Friday, September 16, 2011

Social Corrosion

I mentioned Mark Steyn and Charles Murray a few posts below as views from the right. They argue the welfare state undermines social structures, and damages the crucial cultural features which bring people satisfaction and happiness.

But so do markets. Libertarian ideas can be subject to the same criticism.

I discussed Avner Offer's brilliant book The Challenge of Affluence here, for example. The very innovativeness and buzzing vitality of markets can run well ahead of society's ability to construct norms and institutions to compensate for our blind spots and tendency to focus on the short-term.

And of course the glamor of western consumerism is toxic to most traditional societies which come into contact with it. This is one of the underlying resentments in much of the Muslim world - capitalism undermines the family patriarch and patronage. That of course may often be a good thing. But westernization also undermines many of the settled structures of family, community, vocation and faith that Murray talks about.

So there is no formulaic answer. Cultural structures are important - and are fragile.

Some change is inevitable and will happen in any case, at least unless we bring all science and technology to a halt. But we do have to think about the consequences of large scale change for the daily texture of people's lives. Small-scale change at the level of the kitchen, kin, the daily commute, how we spend our time and what we are proud of is if anything more important than the big forces of history.

Society tends to evolve support structures - social technologies, to use the terminology I talked about here - that are immensely important to making it work, and to making people happy.

Thursday, September 15, 2011

Start-ups go lean

More signs of deep changes in the labor market. The WSJ reports:

New businesses are getting off the ground with nearly half as many workers as they did a decade ago, as the spread of online tools and other resources enables start-ups to do more with less. The change, which began before the recession, may be permanent, according to some analysts.

"There's something long-term at work here," says Dane Stangler, research director at Ewing Marion Kauffman Foundation, a Kansas City, Mo., research group.

Start-ups are now being launched with an average of 4.9 employees, down from 7.5 in the 1990s, according to a recent Kauffman Foundation study. In 2009, new independent businesses created a total of 2.3 million jobs, more than 700,000 fewer jobs than the annual average through 2008, the study found.

Meanwhile, the overall number of start-ups has "held steady or even edged up since the recession," according to the study

The problem is so much is happening so fast.

"U.S. poverty totals hit a 50-year high"

The LA Times carries the latest census data:

In a grim portrait of a nation in economic turmoil, the government reported that the number of people living in poverty last year surged to 46.2 million — the most in at least half a century — as 1 million more Americans went without health insurance and household incomes fell sharply.

The poverty rate for all Americans rose in 2010 for the third consecutive year, matching the 15.1% figure in 1993 and pushing many more young adults to double up or return to their parents' home to avoid join

The definition of poverty is always controversial, especially whether you measure it in relative or absolute terms. You can have a big screen plasma tv and a late model car on the census definition and still be "poor". But there is no way this is anything but terrible news.

And median male income is at the same level as 33 years ago, says the NYT:

According to the Census Bureau, average American income fell by 2.3% last year, dropping it to $49,445. This is 7.1% below its 1999 high point. For men, the story is even worse. The average man's income fell even further. After adjusting for inflation, men now earn roughly what they did in 1978.

Population has risen, of course. But after nearing half a century of the Great Society, we have more poverty than ever.

Change of Pace Photo

A cafe near the Louvre, Paris. There are also definite attractions to the European model (at least while your banking system hasn't collapsed.)

Draining the life out of life

Charles Murray is a very prominent social scientist. He claims to be originally liberal and very much an empirical, data-driven social scientist, but is best known for books like The Bell Curve and Losing Ground.

Mark Steyn (who I discuss here) refers to a speech Murray gave in 2009 on "The Happiness of the People".

Murray asks whether we should want the European social model:

First, the problem with the European model, namely: It drains too
much of the life from life. And that statement applies as much to
the lives of janitors—even more to the lives of janitors—as it does
to the lives of CEOs.

The problem is it undermines the institutions that give people lastIng satisfaction:

If we ask what are the institutions through which human
beings achieve deep satisfactions in life, the answer is that there are
just four: family, community, vocation, and faith. Two clarifications:
“Community” can embrace people who are scattered geographically.
“Vocation” can include avocations or causes.

Seen in this light, the goal of social policy is to ensure that those institutions are robust and vital. And that’s what’s wrong with the European model. It doesn’t do that. It enfeebles every single one of them.

When government tries to take on social problems, he says, it often weakens these institutions:

The problem is this: Every time the government takes some of the trouble out of performing the functions of family, community, vocation, and faith, it also strips those institutions of some of their vitality—it drains some of the life from them. It’s inevitable.

When the government says it will take some of the trouble out of doing the things that families and communities evolved to do, it inevitably takes some of the action away from families and communities, and the web frays, and eventually disintegrates.

For example, the US welfare state has arguably undermined the family.

We have seen growing legions of children raised in unimaginably awful circumstances, not
because of material poverty but because of dysfunctional families, and the collapse of functioning neighborhoods into Hobbesian all-against-all free-fire zones.

The result is anomie and drift and breakdown.

The speech was given in March 2009, so it predates the pictures of mass protests in Greece, strain in European bond markets and rioting in London streets.

I think there is something to this. We spend unimaginable billions on poverty alleviation and income redistribution in western countries. But society seems more fractured than ever. As some people joke, we fougHt the war against poverty for thirty years. And poverty won.

The heart of it comes back to culture versus resources. I talked earlier about the central liberal and conservative truths. The fact is when you transfer resources you also transform incentives and the culture and the ecology of social rules and purposes that goes with them. And that cultural change is often toxic.

What do we take from this? Looking at income and resources and economic quantities alone is not enough. The old left tends to think, with Marx, that culture is just superstructure, a reflection of the means of production. But economics and culture intertwine.

And the more we have solved what Keynes called the "economic problem", the more the cultural side matters in giving people the life they want, with some sense of purpose and satisfaction.

Structured jobs are endangered jobs

Megan McCardle writes in the Atlantic:

Arnold Kling writes one of the most troubling, and true, passages about the American job market that I've read in a while:

"The paradox is this. A job seeker is looking for something for a well-defined job. But the trend seems to be that if a job can be defined, it can be automated or outsourced.

The marginal product of people who need well-defined jobs is declining. The marginal product of people who can thrive in less structured environments is increasing. That was what I was trying to say in my jobs speech."

Why is this troubling, she asks. Perhaps we shouldn't want routine soul-destroying jobs like assembly-line work or white-collar cubicle conformity.

Then the jobs started to go away and we discovered that many people like dreary predictability--at least, compared to the real-world alternative, which is risk.  What many, maybe most, people actually want, it turns out, is the creativity and autonomy of entrepreneurship combined with the stability of a 1950s corporate drone.  This is a fantasy, of course, but given their druthers, it's not clear that most people will pick risk over dronedom.

In fact, I wonder how many people DO want creativity and autonomy. I think most people do. But some people really do want things to be very structured, with a set of rules and clear lines and hierarchy. Some soldiers love the military life for that, for example, and have difficulty when they transition back to civilian life.

And every office has people who think the purpose of life is to observe and enforce rules which have been handed down from above.

People do want security. Much of the welfare state is predicated on that as well. But as she points out, there can be trade-offs.

And routine jobs also tend to be low or medium-skill jobs. That takes a hit out of specific - and large - parts of the workforce.

Wednesday, September 14, 2011

Selling memories

Meanwhile, at the other end of the scale (NYT):

SINCE the financial crisis began, millions of wealthy consumers have decided to play down the joy of accumulating things in favor of the pleasure of accumulating experiences. As a result, purveyors of premium-priced products and services are embracing the notion that they provide customers with moments to remember rather than with more stuff that needs dusting (by the help, most likely).

A case in point is the Ritz-Carlton Hotel Company division of Marriott International, which is expressing that sentiment as the theme of a campaign scheduled to begin on Thursday: “Let us stay with you.”

The switch, replacing the usual hotel-chain request to “Please stay with us,” is intended to convey that the memories of a visit to a Ritz-Carlton luxury property will last longer than another fluffy bathrobe.

The nature of demand is shifting.

"Compulsive consumerism leaves British family life in crisis "

The Telegraph headlines a UN report on Britain

The report by Unicef, the UN children's agency, warns that materialism has come to dominate family life in Britain as parents "pointlessly" amass goods for their children to compensate for their long working hours.

While parents said they felt compelled into buying more, the children themselves said spending time with their families made them happier.

...In its latest study Unicef commissioned researchers from Ipsos Mori interviewed hundreds of children in Britain, Sweden and Spain, asking them about their ideas of happiness and success.

The report, authored by Dr Agnes Nairn, an academic and marketing expert, said: “Parents in the UK almost seemed to be locked into a system of consumption which they knew was pointless but they found hard to resist."

Tuesday, September 13, 2011

A View from the Right

I just finished Mark Steyn's book After America: Get Ready for Armageddon. Steyn is a multi-million selling conservative author, born in Canada, educated in England and living in New Hampshire. He was a theater critic for the Independent in England before turning to political commentary. He is an astonishingly gifted, vivid writer. And in this book he's very depressing.

I've previously said the old debate about the size of the state doesn't interest me so much. Stein takes a very different view. He starts off by talking about the frightening increase in the size of the US debt, and how little we have to show for it. Sure enough,debt was even higher as a proportion of GDP just after the second world war. But America had just defeated two other great powers, and emerged as the strongest country on earth. And it faced little or no economic competition from a ruined Europe and Japan for a generation, to say nothing of China.

The heart of the problem for Steyn, though, is not the size in isolation. It is the fact that big government means a steadily smaller citizen and society. State control undermines self-reliance and promotes passivity and dependence. People come to believe that "big government happy juice" is the solution to all problems, not doing anything about issues themselves. "We have devolved from republican self-government to a micro- regulated nursery."

It is not so much a matter of taxation as, essentially, a moral problem. Too much government enfeebles and infantilizes people. People end up permanently on benefits or other support, without initiative or energy or control over their own lives.

Ordinary people have less power to control their lives free from the encroachments of regulatory agencies and judges. The government penalizes success and rewards failure. The welfare state destroys families, destroys incentives and is unsustainable, he says, as Greece shows. So far so libertarian, (although much better written than average - rollicking, witty and sometimes laugh-out loud funny.)

Most importantly for my interests, he asks (p273) what the next big economic transition is.

As disastrous as the squandering of America's money has been, the squandering of its human capital is even worse.

Agricultural work is gone or performed by the undocumented. Lower-skill manufacturing has gone to China. And 40% of Americans work in low- paid service jobs.

What happens when more supermarkets move to computerized checkouts with R2D2 registers? .. When manufacturing was outsourced, they moved into low-paying service jobs or better paying cubicle jobs - so-called "professional service" often deriving from the ever-swelling accounting and legal administration that now attends almost any activity in America.

What comes next?

Or more to the point, what if there is no "next?"

He sees the answer in the decay of California and the destruction of Detroit. Increasingly ineffective government preys on the remaining productive sectors to bail out failures.

The functional illiteracy rate in Detroit is 50%, he says. The homicide rate is frightening. Who will really want to create jobs there? GM has one worker for every ten refugees and dependents - and had to be bailed out by the government.

Detroit, he says, is the natural conclusion to big statism. It is what is next - even if not immediately.

Decay sets in imperceptibly, but it accelerates, and by the time you notice it, it's hard to reverse.

The welfare state is less a social safety net than a kind of cage - a large cage but a cage nonetheless.

It is a corruscating critique. We end up with obesity, drugs, family breakdown, educational collapse, unemployment and crime.

I don't think this is where we are going, and I'll explain why. But it is a scary dystopian vision, all the more so today when French banks are on the brink, the US labor market is faltering, and Congress is bickering about another $400 billion stimulus.

Relativism and Nonjudgmentalism

David Brooks points to research which finds two - thirds of 18-23 year olds in the US find it hard to talk or think about moral issues at all (NYT). The default is extreme moral individualism.

“Not many of them have previously given much or any thought to many of the kinds of questions about morality that we asked,” Smith and his co-authors write. When asked about wrong or evil, they could generally agree that rape and murder are wrong. But, aside from these extreme cases, moral thinking didn’t enter the picture, even when considering things like drunken driving, cheating in school or cheating on a partner. “I don’t really deal with right and wrong that often,” is how one interviewee put it.

The default position, which most of them came back to again and again, is that moral choices are just a matter of individual taste. “It’s personal,” the respondents typically said. “It’s up to the individual. Who am I to say?”

This is quite remarkable, given the US is still far more religious than other western countries, for one thing. Brooks argues it is less the fault of the young than of adult institutions who don't even give kids the vocabulary to think through moral issues.

It is probably the natural result of pushing "tolerance" as the prime moral virtue for two or three decades.

It might suit the left to have this situation when it comes to issues like gay marriage. But it also may undermine in time much of the rationale for things like progressive taxation, or indeed environmentalism, which require some framework of obligation.

It is also difficult to have much sense of purpose if you don't have much sense of right and wrong. Or perhaps it means you are capable of believing in anything.

Monday, September 12, 2011

Here's some people doing interesting things

Gary Hamel, a famous business school professor and academic, wrote an article in HBR in February 2009 called "Moon Shots for Management". He develops twenty-five organizational challenges management thinking - and the economy - need to get right for the 21st century.

There is now an entire website - Management Information Exchange or MIX heredevoted to people doing interesting things about this, including their stories and experiences.

The Management Moonshots are the heart and soul of the MIX — a roster of make-or-break challenges designed to focus the energies of management innovators everywhere. They emerged in response to a simple but profoundly urgent question: What needs to be done to create organizations that are fit for the future?

There's a lot here. I read Hamel's book The Future of Management earlier this year and enjoyed it.

This kind of thinking is a mixture of blue sky and practical, which I like.

Sunday, September 11, 2011

Hard memories

It is very hard to watch the tv coverage. Especially seeing the kids who lost a parent.

9/11 Ten Years On

It seems hard to believe it is ten years. I worked in TriBeCa at the time, 10 or 15 blocks north of the World Trade Center. But I was in London on the day, staring in disbelief at the tv.

I arrived back about five days later. There was a strange burnt plasticky smell in the air in TriBeCa. And at the end of Greenwich Street was the vast terrible pile of wreckage. The towers I had been so used to looking at, soaring a few blocks away every day when I opened the office door, when I wandered around on the streets - were gone. The skyline was empty. The world had changed.

I still haven't got over it all. I still find it emotional and hard to think about it. And I am still angry. And horrified.

I wander up to the construction site at lunchtime some days. Nothing can bring back the people. But every floor they add to the new buildings feels good. It is good to see them rising into the sky.

I took these photos of the World Trade Center in 1996, on a business trip to New York before I ever imagined I would live here.

I last visited in August 2001 when my sister was in town. Of course, it felt as if something so magnificent, so vast would be there forever.

Ordinary people, ordinary New Yorkers going about their lives attacked out of nowhere. Families left bereaved.

I became so used to them when I worked nearby. I used to walk down to the Borders bookstore in the plaza area at lunchtimes sometimes. It was so hugely familiar.

I didn't know anyone personally who lost their lives. I can't imagine the distress of their families.

The city is still scarred.

It is good to see the new buildings going up. Here is what the site looked like on Thursday afternoon.

It has taken too long to build, to restore. But now the main tower is 80 stories tall already.

It didn't stop us. We're coming back. Better.