Some facts, and claims, about the 21st Century Economy (updated)

Just think about that:
”The leisure and hospitality industry is the single hardest-hit sector in terms of employment losses, according to state labor department data. Employment in the sector dropped by two-thirds between February and April.

Accommodation and food services lost 252,000 jobs, or 68.9 percent of the February level, but have since recovered by 36 percent or 89,800 jobs. Still, 174,000 people who worked in food and drink services in the five boroughs were out of work in August, according to data published by the Federal Reserve Bank of St. Louis”.

AND see the following – not just as limited local NY example – but as a worldwide trend – which currently re-educates ”the people” to a ”all new life” (and thusly economy)

”Making the most of the newfound calm on Mulberry Street in Little Italy, local New Yorkers, who until now had avoided the area because of the throngs of tourists, are increasingly visiting the neighborhood.

Last week, Julia Gold, a 23-year-old waitress at the Italian restaurant Gelso & Grand, was serving about four tables at the restaurant’s outdoor dining area.

“The biggest difference for us is that there are more local, young New Yorkers coming to eat here. It’s been nice,” she said. “Honestly, we’re still very busy, especially on weekends and nights. It’s hard to say, as this is all uncharted territory for everybody, what the future of dining out is supposed to look like. But I’ve found that locals are dying to come out and eat and be served.”
Hotels that have reopened since lockdown are also reporting local interest, especially from those seeking luxury experiences”.

“We are navigating our way through these new challenges one day at a time,” said Isabelle Hogan, the chief concierge at The Mark Hotel on Manhattan’s Upper East Side. “We have been pleasantly surprised to see that although NYC may lack ‘tourism,’ a luxury hotel experience is still desired by locals, who either want a change of scenery from their apartment or are between homes.”

Information economy firms (Facebook, Google etc) invest very little even counting R&R

This feels false. Those firms have built very large and expensive data centers, and have laid many intercontinental undersea cables. This infrastructure is largely invisible to most people, but it is very real. You can see diagrams of parts of this built infrastructure at https://www.infrapedia.com/

(full disclosure: I work as a software engineer for Google. Anything I say is my opinion and not my employer’s)

A few days ago, the the Adam Tooze graph firehose brought up this article: https://foreignpolicy.com/2020/06/18/more-from-less-green-growth-environment-gdp/

It feels relevant to this argument, even if it’s not a direct support or rebuttal. The author looks at raw material use in the US, which is often portrayed as not growing anymore, which in turn implies an economic decoupling – new economic developments do not rely much on material inputs. The article claims that this is an accounting error. Material use is growing exactly in line with GDP, it’s just more hidden because the material use of imports gets undercounted.

I think that point goes wider – the 21st century is economy is much more similar to the 20th century than rich countries pretend it is, because we have moved part of the “20th century” stuff to poor countries. But we still rely on that stuff, it’s still an integral part of our economy. I wonder how well the narrative in the OP holds up in such a wider sense of the economy?

Another point of accountingdoubt: the categorization of “service industries”. In my impression, unbundling and
outsourcing tends to “grow” the service sector on paper, even if the reality on the working floor doesn’t change much.When a firm employees its own cleaning staff, they get counted in the firm’s sector, outsourced they become services. Same goes for, say, engineering firms. Even part of the growth in finance falls in that category, IMO. A lot of it is “unbundled” corporate management ( often unbundling the most personally profitable parts)

Something similar happens with “information services”, where the detailed activities of the people often resemble manufacturing or construction work. It’s “computer working”, modifying generic computers to custom functions, much like “metal working” is modifying metal for custom functions. Even many oeople at Google see themselves as ‘building products’. And a lot of IT (by manhour) is building custom websites or database systems for a fee – it’s fairly arbitrary why this work is counted different from installing an HVAC system, or building a van. If the van is leased, is VW now a transportation services provider?

A final point is literal accounting, which over the last decades is getting ever more optimized for tax minimisation. Presumably because better IT makes it possible for management and investors to deduce the true state of the company, without relying on the official accounts. My impression is that this leads to more “intangibles” in the books, because this gives more flexibility. It’s easier to shift intangible value to low-tax countries, or to tax-opportune moments in time.

Finance is an informational service. Finance as a share of GDP has been growing, starting around 1980 or thereabouts.
I’m not sure about your claim on info economy firms. It’s almost certainly true for those already in a monopoly position, but a lot is invested in monopolist wannabes, most of whom fail.
Traditional infrastructure investment, I believe, is still high in Asia. Certainly not USA.
Intangibles do equal market power. But there is a difference between the dynamic market power inherent in a brand name, and the much more unassailable market power in network effects.
But these are niggles.

R&R?

As regarding your number 1, I would have thought that it was true, but I went back 70 years at the BEA interactive data site…it doesn’t look all that clear….
(chained dollars for three different years…).
1950 1980 2019

gdp 2289.5 6759 19091

goods 504.8 1532 6319
percent 0.220484822 0.226660749 0.330993662
services 1393.8 4414 11379
percent 0.608779209 0.653055186 0.596040019
structures 456.1 1003 1437
percent 0.199213802 0.148394733 0.07527107


But I didn’t sleep at the holiday inn express last night, so…

nastywoman @ 1: “A totally radical change to a regional and local production and distribution of goods”

[Not pushing back, but rather, expressing doubts and unease about this ….]
I’ve read that until the Industrial Revolution and the era of plenty that came with it, the lives of women everywhere, including in the richest countries, were circumscribed by unending toil (tending crops, weaving, making babies) and death in childbed. I once read that part of the appeal of Christianity to upper-class Roman matrons, was that “not having sex” meant “less chance of dying in childbed”. And that was the upper-class — imagine how the poor had it.

I mention this because one of the causes of this era of plenty is industrialization of production of -everything-. Someone once described the depopulation of rural America, as the natural consequence of the industrialization of agriculture: you naturally need fewer people to do the work, just as in factories. That column described Kansas as one big factory for wheat and corn (probably soybeans too). There are enormous economies of scale in doing things this way [ok, and sure, it requires energy, but set that aside for now] and those economies ought to flow down to individual families, and to individual women who thus can make decisions about their bodies that, in a prior time, they were unable to make.

I hope I’m being clear: when I read about “local production” or “permaculture”, or read about how “the ancients knew how to farm without industrialization”, I think to myself: “this is a recipe for the return to subjugation of women”.

Also, I trust it’s clear that I’m not a fan of finance capital, and think massive confiscatory progressive taxation is necessary, including the confiscation of all assets in tax havens that cannot show legal and fully-taxed provenance.

Last: I’ve read that the energetic difference between a tomato grown in California, and one grown on a small farm in upstate New York, both of them shipped to a grocery in New York City, is small, and in fact because the CA tomato farm has greater economies of scale and greater market penetration, it might even favor the CA tomato. The energy consumed crossing the country (on rail) is minuscule (I have read) compared to that consumed in the local delivery van.

There’s some implicit definitions and scope to this that are confusing.

In the intended sense of “economic activity”, an untended robot factory producing a car a minute would not be counted: it’s about what people are doing for pay, not what goods are being produced.

The intended scope is first-world countries: those two billion subsistence farmers, or hundred million Chinese factory workers, are not engaged in human, information, or financial services.

But within the intended definitions and scope, the claims make sense to me. A common theme, across multiple internet and financial firms, is rent extraction: high profit from goods or services whose marginal cost of production verges on zero, based on effective monopolies due to network effects: google, facebook, microsoft are certainly of this nature; and financial markets and firms; and apple and amazon as well to a lesser extent (it’s hard to say that hardware, or warehousing and shipping goods, is extremely low cost, but the network effects are very strong).

There is obviously no such thing as “the” (21st-Century) economy. There are a multitude of local economies, many in vertical free-fall, some treading water, some based on churn. That much is not new, it has been the status quo for fifty years.

Rent-seeking is a problem, but it is not the biggest problem.

The biggest problem is the universal expectation, or moral mandate, that everyone must work. This may have been practical until the late 18th Century, but it was invalidated by the steam engine. There is no longer (and never again will be) anywhere near enough work to go round. The effort to pretend that there is, or that there should be, has completely destroyed politics on both the philosophical level and the practical level.

Our proposed solutions always try to make true facts of these two prior beliefs: 1. Everyone should be able to find a job. 2. The total amount of money in existence ought to be an accounting of the amount of value that there is.

I imagine that both of these are wrong.

I offer the following proof that the total amount of money in existence is an accounting of the amount of value that there is.

What is the total amount of money in existence?
Easy. The total amount of money in existence is forty-two.
What is the amount of value that there is?
Easy. Forty-two is the amount of value that there is.
Forty-two equals forty-two. QED.

Where I think you go wrong is in describing that statement as a prior belief. It’s not a prior belief. Nobody ever believed it before I proved it just now.

“I’ve read that the energetic difference between a tomato grown in California, and one grown on a small farm in upstate New York, both of them shipped to a grocery in New York City, is small, and in fact because the CA tomato farm has greater economies of scale and greater market penetration, it might even favor the CA tomato. The energy consumed crossing the country (on rail) is minuscule (I have read) compared to that consumed in the local delivery van.”

This is definitely true for some things. Here in Europe a tomato grown in Spain and shipped (usually by road as it happens, rail freight isn’t that much of a thing here) to the UK has lower resource use (embedded energy perhaps?) that one grown in a hot house in the UK and locally transported.

New Zeland lamb has fewer emissions eaten in England than Welsh lamb eaten in England. OK, that last was proved by the NZ lamb exporting board or some such but no one has seriously questioned their maths.

Exactly what this is true of and what it isn’t is complex. Requiring very large calculations. It’s almost as if to solve the equations for all products we need some giant calculating machine for the entire economy. One that incorporates those emissions costs – say, the market and price system with a carbon tax.

Rentiers can be very “creative” in finding ways of extracting rents. I am not educated in economics. But I do have a theory that all economic systems eventually evolve into some form of feudalism.
The “sharecropper” model does seem to fit much of our current situation.

Kevin Phillips was railing about the financialization of the U.S. economy decades ago. That’s certainly evident in the U.S. economy, in part due to intentional policy like free movement of capital and enhanced protection for intellectual property. That same pattern may or may not be replicated in developing economies. If not, then the move to non-production jobs in developed economies merely reflects the movement of capital to cheaper labor markets. That leaves some high-paid analytical jobs that can’t yet get dully moved and low-paid service jobs that require in-person work (say, fast food and child care). This dynamic says as much about economic policy choices as it does about “natural” economic evolution. I suspect Germany and perhaps Japan would provide counter-examples.

J-D 20: „Nobody ever believed it before I proved it just now.“

Your proof is clear and convincing. They should have given you that fake Nobel prize! 😉

JQ – I can remember Ross Gittins once writing a speculative post about jewish debt forgiveness (the original sebatical). And how we should have adopted it. I think economists are far too blasé about private debt. The explosion of private is the driver of lots of the trends of the last 40 years. I’m missing this in your facts. I haven’t really studied it, but I tend to the view that the bank business today is to pull rents from virtual part ownership of many assets based on money created by extending private loans. They don’t actually buy anything but they still pull rents from it.

The first two points seem to me to be probably true, but to mix 5 quite distinct phenomena. I’ve quoted, then commented, for clarity:

(1)Most economic activity in the 20th century, including services such as wholesale and retail trade, was fairly directly related to the production and distribution of goods

(2)This is no longer true: most economic activity is now related to human services, information services and finance, and these are at most indirectly related to goods production.

Phenomenon 1 is the shift from household service provision to purchased service provision: this moves economic activity, but not actual activity. (For an example, a mother watching her own children is not economic activity; a working mother hiring a babysitter is economic activity.) It seems that focusing on economic activity will overstate the shift in actual activity, given the dramatic growth in the proportion of women in the workforce; their mothers were not idle, even if they weren’t participating in economic activity.

Phenomenon 2 is the growth in specialization within firms: if GE hires janitors, those count as part of the manufacturing workforce. If it hires a janitorial firm, the janitors count as part of the service workforce. The last 50 years have seen a large shift toward outsourcing-based business models, and again, this tends to overstate the shift in what activities people actually engage in.

Phenomenon 3 is the actual growth of services consumed relative to goods. Within this category, it’s probably worth calling out medicine separately–the drivers seem quite different for medicine than for most other services. (Medical outcomes have improved dramatically–the same is not true for most other fields.)

Phenomenon 4 is the growth in “services” that are really in the category of “goons” (lawyers, finance) and “box-tickers” (HR, compliance) in Graeber’s sometimes-useful taxonomy of bullshit jobs.

Phenomenon 5 is the falling cost of many goods–especially food, clothing, and electronics. This price change means that cost-based consumption measures overstate the change in material consumption. (Let’s say that one buys food, clothing, and education, spending 1/3 of income on each initially. Then imagine that food and clothing fall in price by 50%, and education doubles in price, without the things provided changing at all. Now from a cost perspective, one’s spending on services has doubled; from a consumption perspective, nothing has changed.)

So about –
‘The Economic Consequences of the Pandemic” –
everybody can see and experience –
IS –
that about of ALL of our economical (Human Services) activity has been cut down by the Virus –
AND that people who know a little bit about it – think – that will not change very much in the coming year(s)

So can I finally get an answer if THE above is… true?
Or if it is just a… a… ”whatever” of my imagination?

Like… the following Economic Consequences of the Pandemic – and don’t say: Uhh NY again – but do you know a better… ”parable” for the Economic Consequences of the Pandemic?!

”One late-August morning, I met former New York governor Eliot Spitzer at Hudson Yards, the lavishly subsidized $25 billion real-estate development that will one day house Facebook offices, investment funds, and the pharmaceutical firm Pfizer. I found him at the base of an unfinished skyscraper, where a marketing banner draped across the scaffolding read RESET EXPECTATIONS.

Spitzer was wearing a mask, a green gingham shirt, and bookish horn-rimmed glasses. The former governor is now a builder, having returned to his family’s real-estate business after self-destructing in politics. He had been talking to me intermittently since the middle of the summer, analyzing the pandemic as someone with a deep personal investment in the health of the city. “I don’t know when people are coming back to these buildings,” Spitzer said as we strolled north toward the site of a mixed-use project he is constructing in partnership with the Related Companies, the main developer of Hudson Yards. “At first, the optimists were saying, ‘This will be a three-week shutdown, and by Labor Day it will be back to normal.’ ” Now the emergency evacuation had settled into a state of semi-permanent dispersal.

That day, the city would record just 281 cases of COVID-19, close to its low since the pandemic began, and life in the city’s residential neighborhoods had returned to a pleasant rhythm, with people dining on the sidewalks and Instagramming sunsets in the park. But the whirring core of Manhattan still felt weird and abandoned. It was a little before 11 a.m. on a weekday, and there was not a single office worker in sight. Chairs were stacked on tables inside the Maison Kayser sandwich shop at Hudson Yards, where a sign on the door read CLOSED UNTIL FURTHER NOTICE. The chain was bankrupt. So was Neiman Marcus, which had recently announced it was abandoning the 50-year lease on the department store it had just opened in the Hudson Yards mall. Only 8 percent of Manhattan’s 1 million office workers were now estimated to be back at their desks, compared with 20 or 25 percent in other U.S. metro areas. Around Times Square, where almost a quarter of the retail locations were available for lease this spring, disorder and vagrancy had crept into the negative space.

The present crisis encompasses aspects of every challenge New York has faced in recent memory. Like Sandy, it is a natural disaster. Like the 2008 financial crisis, it has caused a surge in unemployment and poverty. Like 9/11, it is a mass-casualty event and a psychological trauma. As in the 1970s, the city government faces a fiscal crisis with tax revenue projected to plummet. And it is all wrapped around an unprecedented crisis of authority, which confounds any attempt to organize a response.

“We presume that since New York has been the epicenter for as long as we can recall, that there is an inevitability to that fact,” Spitzer told me. “And yet there isn’t. This is the first moment when I seriously worry about the city’s place — economically, culturally, socially — because the social fabric of the city is being torn apart.”

I think nobody’s point above about non-corporations not being able to own things is historically wrong and is a good example of how people misunderstand the extent of change in the modern economy. There are no metrics, obviously, but I think there are many ways we “own” no less than we ever did. To take his example of music:

in the 1970s it was physically very difficult for people to own much music (because records) and few people could afford the equipment required to play that music well. This was less true in the 1980s (CDs) but still true. If my current music collection were converted to physical storage I would never be able to keep it, even if that storage were CDs.
most of the music most people listened to in the 1970s and 80s was on radio, and we didn’t own it at all, we had to endure advertising in order to listen to music that was chosen for us by people who were paid by corporations (payola) to choose who we listened to. We could not avoid this! There was no amount of money you could pay to get control of this music, except if you could afford a record player and had space for extremely cumbersome and fragile music devices

Now, you can pay a small amount of money a month to have huge control over what you hear and when and how, without advertising, and with search algorithms to find things similar to what you want. Sure, you don’t own it, but you never did! Only now you have a huge amount more control over what you listen to. Also you can purchase only the parts of an album you want – so you can have much more control over which music you get and how you play it. It was common in the 1980s to buy music that was 70% shit so you could enjoy a few songs. Now you can dump the crap and spend your money wisely. It’s also worth noting that the price of albums is approximately the same as it was then (see my point below about infinite production).

the music companies were vicious about controlling radio broadcast, so e.g. every cafe had to pay a small annual fee to a rights organization if they wanted music on in the workspace

The same applies to movies. In particular:
– almost all movies were rented at exorbitant fees and returned within a few days to the video store, which usually had a limited selection and didn’t do interlibrary loans. Also in the 1980s and 1990s it was years before movies came to video, not months as it is now, and so you basically “rented” the viewing of a thing at a high price and couldn’t “own” it for years (star wars in particular – you simply could not rewatch it!)
– videos were large and cumbersome things, which were difficult to store. DVDs improved this but for example just in this pandemic I have watched probably 10 seasons of stuff, which in the 1980s would have been incredibly expensive to buy and would not have fitted in my house.

All of this is even more true of porn, which is the ultimate product no one wants to be caught in ownership of!

I don’t think there is any sense in which I “own” less movies now than I did 30 years ago, but I have seen an enormous amount more material at a far lower cost.

This is part of the pernicious idea that there is something new about the internet economy that has never come up before. You see it all the time in discussion of Facebook. But there isn’t. The advertising-pays model of bullshit content creation and management is as old as radio; the rental model of consumption of books, movies and music is as old as libraries; and corporations rather than individuals controlling when, how and what we could watch and listen to is as old as TV and radio and is something that we are only now able to break free from with the help of the internet. The idea of targeted advertising is also as old as print media, it’s not some weird innovation that Zuckerberg came up with.

Finally the internet enables infinite production of cultural goods, there is no limit to how much can be disseminated and used. This aspect of the internet is genuinely new but everyone seems to ignore it in favour of problems like payola that are way, way older than any zoomer.

If we are lucky the internet will shift from the old radio-style advertising-pays model to a subscription model and we will all be better off. Netflix has certainly done that for tv, and every problem people identify associated with it is as old as content creation. Don’t be fooled into thinking what’s old is new again just because it’s on a flat screen!

nastywoman @ 34, etc.

If I understand you correctly (and I may not, as I´m afraid I find it very difficult to follow your prose at times – a personal failing on my part) your question, broadly speaking, could be considered to be:

(1) In many countries, and the US in particular, human services is the largest sector of employment
(2) The human services sector will be dramatically impacted by COVID-19
(3) If (1) and (2) are correct, what may be done to counteract the harm?

I hope this is a fair interpretation – if not, please feel free to correct me.

Proceeding on the assumption that I have understood you, I suppose my response would be as follows. I am not an expert on economics or the US by any means – however, I think probably a good place to start would be:

to form a strong, left-wing coalition which recognises the importance of intersectionality, and uses its soft power to push for social, economic, and political changes which favour the proletariat and the disempowered in order to redress the current imbalances in societies;

to elect those who recognise the importance of an equitable society to positions of power, and to ensure this happens at every level in society (from President to local dog-catcher), while also recognising that the lesser evil – while still an evil – is actually preferable to a greater evil (for example, that if the choice is between a boring, neoliberal centrist and someone who is happy to enact almost cartoonishly terrible and harmful policies, voting for the former – while still pushing for better candidates next time – is preferable to letting the latter seize the rains of power and destroying millions of lives through incompetence, greed, and a complete lack of concern for the working class);

to push through major reformations to redress the imbalance between employers and employees (for example, making provisions for labour unions/worker´s councils, facilitating collective bargaining, putting a stop to special clauses freeing employers from responsibility for the safety of their workforce, etc.);

to develop a society where seeking an education or falling ill need not land you in a lifetime of debt;

to ensure there is accountability, and to actually hold those in positions of power and privilege responsible for their actions to a degree which is actually proportionate to their harm, power, and impact (as Sir Terry Pratchett once put it: if a poor man will spend a year in prison for stealing out of hunger, how high would the gallows need to be to hang the rich man who breaks the law out of greed?);

to acknowledge that people with expertise (while, of course, still fallible) who have come to a consensus through vigorous peer review backed by data do in fact, generally speaking, have a better foundation for opining on a topic than someone with no experience, data, and nothing but assertions and accusations;

to recognise that human civilisation may well end soon, and that significant social and technological changes will be necessary to mitigate this – and to actually ensure that these changes are carried through (and to plan these, so that we are not just handing the keys to our future over to a technocratic oligarchy who´s perception of their own competence is vastly out of proportion to any demonstration of same);

to plan and enact radical changes to society with a view to ensuring that it is fairer and more just (and that the fruits are proportional, as much as possible, to the labours, rather than exceptional rewards for some which are vastly out of proportion), and to recognise that this is because a fair society which is more equitable actually benefits everyone;

I would also posit the following may be useful as well:

to improve education, particularly with respect to the importance of developing a sound epistemology;

to recognise that forcing sick people to work is probably a bad idea, and that viruses don´t generally care about one´s bank balance (seriously, has no-one read Mask of The Red Death?);

to recognise that rich people rarely have achieved that status solely by merit (and to stop giving their opinions undue weight purely because they are wealthy), and that poor people have rarely achieved that status solely through personal faults (and to reorganise society so that the person working 3 jobs faces punitive and unjust treatment purely because they lacked the foresight to be born the child of a billionaire);

to remind the wealthy and powerful that workers banding together to present formal address of grievances is the alternative we worked out a long time ago to violence and revolutions;

to remind certain sectors of the left that actually effecting positive change in society is slightly more useful than forming circular firing squad devoted to alienating as many people as possible, and that actually achieving anything requires actually forming a coalition (and that that may mean gasp actually compromising with people who agree with you 99.999% of the time rather than denouncing them as heretics – as unsatisfying as that may be);

to demonstrate the success of a fair system (based along the societal reforms and redevelopment previously mentioned), and to form strong international ties in order to effect significant global and local changes with respect to the broad range of issues facing us (social, economic, climate, etc.).

Personally, I put the likelihood of any of this happening only marginally ahead that of Zuckerberg offering a formal apology for all the harm he´s caused, before donating his entire fortune to charity and spending the rest of his life doing volunteer work as recompense (i.e. not significantly high). Of course, I generally put the odds of human civilisation continuing as it is into the latter half of this century pretty low anyway, so I suppose “plus ça change, plus c’est la même chose”.

To offer some of my own ramblings (very briefly, as I sadly have little time to devote to this topic right now – and certainly not to the extent it warrants):

1) I think the ongoing, increasing shift towards a rent-based approach is indeed an important point. This rent-extraction, often taking the form of offering “licenses to use products” (particularly in the digital world), would seem to represent a continuous transfer of wealth upwards (I can’t help but feel Noonan’s bread analogy is ever more apposite). Or, to put it another way, “sell a person a fishing rod and you can charge but a fixed amount, but rent a person a fishing rod and you can charge continuously for the remainder of their life” (or something to that effect).

1, a) Perhaps off topic, but I sometimes wonder about the social ramifications and potential impact of microgrid energy production and distribution (rather than from a purely technological perspective). It would be, perhaps, interesting to consider what happens if everyone has shares in their own communities energy production – particularly if we actually consider designing more sustainable and environmentally sound areas of living.

2) It would be interesting to consider the potential impact a heavy and sustained investment in renewable energy infrastructure (+ whatever else may be necessary, e.g. some nuclear, etc.) will have on the ratio of industry to human services in the future (supposing that, you know, societies actually decide the threat of our own extinction is actually something worth addressing at any point).

3) I think I would like to see an expansion on JQ´s claim “Incentives don’t work in in this kind of economy (if they ever did)”. While I think this feels plausible to me, a bit of clarification here would be quite useful – unless that is seeking spoilers to the ending of the forthcoming book :-).

= = = Spitzer was wearing a mask, a green gingham shirt, and bookish horn-rimmed glasses. The former governor is now a builder, having returned to his family’s real-estate business after self-destructing in politics. = = =

I can’t comment on the ups and downs of New York politics; it seems clear to an outlander that Spitzer made many mistakes. But in terms of this discussion I think it is important to note that at the end Spitzer did not “self-destruct”: he had his financial transactions carefully tracked by private parties and the results of that tracking turned over to Treasury and Justice. Who exactly ordered that tracking be done at transaction levels well below what would typically be flagged, how it was carried out, and who decided relatively low-level technical violations of reporting rules should be bundled up and handed to DOJ with a bow on them has never been revealed. Presumably someone in the NYC financial industry who had a beef with Spitzer, but the voting citizens of New York were never told.

Some of this talk about monopolies, outsourcing, financialization, and the growth of the “service” sector has me asking a weird question. What if the economy and the nature of work hasn’t changed at all, just the way we talk about it? Maybe I just read too much Foulcault-style “discursive” literature in undergrad, but bear with me here. Some of the biggest changes we can actually observe are the colossal growth of marketing and finance coupled with mounting “professionalization” of formerly autonomous or fraternal trades (not just teachers and nurses going to grad school to get ahead of their peers, but even people in solidly “blue collar” ones like farmers, cooks, and carpenters) and the increasing fetishization of advanced degrees in general. What all these trends have in common is a propagandistic embrace of hyper-competition as a product in itself. Making companies/individuals more “competitive” in the global marketplace is basically the only service huge chunks of the corporate world actually provide and increasingly is the only goal of the neo-liberal university. The ethos of meritocracy and competition is so omnipresent in the current iteration of corporate capitalism that we can be excused for not noticing that it rests on unproven assumptions. What if competition isn’t breeding efficiency (not just because it’s stymied by monopolies, but because it’s inherently destructive)? What if time invested in higher education doesn’t enhance human capital, all else equal, but only seems that way because it’s the preferred path of a privileged class that has never had all else be equal? What if all the changes from “industrial” to “post-industrial” are just artifacts of deliberately sloppy accounting when goods cross national boundaries, and a way of explaining away wage theft, money laundering, and tax evasion? What if the “nature of work” hasn’t changed at all, just employee power and job security? What if it’s all bullshit?

Faustus 38: you are making some good points but I want to push back against this weird idea that streaming is somehow such a big part of the economy. Even if it is true that people now own fewer music records than they used to, so what? That’s a tiny sector of the economy. When nobody @3 postulates a “shift from ownership of products to rental of products”, I wonder, do people in your part of the world own fewer cars, bicycles, furniture, electronic devices, household appliances, clothes, etc. than they did 50 years ago? I am aware of no data that support such a claim.

I often see advertisements asking consumers to “let go” and join a car sharing instead of owning their own car. It would be a good development but it still doesn’t happen at scale. Car ownership is in decline in large cities but not overall, and e-bike ownership is surging. I’m not saying that this predicted shift to co-ownership won’t happen. It might very well happen in the medium term (in certain areas) and it would make a lot of sense (in certain areas). But the hype seems overblown.

An anecdote. My parents were small scale farmers. At the time coownership of agricultural machines was the rule. In the 1970s, even freezers (an important device if you slaughter you own pigs and need to conserve the meat) were cooperatively owned. Later, everybody had their own freezer in their cellars and the old coop freezers were thrown out.

It used to be common in rental houses that the renters shared the washing machines, and it still is where I live but the trend goes to each apartment its own washer (it’s not owned by the renter of course, but for practical purposes there is no difference). If there is in fact a trend in the other direction, back towards increased co-ownership, that would be less novel a development than some people seem to think.

Just to add a point to my comment about not liking the word proletariat, it also can be related to my view that there is no such thing as unskilled job, although in current circumstances it looks like “president of the United States” might come close.

Sorry John, I was not thinking about the aspect of information use that you identify in that post, but about the transformation of the physical economy of cultural products like books, movies and music. Basically these industries are no longer constrained by supply – there is no physical limit to the distribution of products and almost no physical limit to their storage – and this should have huge implications for how we consume them, what proportion of our income is spent on them, and how much control we have over them. But most people who comment on this issue still seem to think in terms of physical laws of supply and demand. Even the concept of “owning” music, books and movies doesn’t make much sense anymore. Why would I want to e.g. own a copy of Aliens for $20 when I am gonna watch it a few times in my whole life and I can do that on demand for a small fee? And when the most iconic scenes are free for me to relive on YouTube? It’s a different economy, and I was responding to nobody’s complaints about renting things in light of that.

Your point about the value of information and corporations’ ability to take value from it is interesting but is it a threadjack? In any case if it’s not, I’d like to point out that a single huge source of information – wikipedia – is free, and I’m guessing a large chunk of google’s ad revenue comes from people searching for a thing and going straight to the wiki page, when they could search within the wiki page without advertising. How much of google’s money comes not from capturing information but from capturing people’s laziness or unwillingness to use the internet more carefully?

Fake 46, JQ 53:
I don’t about cooks and carpenters but modern farming definitely is a high-skilled, science heavy profession. It makes a lot of sense for farmers to get a solid higher education (without wanting to disrespect the experience that farming families have traditionally developed with their land over generations). A higher degree in farming makes a lot more sense than in marketing or some such.

And as JQ points out, professionalization was well under way in the 19th century. In the US, most state universities are land grant universities established under the Morrill Act:
„The mission of these institutions as set forth in the 1862 Act is to focus on the teaching of practical agriculture, science, military science, and engineering… This mission was in contrast to the historic practice of higher education to focus on a liberal arts curriculum“ Wikipedia

I find the view of education as a driver of competition unconvincing. When jobs are scarce, there is competition. Whether employers use credentials or some other criteria for selection is beside the point. I would agree however that the meritocratic discourse around education, respectively credentialing, is ideological. The idea that if everybody had college degrees, everybody would get good, high paying jobs, is ridiculous.

TM at 48:
I often see advertisements asking consumers to “let go” and join a car sharing instead of owning their own car. It would be a good development but it still doesn’t happen at scale.

Two times in my life I have been members of care share programs – when I moved (back) to Philadelphia from NY City, around 2009, and when I moved from Philadelphia to Melbourne in 2017. In both cases, the car share program was useful for me, but so much less useful, in both of these cities, than having a car, that I soon just bought a car. (In the first case, I hadn’t had a car for more than 10 years before that, but some of that was due to not having any money for a long time – when I was a grad student.) The car share plans were… okay. But, in both cases, it was necessary to walk at least a kilometer or two to get to a car, book in advance, know about how long I’d need it, etc. That was just way too much work for me in most cases. Maybe it would have been okay in NY City, where I almost never needed a car, but in places like Philadelphia or Melbourne, where transit is vastly less useful than in Manhattan, it wasn’t a substitute. And, this is even before you figure in that my favorite pass-time is white water kayaking, which isn’t really something you can do with car sharing.

In any case, maybe if self-driving cars even really become a reality this will change for more people, but until then, car sharing will be a good thing to have, but mostly a niche thing, in most places.

reason @ 49 and 50

Thank you for offering your perspective – I appreciate that people can infer different connotations, and good communication is important to me (even if I am generally bad at it!). I will take this as a learning opportunity, and try to be more careful in future.

My use of proletariat was not intended to be dismissive or snarky (perhaps it was a poor choice of wording on my part). And (not to derail too much) I would agree that I can’t think of anything I would class as unskilled jobs (and certainly not unskilled people!). I vaguely remember there recently being a previous thread on people being able to fill positions when required to do so! Regardless, I certainly did not intend for my use of the word to imply that sort of thing, or to be offensive.

To again simplify horribly (well, class and social structures are pretty complex topics, so I don’t want to go too deep into the weeds!), by proletariat I meant people whose main possession of economic value is their labour (and not necessarily purely manual labour, but any kind of labour). I think, as someone coming from a family background of (what may be simplistically considered as) Anglo-Irish Socialism, the word doesn’t have quite the same implications (or negative undertones) as it might for you – which is a good thing for me to know in the future.

Thanks again for your patient and reasonable discussion – it is much appreciated!

Another thought I had is that the whole “gig economy” and the “disrupter” ethos has positioned itself as as the solution to overregulation, creeping professionalism (especially over-education/accreditation) and the iron cage, but that’s only possible because of the benign neglect of the neo-liberal state. Industries have been very willing to regulate themselves and accept
limits to their profit motive when the alternatives (state regulation, public ownership, legal scrutiny, worker revolt, etc.) were intolerable.

With a corporate controlled government, complacent consumers and investors fed on industry propaganda, and a cowed and/or corrupted labor movement, those pressures seem to vanish and companies dream of running “lean” (no unions, no professional associations, and no internal oversight to speak of) and the forces of professionalization seem to dissipate, but I think its a blip. Most of those “disruptors” are just criminals who haven’t been punished (yet) and industries will rediscover the importance of professional standards and start holding themselves accountable again almost the instant there is a threat of someone else doing it. Even the current toothless regulators (plus social media shaming campaigns) have pushed tech to self-regulate. Imagine what actual governance would do.