation to improve in the future (more experience = more money, plus the car loan will eventually be paid off and I can drop the collision insurance), somebody whose economic circumstances are very shaky to begin with and for whom the payoffs of education are uncertain could very easily be convinced not to bother with it by these facts.
@Curious Observer:
Precisely!
Very well said, and excellent comment! Indeed, there are huge financial disincentives to work, as you excellently explain. In fact, I’m going to tweet your comment.
My reaction to Curious Observer’s story: Wrong college major. If you are going to go to college then major in something that will start at much higher than $38k per year.Given the right major you can start at over $100k per year and go up from there.
Being poor sucks in a big way. If you are smart enough to learn skills that pay way better then you are being negligent if you do not pursue getting those skills.
As for the cost of living: I am struck by the need to be able to live in low cost housing in a safe neighborhood. The car cost could be avoided if you could walk or bike to work. The housing cost could be reduced by sharing housing.
Randall,
“Wrong college major. If you are going to go to college then major in something that will start at much higher than $38k per year.”
The majority of recent college grads make less than I do. I chose a fairly practical major (accounting) for a fellow with an above-average but not anywhere near outstanding IQ (probably around 115, as a rough estimate). Sure, there are some very specialized majors that make a lot more, but most of the people who do them have genius-level IQ and work their bums off through school and their working years. I went to school with lots of smart, hardworking people, and maybe one of them got a job that, starting out, paid more than $60K a year. He had a 1600 on the SAT, and still studied 30-40 hours a week outside of class. If he’s happy in his job, then more power to him, but the idea that I, (or the vast majority of people in this country), could simply choose to do his major (electric engineering, with a focus on medical applications), is pretty silly. Moreover, even if it was possible, and a bunch of people took your advice, then supply and demand would kick in and drive down wages in those fields, so then they wouldn’t be such a great deal. In any case, haven’t STEM salaries been stagnant for a decade? The real money, as Half Sigma has said, is really in value transference, but I’m neither clever enough, nor (I would like to think) sociopathic enough to do that.
“I am struck by the need to be able to live in low cost housing in a safe neighborhood.”
I’ll admit that, originally being from the midwest, I have this weird sense of entitlement to not being mugged when leaving my residence. In any case, as I said in my comment, the low-cost housing was also far away from where I work, so your next suggestion (drop the car), would be even more more impracticable if I had thrown caution to the wind and settled there. That suggestion might work in a handful of American cities, and probably in most European cities, but the simple fact is that urban planning in most of the US is predicated on automobile ownership, so most cities are not all that walkable, nor that friendly to bikers. Moreover, this trend is self-reinforcing through cultural norms. If I biked to work, besides smelling like armpit when I got there (I’m in the deep south, and it gets hot and muggy here), I’d be the weird, hippie (lol at that) guy, and that would probably impede my advancement at my job. So cultural norms in the US are also a barrier to living frugally.
As for getting a roommate: That’s something I’m looking into for when my current lease expires. Unfortunately, moving to a new city tends to make that sort of thing harder, since one must find someone he trusts to:
1. Not steal from him.
2. Not trash the apartment and/or walk out on the lease
3. Not run up the utility bill to ungodly levels.
That social capital, it’s not just a nice thing to have, it’s also got a lot of practical benefits. Too bad social atomization in the US has left us with a dearth of that sort of thing.
Sorry, Jayman. I didn’t originally mean to rant at such length, but when I get going, it’s hard for me to stop.
A final point I’d like to make about the issue facing workers in the US, especially in the working and lower-middle classes, has to do with a pet theory of mine, which is that economies are geared towards different levels of consumption, and this affects the ability of individuals to change their level of consumption, even when they suffer severe consequences from not doing so.
By analogy, if you drive a car with a standard transmission, there are different gears you have to shift to in order to change speeds. If you’re in first gear, you can’t go 30mph. The rpm would simply be too high. By the same token, If you’re in 5th gear, you can’t drop your speed down to 30mph. The rpm would be too low and the engine would putter out. You can change speeds within a certain range, but to move outside that range you have to shift gears.
I would say that different economies are set in different “gears” and individual consumption is analogous to the particular speed one can drive in a particular gear. Now, if your economy is geared towards a moderate workload and moderate consumption, it’s easiest for to have a lifestyle that falls somewhere near that medium. A European country like Germany or France would be a good example. Cities are typically designed to be walkable or bikeable, and mass transit is widely accessible. Since space comes at a higher premium than in the US, housing is built more compact to begin with. However, people in these countries typically work shorter hours than in the US. So whatever inconveniences they suffer from their more frugal lifestyle, they can more easily adjust to, because they have more free time. One can easily get by without an automobile in these countries, without too much added inconvenience. On the other hand, people who want to go all out and live the American lifestyle in Europe pay much higher marginal costs (parking, gas taxes, etc.) because the societies in which they live aren’t set up for that sort of lifestyle.
In the US, however, the economy is not really set up for people with a lower-consumption lifestyle. While it’s not impossible to live without a car, for example, it is far, far more inconvenient than in Europe. So for an individual, the trade-offs of being more frugal in that regard, in terms of time, inconvenience, and personal risk go up compared to the case for an individual in Europe. So it’s much harder to change your level of consumption below a certain point. Not impossible, but very difficult.
The much thornier issue is how economies being stuck in different “gears” affects social expectations. People in certain professions are expected to maintain a certain type of lifestyle, essentially as a status marker. An accountant or engineer who rode the bus to work, in spite of the inconvenience, would be an odd duck. A professional who bikes or walks to work would be considered crazy in most parts of the US. This is poisonous to career advancement. Thus, social norms also contribute to keeping people stuck in a “high-consumption” mode.
Government policies, such as urban planning based around walkable cities, and more comprehensive mass transit, would make it significantly easier to switch to a low-consumption lifestyle, by making it more convenient to give up the auto. In turn, drastically reducing one of the major marginal costs of working (transportation) would make working more cost-effective for the average person to have a job in the first place. This would be a step towards both increasing economic mobility, and would have the added bonus of being better for the environment. Unfortunately, I think such policies are unlikely to be widely adopted in the US. They really only seem to be embraced by high social capital countries like Germany, France, and the Scandinavian countries.
“An accountant or engineer who rode the bus to work, in spite of the inconvenience, would be an odd duck. A professional who bikes or walks to work would be considered crazy in most parts of the US”
Ha! I love this comment. I do both of these things and I’m not exactly located in NYC or the Left coast. You are quite right, you have to not care about professional advancement or raises, which I don’t (I am not very money motivated, which always vexes my corporate superiors). I would also suggest never using anything other than the crudest most child-like vocabulary in business meetings, and never drawing large complicated renditions of your own company’s cannibalistic/monopolistic tendencies on white boards. Believe me, you’ll be glad you didn’t.
Also in response to Randall and his ‘wrong college major’ comment, I say Bah, within reason. I took a biological anthropology degree and talked myself into major IT companies doing development. If you can do a job, demonstrate that skill, and you understand how to appropriately signal those things to a prospective employer, then your major is _almost_ entirely irrelevant. Heck, a lot of the best IT start-ups are snatching top programmers while they are still in High School. Being great at something useful never hurt anyone.
~S
It does seem to be a fact that nations without a dominant tribe tend to be in civil war, breaking up or getting subdued by other nations. For America the dominant tribe until the 1960s was the WASPs. Today, no group is strong enough to take on that role. As people get redundant in the work force their identities no doubt switch to other areas, like race and ethnicity. It’s hard not to think that people in some states will find secession or similar policies towards autonomy appealing. This has already happened in Italy as high IQ regions in the north have lost interest in financin low IQ regions in the south and gained economic autonomy. I guess places like the Dakotas and thereabouts could be feeling the same way.
@ curious observer:
You raised some excellent points. There are huge financial barriers faced by the average university graduate or unemployed person in today’s economy [applies equally to USA and UK] when wishing to enter the workforce. For example:
Here in the UK, housing rental prices are at an all-time high: http://www.telegraph.co.uk/finance/personalfinance/houseprices/10179754/UK-rental-prices-hit-record-high-survey-shows.html
Running a car and driving to work keeps getting more and more expensive: http://www.dailymail.co.uk/news/article-2148674/Cost-motoring-soars-6-000-year-time-fuel-prices-roof.html
Commuting to work by public transport hardly cheap either: http://www.independent.co.uk/news/uk/home-news/england-has-the-priciest-train-tickets-in-europe-8434671.html
Utility bills keep rising way above the rate of inflation: http://www.telegraph.co.uk/finance/newsbysector/energy/10130970/UK-electricity-prices-almost-twice-as-expensive-as-Germany-within-three-years.html
A unemployed person living a life on state benefits here in the UK gets: a roof over their head; food on their plate; their bills paid; to go to bed at whatever time they want; to get up at whatever time they want; and to spend their day doing whatever they want [within the constraints of their limited budget]. No early starts; no long and stressful morning commutes; no job stress; no office politics; no expensive car to run; and plenty of free time.
While I personally couldn’t survive on such a small income, the idea of such an easy life can sometimes be quite alluring [especially when the alarm clock goes off at 6:30am on a winter’s morning].
Following on from what I post a few days back:
(On BBC website today)
“What does China own in Britain?”
http://www.bbc.co.uk/news/uk-24473933
“Re-balancing and the re-industrialisation of Britain”
http://www.bbc.co.uk/news/business-24512779
@ curious observer:
I read an interesting story about the decline of the streetcar [tram] systems in the US and the subsequent transition to a car-centric society:
http://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy
I don’t believe this occurred in quite the same way here in the UK. However in the early 1920s the UK had more than 200 urban electric tram systems in operation. By the early 1960s following a large-scale programme of closures as a result of competition from buses and cars, there was only one tram system still surviving. [Since the early 1990s five tram systems have been reopened in large British cities in an attempt to improve public transport and tackle congestion on roads].
Most continental European countries didn’t follow the British model and kept their electric tram systems in operation, and consequently also didn’t suffer quite the same problems of suburban sprawl and road building destroying large areas of countryside. People could live in closer proximity to urban centres where they worked and commute shorter distances using efficient public transport systems.
“This, is, by the way, why people calling for ways to reverse sub-replacement fertility are fundamentally wrong-headed. Unless you’re going to open up new frontiers for colonization, you don’t want fertility rates to get too high, because population growth without geographic growth inevitably leads to falling standards of living for the people and more strife. But such is the problem with people who can’t see beyond their own small little academic worlds.”
You yourself have exhorted smart liberals to have more children!
Look I worry about sub-replacement fertility, but that doesn’t mean I want to return to tfrs of 5 children per woman. I just think a country like, say, Italy, would be better off if its tfr for native Italian women were 1.8-2.1 as opposed to 1.2. I think most people who worry about sub-replacement fertility feel the same.
@MontU:
I have. Concern about eugenic fertility ≠ concern about sub-replacement fertility.
Yes, Southern and Eastern Europe may actually be wise to raise their fertility rates. This may not be all that easy, however.
I don’t know about that. Many some of the wiser thinkers on the matter do. But some of the others who discover the concept of sub-replacement fertility but not the concept of HBD worry about fertility rates in and of themselves, when that’s ultimately secondary to the main issue for most people, especially for countries like the U.S.
subreplacement is only a temporary problem. any change is disruptive and will cause economic contraction ceteris paribus. but if the pain is endured, smaller populations will be richer eventually.
Great post. I think you come closer to the real problem then 99% of the pundits out there. However, robotics is not even the root of the problem. The problem is that the technological advances have created an eco-system that enables the willing and capable to add more value to society all the while stripping away the value added of the lower end of the bell curve. As to your prediction about a recession, I don’t think that will come any time soon. That is because of the following
1. When society as a whole progresses economically, this enable even the lower end work to charge more for their goods. A perfect example is a barber. Today’s hair dresser earns a great deal more for an hours of work(by my accounts at least $20-$40/hour before shop expense) in spite of the fact that the productivity is similar to, say, a couple of centuries ago.
2. We are living in a society of entitlements. Today, if you are not earning anything, unlike a couple of century ago, you have a roof over your head(section 8 housing), good food to eat( food stamps), a nice TV, cell phone etc). Most would even have public transport or the use of a car. I expect this sorts of “rights” of the poor to continue to expand going forward as they have all the voting power.
3. Being enterprising that we are, someone will find novel uses that will employ the masses. There are societies much further down this road than United States. Think of India, with a billion mostly left end of the bell curve people and a very small intellectual elite. Somehow, they manage to find employment for most of the population.
It does not mean that what you said won’t be a problem, it is just going to take much longer for any sort of crisis to emerge.
You claim that our current govt will provide stimulus unlike in the 1930s. This is wrong as both Hoover and FDR tried the Keynesian approach which did not help at all. We are greater a Greater Deflationary Depression soon and there is nothing that can stop it.