Compromise and Conceit

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.