August 27, 2018

Bernie era will continue Reaganite Gilded Age, as Lincoln era continued inequality of Jackson era

As if the upcoming Second Civil War were not enough to deal with, at least we can breathe a sigh of relief after it's over, and go back to the New Deal days under a realigned Bernie-style party, right? That's certainly what people want, but not necessarily what the elites will do.

The closest parallel to the Bernie era is the Lincoln era that came after the Jacksonian era, which was like our current Reaganite era. The Lincoln Republicans made a lot of improvements over the Jacksonian Democrats, like ending slavery, tipping the balance toward manufacturing rather than agriculture, investing in infrastructure, and dialing down militarist expansion. Those kinds of changes seem entirely possible under the new era led by the Bernie followers' agenda.

At the same time, the Lincoln era saw the continuation of several negative trends that had begun under the Jacksonian era -- rising immigration, falling standard of living for ordinary people, rich getting richer (thus, widening inequality), partisan polarization, minimal civic organization, a laissez-faire approach to business, and the absence of a national or central bank to regulate the banks away from excessive risk-taking, which caused wave after wave of panics and depressions.

Those negative trends only began to reverse in the 1910s, well into the Progressive Era, and the reversal lasted throughout the New Deal / Great Society era. Here are two charts from Peter Turchin's work here and here on political dynamics, the first showing inequality and well-being (things like real wages, health, and marriage), and the second showing political stress and well-being:


Just because Bernie himself and his followers want the New Deal as their model for when America was ever great before, does not mean that's what they'll be able to deliver when they start re-shaping society. Whatever constrained the Lincoln era to continue some of the corrosive aspects of the Jacksonian era, will probably constrain the Bernie era to continue these same corrosive aspects of the Reaganite era.

I don't see the Bernie people closing the floodgates of immigration that the Reaganites opened, the two parties acting on a largely bipartisan basis, the rise of civic organizations like we saw during the Progressive and New Deal eras -- since there is barely the seed of such groups right now, on the cusp of the Bernie era -- the imposition of all sorts of controls over business, a strong central bank that will keep the finance sector from inflating and then popping one bubble after another, or narrowing inequality between the rich and poor.

Why? Because the underlying causes of these problems were not addressed by the Lincoln realignment -- it was primarily a shift in power from one group of hyper-competitive elites to another. That did undoubtedly bring about good things, since the elites in the former dominant party were the worst -- dependent on slave labor for their plantations, mindless expansion for military elites, and low tariffs and no infrastructure.

Shifting power to a different bloc of hyper-competitive elites -- like the manufacturing magnates -- meant the dominant coalition now had no material interest in slavery, low tariffs, minimal infrastructure, or militarist expansion. But that simply meant that the trend in inequality would continue widening, only replacing the plantation owners of the South with the manufacturing Robber Barons of the North. These Robber Barons didn't mind hordes of cheap labor immigrants flooding our shores, which meant the factory owners didn't have to pay as much in wages. And why would the Robber Barons make bipartisan peace with the plantation owners, after all the hell they had caused just yesterday?

What are the underlying causes that must be addressed? Turchin has another good summary of the structural-demographic model of societal instability, where three major factors cause instability to rise (and their reverse, to fall):

1. Over-supply of labor below the elite level, whether by soaring numbers of aspiring workers or vanishing jobs to meet that supply.

2. Over-production of elites (including aspiring elites), and their rising competitiveness with one another.

3. Deteriorating health of the state, especially its fiscal health.

Read his summary for how these all interact with each other, and how they combine to influence societal instability.

Here, the main point to make is that most of the people today who would be re-shaping society under a Bernie realignment are not working to do much about these factors. Indeed, if you brought them up explicitly, the Bernie leaders would probably say what's the big deal? That strongly suggests that these negative trends will continue even under an era whose dominant coalition is a Bernie style group.

(I'm distinguishing Bernie leaders from Bernie voters, who are more likely to support reversing these negative trends, but who won't have much power to re-shape society.)

First, they say little about the role of immigration in causing a drastic spike in the supply of labor overnight at the sub-elite level of workers. That could not happen through endogenous demographic forces, such as a baby boom in fertility among natives. They insist on never reducing immigration, when asked directly about it.

On the other side of the standard-of-living equation, they say little about "bringing good jobs back" to this country. Little of the vanishing jobs story has to do with automation -- maybe at some point in the future, but the immiseration of working people during the Reagan era has mainly been caused by off-shoring decent jobs to cheap labor colonies like China, Mexico, and India. The Bernie people say very little about industrial policy, other than they don't want further good jobs to leave through additional free trade deals.

Are they proposing draconian punishments on greedy anti-American corporations, unless they de-industrialize the cheap labor colonies and re-industrialize America? Not really, so good jobs will probably not come back even under the Bernie era.

So there will be little progress on fighting cheap labor policies -- hence their far more prevalent emphasis on a more generous welfare state, to ameliorate the pain dealt by the greedy corporate bosses, rather than to force them to provide workers with deservedly high-paying jobs in the first place.

Second, if anything the Bernie people are ratcheting up the over-production of elites by calling for debt-free college tuition, since going to college is the primary channel by which aspiring elite members try to gain access to the upper stratum.

That will send the higher ed bubble into overdrive, turn everyone into an aspiring elite member with an entitled attitude and lifestyle, and place even more of the population on the "not working-class" side of the class war. Bubble degree mills don't provide anything of value in skills or training, so again their focus is on providing a more generous welfare state to soften the landing of people who just figured out that getting a degree per se doesn't get you into the elite stratum.

To her credit, Ocasio-Cortez does make sure to qualify her endorsement of the "debt-free college" talking point by adding, "or trade school" -- something actually worth a damn, not part of the higher ed bubble, and not an intensification of status-striving elite wannabes. That would actually be a recognition that we have to stop goading everyone into striving to join the elites, and take up something useful and humble instead -- and as an added benefit, something that will lead to an actual job paying actual money!

Reversing the over-production of elites requires popping the higher ed bubble once and for all, letting 10-15% go to college (cheaply by nature, with a dramatic drop-off in the demand for college admissions), and everyone else getting cheap or free training through vocational classes in high school, trade school, apprenticeships, etc.

Apart from the career angle to elite status, most of the Bernie people don't seem interested in reversing the trend toward urban residence in only the most rarefied of metro areas. They are embarrassed about living in Milwaukee or Detroit -- major metros, but not major enough -- and must transplant themselves to Seattle or New York. This falls under lifestyle striving and persona striving -- you're just too cool to have the stink of Milwaukee rubbing off on you, and can only be cleansed as your awesomeness deserves to be in Brooklyn. Courtier living is no different just because it comes in a hipster flavor.

To reverse hyper-competitiveness, people need to stay where their roots are, or re-populate small towns rather than feed the Moloch of major metros.

And third, the Bernie people seem openly dismissive of the national debt being a problem -- $20 trillion, $100 trillion, who cares? That's just how things are paid for -- we're simply going to re-direct that debt-fueled flow of goodies away from the Reaganite welfare addicts like the military, and toward Bernie patronage recipients like grad students working at Starbucks who can't afford to live in Williamsburg without some kind of help.

I'm a little more hopeful on this one, since the Bernie coalition will still have the finance sector as its senior member, just like today's Democrats, and they are heavily interested in keeping the debt down. If it explodes, then their financial assets, mostly denominated in US dollars, become worthless (either through inflation, or debt default destroying trust in the dollar). And their elite schemes are not as costly as the military, and actually have some chance rather than no chance of providing a return on the investment (all our foreign military adventures are pure wastes of money, with no loot, booty, or spoils to bring back).

And I'm not talking about how Medicare for All would require debt to finance it -- it's still cheaper than the way we do it now. I mean their overall attitude that worrying about the debt is one of those corporate Republican attitudes -- when it obviously is not, as proven by the Reaganites exploding the debt through the roof for 40 years, reversing the period of stable debt under the New Deal Democrats (done at the behest of the banks who controlled that coalition).

I don't see this as a gloom and doom outlook on the Bernie era that will follow the upcoming civil breakdown. It's just a realistic assessment of how political and economic dynamics work, as shown throughout history, including our own. We are not at the phase that immediately precedes a New Deal kind of phase, so it's going to take us longer to get there than people are hoping for -- but it doesn't mean we'll never get there, that our nation is done for, etc.

It just means buckle up for a longer haul than you were expecting from the thought of reversing history one era backward, when cycles only move forward. If you've fallen from a recent peak, you just have to push through the upcoming nadir to start rising up the next summit as fast and as painlessly as possible.

6 comments:

  1. But inflation has been low in the reagan era. there has been so much unused capacity in the economy. Millions of men have dropped out of the workforce.
    Working people benefit from higher inflation than the current puritannical 2 prrcent target set bt the fed.
    Modern Monetary theorists point out that the US govt can print money without issuing bonds or raising taxes.
    Eventually, like with say double digit inflation, debt becomes dangerous, bit we are a long way from that, further away than many assume.
    Right I'd say the Bernie people are right that worrying too much about debt is a Reaganite ruse.

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  2. Off topic, but I think you'll find this to be pretty interesting reading (https://www.theatlantic.com/magazine/archive/2018/09/the-next-populist-revolution-will-be-latino/565730/).

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  3. Inflation destroys workers wages since wages never keep up with the rate of inflation.

    The things that do help workers are labor shortages and getting rid of debt at every level which ensures steady or declining consumer prices.

    Inflation at say 6% but wage increases at 2% mean 4% decline year after year in purchasing power . In abstract terms, a person making 50K per year makes 48 the next, 47 and change after that ad-infinitum

    No inflation or debt free deflation means a persons earning are steady at a given pay level which is a huge plus. I make 50K I have 50K next year

    The solution to the problems though is creating an artificial demand for labor by closing national borders regulating the work week and in the US situation, mass repatriation

    However the current USA lacks the political will to do roads much less anything difficult

    That said the US won't be lead into a New Deal. Once the Boomers die off in a few decades it will move to an ethnic spoils state with the elite on the top doing the skim.

    This the Latin American experience and there is no reason to suggest the US will be able to avoid it.

    we certainly aren't going down the social democratic route, That requires social capital that the US hasn't had since the 80's and only had briefly during the new deal

    That is the consequences of a nation full of immigrants, too little collective identity over the long haul and even creating a faux identity in the post war era was short term

    of course we could have an actual civil conflict 2.0 or a civil war that could end the union or we could just go out on moral exhaustion like the USSR did

    The last would be a good outcome in some ways as the New USA plural will become politically more culturally and ethnically homogeneous and much less warlike which in time will enable things to get done within those boundaries. It has risks and what is done may not be the right thing but its a thing and action can be better than inaction

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  4. Is inequality really cyclical, though? Studying other countries, we see that some countries suffer from inequality for centuries, others have a long, uninterrupted tradition of egalitarianism. For instance, Mexico has had inequality for centuries, since the days of the Aztecs, continuing through colonialism and independence(the Mexican Revolution was more like a massive slave rebellion, ending in massacre). On the other hand, the country Japan has been more egalitarian, until the recent rise of globalism - and even that hasn't dented them that much.(Millenial fascination with Japan and anime may be influenced by its more egalitarian nature).

    Geopolitics makes the convincing argument that inequality has geographic basis. If this is true, then some countries more likely to be egalitarian, others more destined for more social stratification. The U.S., on the other hand, is a more capital-rich country, empowering the masses.

    In this view, America's experience with inequality is more like catching a virus, then manufacturing antibodies to fight it off. Peter Zeihan makes the argument that America embraced globalism only as a strategy to win allies in the Cold War - we let other countries screw us over economically, as long as they would ally with us against Soviets. Since end of Cold WAr, globalist elites became entrenched, but are now being deposed.

    Finally, in their book, "The 13th Generation", Neil Howe and
    William Strauss point to several trends indicating that Generation X are more egalitarian than Baby Boomers. For instance, Gen X's preference for local bands and the local music scene; avoiding the values battles and less ideological; less interested in accreditation. If this true, it shows that America is returning to its basic egalitarian nature, with younger generations becoming more egalitarian.

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  5. As to what the new political coalition will look like, we know that we are entering a period of increasing economic regulation, according to Skowronek's cycles - so probably a period of Democrat dominance.

    Peter Zeihan argues that the only groups now loyal to Democrats are blacks, gays, single women, and "Greens"(educated upper-middle class liberals).

    Republicans, on the other hand, are also depleted. Their only groups left are non-union blue-collars(haven't won over union workers) and evangelicals.

    Rather than being polarized, the country has become politically fractured - with most of the voters not trusting either party, and no powerful political coalitions left. This is worse than being polarized, because each small group mistrusts everybody else - "all against all".

    If Skowronek is right, probably Democrats will emerge and create some new coalition - that is compatible with the Green Party politics, etc.

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  6. If you're interested, here are the excerpts from Neil Howe's book, "13th Generation", (book was published in 1993):

    "Ask a 13er to show you his favorite music, and he might not turn on MTV, but instead take you to the best garage band in his own neighborhood. To him, that music is REAL, authentic, unfiltered. Once fame strikes and a hot band gets pop-anointed, the question arises in a young fan's mind whether that band is now selling out, more interested in pushing twenty-dollar t-shirts than in making authentic sounds. (Hey, it's great they're making money, but it doesn't have to be my money!) By the time that band hits platinum, they're already history - among the youth congnescenti, at least. So this generation never develops its own equivalent of Elvis, the Beatles, or Simon and Garfunkel. U2 is the closest anybody has gotten, and that's not very close. Lollapalooza is the closest they've gotten to Woodstock, and few elders even know what it is."

    On being less ideological, more practical:

    "Where older generations give moralistic lessons on "values" issues like abortion, 13ers translate the arguments into immediate human terms. The political debates that matter most to 13ers are about how to help real people thrive(or at least avoid perishing) in a dangerous world."

    "As they strive to reinvent some sense of sexual order, 13ers are confounding traditionalist and modernist elders on both sides of the great 90s-era culture war. On the one hand, many 13ers openly revere traditional mom-and-dad families that stay intact, show a renewed interest in chastity before marriage, and have a negative opinion of the "no fault" divorce laws their parents introduced back in the early 1970s. On the other hand, these are no Ozzie and Harriets. They are decisively pro-choice on abortion. They are unflinchingy in their insistence on workplace equality. And they strongly support requirements that employers do much more to accommodate duel-income families."

    "To blunderbuss crusaders on either side, 13er attitudes about sex appear to be a puzzle of contradictions. Are 13ers turning into family moralists? Hardly. They think people should be free to do anything they want - and that includes the freedom to scope out traditional institutions that might actually work and to steer clear of stuff they're rather not be around. Are 13ers anti-family? Not at all. They just believe that family-making should be voluntary and that every family, even a single-parent family, should be allowed to make a good living."

    "Thirteeners believe that sexual harassment is because it's simply unjust, not because it's a symbol of some metaphysical war between the sexes. They recognize date rape as a genuine problem, a reflection of how 13er-era sex has been stripped to its core elements of power, not as proof that women and men are natural enemies. As they see it, such evils can't be ignored - nor can they be stopped by setting up a battery of federal regulators or by sifting every word and gesture through a PC filter. Yet wherever 13ers look, they see older people elevating simple questions into grand controversies, with the day-to-day reality lost amid all the inflated rhetoric."

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