Is Renee trapped in a dead end job?
While I was travelling in Germany, being forced to eat huge piles of food at restaurants and cafes, I noticed that many of the staff shoveling the food into the trough[1] were middle-aged men, something I also noticed when I was in Paris a few years ago. In contrast, this phenomenon is rarer in Japan (depending on the restaurant) and extremely uncommon in the UK and Australia. In the UK, restaurant staff are usually foreigners (Eastern European or Australian), while in Japan and Australia they tend to be students doing part-time jobs. Obviously there are exceptions to this, especially in owner-operated restaurants and in certain chains in Japan, and also Japan has a large number of staff working at restaurants and bars who are employed as full-time kaishain (the pinnacle of Japanese industrial rights) but young; however, the preponderance of middle-aged men in western European cafes is interesting. It’s interesting because in general, middle-aged men from the dominant cultural group of a country aren’t found in any industry in large numbers unless that industry has good wages and conditions. Certainly, Germany isn’t in the kind of dire economic straits that would drive men previously employed in solid jobs to take up dubious part-time work, so it’s reasonable to surmise that working in a restaurant as a waiter in Germany or France is a job with decent conditions and wages.
This led me to thinking about differences in approach towards managing inequality between continental Europe, Japan and the anglosphere. I think the anglosphere has an idea that it can reduce inequality through social mobility, in which poor people and/or their children, through education and training or hard work, can “move up” the “social ladder” to improve their situation; while Western Europe and Japan work on the idea of structural equality, in which jobs at the “low” end of the “social ladder” are renumerated sufficiently well as to enable a middle-aged male to raise a family on a single income even though he is not working in a high-end job.
I think social mobility might be a ponzi scheme, that is unsustainable and regressive and ultimately leads to entrenched inequality, racial tension and economic collapse. Like a lot of my thoughts on economics, this is probably a brain-fart, it’s definitely speculative, and I’m aware that there are a lot of people on both the left and right of politics who care about inequality who have reasoned and strong opinions about the importance of social mobility as a factor in reducing inequality. In this post I will lay out my understanding of the differences between the approach, discuss some of the possible failings of the social mobility model in the West, and explain why I think it causes the problems of inequality, racial tension and economic collapse. It’s a long post, so I’ll set it out in sections so readers can skip to the end.
Social Mobility vs. Structural Equality
First to define terms, which I am using very loosely here. Social mobility is the process by which poor people can improve their lot. Go to university, get a qualification, move onto work in banking and become rich so that you can employ a poor foreigner as your cleaner. In this model of managing inequality, some jobs (such as being a cleaner, a waiter or day labourer) are viewed as having no long term future, i.e. they don’t pay enough or have good enough conditions to support a family or any personal aspirations. In order to ensure that people don’t get trapped in these jobs for generations, welfare and education policies ensure that the children of people trapped in these jobs are able to “move up” to better jobs, leaving their class behind. This doesn’t help their families but is supposed to ensure that the children of the poor don’t suffer because of their parents failure to get a better job or a good education. In this model, inter-generational inequality is a bad thing but some people must inevitably be trapped in these jobs. Ideally, everyone can move out of these jobs, and people who worked their way up from poverty to wealth are esteemed. For example in today’s Guardian, Ed Milliband (an intellectual lightweight in the labour movement if ever there was one) states that he doesn’t mind people being rich so long as they worked for it. Of course, having got to riches they may enact a series of corporate policies guaranteed to entrench poverty in their employees but that’s okay because they worked hard to elevate themselves from poverty. This model of social mobility is often connected to notions of a deserving and undeserving poor: if you are poor but ensure you work hard for your minimum-wage job, never claim welfare, and make your kids go to school, you deserve support to get your kids to uni and a “real” job, so that they can look down on you once they become professors of neo-liberal economics; but if you slack off at your job, or teach your kids that there is no future and it’s not worth trying, you don’t deserve help; and if you look on the whole thing as a farce and refuse to work for sub-poverty level wages, then you don’t deserve any help from the state and neither do your kids. I should note that I am a beneficiary of this social mobility model, having been raised in a single-income tradesman’s family, but now with a good education under my belt working as an academic in Japan.
The alternative model I am comparing this to is the concept of structural inequality, in which the wages of “low end” jobs like cleaning, waiting and labouring are set so as to ensure that a person in this job can live a full life despite their sub-standard education and lower status. By “full life” of course I don’t mean lear jets and Bollinger, but financial security, the ability to live in a safe and clean home, and a little bit of disposable income to support the ordinary dreams of ordinary people. One often hears older folk opining about how this used to be possible in America: the fabled one-income family who had a summer cabin in the Catskills, and raised two kids with the wife at home despite the dad being nothing more than a factory worker at GM (or whatever). The idea behind this model is that somehow – through private companies making responsible judgments or government transfers – society maintains itself in such a way as to ensure that everyone at all social strata can be happy. Of course these models aren’t always great: the fabled American equality of the 1950s was established in a society that excluded blacks and women from the workforce, and societies that have this kind of system can be expensive, as witnessed in e.g. France, which is a pretty expensive place to live. A lot of neo-liberal economists criticize this system in often quite macho and scornful ways – they talk about “cutting the fat” and take a kind of macho pleasure in watching companies like GM or Japan Airlines struggling to manage the financial challenges of accrued benefits. Criticism of this system often have an element of moral judgment consistent with children’s stories about the squirrel that didn’t save nuts: societies with these systems are “unsustainable” and need to face up to reality, or are described as soft or idealistic, and there’s always this hint of joy or satisfaction at their struggles to maintain their systems, or at declining birthrates, or sluggish growth. But the societies that maintain these systems seem to be very happy with them. So what’s the story?
How social mobility has failed in the anglosphere
The first thing to note is that the social mobility model hasn’t worked particularly well in the UK or the USA. Inequality in the UK is terrible, and median incomes in the US have declined over the last 10 years; worse still, median incomes amongst the least skilled sectors of the economy have been declining steadily for 40 years, despite productivity growth over the same period, with the difference being pocketed by the very rich – even during the recovery from the GFC. The Occupy Wall Street protests and the discussion of the one percent makes the point that over the last 40 years – as those low-skilled employees have seen their wages decline – the richest sector of society have concentrated their hold over capital, and in a capitalist system it is this concentration of control of capital that determines who gets the best jobs, who gets the most benefit from economic growth, and (sadly) who gets the most say over politics. Inequality doesn’t just make poor people unhappy, it also ensures that rich people get a greater say over things like health insurance or industrial policy.
An additional consequence of inequality in the UK, and probably in the USA too, is that poor people increasingly lose access to the basic services that are necessary to maintain a reasonable standard of living. Nearly 40% of the UK population experience fuel poverty, and according to recent research in the Guardian one in five children are living in poverty; I think now 40% of the US population is receiving some form of food stamps, and the British government has had to announce a “beds in sheds” taskforce to deal with the growing problem of extremely poor temporary housing in gardens and sheds. Looking at these societies as a whole we see not an improvement in the lot of poor people, but an increasing number of desperately poor people living in very precarious circumstances. It might be possible to argue that this isn’t the fault of the economic model as a whole (Britons always blame immigration for their problems), but as the rich grab more and more of the world’s excess wealth, and the poor get forced to live in sheds and eat under-nourishing food from charities, I think it’s safe to say there is something wrong. The model has failed. Why?
Social mobility as a ponzi scheme
The first and most obvious problem is that we can’t all “move up” the social ladder. Someone has to empty the bins and wait on tables. Who is going to do that? In the absence of significant immigration from poorer nations, it’s fairly obvious that society has to find a way to fill those jobs, and so long as the people paying for them refuse to remunerate them properly, other social forces are going to conspire to ensure that someone gets stuck in them. The commonest mechanisms for achieving this are race- and class-based discrimination, which operate to ensure that some small portion of the population remains trapped in a social stratum that works for peanuts. Whether it’s economic (paying Aboriginal farmhands in sugar and tobacco), social (old boy networks to ensure only certain classes get certain jobs), subtle (using university admission interviews to screen out working class applicants) or open (Jim Crow laws) they all serve to ensure that some people are forced to restrict their job choices and their economic future.
A society which aims to maintain certain jobs at a poverty-level wage, and offers no solution to the problem of poverty except “get up and get out” is going to collapse unless it can find a way to force others to do those jobs. In societies with high population growth it may be possible to maintain this through part-time student labourers, though in general the only reason students will fulfill this part time labouring role is that there are insufficient welfare transfers to enable them to study without working (i.e. a system which discourages poor peoples’ access to social mobility). But in societies with low population growth, there are only two alternatives to entrenching class- or race-based inequality: construct an economic order in which as many people fall down the ladder as rise up it; or import new labourers from much poorer nations. Looking in from the outside, it appears that the USA has adopted the former trick. The middle-class is shrinking and losing much of its previous economic privileges, and this isn’t occurring because the top tiers of society are growing; rather, people are sliding down the social ladder, and the frantic struggle of the middle class to avoid the loss of these accepted economic rights is having huge effects on American society (see below).
The other option, preferred by the UK, is to import labour to fill jobs that British working class people consider beneath them. This, also, has ramifications at both a global and local level, and it doesn’t change the fundamental nature of the ponzi scheme – just delays its effects while creating social pressures at home.
Social mobility, immigration and social tension
Importing migrant workers to do shit jobs in countries with residual class tensions and a model of social mobility creates racial tension. The local working class, restricted in their upward social mobility, see migrant labourers as competition for jobs that they themselves are trying to escape but can’t; neo-liberal welfare policies, often implemented as part of this social order, lead to restrictions or conditions on access to welfare for the “undeserving” poor, which creates the perception of conflicts over limited shares of welfare money (even though in most neo-liberal economies, migrants get zero welfare support from the government). Furthermore, in societies such as the UK and Australia where racist views of migrants can be quite common, having large numbers of migrants fill shit jobs reinforces the impression that they are not a valid long-term employment prospect, both culturally and through pushing down the wages of these jobs. Of course it’s possible – as happens in countries like Australia and Canada – for these migrants to fill these jobs temporarily as they themselves move up the ladder, but this is only possible in these countries because they have a new population, space, growing economies, and a vibrant political culture with few class barriers. In societies like the UK, which are stagnating industrially and have a long tradition of racial and class discrimination, as well as limited space and poor infrastructure investment, high migrant intake means pressure on already poor infrastructure, resentment, and the growth of nasty movements like the English Defense League. In addition to these obvious pressures, neo-liberal economies with a focus on social mobility also tend to obsess about government spending on infrastructure, but large migrant intakes demand planned infrastructure investment which private companies won’t do, and this exacerbates conflicts over access to welfare, housing and other scarce resources.
Inter-generational conflict has also been created by this ponzi scheme, because as people heading towards retirement age are seeing their own economic rights withering they begin to look elsewhere in society for ways to save money and husband resources. Hence we see the unedifying sight of the Tea Party demanding cuts in all government spending except Medicare, because its members are mostly angry baby boomers; or Paul Ryan’s budget plan including a “grandfather clause” that will protect benefits for the current generation, but destroy them for its children. It’s a kind of economic cannibalism, in which older people destroy their children’s future to prevent themselves from sliding down the social scale. The Tea Party is a socially destructive movement, spawned entirely through conflicts over welfare and government spending and populated with insecure middle class baby boomers worried about their future. It’s a perfect symptom of the end game of the social mobility construct.
Increased inequality, the housing ladder and the global financial crisis
In addition to denigrating all forms of welfare spending to promote equality, attacking minimum wages and any protection of workers’ rights and conditions, neo-liberal economics sets its store by government fiscal “responsibility,” and the first and last word in neo-liberal economics is tax and spending cuts. But as governments cut spending on infrastructure, welfare and regulation, the middle class loses its previous economic protections and rights, and as we have seen in America, its real wages begin to decline as services previously provided by government are privatized and increase in cost. The most obvious example of this in the USA is healthcare, and in the UK transport. The neo-liberal solution to this is to encourage households to go into debt, and this is exactly what US and British households did in the lead up to the global financial crisis (GFC). To protect their living conditions they took the government’s advice and went into debt in order to wager on that most precarious of ponzi schemes, the housing market. The result was economic collapse, bankruptcy and further reductions in the living standards of the middle class. In response governments introduced further cost-cutting measures in order to bail out the banks, driving more of the middle class down the income ladder in what is, essentially, a huge correction on the previous 20 years of social mobility. In addition, the housing stock has decreased, and larger proportions of society in the post-GFC era are unable to afford to buy a house.
The result of 20 years of neo-liberal spending cuts and workplace “reform” has been a financial collapse, destruction of welfare, and loss of all the gains that the working and middle class supposedly made during that period, as well as a reduction in the availability of housing and capital for these sections of society. The only country to escape this has been Australia, which has done so through good luck (a mining boom) and careful avoidance of the worst excesses of neo-liberal policy. But even there the housing market is clearly unsustainable, and becoming increasingly unaffordable for a new generation, indicating that social mobility will soon stall or go backwards there too.
The lesson of the last 20-30 years of neo-liberal policy is that inequality will out. You can’t privatize the responsibility for social mobility while simultaneously reforming workplaces and cutting government spending. Something will give, and in the case of the anglosphere, it was the GFC.
A note on government vs. private support of structural equality
Policies of structural inequality obviously rely on making sure that people on the bottom of the income ladder can afford to live, long-term, on the wages from their job, especially since they’re unlikely to ever gain access to significant capital. Doing so doesn’t necessarily require government intervention though – it may be possible to achieve it through a social compact with business. I think this is what happened in Germany and Japan, where there is a complex social agreement between unions, companies, governments and civil society. In this agreement everyone agrees not to rock the boat, but companies give up some element of profit for the greater good, the upper class give up stratosphere wages, and the unions give up on certain elements of workplace rights and social activism. The result may not be to everyone’s taste, but it leads to a society where, for example, my old kickboxing teacher in Matsue could afford to buy an apartment in Hiroshima, raise two children, and live in a different city to his family, all on one wage – as a television salesperson in an electric store. Can you do that in modern Britain or America?
Systems of structural equality can be maintained through cultural and social agreement, not just through Western-styled government intervention. I think the problem is that the anglosphere, with its focus on excellence, individualism and achievement, sees the kinds of cultural and social agreements made in Asia or continental Europe as fundamentally repressive, limiting and – ultimately – soft. Hence the almost visceral glee with which neo-liberal commentators greet Europe’s economic problems, or Japan’s low growth, while ignoring Britain and the USA’s obvious huge social problems, the inherent inequality of its economic system, and the long-term downward trajectory of education, health and industry in those countries.
Conclusion
I think the notion of social mobility as a cure for social inequality is untenable. Obviously social mobility is a desirable goal in itself – people should be able to do what they want to do, if they are able and it doesn’t cost society too much to help them – but as a cure for inequality it doesn’t work. The best way to address inequality is to reorient the economy, the state and the cultural order to ensure that people who do shit jobs can afford to live full and happy lives while doing those jobs, and anyone can pursue any career – no matter how “low” the work they do might be – if that’s what they want or are able to do. Obviously society needs intellectuals and academics (though maybe not economists), engineers and doctors, and people should be encouraged to do those things, but that doesn’t mean that the person who cleans their toilet should be employed under such terrible conditions that if they don’t somehow find a way to be an engineer themselves (or marry one) they will never be able to afford to raise a family, live in a proper house, be warm in water, or eat healthy food. Current economic orthodoxy in the anglosphere doesn’t allow for this concept, and it’s one of many ways in which I think the English-speaking world stands to gain from paying more attention to Europe and Asia, instead of always assuming that their own economic and cultural ideas are the best.
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fn1: If Germany is serious about reducing its CO2 emissions, here is a simple method: eat more reasonable amounts. Everyone in South Germany ate, by my estimation, 20-50% more than they needed to, and most people by the age of 30 appeared to be overweight or obese. This also has interesting ramifications for discussion about food inequality around the world. There’s a post in this, I think.
Compromise and Conceit 
September 17, 2012 at 11:09 am
”Social mobility is the process by which poor people can improve their lot.”
You’ve grasped half the idea. Yes, it is a process whereby poor people can improve their lot. It’s also a process whereby the children of middle and upper classes can end up flipping burgers because they failed to grasp that it’s hard work that made the parents rich, not some magical process whereby richness becomes a dominant genetic trait [1].
”Of course, having got to riches they may enact a series of corporate policies guaranteed to entrench poverty in their employees but that’s okay because they worked hard to elevate themselves from poverty.”
I think the only group saying this is the voices in your head.
”I should note that I am a beneficiary of this social mobility model, having been raised in a single-income tradesman’s family, but now with a good education under my belt working as an academic in Japan.”
Is the point of your post that the blogging world would be better off with lower social mobility and higher social equality so that you were a violently anti-intellectual tradesman who made a reasonable income? [2]
”the fabled one-income family who had a summer cabin in the Catskills, and raised two kids with the wife at home …”
Your comments about single income v dual income are barking up the wrong tree. They have nothing to do with social mobility and everything to do with female empowerment. It’s pretty basic logic that once a minority of women joined the workforce (due to non-social mobility factors) and the couples that accepted that found they had two incomes then it was always going to apply pressure on single income households purely because of supply and demand.
For example, if there is a nice house that both you and I want to live in and your wife works while mine doesn’t. When the house is for sale, then (all other things being equal) you can pay a lot more than I can due to having two incomes. Replicate this across much of the economy and you’ll see that women being able to contribute financially to the family [3] leads to more production, more consumption, more equality of the sexes, and a relative shift away from single income families towards dual income families in terms of standards of living.
And this isn’t a bad thing. It’s critical to allowing women to participate fully in the economy and lets people make their own economic decisions. The only downside is for people who want their economic decisions to be magically better than they have any right to be [4].
“median incomes in the US have declined over the last 10 years”
Median incomes has to do with median incomes, not social mobility. This fact is relevant to your comments on structural equity, not inter-generational social mobility.
”Inequality doesn’t just make poor people unhappy, it also ensures that rich people get a greater say over things like health insurance or industrial policy.”
You’re trotting out your anti-inequality arguments again. You said you were going to talk about social mobility v structural quality. This does not directly address such a point, and while it’s correlated you haven’t provided any evidence of causation. And frankly even the correlation could be tenuous if people rapidly rise, shape society to suit them, then fall from grace. Look at Fortescue Metals in Australia for an example of a rich guy very quickly losing his money and power.
”Nearly 40% of the UK population experience fuel poverty, blah blah blah growing problem of extremely poor temporary housing in gardens and sheds.”
Not related to intergenerational social mobility. Irrelevant.
Look I stopped reading at that point and skipped to the conclusion. It’s pretty clear that what you mean by social mobility has bugger all to do with social mobility and everything to do with the fact you dislike inequality. How about you write a blog post about that topic?
Your talking about totally different time scales and claiming that social mobility is a solution to inequality when I’m unaware of anyone who argues that. They say that social mobility means that inequality does not become generationally entrenched and therefore is tolerable. They’re stance on inequality is then shaped by their other beliefs that act in a relevant timeframe.
Finally, you can’t cite the UK and US as trying to use social mobility as a solution to social inequality when they’re two of the three least mobile Western nations ( http://en.wikipedia.org/wiki/Social_mobility#Country_comparison ).
[1] Interesting, the only people dumb enough to form a view that richness could become genetic would be the Lysenkoist school of “genetics” in the Soviet Union.
[2] And have you considered that in Australia, tradesmen have a reality easy time getting into the upper middle class? Sparkies and plumbers have a hard job, but they can earn a packet.
[3] Somewhere in the world is someone who will insist on misreading this as saying that I think women didn’t contribute to families. If you find this post by some freak accident and start typing as much, could you please drop dead from the boiling hatred in your own heart before hitting post?
[4] For example, assuming that because Britain was once the centre of an empire that they should still be allowed to benefit from such a structure at the expense of people with different coloured skin.
September 17, 2012 at 9:42 pm
Perhaps you should have read the whole thing (an extreme demand, I know) because I make this point in the section on ponzi schemes. Also, are you seriously suggesting that hard work makes people rich? My father worked extremely hard for 40 years, and ended up a declared bankrupt in a trailer park on a hillside in Devon. There are very few people in the developed world who work harder than the average Japanese hairdresser, but his wages will never make him rich or even well off.
No, I think the “group” saying this is Ed Milliband, and I think it is a very sad thing for a person of importance in the labour movement to be saying such a thing. There are no more deserving and undeserving rich than there are deserving and undeserving poor. There is an economic system under which possession of capital enables the exploitation of labour: you either accept that and find ways to ameliorate its worst effects, or you don’t (in which case you overthrow it)(and I should point out that Ed Milliband’s party rejected the latter option when they selected a Vampire as their leader). Running around suggesting that someone who was born rich is inherently inferior to someone who earned it, even if the person who was born rich treats their employees better, is just silly. This kind of pre-war protestant-work-ethic unionism is a complete furphy.
I think I should leave that to the Nobel committee to decide. Though I will observe that this post is nowhere meant to imply that social mobility is in and of itself a bad thing.
True, but I think it’s also pretty basically accepted now that even double income families can’t enjoy these kinds of easy economic privileges anymore. I think you’re barking up the wrong tree blaming this on women’s participation – the economy has grown a lot since women entered the workforce and their increased consumer power has seen a small revolution in markets. I don’t think you intend to argue that increasing the workforce participation rate has led to a reduction in overall wealth. What has happened is that an increasingly small slice of American society has seized an increasingly large part of the economic pie, leaving everyone else to fight for what’s left over. Dual-income families might win that battle for now, but that’s not the reason they’ve been chucked into the contest in the first place.
No, because social mobility increases incomes. If median incomes are declining then one possible reason is that more people are falling than are rising, and another is that the phenomenon of some people rising up the ladder puts downward income pressure on those who don’t. Either situation is a disaster for the people who fall or are left behind. If median incomes are stagnant, then this means that there remains a large pool of people (50% of the population!) for whom inequality is increasing, even though they’re living in a society where people can supposedly “better” themselves. How is this supposed to be good? If society as a whole were becoming poorer or less productive due to some exogenous force it might make sense, but since the economy has grown over the last 40 years that can’t be an explanation. So what is the reason for 50% of the population getting poorer, even though individuals are able to exit from that 50% if they “work hard”?
No, I think you’re misunderstanding me here – which is completely reasonable given how stupidly long my post was. Social mobility is sold by the powers that be as a personal solution to inequality. That is, they tell us that inequality is inevitable but that this is okay because if you try hard you can elevate yourself from inequality, so there’s no reason that the intelligent, the virtuous or the lucky should suffer permanently from inequality. The problem with this is that the crippling effects of inequality are still there. Falling into or being stuck in poverty for any length of time is a disaster, because a society based around social mobility does not intend that the lowest stratum of society be viable for long-term living. Even short brushes with this section of society can be devastating for the people who fall into it. In a society with stagnant median incomes, this means that the proportion of the population experiencing this economic distress doesn’t change – just that the identities of the people suffering that distress change. I can’t see this as a good thing. Or, perhaps more pointedly, if we must have inequality, I can’t see that this model is superior to one in which a fixed number of people remain in this class but are able to sustain a basic lifestyle while being so enmired.
If your argument is that most societies in the anglosphere aren’t preaching us this model, I think you’re plain wrong: it’s the central message we’re fed by most media bodies, and it’s the main platitude that gets trotted out whenever education or housing is discussed by our politicians. “Getting on the housing ladder” is a classic example of this, an implicit recognition that you’re fucked if you can’t find a way to rustle up some capital. If your argument is that this is not how the model works, I’m unconvinced. This is exactly how the model works: some people leap out of poverty through education or hard work, but those who remain behind are trapped in an impossible situation because the intention of a society where personal solutions to inequality through self-improvement are the only options is that remaining in “low-rent” jobs is difficult. The alternative – that of ensuring, somehow (I don’t claim to know how[5]) that a life working in the lowest grade jobs is a viable existence – is not one that we’re often presented with in the anglosphere. Do you deny that the rhetoric of our politicians does not centre on “bettering oneself” and poor people “getting a leg up” etc.? I don’t think economic policy in the UK or USA at the moment is focused on making low-grade jobs viable options, as evidenced by e.g. the viciousness with which the British government is attacking all forms of welfare for the working poor.
You note that the UK and USA are two of the least socially mobile nations. I don’t think this is a coincidence. I think that this rhetoric of social mobility (which I’m seeing a lot of in the UK at the moment in conjunction with the Tory party’s attack on the working poor and the labour party’s dismal failure to live up to its name) is precisely that: rhetoric. It hides a lack of true empathy for the poor, and a lack of understanding of what poverty is really like. I don’t think Australian politicians are saints but I think that people like Bob Hawke, Paul Keating, John Howard, Julia Gillard[1] and Tony Abbott[2] have a much better understanding of what poverty really means than do the remote, compromised and disconnected leaders (of both parties) in the USA and the UK. As a result their rhetoric of social mobility is much more nuanced, and they’re more aware of the need to balance social mobility with basic support for people who are going to be long-term working class.
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fn1: Julia Gillard is constantly reciting the mantra of self-improvement, as one might expect of a woman who grew up in a very ordinary family and soared to the dizzying heights of Australian lawyerdom but hasn’t quite worked out that this doesn’t make her better than anyone else
fn2: I don’t know if you saw David Marr’s interview with the ABC, but after dismissing the importance of the alleged punch[3], he has this very interesting thing to say about Abbott:
fn3: some journalists are terribly naive, aren’t they? Or perhaps trying to excuse their inflammatory behavior[4] after the fact…
fn4: Don’t get me wrong, I love watching the Mad Monk squirm, but really? What did David Marr think was going to happen if he published an article that included this gem about something Abbott did 35 years ago? Would any sane person want to go into politics knowing that some mad-arsed moment of fuckwittery that they perpetrated as a dumb 20 year old was going to bite them in the arse 35 years later?
fn5: I think the libertarians have an argument based on universal minimum income[6]?
fn6: This footnote was put out of order because I decided during editing[7] that I just hadn’t said enough.
fn7: I know it’s hard for you to believe I edit anything on this dodgy rag, but I do.
September 18, 2012 at 8:45 am
“Also, are you seriously suggesting that hard work makes people rich?”
All cats have four legs. Dogs have four legs. Therefore my dog is a cat. /logicfail
I’m not suggesting that hard work makes people rich – that’s a universal generalisation of a logic that is manifestly untrue. I’m suggesting that without hard work richness is unlikely to be obtained [1]. Unless you want to say that a senior exec getting $200+k/year is not rich, cause once we restrict it to inherited mega-wealth then hard work decreases in value.
“having got to riches they may enact a series of corporate policies guaranteed to entrench poverty in their employees but that’s okay because they worked hard to elevate themselves from poverty.”
“the “group” saying this is Ed Milliband”
Really? Ed Milliband said something to the effect of “Get rich then pull the ladder up after you”? I haven’t bothered reading his speech, but I think I’m going to say nonsense to you without bothering to check.
”There are no more deserving and undeserving rich than there are deserving and undeserving poor.”
Says you. I don’t think your beliefs would be reflected in polls of society at large. In general people are OK with boys/girls from the gutter pulling themselves up with sporting prowess/singing talent and then owning a huge home. Hence why Cheryl Cole is regarded as a role model by young girls. They’re less ok with people inheriting wealth and then being a tit about it, hence why Paris Hilton is a figure of derision. I’ve got no evidence that either one is better/worse to their employees.
“I think it’s also pretty basically accepted now that even double income families can’t enjoy these kinds of easy economic privileges anymore”
It’s true that double income families are now the common case. The family also has fewer kids on average. The period of time where being one of the rare dual income families meant you had an edge has passed and now we’re in the period when everyone has caught up with “the Jones” and that demand has increased prices across the board.
But despite that the standard of living is still much better for everyone in the first world. People are vastly more likely to have taken an overseas holiday. To have easy access to a vast communication network. To have all the entertainment they could ever want. To be vastly less likely to suffer a disease.
I’m not saying this is “better” as that’s a value judgment that everyone can make for themselves. For example, George Monbiot would probably say not. But its just a fact that given a choice between a 10 inch black and white TV and a 50 inch LCD TV most people will choose the latter. So either the standard of living has gone up or we’ve somehow retrospectively made the past worst [1].
“I don’t think you intend to argue that increasing the workforce participation rate has led to a reduction in overall wealth.”
Correct. I’m absolutely not arguing that. I’m saying there has been an overall increase in wealth at every point of the income scale. In the 1980s only the rich had (brick-like) mobile phones. Now almost everyone has one. That’s a real increase in wealth and the inclusion of women in the workforce is part of the change that has made the increase in wealth for everyone occur.
You’re unhappy about unequal wealth distribution, which has also increased over the same time. But it’s a different topic to the one I was talking about, which is that supply and demand will adjust for the fact that dual incomes are more common, which means prices are more geared to the assumption of dual incomes. This doesn’t mean that you’re not better off than the 80s, because you are, it means you feel worse off because now two people in the house work and you still can only afford to by the second best item, cause the absolute best item has gone up in price.
“No, because social mobility increases incomes.”
I know what you’re talking about, but you’re still using it too loosely. Imagine if 50% of the population was “rich” and 50% was “poor” and every 3 years we all had to swap jobs/houses/income. Social mobility would be 100% and there is no reason to assume that incomes would change at all.
At an individual level, changing you socioeconomic class for the better will increase your income (given that income is the primary driver of socioeconomic class as the term is used in Australia). At a societal level, high social mobility from low socio-economic status to a high one is actually just a reflection of median wages going up. If there is no counter-balancing high to low movement then the median wage increases and you get the pressure on expected income that I talked about.
“If median incomes are stagnant, then this means that there remains a large pool of people (50% of the population!) for whom inequality is increasing”
So you’re saying, if the median income is $50k and an executive somewhere gets his income increased from $10M to $20M then the people below the median income are worse off?
”So what is the reason for 50% of the population getting poorer, even though individuals are able to exit from that 50% if they “work hard””
Sorry, what data shows that the 50% are getting poorer in real terms? Inequality statistics aren’t going to show this. We’d need to examine at least wages in real terms, and possibly wages in real terms that have been adjusted to reflect the relative purchasing power of a real term $1 over time [2].
“Social mobility is sold by the powers that be as a personal solution to inequality.”
Ah, OK. The old “I came from a dirt floored house and now I’m president”.
Hmm, it’d depend who it impacts. If the people coping the low income are young students then its a temporary condition and just fine. If its middle aged men then its unlikely to be temporary. Based on your observations in the initial post the UK/Australia has high social mobility of this type and Japan/German/France has low.
Let me put it another way. Is it OK for students to work marginal jobs when at uni and then go on and earn a fortune? I’m generally OK with it. As long as the identities of the people in that position change and it’s not an endless trap, then there’s no real harm. I see you don’t think that is the case in UK/Australia as you feel that people get trapped there even once they get older.
”“Getting on the housing ladder” is a classic example of this, an implicit recognition that you’re fucked if you can’t find a way to rustle up some capital.”
I cannot express how stuffed up I think the Australian housing market is. It’s a government backed bubble that is still waiting to deliver its full load of problems.
”poor people “getting a leg up” etc”
In Australia and the UK I’ve never seen a mass government program announced that was really giving the poor a leg up. It’s invariably an ongoing hand out. That’s because all the good programs that are a leg up have been in place forever (i.e. education/training). The stuff we get these days is “I know educating your kids can be hard, so here is a cash payment that will be paid every year to anyone earning under $150k with school aged kids” [3]
PS Congrats on holding a consistent line on Abbott and the alleged punch to Gillard’s recent PR problems. Both appear to be largely beat-ups.
[1] I’m also totally unfazed on how people want to measure/record such improvements.
[2] What I mean about that is that if the wage drops in real terms, but the quality of goods purchased increases sufficiently then it does offset the real drop in wages. So you used to earn $20k and now earn $15k, but a computer used to cost $2k and now costs $500. Food/housing tends to not react like this, but consumer goods do.
[3] Bloody Australian middle class welfare.
September 20, 2012 at 11:16 am
But this is an empty phrase. Without hard work hair is unlikely to get cut, rubbish bins cleaned, nappies changed, sick patients washed. The point is that some hard work pays an enormous amount more than other hard work. Your example of the exec (who incidentally is just below Mitt Romney’s cut-off to be considered “middle class,” the poor dear) is a good case in point. Her hard work remunerates her well because he has qualifications (formal and cultural), she has a good education and was raised by well-adjusted parents (well, maybe not Steve Jobs), and she may (especially for older execs) have been put into the right networks when she was young. It’s highly likely that she had some beneficial access to capital that enables her to make decisions others can’t, and that access is likely through inherited wealth. It isn’t just hard work that makes her rich, but a system of cultural goods that is necessary, on the one hand, to enable some people to become execs, and on the other to ensure that some people become bin cleaners. The issue is whether people can remain bin cleaners safely their whole lives, or whether the only option for them is to go “up the ladder” if they want to avoid distress, and what is the social value of forcing someone else to go down the ladder and into distress if a bin cleaner goes up.
No, Ed Milliband said that he will judge the social worth of rich people (which,btw, what gives him that right?) not by how they dispose of their current wealth, but whether they got it by climbing the social ladder. It’s not that he endorsed getting rich and pulling up the ladder, he just thinks it’s irrelevant when compared to the fact that someone worked to get rich. I don’t think that is a very useful message, especially coming from the party of labour. See my response to your next point for more clarification of that latter complaint.
Yes, Says me. On my blog. Shock! I’m aware that society doesn’t agree with me on this, which is why I’m talking about it! I also don’t think we should distinguish between undeserving and deserving poor. A person’s income and the personal virtues by which they did or didn’t earn it should not be an important social issue except in as much as they are reflective of and/or create structures of inequality. If we lived in some Culture-style society where anyone could do anything, it wouldn’t matter that I had a trillion bucks and someone else had 10 – because our income would not reflect and could not create structures of inequality. But in our actual society, possession of, access to, and control over the use of capital are key to our ability to control our own lives, and control the destinies of other people’s lives. Thus, the amount of money someone has should not be judged in terms of the set of virtues by which they gained or lost it, but in terms of its influence on society as a whole. Have they taken too much of the share? Do they use their money to promote social injustice? Do they return to society a just amount to reflect the amount they have gained from the system? Do they have insufficient access to basic goods? and so on. What Ed Milliband is talking about – and it’s a common mode of discourse that comes along with the social mobility framework – is a kind of modern meritocracy, in which it’s okay to have too much capital or to use it unfairly, provided that you got it by some virtuous means. Really, a representative of labour should understand how wrong this is. In fact, it’s probably wronger than that stupid slogan about being relaxed about people being intensely rich that that other UK labour idiot spouted. Wealth – whether inherited or acquired – is only important for its social function, not for how it reflects on the individual who owns it.
And would you recommend that we move to such a society? Because that is the extreme end of the social mobility spectrum. It doesn’t make any sense, does it? If you rephrased social mobility as “a certain number of people will get wealthy enough to move out of distressing circumstances this year, but an equal number will enter distressing circumstances,” then you haven’t really proposed a nice model of social development, have you? An alternative – “more people will move out of distressing circumstances than fall into them” will see society grow economically, but at the expense of a loss of low-paid and manual labouring workforces (the people in distress). At which point we realize we’re looking at an unsustainable model for reducing (absolute) inequality, because we still need a certain number of people to do certain kinds of work.
Yes, because it means that extra wealth was created (that 10m didn’t come from nowhere) and the people in the bottom didn’t get any of it. They own a numerically quantifiable reduced proportion of society’s assets. In social justice terms they’re being squeezed out, and in economics terms they just had their bargaining power slightly reduced – remember, you need capital to bargain in our society, and they didn’t get any of that extra money, so now the exec (and his class) have slightly increased their bargaining power. Now, if instead of a single executive getting 10M more, it were a person from the bottom moving up to get the extra $10M that had been created, we would see a slight increase in the median (assuming there’s an odd number of people in society). That slightly increases the capital reserves of the median group compared to where they were, but not by as much as the capital of the rich group has increased (remember, they got $10M more). Now, if that poor person moving up to get $10M comes at the expense of a rich person moving down the ladder, there’s been either no net change or, if the rich person who moved down was lower than the $10M percentile cut off, the bargaining power of the poorest 50% has increased but not by as much as that of the rich. Social mobility will only make the poorest 50% better off relative to where they were as a group if the person moving up knocks an even richer person off their perch and down into the bottom 50%. That seems both unlikely and an extremely cannibalistic society.
If, on the other hand, that 10M had been taxed at 70% (for example) and distributed across all of society, the relative rankings of individuals might not change but the effect on the bargaining power of the people in the bottom 50% would not be as greatly reduced. If it were all given to the bottom 50% their bargaining power would increase relative to where it was (some would move out of the bottom 50%, but the ones who moved in would be at a higher income than the ones who moved out had previously possessed). I guess that’s structural equality compared to social mobility.
I think this is okay provided the economy is properly balanced to ensure that there’s no need for anyone to stay in such jobs long term, and it’s not the main way by which we imagine all poor people are going to be required to live. If the only option for a poor person is “get a better job” then inevitably people will get trapped in jobs that were never designed to sustain them – the ideal of any society should be to ensure that there are as few such jobs as possible. That isn’t to say “we should eliminate cafe workers” but that, if people are going to end up working in cafes their whole lives, we ensure (somehow) that their wages/transfers/conditions are such that they can honestly expect to raise a family and be happy in that job. And the problem with the social mobility model is that people who get trapped in these jobs are assumed to be losers or somehow to blame for their own distress, even though we know (through simply looking at how society works) that someone has to do those jobs, and if not enough people choose to do them, someone is somehow going to be forced to. Which brings us to …
Romney’s unfortunate brain-fart a few days ago is a good example of the just-so stories that are being told. He describes people below the median income (to put it roughly) as “not taking responsibility for themselves”. Implicit in this is the idea that if being in the bottom 50% of the income range is too hard to live, you should just work harder and get out of it, and if you don’t then you’re not a virtuous person. It’s obviously callous but the broader point of this post is that I don’t think the model is long-term socially viable, and we’re starting to see the effects of that.
Other examples of government ideals built on the same implied social mobility framework are things like the first home owner’s grant. It’s intended to help people “get on the housing ladder” because it’s believed that helping people move up the income ladder through hard work is somehow more valid than just giving them a tax transfer to ensure that they can live on the job they’re doing. At least the housing ladder doesn’t require you to change jobs as well, just means that in the long term you’ll have some capital even though you’re doing a badly paid job; but as you say it’s unsustainable. It seems like every option governments try for social mobility without structural equality leads to a ponzi scheme somewhere …
Here’s one: Austudy. When I was 17 my dad lost his job and his house and got declared bankrupt, got blackballed by his industry, and moved to the UK, where due to age he could never work again. I was left behind to finish high school and then do uni by myself, but Austudy gave me $120 a week for 4 years, so that I didn’t have to do a full-time job just to support myself and could thus complete my studies. HECS also meant that I didn’t have to martial $1200 up front for my uni, which would have been impossible, and for about 8 weeks or so the local family and community services in my town provided me with food vouchers for $12 worth of food a week while I waited for austudy to start paying me (they also gave me free tickets for as much lamb mince as I could eat, because farmers in regional South Australia had to cull their herds and had donated the lot to charity). I guess you could see them as an ongoing hand out, but I think they’re pretty good nonetheless (I guess Romney would disagree), given the benfits of that education for me. Also, the Gillard maternity leave thing is not an ongoing handout and is set at the minimum wage so is of much less value to the middle class than to the working poor. I think that’s a responsible form of maternity leave that balances social justice, feminism and the essentially middle class handout-y nature of maternity leave…
September 22, 2012 at 3:37 pm
What you are arguing for was broad Australian policy from 1910 to 1974 or so – high wages at the low end through centralised arbitration, tariffs and restricted immigration. All now dismissed as completely unpractical and economically unsound. Interestingly, mostly still supported by the Australian population: see http://blogs.crikey.com.au/pollytics/2012/06/11/what-australians-believe/
Your essential point is good – if you want a reasonable degree of income equality, the best way is to structure the economy to provide it via social compacts and unions, not via money transfers.
October 15, 2012 at 7:10 am
Thanks for this. A very interesting delve into the world of economic policy, which for me is usually a subject that causes Ostrich-head-in-the-sand behaviour. I stayed till the end!