Two Years On

It’s been a strange journey, folks. I wish I could tell you what I’ve been doing, but no dice. Just wanted to let anyone who still cares know that I’m alive and kicking and continuing my ratty ways.

That, and to sort of reflect on what happens when you become a big shot. Here at the Rat Site, we’ve always tried to give good advice, and I sincerely hope that everyone who visits goes away with the tools for success.

I guess I got into succeeding because I was sick of being poor. Mission accomplished, now watch this drive! But even if that was the top-line goal, there’s always more to the story. You may believe, as I suppose I did, that by doing it, you will get people to look at you in a different way, defer to your opinions, see you in a different light. And, truth be told, you totally will! It’s just that this power only works on your professional network. And that’s mostly a bunch of people that you don’t really care about. They might matter a lot to your livelihood, but not to your emotional life.

To the people you really care about, you’ll never be much bigger or much smaller than you were before. It’s actually kind of crazy how much homeostasis there is in how the people close to you see you. In your office, CEOs might tremble beneath your lash. At home, at your religious congregation, to your family, you will pretty much be the same schmuck you always were.

There’s an odd comfort in this, but only up to a point. Once your relationships are baked in, they’re somewhat resistant to change. You’ll always be a spouse, a child, a parent, a sibling, whatever else. And those relationships tend to be pretty sticky; your parents will always see you as a kid to some degree, but your brother can’t fire you (unless you work for a certain Japanese printer company.)

But this comfort only goes so far, because it’s predicated on you continually succeeding in your role: providing everything that your dependents can’t furnish for themselves. And if you stop winning, you can lose those relationships, and it will be your fault.

Ruminating on this explains why I’m blogging tonight. Much as I (and you) might wish it otherwise, every accomplishment, every milestone comes with a carrying cost. After you’ve worked a few miracles, people come to expect it, and to blame you if you can’t deliver.

So that’s the relevance to this blog’s theme and why I’m returning to blogging for tonight. Because at the end of the day, everything that you care about is riding on how well you’re ratfacing. You can’t win, but you can certainly lose, and your daily grind earns you, at best, the right to keep playing for one more day. It’s terrible, but it beats the alternative, so what are you waiting for?

Mass Encarcinization 3: The Grey Army

I haven’t posted for a while because even rats have been affected by coronavirus. Disruption induced by the quarantine lockdown has sharpened the point of the previous posts in this series, so there’s no shortage of ostensive definitional material for mass encarcinization right now.

The previous posts in this series present these theses:

• Intensification of labor inputs is fake economic growth;
• Intensification is a universal phenomenon across all work sectors;
• Intensification is novel in developed countries and contrasts with the seller’s market labor enjoyed during the Boomer heyday;
• The financial and voting power of the Boomer bloc allows it to demand intensification from present workers;
• This power will remain substantially unchanged for at least 15 years; and
• The Boomer bloc cannot allow intensification to decrease without making lifestyle concessions that it is unwilling to accept.

Here at the Rat-Faced Man, we’ve reported on Boomer poverty and failure, and chillingly, this will also become worse going forward, so the political pressure is never going to relax. Boomers aren’t going to accept that the percentage of their cohort eating cardboard is too low, not too high. As you are not a Boomer, you must therefore contend with intensification as the defining condition of your working life. How can you survive and even, somehow, prosper?

There are two dynamics at work right now that push in opposite directions. On the one hand, lockdowns have an immediate adverse effect on labor. Job losses hit women, the less educated, and the youngest the hardest. Here are the absolute losses:

And here is the generational breakdown in a typical large city:

But on the other hand, the investing class has had an intense need to make returns that has led to a huge pump:

How to interpret the intersections of these trends? Perhaps it really is true that all the employees fired had a near-zero marginal product and the stock market can rebound without their dubious contributions. But the USA is right around the G7 average for productivity per hour worked, so I don’t buy it. It just seems obvious that companies need those workers to make returns.

Normally, this is where I’d call a stock bubble, but then, ten years ago, I didn’t believe in negative interest rates either. (By the way, Grad PLUS loans still carry a coupon over 7% and charge an origination fee over 4%. Just in case you were worried!) I would have said that investors need to make returns but, as we’ve seen, the class of people with money to invest can’t make enough money for what they want given available return opportunities. We are facing a situation where investors intend to make returns through appreciation, not interest, buybacks or dividends.

How can this possibly work? Well, when you have a flood of investable capital and you’ve taken out a chunk of productive capacity, you’ve created the opportunity to head-fake remaining businesses. Borrowers mistake the short-term reality of competing for scarce cash for a longer-term reality of investors needing to put money somewhere, anywhere, in order to get the next pump and become part of the fraction of the investing cohort that’s able to go liquid when the desired returns have been achieved.

Recall that investment is sharply generationally divided. Coronavirus has created a situation in which the age cohorts most likely to working the hardest, most miserable jobs are facing eviction, debt defaults and unemployment in huge numbers in the midst of what had already been a historic move toward investor power. Boomers and millennials are locked in a series of ultimatum games that the millennials will always lose because of their worse downside exposure. (Recall that, as usual here, “boomers” means the expanded boomer generation of silents and early Xers).

There’s a lot of “guillotines now”, “Saxon begins to hate” rhetoric floating around out there, but I don’t find it convincing. We are all embedded into systems that we can neither live with nor without. These include financial systems. Hence our strange combination of intensification and paralysis.

Basically, we’ll lie back and take it unless and until we simply expropriate old people. This will happen when two more trends cross: boomers getting so old that the average one is over 70, and millennials getting so old (let’s say about 50) that they collectively realize that homeownership, medical care and retirement will not become available to them through the financial system. Millennials will then resort to the political system, and the prospect of the lowbrow demagoguery likely to come of this is blood-chilling.

However, this is probably 15 years into the future. So, as always here at the rat-faced man, we ask what we’re going to do now.

As we’ve seen, our economy is now defined by a series of ultimatum games that young people are collectively guaranteed to lose. You don’t need to lose your personal matches, though. As we’ve also seen, plenty of boomers were so feckless that they were born on third base and struck out anyway. The correct strategy, therefore, is to appropriate value currently in the hands of the weakest boomers.

Financial pain is unevenly felt, but some of the people currently losing jobs, houses and businesses are going to be boomers. Most of those assets are going to accrete to other, wealthier boomers, so you need ground game. Now is the time to:

1. Pick up assets, not as investments per se but as strat buys
2. Insert yourself into infrastructure processes, e.g. by filling a gap in a supply chain
3. Ensure that as few boomers as possible return to work — doing their jobs for free, if necessary
4. Identify the ownership structures of thinly capitalized retail likely to be supported by an OEM or a distributor (e.g., phone stores) and get equity for cash now
5. Look for primary housing
6. Pick up cheap millennial staff — right now, they’ll agree to internships, trial periods, work-study, anything

But whatever you do, don’t keep on keeping on in a job that can be intensified. Don’t come out of this as just another broken cog.

Mass Encarcinization 2: The Precariat

In my introductory post, I focused on intensification of inputs to production to conceal inability to increase labor productivity. This idea can seem a little too cute and conclusory. After all, if this force is so irresistible, how is it that it is successfully resisted? A theory that proves too much is, at best, discursively useful and as such cannot be the basis for an overall ratfacing strategy.

To be clear, intensification is only one possible outcome of the ongoing dynamic between employees and employers. It’s perfectly possible for workers to reverse intensification. However, doing so requires employers to court their employees. Here’s why this isn’t happening:

Similar trends prevail across most of the fully developed economies. For example, Japan:

In the early 90s, there were about 4 jobs available for every 10 fresh grads, so that most of them started off their careers with an unsettling streak of rejection that led to many of them being unable to secure a job in an already depressing economic climate. It was also precisely at this time when lifetime employment, once taken for granted in Japan, began to break down. While companies were bread-crumbing the Dankai Jr., the Dankai stayed on their entitled salaries and in eternally secure employment thanks to the seniority system that was still fully intact 30 years ago.

Or in the UK:

The generational divide in wealth has been in the oven for more than 20 years at this point, so by now it’s become determinative for the economic fortunes of those in their prime work years. Gen X and Millennials collectively form a mass precariat. As such, their dependence upon their employers has created an employer-employee dynamic very different from the one boomers faced.

Some hope that this will end real soon now, but fat chance:

That’s right. In 2030, when the youngest of them will be 66 and the oldest will be 84, Boomers will still control nearly the same share of the national wealth that they did in 2015! Meanwhile, the Millennials, who will be 30-50, will have about 3/4 of the share that Boomers had at 35. The Deloitte graph doesn’t directly capture this, but this graph understates the severity of Boomer dominance because Boomers also have access to social programs and job benefits that are superior to those of younger generations, like defined-benefit pensions or unaffordable government subsidies to housing and stock prices.

We thus have two strands: systematic generational differences in wealth and opportunity during prime working years, and the shift of wealth from workers to retirees. Retirees, however, are investors, and despite their shocking collective wealth, Boomers are systematically underinvested, with most planning to live off of social security and a majority entering retirement without a paid-off mortgage. Boomers (and their proxies, such as CalPERS et al.) thus need to make systematically impossible rates of return:

In the 90s, people worried about their retirements rotated their stock portfolios from stodgy companies to tech. That didn’t work; tech outperformed from the mid-90s to the end of the decade, then collapsed. Since investors form their expectations by looking backward, expected returns for stocks declined. The UBS/Gallup survey showed that in 2000, equity investors expected one-year returns of about 16%. By 2002, expected returns were 6%. In the 2000s, the move was to lever up by buying bigger houses with lower down payments…

Levering up… doesn’t directly change the state of the world, it just changes who collects which tranche of returns. If you buy the house you can afford with a 25% down payment, a 10% appreciation in its value makes your investment worth 40% more. If the same sum of money is a 5% down payment, a 10% increase in your home’s price means a 200% gain. But the larger mortgage means that a larger dollar amount of the home price appreciation accrues to your lender, not to you — they earn the first (1–down payment %) * (interest rate) of returns, every single year. You’re buying a higher-strike option on the same basic asset.

The adjusted expected return ca. 2002 seems to have been pretty rational: CalPERS in fact returned 6.7% in 2018-19. However, this is lower than the average public pension plan’s asset-weighted return assumption of 7.75%, to say nothing of actual performance, which was 5.87% from 2000 to 2018. In short, pensions are underfunded and the only way to make it more is to realize more from your investment.

We thus have the collective agents for the Boomers (pension funds, mutual funds, etc.) coming under intense political pressure to make high returns now. Any politician who screws Boomers will get turfed quickly. The funds are subject to capitalist accountability and are listening attentively. They are moving into ever more aggressive and aggressively managed vehicles. At the same time, human and physical capital is eroding. The only solution is to intensify productivity by the dwindling percentage of the population that is still highly skilled, highly productive, and in the workplace. That’s you, by the way.

And this explains why it actually sucks now to be a doctorlawyerconsultantetc. You’re producing, or at least aggregating, a lot of the remaining wealth accruing to present workers. There’s no one else to tax. (Taxing corporations would just reduce investment returns to Boomers). And that’s why, if you’re one of those cows, you have to transition to rat as fast as possible.

A word on endgames. Boomers can’t, I hope, live forever. Where will the money go? “To medical bills” isn’t an answer, because we really want to know where those bills reach the bank account of some identifiable person. We already know that doctors produce far more revenue than they receive comp. If the money goes to a hospital chain, it’s going to those hospitals’ investors. And the investors are going to be Boomers! In other words, Boomers’ money will go in large part to other, richer Boomers. Obviously from there it goes to inheritance, and thus concentrated, to scions in younger generations. We thus enter the next generation with greatly filtered wealth and no social mobility (you can’t “earn” a billion dollars) and intensification continues.

On that note–Merry Christmas!

Mass Encarcinization 1.5: Excel Gore

In the old, weird America of 1972, people lived by gut calls and felt free. It wasn’t all good, but for better or for worse, it was a life less patrolled by the superego, leading to this kind of behavior from those who experienced it:

We managed to find a plug in floppy drive but there was only an Excel file on the disk. I opened the file and he had written his poetry book in Excel cells, with widened columns and rows, complete with spaces to center text and indent paragraphs etc. When one cell got full of text he moved to the next. New poems were started a couple of columns over. I remember he also asked how to change the size of the font for the initial letter of each verse. He must have been using Excel 2003 or something because when he saw the ribbon, which was new to Excel 2007 he said it might not work properly because he used Excel. I tried explaining he should use MS Word. He said “oh I got a disk with that on.” He pulled out another floppy and there was a file called houseke~.doc. I feared the worst. He had a Word table over several pages where he kept his home accounts, all beautifully typed in by hand, decimal points all lined up (hell I can’t even do that now), not a calculation in sight – they were all done by a calculator and hand-entered.

This is sad in lots of ways. On the one hand, some poor guy spent innumberable hours manually formatting Office files in obsolete software and was one of a handful of people ever to see them. The monumental futility of it is astonishing. But on the other hand, I see no indication that he experienced the kind of desperation that might have motivated to spend his time more productively. He had the time and repose to do useless things because they were meaningful to him. That’s sad too, but not for him. It’s sad for us.

Eccentricity is, by definition, a deviation from the norm in a system, structure or protocol. We are a rich society, but we are crushing out eccentricity because it is not productive. There is a productive imperative to our work that supervenes all others, but it is not actually enriching most of us. Or, under the thesis of this series, here we see what life looks like for someone who was never pressured to turn into a crab.

Mass Encarcinisation 1: Stakhanovite Schools

People respond to incentives. Behavior in many spheres is radically changing. How are the incentives changing? What are they changing us into?

My thesis is that many systems have suddenly acquired similar incentive structures and are thus forcing fundamentally different people and institutions to adapt in converging ways. Essentially, given the current environment, unrelated people and institutions are all becoming crabs because the crab form is adapted to the environment. This thesis will be supported over a series of posts with reference to internal and external pressures.

High Modernism isn’t cool right now, but that doesn’t mean it didn’t win. One of its characteristic modes of thought is Taylorism: you turn work into “tasks”, then figure out how to do the tasks more efficiently. Initially, it just meant making workers work harder and timing each task with a stopwatch. This is characteristic of early 20th-century thinking generally, with its suspicion and austerity. Bosses were worried that workers were cheating them by not working hard enough: “if you have time to lean, you have time to clean“. However, if all you’re doing to increase production is dialing up labor inputs, you don’t have any increase in labor productivity. No wonder that Communists were fans of Taylorism — it’s a systematization of Stakhanovism (which was in any case a fraud and symptomatic of the universal economic falsity of the USSR).

By contrast, the vast increases in human power produced in America during the postwar period were based on a virtuous circle of engineering, fundamental research and manufacturing. Bell Labs alone produced the transistor (there are several billion of them in your pocket), the cell phone, the solar cell, the laser, Telstar I, digital signal processing, and the infrastructure of most contemporary systems programming. Obviously the impact of these far exceeds any possible benefits to working twice as hard with 1930s technology.

Unable to multiply labor productivity as the Americans had, but facing bold growth targets from the top of the political system, the USSR resorted to a parasitic, shadowy combination of industrial espionage, the aforementioned ideology of hard work, and systematic reporting fraud. If you have growth imperatives, but not a system capable of producing growth, you don’t have any good alternatives and will probably get fired for failing to meet an impossible target (link to original in pasted text). Reforming Soviet economics was impossible so long as price signals were ideologically off the table. Prohibited from perceiving demand, Soviet producers responded to political signals instead of price signals and focused on elaborate plans for producing X more of Y year over year, which is why Gosplan was calculating with abacuses in 1988 (it’s easier for someone specializing in “psychology and management” to issue directives that amount to “make more abacuses” than to permit the degree of self-management that enables productivity increases at the level of small-group collective initiative).

As to modern society, does it seem more like post-war America or more like the USSR? I believe we’re becoming the latter, with various twists, and will make my case in this post by considering the behavior and incentives of schools. So let’s start with something elementary.

Primary schools have now adopted an ideology of disruptive transformation. Somewhat like in the Chinese state, general slogans are promulgated from misty summits of power; these purport to get cashed out into concrete actions by mid-level administrators whose implementing policies may seem totally unrelated. How does “Embrace mistakes as room for growth” become “failure to attain KPIs will lead to salary cuts“?

The political imperative at work is the elevation of persistently low-achieving students. There is nothing longer-lasting in American politics than education reform. Indeed, from the Clinton to the Obama presidency, a span of 24 years, education reform was a constant. Is education reformed yet? Federal reforms don’t fully capture the degree to which education reform continues to be a locus of state-level agitation. American schools cost $11,000 per pupil per year (in other words, about 106% of the taxes paid by the average American), yet we are informed that education is grossly underfunded, so we might also ask when education will be properly funded for, evidently, the first time in the history of the universe. But then, in the Soviet system, reform and funding increases were also constants.

At some point, we have to ask whether schools are even relevant to educational quality. To speak just to the funding issue, some states are strong performers despite low per-pupil spending. But then, looking abroad, we see no causal relationship between educational outcomes and prosperity. Rich Norway and egalitarian France come in below the United States, the “Start-up Nation” can’t keep up with moribund Russia, and pride of place among Europeans belongs to the backward hicks of Estonia. Beyond the money, mighty yet chill Finland has no tests and no stress, while the suicide-wracked “Hell Joseon” had to ban all-night tutoring sweatshops. My conclusion from all this is that policy as a master key to educational quality is just something that people believe because they have to believe in something. It’s necessary for psychological comfort, but it doesn’t provide any useful guidance for people who want their kids to learn things.

Once we understand that educational reform is a system imperative, we can understand why educators are simultaneous managed by metrics and managed by objectives. The objectives are, like the baffling slogans emanating from Xi Jinping, so opaque as to be actively confusing, and there is no obvious relationship between them and their purportedly implementing actions. What’s more, all this management produces nothing discernible in added value. The amused, uncomprehending condescension of Finns when faced with the churning hive of American education is, I imagine, not unlike that of a talented athlete or musician watching a dolt like me fumble around. “Why doesn’t he just do it right, like this?”

Of course, failing to take action in a crisis is how politicians get fired. And we live in perpetual crisis. Next post: convergent crises in education, business and personal finance.

Ad terrorem

Le silence eternel des ces espaces infinis m’effraie.

–Pascal, Pensées

It’s sacrilege to prostitute Pascal, who was talking about the inadequacy of human knowledge, for a blog post bitching about the economic situation of middle-class people in developed countries. Here at the Rat-Faced Man, we don’t even have respect for ourselves, so we proceed. Let’s have a look into the economic abyss and see what stares back at us as we become monsters, or at least vermin.

Source, source. As these graph show when read together, virtually all returns to the vast increase in first-world labor productivity observed over the past 40 years have accrued to the most educated workers — workers whose gains have been far outpaced by inflation in educational costs. This is associated with a collapse in personal savings:

And what appears to be a permanent emergence of student debt as the class of household debt most likely to be in default:

It’s grifty and abusable to say that education is the key to social mobility. If your student loans are in default, you’re out of luck. It’s more accurate to say that, if you aren’t part of the educated precariat, you’re most likely experiencing explicit downward mobility. Therefore, people are incentivized to crowd into education, which is great if you’re in the education business. Talk about a seller’s market. But otherwise, it’s terrible, because the only social mobility any of this suggests is mobility upward (for the best-situated Boomers and the already wealthy) and miserable, grindy reality for everyone else (which includes everyone else and almost certainly both you and me).

Here at the world’s most popular rat-themed website, we are in the business of personal solutions, not social reform. So let’s talk about the reality of making the most of your status as a member of the educated class that reads this blog.

Millennials expect to be routinely fired for no reason and to receive no investment in skills development. No wonder they believe that they, not their employers, are responsible for developing their skill sets. This is a polite way of saying that they accurately believe that they’ll be thrown away whenever it’s inconvenient and that, therefore, they are always preparing for the next interview. You have to be able to give an elevator talk on a moment’s notice that will convince a generationally-privileged chairwarmer that you’re a ninja. Do any of you remember your Boomer dads saying that what you really need is a firm handshake? To be fair, it was true in 1973. But these days, I don’t have an Apple IIc or a fax machine, and we can’t live in the past.

Thus, you have to make sure that you acquire and keep up your skills. And not just cargo-cult skills like “web design” or “multimedia”. That’s how they get you. You need high-end technical skills that are truly in limited supply. Most people are not capable of acquiring those skills, and that sucks for them. But if you can, and you don’t, you’re negligent.

At my present job, as best as I can determine, my role covers the responsibilities that would have belonged to between two and three VPs in the recent past. To be clear, by the recent past, I mean five years ago. And prior to me, these jobs were not competently performed. Without getting too specific, I’ve uncovered mid-8 figures in totally naked exposure — no hedges, no structuring, nothing — that could have been mitigated or entirely prevented for 5 figures of expenditure in 2014 and 2015. My comp is something like a third of what my retired or shuffled-upstairs predecessors would have collectively taken home. I needed to have three independent skill sets just to get hired. Realistically, I think the real number is five to seven to master the job.

One cope would be to just look at the whole thing and say “haha wow holy shit“. In a certain sense, I do that every day to stop from just dropping dead from stress. But on the other hand, Boomer shiftlessness has left whole career ladders entirely empty. The silver lining to all their looting is that, at the end of the day, there aren’t many people to do the difficult jobs, and if you can really do one, there will always be people looking to hire you.

Thus, with a punishing job and a young family, I spend every day listening to white papers on my commute, studying technical materials and specs every night, and grinding Anki instead of watching TV or going to the beach or whatever it is that people do who haven’t gotten the memo yet. My reward for all this is that when things hit my desk, I don’t have to wonder what to do with them. On calls, when questions come up that could take weeks for my organization to do incorrectly, I just say the answer and, up and down the chain, my group takes my word for it. My group just went through a round of layoffs, but I got promoted while my boss got fired.

Now, no doubt, this invites comments like “you’ll get yours, you smug asshole“. In all candor, I’m sure that I will. But not today. My reward for the work is that, for today, I get to keep playing. And if I can keep playing until all the Boomers are dead, that juggalo-haunted hellscape will one day be mine, because the rats will inherit the earth.

From Pecora to Camorra

Almost 30 years ago, Michael Lewis, the dean of business journalism, wrote, “The zeitgeist… is ripe for another Ferdinand Pecora.” As you’ll recall, the “Pecora Commission” was the press name of the Congressional inquiry into the 1929 Wall Street crash. The Pecora Commission is generally credited with creating the popular support that encouraged Congress to pass Glass-Steagall, the ’33 Act and the ’34 Act. Whether you love or hate the New Deal era, most Americans can’t imagine life without investor protections. We invest money as a matter of course; you may not do so on your own account, but that’s what 401ks and IRAs are for, and that’s how pension plans fund themselves. Most middle-class Americans rely on functioning capital markets, not the state, to fund their retirements.

As you’ll also recall, southern Italy is largely run by organized crime clans, most famously (within Italy) the Camorra. This culture of organized crime grew out of “amoral familism,” the phrase coined by Edward Banfield in the sociological classic The Moral Basis of a Backward Society. Under amoral familism, patronage networks centered on the extended family provide jobs and money to their members. You don’t really get hired into a job in a Camorra-controlled industry. Instead, Vinnie talks to Vito and they agree that as Tony’s nephew, dey gotta do sumtin’ for ya. Then you get a job as a garbageman for which you show up one week a month, making half of what a full-time garbageman would make in Milan. You implicitly make double the Milanese guy’s hourly wage; you kick up to Vinnie and Vito; it’s true the garbage tends to pile up, but the insiders are pretty happy with the arrangement.

Thus, we see two poles of social trust. In one, people tend to extend trust to institutions and unfamiliar people as a matter of course. In the other, capital (whether social or otherwise) is appropriated by insider networks in a context of widespread distrust. Vinnie and Vito help you out because you are a sufficient insider to enter into patronage networks. When you put money in your Vanguard funds, however, you’re not trusting Vanguard because you’re a member of the Bogle clan — you’re trusting the overall honesty of the system.

If trust in the system breaks down, in short, we go from Pecora to Camorra. Which way are we going today?

I believe Michael Lewis was wrong. It says so right on the name of my blog. I don’t think he made his prediction out of sincere belief, but out of sincere desire and wishful thinking. I don’t think we’re going to get a modern-day Pecora because we are no longer the kind of society that produces informed anger over the abuses he aimed to correct. I don’t mean that we’re morally decayed — maybe, maybe not. No, we’ve lost the kinds of elites who could act effectively against abuses. Our contemporary elites are too centralized to be politically accountable to diverse constituencies with conflicting interests, and far from decrying abuses, they see them as necessary and good.

After the financial crisis, we wound up with a bunch of state action, it’s true. But as an insider, I frankly question its effectiveness. Contemporary business crimes have no names. In 1929, it was not illegal to do many things that we would consider morally repugnant, like stock watering, pumping and dumping, or some forms of insider trading. Back then, Wall Street pushed back on regulators ineffectively. Today Wall Street owns the regulators; worse, the regulators simply don’t have the acumen to understand preposterous scams, never mind subtle, legal abuses. One of the big takeaways from the Madoff case is that Madoff was simply too prestigious for the complaints about him to register with regulators (one guy sent 5 reports over 8 years pointing out why Madoff’s returns were impossible, but the SEC decided he was a stupid crank and tossed his letters).

The specific prohibitions on the abuses identified by the Pecora commission were enactable because Wall Street was not totally insulated against demands for accountability from politicians. National politics was polycentric and politicians were beholden to regional bases. Glass-Steagal was sponsored by two Southern politicians; the 73rd Congress that passed these laws during the Hundred Days had its deep blue strongholds in the South, the lower Midwest and the Western states. The civic-minded, polycentric elite of the day had plenty of people in places like Cincinnati and Richmond who were capable of making coherent, effective demands for reform because they understood the issues. By contrast, contemporary Wall Street enjoys, and doles out, bipartisan support while being run by a national elite from everywhere and nowhere, and regional politicians are descending into gestural politics and fecklessness.

The problem is the the contemporary system isn’t exactly evil. I wouldn’t have been clubbable enough to make in into the 1929 elite because I have a hick accent, crappy teeth, no family money, and wouldn’t have passed for a Hahvahd Man. We really do live in a more open, meritocratic society. So why does it feel so crappy all the time?

I believe it’s because our elites are too consolidated and have too few internal disagreements to be capable of meaningful conflict. Essentially, we’ve gone from a political society to a managerial one, and in a managerial society, people have best practices, not opinions. And in a strange way, this has brought us full circle, to something we might call “amoral classism”. The elite class in this country believes as thoroughly as any 1929 patrician in its mandate to rule; however, the process of elite socialization no longer allows for the kind of internal conflict that kept the elites of the New Deal era relatively honest. We are thus left with a society consisting of elites and proles with relatively little in the way of a politically active, financially informed middle class. And this class solidarity is why, in 2009, no bankers went to jail. How could they? Who would send them?  Does Vito snitch on Vinnie?

Clownward Mobility

Some people were born on third base, but what about those who squandered opportunities that aren’t coming back?

Today, we’re going to be looking into failures in the Boomer generation. Let’s set aside sad cases of mental illness and drug addiction — other than to note, of course, that Millennials in similar situations will be far worse off. Let’s look at what it likes when Boomers fail. (As usual, I’ll use “Boomers” to refer to people born 1935-1965: people whose lives began before deindustrialization became acute, our physical infrastructure began to degrade, and our position as the world’s net creditor disappeared).

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Our first case is that of a journalist born to an executive of a major corporation. He almost wound up homeless. Unlike most of the others in subsidized housing, William McPherson had a Pulitzer in his hobo bindle. Mr. McPherson retired at 53, on a non-indexed pension with no price protections on his medical insurance, and lived to 84. He seems to have made good calls on AOL and Apple, and bad ones after that; but, in his own words:

I’d fallen under the spell of magical thinking. In my opinion, I didn’t squander the money, either; I just spent it a little too enthusiastically — not on Caribbean cruises but on exploring the aftermath of the fall of Communism in eastern Europe.

The pride here is palpable. He’s not like those other, lesser Boomers who boomed their money away on Harleys and trashy pleasures. He was out there living the life of the mind. Everyone wants to be a philosopher, not because it pays well but because they want to gain social status, even if only in their own minds.

Without being too hard on a sad, old man who died poor and alone, there’s a kind of narcissism that lives among people who always thought they’d have enough money. They don’t crave the approval of a circle of real subordinates as a clinical narcissist would. Instead, they need to see themselves as people who learn things, know things and are above the petty concerns of proles. Making a living is, to be clear, a petty concern of proles.

This attitude isn’t entirely discreditable. You could even say that it’s got a deep heritage in the values of Western society. However, universal freedom was never universal. This heritage was founded on widespread slavery and on the total domination of rural hicks by urban elites. I’m not here to litigate the justice of this system, only to point out the economic base upon which it rested. And you’d be wise to ask where in the economic system you are situated.

This was McPherson’s mistake. He thought that he was an aristocrat of the soul. Maybe this doesn’t require being an aristocrat of wealth, but you need enough to get by, and he didn’t have it.

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History repeats itself, first as tragedy, then as farce. McPherson’s story is repeating itself in hundreds of thousands of cases, such as the case of Kathleen Wolf. Ms. Wolf didn’t wind up homeless. She merely had to downgrade to a small town in Iowa. Essentially, she thought she had money because she had cash flow to join a country club and wear Tiffany glasses, until she didn’t.

Now a philosopher-scholar and a California real estate agent are worlds apart. But we’re not talking about situations that are fundamentally economic different — indeed, they are universal across the Boomer generation.

People in the US ages 65 to 74 hold more than five times the borrowing obligations Americans their age held two decades ago, according to an analysis of federal data by the Employee Benefit Research Institute, a nonpartisan, nonprofit policy researcher.

Paying it off won’t be easy. Median savings for US households nearest retirement age has dropped 32 per cent in the past decade to $14,500, according to an analysis of federal data by the Economic Policy Institute, a left-leaning think tank.

Nearing retirement age? Savings of $14k? You’re going to be eating CARDBOARD. C. S. Hecht at Vox agrees:

When I was younger, I never thought I’d spend my golden retirement years living out of my car. For most of my life I had a roof over my head, food on my table, and steady work as a journalist and writer. I grew up living a middle-class life. I was able to live and travel to many places close and far from my native state of New York. Most of my adult life has been in California and Nevada, but I also traveled around the world to Europe and India after graduating college.

Then in my mid-40s, my life slowly started to unravel. I divorced my husband, and three remaining family members who were very dear to me all passed away, shrinking my safety net. I got rear-ended by a car and developed fibromyalgia. For years, every morning when I woke up, it felt like I had been run over by a Mack truck. Later, in my 50s, I went through extensive therapy to heal my fibromyalgia symptoms — but then developed osteoarthritis in my knees.

Then the recession arrived. I had been working primarily as a freelance writer, editor, and PR manager, but well-paying gigs rapidly slowed down. I was running out of money fast and needed steady work. Day after day was spent sending out hundreds of résumés and applications, but I rarely heard back and only landed one or two interviews. Unemployment shot up 5 percentage points in 2009, peaking at 10 percent the next year.

Eventually, I couldn’t scrape together enough money from savings and the occasional gig. I needed money badly, and when I turned 62 I applied for early retirement to activate my Social Security checks. At $672 a month, it wasn’t enough then, and it’s still not enough now.

None of these are “bad people” — they are simply people whose lives were utterly ruined by acting like they had more degrees of freedom than they really had; people who had no idea that they were living far better than they had any real right to expect. They didn’t save and they didn’t plan, and now they’re done here.

Getting back to my economic base statement. I know I’m a worker, and I do my philosophizing part time. It’s probably best if you do the same.

Why are millennials so “obsessed” with “filtering their water” for “engineered nano-parasites”?

A day or so after I last hit “poast”, along comes Slate asking the hard questions. Why, indeed, are millennials so obsessed with securing a baseline standard of living? An admission against the article’s thesis is quickly lampshaded:

It’s true this generation has been shaped by a somber set of circumstances—more college debt, greater instability, lower pay on average.

But then, of course, Slate moves on to turn conventional wisdom on its head by pointing out that there’s really only one demographic that’s obsessed with work:

Yet certain segments of the population—rich college-educated men, in particular—have somehow bucked this long-term trend. This group has been working somewhat longer hours, and enjoying somewhat less free time, than people further down the socioeconomic ladder.

“Rich” is thrown out lazily. We’re supposed to believe that Thurston Howell IV has replaced monocle-polishing with round-the-clock dealmaking in order to compete with other formerly idle rich. Conveniently, Slate studiously avoids defining “rich”. To be fairer than they deserve, they are lazily copying The Atlantic’s similarly obscure use. I clicked The Atlantic‘s links so that you don’t have to, and I couldn’t find a useful definition everywhere, so it’s probably choosing some idiotically low income level, defining that as “rich”, and then interpreting the behavior of stressed-out providers churning code or deals at all hours as greed.

In any case, the facts don’t really support this thesis. Everyone works harder now and there’s hardly a difference between how hard the middle and top quintiles work. At my jorb, the office plankton doods seem to work pretty damn hard. I work harder, but that’s me.

Having thus eviscerated Slate with facts and logic, I thought I’d take a victory lap through the rest of the piece:

Thompson also mentions a Gallup report from 2016, which claimed that, “like all employees, millennials care about their income. But for this generation, a job is about more than a paycheck, it’s about a purpose.” Yeah, well, the same report also notes that 48 percent of millennials say overall compensation is an “extremely important” factor in the job hunt, and that 1 in 2 millennials would consider switching jobs if it meant getting a modest raise. Paychecks still have pull.

Here, the communists at Slate may be onto something. As I said in my previous poast, I change jobs a lot, and this is driven by money and the need to forcememe my way into having skills that I’d never be permitted to organically develop in a continuous career. For instance, if I were to stay at my current job, it wouldn’t matter that my team has created a product that produces about $10m in annual steady-state GP — I’d make VP when someone older retired or died, even if they’d been functionally dead for years. Meanwhile, I’d be exposed to skill atrophy or irrelevance risk, like a guy who built a nifty FORTRAN system in 1981 and wound up maintaining it into the eras of object-oriented IDEs, early web programming, and contemporary languages. At that point, you just hope your product doesn’t die before you do, and if it does, I guess Rob Rogers has some career advice for you.

Slate concludes that it’s all in our heads:

Journalists tend to be well-educated but not so highly paid, and strive in a field that’s both competitive and in decline—and that, too, has been the case for at least a couple decades. Which is to say, we’re more susceptible than most to “toil glamour” and the gospel of career fulfillment. If anyone’s obsessed with work, it’s us.

Thing is, that’s not just journalists. Career uncertainty, real estate inflation and guild card inflation have impoverished a generation, and the one before is doing exactly what Rob Rogers tried to do: holding onto their jobs because they’re too much trouble to fire. Put it all together, and if you want to thrive — you have to strive.