Fable: THE TOWN MOUSE AND THE COUNTRY MOUSE

A Town Mouse once visited a relative who lived in the country. For lunch the Country Mouse served wheat stalks, roots, and acorns, with a dash of cold water for drink. The Town Mouse ate very sparingly, nibbling a little of this and a little of that, and by her manner making it very plain that she ate the simple food only to be polite.

After the meal the friends had a long talk, or rather the Town Mouse talked about her life in the city while the Country Mouse listened. They then went to bed in a cozy nest in the hedgerow and slept in quiet and comfort until morning. In her sleep the Country Mouse dreamed she was a Town Mouse with all the luxuries and delights of city life that her friend had described for her. So the next day when the Town Mouse asked the Country Mouse to go home with her to the city, she gladly said yes.
When they reached the mansion in which the Town Mouse lived, they found on the table in the dining room the leavings of a very fine banquet. There were sweetmeats and jellies, pastries, delicious cheeses, indeed, the most tempting foods that a Mouse can imagine. But just as the Country Mouse was about to nibble a dainty bit of pastry, she heard a Cat mew loudly and scratch at the door. In great fear the Mice scurried to a hiding place, where they lay quite still for a long time, hardly daring to breathe. When at last they ventured back to the feast, the door opened suddenly and in came the servants to clear the table, followed by the House Dog.

THE TOWN MOUSE AND THE COUNTRY MOUSE

The Country Mouse stopped in the Town Mouse's den only long enough to pick up her carpet bag and umbrella.
"You may have luxuries and dainties that I have not," she said as she hurried away, "but I prefer my plain food and simple life in the country with the peace and security that go with it."

Better a little in safety, than an abundance surrounded by danger.

Where You Should Move to Make the Most Money:

Where You Should Move to Make the Most Money: America’s Superstar Cities

A tech-driven concentration of talent since the 1980s has helped the rich get richer. But it has also sharpened an urban-rural divide that, some say, threatens growth.



By
Christopher MimsDec. 15, 2018 12:00 am ET





Technology is creating an economy in which superstar employees work for superstar firms that gather them into superstar cities, leading to a stark geographic concentration of wealth unlike any seen in the past century.

The latest example of this is Apple announcing this past week a billion-dollar investment in a new campus that could ultimately accommodate up to 15,000 employees in a city already red hot with talent (Austin, Texas). That follows Amazon’s recent choice to put its two new headquarters in existing superstar cities (New York and Washington, D.C.).


When economists talk about “superstar” anything, they’re referencing a phenomenon first described in the early 1980s. It began as the product of mass media and was put into overdrive by the internet. In an age when the reach of everything we make is greater than ever, members of an elite class of bankers, chief executives, programmers, Instagram influencers and just about anyone with in-demand technical skills have seen their incomes grow far faster than those of the middle class.
In this winner-take-all economy, the superstar firms—think Apple, Google and Amazon, but also their increasingly high-tech equivalents in finance, health care and every other industry—appear to account for most of the divergence in productivity and profits between companies in the U.S.

As firms cluster around talent, and talent is in turn drawn to those firms, the result is a self-reinforcing trend toward ever-richer, ever-costlier metro areas that are economically dominant over the rest of the country. Ironically, the internet that many of the firms power isn’t helping. While it was supposed to erase distance, it can’t yet replace high-quality face-to-face communication required for rapid-fire innovation.

Members of the Federal Reserve, among others, have warned that the rise of geographic inequality and a deepening urban-rural divide threaten growth in the U.S. This has led some to declare that rural America is the “new inner city,” plagued by poverty, drugs and “deaths of despair.” Similar patterns of migration of wealth to cities appear to be playing out all over the world.
Rising FortunesThe best-earning metro areas have seengrowth in average annual wages acceleratemore quickly than cities in the rest of America.Index of average annual wagesSource: Brookings Institute analysis of BEA dataNote: Index with 0 level set to 1969. Metro rankingsare determined each year of the data.
Top 2% of metrosMedian metroBottom third of metros1980’95’10100120140160180

For most of the 20th century, this divide did not exist.

“Something changed in 1980,” says Mark Muro, a senior fellow and director of the metropolitan policy program at the Metropolitan Policy Program at the Brookings Institution. “What happened was the introduction of the PC.” He adds, “Until about then, metros were becoming more like each other. Incomes were converging, and industries were becoming more distributed across place.”

From the early 1970s through the 1980s, companies like IBM , Digital Equipment Corp. and Apple used mainframes, minicomputers and eventually PCs to make companies—and the first technologically adept superstar workers—more productive. Mr. Muro calls it the first wave of the “digitalization” of work.

The internet was supposed to lead to a golden age of distributed workforces. In some ways it did: The proportion of workers who do their jobs remotely is now at least 20% and growing.


But superstar firms continue to insist that their top-performing employees cluster in global headquarters or at least regional offices, costs and congestion be damned.

Facebook ’s new office is literally the world’s largest open-plan workspace, even though workers generally hate them. Apple’s new HQ in California was designed from the ground up to force people to bump into each other and collaborate. Amazon could have saved a bundle by creating an entirely virtual “HQ2.” After all, the—mostly online—tools for identifying tech talent work anywhere, and can spot a great coder in Arkansas or India.

But even the most modern communication technologies are limited: They can’t carry as much information as a real-life, face-to-face collaboration. Slack, email and instant messaging are famous for their inability to convey tone, and the resulting crossed wires.


The internet can’t yet replace the face-to-face communication required for rapid-fire innovation.

The more a firm is dependent on innovation—that is, leveraging technology to be the absolute best at what it does—the more intense the collaboration of its superstar employees. Famously, Google’s only two “Level 11” engineers (on a scale of 1 to 10) code by sitting next to one another, staring at the same screen and working on a single keyboard.

Technologists who employ both remote workers and people collected into an office have debated and analyzed the phenomenon at great length. Their own experience boils down to this bon mot from venture capitalist Marc Andreessen : There’s a “huge premium to being 10% better at executing,” meaning that while it can be a pain to bring workers to a central office, it’s worth it even if it leads to an incremental gain in productivity.

Johnathan Nightingale, former vice president of Firefox at Mozilla, has pointed out that while remote work can be sustainable, anything that slows down a startup in the critical first few years can mean losing to a faster competitor. Whether or not this is the case, it’s become such an accepted way of thinking in tech that companies—even big ones that only “think like a startup”—obey it as if it were a law.

Attempts to turn cities outside of Silicon Valley into superstar cities by making them tech hubs have met with mixed success. Metro areas succeed when they capitalize on their existing talents. One reason Amazon chose Nashville, Tenn., for a big regional office, says Mr. Muro, could be that it’s already a hub for medical IT and digital patient records.

Using data from time-use surveys conducted by the federal government, Mr. Muro and his colleagues created an index of every metro area in the U.S., ranking them by how much workers in each use computers to accomplish their jobs. This yields a measure of the digitalization of every job, industry and city surveyed.

The results include both exactly what you would expect—Silicon Valley is No. 1—and some illustrative surprises. Salt Lake City, home to the “Silicon Slopes,” is No. 12 on the list, right behind the tech hub of San Francisco and ahead of tech-happy Seattle. Austin, where Apple is expanding, is No. 9 on the list.

Unlike other rankings, from real-estate prices to venture-capital investment, the Brookings index shows us not only which cities have done well and become unaffordable. It also shows which still-affordable ones should, by the superstar logic, do well in the future.

Not everyone agrees that technology is a primary driver of geographic inequality. Stacy Mitchell, co-director of the nonprofit Institute for Local Self-Reliance, argues that many of these trends are better explained by changes in policy, which since the early 1980s have in many distinct ways given large companies free rein to merge, dominate markets, pursue government subsidies and tax breaks, and in general grow larger at the expense of small, medium and local businesses.

“In particular, the 1982 merger guidelines are very specific in that the only thing that matters [when considering antitrust] is economic efficiency, which is translated into consumer welfare and low prices,” she adds.


The cities with the most startups and investment tend to see more business formation, but a long-term challenge lurks: If a superstar city becomes too large, the service workers who aren’t benefiting from the boom will be priced out. In the end, this might limit the size of these cities—at least until many of those workers are replaced by robots.

Top 12 U.S. metropolitan areas in 2016 by mean digital score, according to Brookings Institution analysis of federal data

1. San Jose-Sunnyvale-Santa Clara, Calif.
2. California-Lexington Park, Md.
3. Huntsville, Ala.
4. Boulder, Colo.
5. Durham-Chapel Hill, N.C.
6. Trenton, N.J.
7. Washington D.C.-Arlington-Alexandria, Va.-Md.-W.Va.
8. Boston-Cambridge-Newton, Mass.-N.H.
9. Austin-Round Rock, Texas
10. San Francisco-Oakland-Hayward, Calif.
11. Ann Arbor, Mich.
12. Salt Lake City

The Return to Serfdom

The Return to Serfdom

By JOEL KOTKIN


July 25, 2019 12:29 PM


A steel worker returns to work at U.S. Steel Granite City Works in Granite City, Ill. (Lawrence Bryant/Reuters)

I’m not a free-market fundamentalist. To me, the beauty of liberal capitalism lies in its performance: More people live well, and live longer, than ever before. Millions of working-class people have moved from poverty to become homeowners and have seen their offspring rise into the middle class or higher.

Today this egalitarian capitalist progress is showing signs of fading, not only in the United States but also in Europe, Australia, and increasingly East Asia. This marks a drastic reversal from the conditions that prevailed after World War II, when the incomes of those in the lower quintile surged by roughly 40 percent, while the gains in those in the top quintile grew a modest 8 percent, and the top 5 percent saw their incomes drop slightly. Social mobility since the 1990s has declined dramatically, not only in the United States but also throughout Europe, including Sweden. Despite the European Union’s vaunted welfare state, the middle class has shrunk in more than two-thirds of the countries there.

Less recognized in the media have been the fortunes of China’s working class. Overall, 500 million Chinese, close to 40 percent of the population, remain poor, living on less than $5.50 a day; in 2010 the Organisation for Economic Co-operation and Development reported that the Chinese middle class constituted only 12 percent of the population. Rather than replicating the middle-class growth of post–World War II America and Europe, notes researcher Nan Chen, “China appears to have skipped that stage altogether and headed straight for a model of extraordinary productivity but disproportionately distributed wealth like the contemporary United States.”

The working-class future may be further clouded by the loss of what were once respectable, upwardly mobile jobs — postal workers, switchboard operators, manufacturing laborers, computer operators, bank tellers, and travel agents. For the 90 million Americans who work in these kinds of jobs, and their equivalents elsewhere, the future could be bleak.

Even if they find jobs, the decline of private trade unions has weakened the political clout that workers once enjoyed. In virtually all advanced countries, rates of unionization have dropped; since 1985, the portion of unionized workers among all the higher-income countries dropped from 30 to below 20 percent. There are unions in China, but membership is essentially worthless, because they have little power and must conform to the party’s priorities.

Many working-class people have descended into what has been described as the “precariat,” a group of workers who have limited control over the length of their workday and often live on barely subsistence wages. Research reveals that 20 to 30 percent of the working-age population in the United States and the EU-15 (the 15 member states of the EU as of April 2004), or up to 162 million individuals, does such work.

Conditions for these workers represent a throwback to earlier times. In ultra-expensive places such as Silicon Valley, many conditional workers live in their cars. The typical Uber driver is not the one seen in ads, the middle-class driver picking up extra cash for a family vacation or to pay for a fancy date; most depend on their “gigs” for their livelihood. Nearly half of gig workers in California live under the poverty line. These workers often face a dismal future as they age; only one-third of independent contractors in the U.K., for example, have any sort of pension savings for their retirement.

Critically, the traditional bulwarks of working-class community — religious institutions, neighborhood and social groups, unions, and extended family — are all weakening. Marriages among the upper classes may be getting more stable and less likely to dissolve but take place later, as sociologist Stephanie Coontz has noted. But the situation is different among the middle and working classes; overall, as many as one-third of the births in the U.S. take place outside matrimony.

In some heavily minority urban areas, the rate of children born to unmarried mothers reaches an astronomical 80 percent, but this is becoming commonplace in once-traditional working-class-white areas as well. The rate of single parenting is the most significant predictor of social immobility, according to a study led by the Stanford economist Raj Chetty. Princeton sociologist Sara McLanahan has found a similar pattern in Europe.

Economic collapse is a clear contributor to this phenomenon. A detailed 2017 study by economists David Autor, David Dorn, and Gordon Hanson shows that towns and counties that lose manufacturing jobs also see marriage rates decline, while the share of children living in single-parent homes and the rate of births to unmarried parents rise. As in the 19th century, working-class people face mounting health problems and issues of substance abuse, particularly in old industrial areas such as Scotland. In the United States among low-educated, middle-aged whites, mortality rates are increasing, mostly as a result of what the Princeton economists Anne Case and Angus Deaton call “deaths of despair.”

Even in Asia, there are signs of social collapse. According to a recent survey by the Korea Institute for Health and Social Affairs, half of all Korean households have experienced some form of family crisis, many involving debt, job loss, or issues relating to child or elder care. Similar strains can be seen in Japan, with a rising “misery index” of divorces, single mothers, and spousal and child abuse — all of which exacerbate the country’s disastrous demographic decline and growing class division.

In “classless” China, a massive class of migrant workers — over 280 million — inhabit a netherworld of substandard housing, unsteady work, and miserable environmental conditions, all after leaving their offspring behind in villages. These new serfs vastly outnumber the Westernized, highly educated Chinese whom most Westerners encounter.

Researcher Li Sun at the University of Leeds estimates that there are 60 million “left-behind children” and another 58 million “left-behind elderly” in China. Cut off from their families and the company of women, migrant workers suffer rates of venereal disease far higher than the national norms. Scott Rozelle, a professor at Stanford, found that most kids left behind in the rural villages are sick or malnourished and that up to two-thirds struggle with combinations of anemia, worms, and uncorrected myopia, which set them back at school. More than half the toddlers, he predicts, are so cognitively delayed that their IQs will never exceed 90 — portending a future akin to that of gammas and epsilons in Aldous Huxley’s Brave New World.

In the West, the deterioration of working-class conditions has already sparked what could be described as “peasant rebellions.” Reacting to the arrogance and disdain of the globalized urban upper crust, these voters drove the election of Donald Trump, the support for Brexit, and the rise of populist parties across Europe.

In France, a clear majority regards globalization as a threat, but most executives, many trained at elite schools, see it as an “opportunity.” Protests of the so-called gilets jaunes (yellow vests) against higher gas taxes in the winter of 2018–19 demonstrated the depth of this anger; the movement may have started in small towns and industrial cities, but it also won over the Paris suburbs, home to roughly 80 percent of the capital region’s population.

Like the revolutionaries of 1789, those in the contemporary French third estate (the commoners) have been stirred by the hypocrisy of their betters. In pre-revolutionary times, French aristocrats and top clerics preached Christian modesty while indulging in gluttony, sexual adventurism, and lavish spending. Today they call for working- and middle-class abstemiousness while they live large and exempt themselves by paying their modern version of “green” indulgences through carbon credits and other virtue-signaling devices.

We may be, as Tocqueville wrote in the 1840s, “sleeping on a volcano” destined to explode. The imposition of the Green New Deal proposed by Representative Alexandria Ocasio-Cortez — which would effectively mandate the end of many industries, from fossil fuels to aerospace to cattle ranching — would likely spark a mass rebellion in middle America. The “green” policies so appealing to a Silicon Valley billionaire, an investment banker, or a grant-seeking scientific researcher seem more like class warfare to residents of Youngstown, Ohio, the Ruhr in Germany, or, increasingly, China’s blue-collar cities.

China, with a history replete with violent peasant rebellions, could be the most important flash point. Workers increasingly stage strikes and protests. Communist officials have been put in the awkward position of cracking down at universities on Marxist study groups whose working-class advocacy conflicts with the policies imposed by the nominally socialist government.

In China, a rebellion would probably replace one form of authoritarian rule for another. In the West, it could undermine stable democracies. We may be seeing a reprise of what historian Eric Weitz describes as the “proletarianization” of the German middle class, which set the stage for the rise of National Socialism.

The rise of right-wing, even neo-fascist movements in Europe parallels the historic tragedies of the Fascist era, but, equally important, the liberal order is also threatened by an increasingly militant, radical leftist upsurge. In France the former Trotskyite Jean-Luc Mélenchon won the under-24 vote, beating the “youthful” Emmanuel Macron by almost two to one among this age group. Similarly, in the United Kingdom, the birthplace of modern capitalism, Labour, under the neo-Marxist Jeremy Corbyn, won more than 60 percent of voters under 40, compared with just 23 percent for the Conservatives. Similar trends are evident in Germany and the rest of Western Europe, where the Green parties, with a program of draconian social engineering, enjoy wide youth support.

Socialism is on the rise even in the United States. A 2016 poll by the Victims of Communism Memorial Foundation found that 44 percent of American Millennials favored socialism, while another 14 percent chose fascism or Communism. By 2024, these Millennials will be by far the biggest voting bloc.

Ultimately societies, notably democratic ones, need to instill hope among the majority for a brighter future. But our dominant classes increasingly see little need for the masses. As one Silicon Valley venture capitalist told me at a California environmental conference, the future won’t have much need for people; we’ll have robots and an elite class, which naturally will include his children.


Yet people are not fungible or easily replaced. The “great question” that “hovers” over society, suggests Kentucky-based poet and novelist Wendell Berry, lies fundamentally in “the question of what are people for.” In embracing the “absolute premium of labor-saving measures” and loyally serving the needs of the least needful, we are undermining the social basis of both democracy and capitalism, creating an expanding market for ever more dependence on the state while undermining the dignity of large parts of our populations.

JOEL KOTKIN teaches as a presidential fellow in urban futures at Chapman University (Orange, CA) and is the executive editor of the widely-read website NewGeography.com. He is the author of seven previous books, and a regular contributor to The Daily Beast and Forbes.com.
IN THIS ISSUE

Occupational Licensing Parody

Here’s how much Silicon Valley tech workers actually make

Here’s how much Silicon Valley tech workers actually make

By Madeline Wells, SFGATE Updated 1:12 pm PDT, Thursday, June 27, 2019




Photo: Jens Meyer, Associated Press
According to SEC filings, the median pay for Google employees last year was $246,804.



Surprise, surprise: people who work in tech are rich. But ever since a new law came into effect last year that requires publicly traded companies to report the median pay of their employees, we know exactly how rich.

Silicon Valley led the pack. As reported to the SEC, Google employees are the most made of money: their median annual pay in 2018 was $246,804. That's an increase of nearly $50,000 from what Google employees made in 2017.

ALSO: Report: The most expensive counties to rent in the US are all in the Bay Area

Facebook came in second place, with a median pay of $228,651 in 2018. However, this number fell by nearly $12,000 from 2017. A spokesperson told WIRED there was "no specific reason" for the decline, although Facebook suffered multiple crises last year, including a massive data breach that caused its stock prices to plummet.


ALSO: There is 1 six-figure job open for every 30 San Franciscans in May, study shows

Meanwhile, it's not too rough to work at Twitter, Square, Workday, or Nvidia, either, where employees all made on average over $150,000 in 2018. That's more than enough to afford rent for the average San Francisco "modest two-bedroom" according to the National Low Income Housing Coalition's "Out of Reach" report (they reported you'd have to make at least a cool $127,000).

However, working at Amazon doesn't look so hot: the median salary in 2018 was only $28,836. But that's because the majority of its workforce doesn't consist of highly-paid software engineers — it's blue-collar workers managing inventory and filling warehouse orders. Conversely, Google's median pay was highest because it didn't include any of its many temporary or contract employees.

If it seems to you like Silicon Valley tech employees are especially loaded, you're not imagining things: the average wage for a software engineer in the San Francisco Bay Area last year was roughly $140,000, while the national average was $104,000. No wonder there are so many Bay Area transplants.

Madeline Wells is an SFGate editorial assistant. Email: madeline.wells@sfgate.com | Twitter: @madwells22

WHAT DO THE OLIGARCHS HAVE IN MIND FOR US?

by Joel Kotkin 06/24/2019

There seems to be no good reason why a thoroughly scientific
dictatorship should ever be overthrown.
~Aldous Huxley, Brave New World Revisited

The recent movement to investigate, and even break up, the current tech oligarchy has gained support on both sides of the Atlantic, and even leapt across the gaping divide in American politics. The immediate concerns relate to such things as the control of key markets by one or two firms, the huge concentration of wealth accruing to the tech elite and, increasingly, the oligarchy’s control over and manipulation of information pipelines.

What has not been discussed nearly as much is the end game of the oligarchs. What kind of world do they have in mind for us? Their vision of what our society should look like is not one most people—on the Left or Right—would like to see. And yet, unless unchecked, it could well be the world we, and particularly our children, will inhabit.

Almost 40 years ago, in his book The Third Wave, the futurist Alvin Toffler described technology as “the dawn of a new civilization” with vast opportunities for societal and human growth. But instead we are lurching towards what Taichi Sakaiya has called “a high-tech middle ages.” In his landmark 1973 work, The Coming of Post-Industrial Society, Daniel Bell predicted that, by handing ultimate economic and cultural power to a small number of technologists and financiers the opportunity to monetize every aspect of human behavior and emotion, we would be handing them the chance to fulfill “a social alchemist’s dream: the dream of ordering mass society.”

The New Aristocracy

Like the barbarian princes who seized control of western Europe after the fall of Rome, the oligarchs have captured the digital landscape from the old industrial corporations and have proceeded to concentrate it in ever-fewer hands. Like the Medieval aristocracy, the ruling tech oligarchy—epitomized by firms such as Amazon, Google, Facebook, Apple, and Microsoft—have never produced a single coherent political manifesto laying out the technocratic vision of the future. Nevertheless, it is possible to get a sense of what the internet elite believe and, more tellingly, to see the outlines of the world they want to create.

This tiny sliver of humanity, with their relatively small cadre of financiers, engineers, data scientists, and marketers, now control the exploitation of our personal data, what Alibaba founder, Jack Ma calls the “electricity of the 21st century.” Their “super platforms,” as one analyst noted, “now operate as “digital gatekeepers” lording over “e-monopsonies” that control enormous parts of the economy. Their growing power, notes a recent World Bank Study, is built on “natural monopolies” that adhere to web-based business, and have served to further widen class divides not only in the United States but around the world.

The rulers of the Valley and its Puget Sound doppelganger now account for eight of the 20 wealthiest people on the planet. Seventy percent of the 56 billionaires under 40 live in the state of California, with 12 in San Francisco alone. In 2017, the tech industry, mostly in California, produced 11 new billionaires. The Bay Area has more billionaires on the Forbes 400 list than any metro region other than New York and more millionaires per capita than any other large metropolis.

For an industry once known for competition, the level of concentration is remarkable. Googlecontrols nearly 90 percent of search advertising, Facebook almost 80 percent of mobile social traffic, and Amazon about 75 percent of US e-book sales, and, perhaps most importantly, nearly 40 percent of the world’s “cloud business.” Together, Google and Apple control more than 95 percent of operating software for mobile devices, while Microsoft still accounts for more than 80 percent of the software that runs personal computers around the world.

The wealth generated by these near-monopolies funds the tech oligarchy’s drive to monopolize existing industries such as entertainment, education, and retail, as well as those of the future, such as autonomous cars, drones, space exploration, and most critically, artificial intelligence. Unless checked, they will have accumulated the power to bring about what could best be seen as a “post-human” future, in which society is dominated by artificial intelligence and those who control it.

What Do the Oligarchs Want?

The oligarchs are creating a “a scientific caste system,” not dissimilar to that outlined in Aldous Huxley’s dystopian 1932 novel, Brave New World. Unlike the former masters of the industrial age, they have little use for the labor of middle- and working-class people—they need only their data. Virtually all their human resource emphasis relies on cultivating and retaining a relative handful of tech-savvy operators. “Software,” Bill Gates told Forbes in 2005, “is an IQ business. Microsoft must win the IQ war, or we won’t have a future.”

Perhaps the best insight into the mentality of the tech oligarchy comes from an admirer, researcher Greg Ferenstein, who interviewed 147 digital company founders. The emerging tech world has little place for upward mobility, he found, except for those in the charmed circle at the top of the tech infrastructure; the middle and working classes become, as in feudal times, increasingly marginal.

This reflects their perception of how society will evolve. Ferenstein notes that most oligarchs believe “an increasingly greater share of economic wealth will be generated by a smaller slice of very talented or original people. Everyone else will increasingly subsist on some combination of part-time entrepreneurial ‘gig work’ and government aid.” Such part-time work has been growing rapidly, accounting for roughly 20 percent of the workforce in the US and Europe, and is expected to grow substantially, adds McKinsey.

Of course, the oligarchs have no more intention of surrendering their power and wealth to the proletariat than the Commissars did after the 1917 revolution in Russia. Instead, they favor providing what Marx once described as a “proletarian alms bag” to subsidize worker housing, and provide welfare benefits to their ever expanding cadre of “gig” economy serfs. The former head of Uber, Travis Kalanick, was a strong supporter of Obamacare, and many top tech executives—including Mark Zuckerberg, Y combinator founder Sam Altman, and Elon Musk—favor a guaranteed annual wage to help, in part, allay fears about the “disruption” on a potentially exposed workforce.

Their social vision amounts to what could be called oligarchal socialism, or what the Corbynite Leftcalls “fully automated luxury communism.” Like the original bolshevist model, technology and science, as suggested by billionaire tech investor Naval Ravikant, would occasion “the breakdown of family structure and religion” while creating the hegemony of a left-wing identity-centered individualism.

Life in a world dominated by these oligarchs would depart from the model of democratic and competitive capitalism that emerged over the last half-century. Rather than hope to achieve upward mobility and the chance to own property, the new generation will be relegated largely to the status of rental serfs. For the next generation, this promises a future not of upward mobility and owned houses, but of rented apartments and social stagnation. Here in California, Facebook is leading the drive to vastly expand this kind of housing, where the serfs and technocoolies can lose themselves in what Google calls “immersive computing.” The poor, most of whom simply want opportunity, will be relegated to permanent dependent status.

The World They Are Creating

To get a preview of the society the oligarchs want to create, the best place to look is where oligarchal domination is most complete. Wired magazine’s Antonio Garcia Martinez has calledSilicon Valley “feudalism with better marketing.” In Martinez’s view, the new aristocratic class is an “Inner Party” of venture capitalists and company founders. Well below them is an “Outer Party” of skilled professionals, well paid, but forced to live ordinary middle-class lives due to high housing prices and high taxes. Below them lies the vast population of gig workers, whom Martinez compares to sharecroppers in the South, “…with the serfs responding to a smartphone prompt rather than an overseer’s command.” Further below still lie those who constitute, in Martinez’s phrase, “the Untouchable class of the homeless, drug addicted, and/or criminal.”

California, and particularly the Bay Area, already reflects this neo-feudal reality. Adjusted for costs, my adopted home state suffers the overall highest poverty rate in the country, according to the US Census Bureau. Fully one in three welfare recipients in the nation live in California, which is home to barely 12 percent of the country’s population, while a 2017 United Way study showed that close to one in three of the state’s families are barely able to pay their bills. Today, eight million Californians live in poverty, including two million children. Roughly one in five California children lives in deep poverty and nearly half subsist barely above that.

For all its protestations of progressive faith, the Golden State now suffers one of the highest GINI rates—the ratio between the wealthiest and the poorest—among the states. Inequality is growing faster than in almost any state—it now surpasses that of Mexico, and is closer to that of Central American banana republics like Guatemala and Honduras than it is to developed countries like Canada and Norway. There’s even the return of medieval diseases such as Typhus tied to the growing homeless encampments. We could soon even see the return of Bubonic plague, although the mainstream media seems to be ready to blame this, like most ills, on climate change as opposed to failed social policy.

Urban website CityLab has described the tech-rich Bay Area as “a region of segregated innovation,” where the rich wax, the middle class wanes, and the poor live in increasingly unshakeable poverty. Some 76,000 millionaires and billionaires call Santa Clara and San Mateo counties home. At the other end are the thousands of people who struggle to feed their families and pay their bills each month. Nearly 30 percent of Silicon Valley’s residents rely on public or private assistance.

As recently as the 1980s, the San Jose area boasted one of the country’s most egalitarian economies. But in the current boom, cost-adjusted wages for middle class workers, Latinos, and African Americans in Silicon Valley actually dropped. Many minorities labor in the service sector in jobs such as security guard, for around $25,000 annually, working for contractors. There’s ever-greater segregation of minority and low income families, workers forced into mobile home parks or sleeping in their cars, as well as some of the nation’s largest homeless encampments. According to the Brookings Institution, in the last decade, increasingly tech-dominated San Francisco has suffered the most rapid growth in inequality while the middle class family heads towards extinction.

Needed: An Alliance of Progressives and Conservatives against the Oligarchy

Americans, enamored of the entrepreneurial spirit, were initially slow to see in the tech oligarchy a threat to the future of the republic. But public skepticism, notably in California, towards the tech lords is growing; many on both sides of the political divide see them much like modern versions of the gilded age mogul, successfully playing the political system to avoid regulation, anti-trust action, and taxes.

Yet overcoming the oligarchs will not be easy. Far more than the old industrial giants, they enjoy unprecedented sway through their manipulation of the information pipelines, as is widely evidenced in de-platforming of largely conservative voices on outlets such as Facebook, YouTube, and Twitter. Nearly two-thirds of readers now get their news through Facebook and Google and their dominance among younger generations is, if anything, more overwhelming. As the Guardianput it: “If ExxonMobil attempted to insert itself into every element of our lives like this, there might be a concerted grassroots movement to curb its influence.”

To this influence, they have added control over what is left of the traditional media they have helped to undermine. Often getting bargain basement prices, the oligarchs have been able to buy up prestigious outlets, including the New Republic in 2012, the Washington Post in 2013, the Atlantic in 2017, and Time last year.

In the coming political storm, the oligarchs will also retain some supporters on both the Left and Right, all aided by a huge, growing, and politically hermaphroditic lobbying operation. Some California progressives have backed the oligarchs on privacy and Senator Kamala Harris, one of the leading Democratic contenders, has gained widespread support from the oligarchs. Meanwhile, on the Right, some libertarians at places like the Wall Street Journal and conservative think-tanks, continue to defend the oligarchs as the rightful winners of dogged economic competition.

But these well-placed defenders may not be enough to fend off regulatory assaults, particularly as more people recognize how the world being created by the tech elites offers little promise for the middle class, democracy, or free thought. Rather than the saviors many once saw, the oligarchs now represent a clear and present danger to the most basic foundations of our democracy. Resisting them represents the great imperative of our era.

This piece originally appeared on Quilette.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University, director of the Chapman Center for Demographics and Policy and executive director of the Center for Opportunity Urbanism in Houston, Texas. He is author of eight books and co-editor of the recently released Infinite Suburbia. He also serves as executive director of the widely read website www.newgeography.com and is a regular contributor to Real Clear Politics, the Daily Beast, City Journal and Southern California News Group

THE ASS, THE FOX, AND THE LION

 

 An ASS and a Fox had become close comrades, and were constantly in each other's company. While the Ass cropped a fresh bit of greens, the Fox would devour a chicken from the neighboring farmyard or a bit of cheese filched from the dairy. One day the pair, unexpectedly met a Lion. The Ass was very much frightened, but the Fox calmed his fears.

"I will talk to him," he said. 

So the Fox walked boldly up to the Lion.

"Your highness," he said in an undertone, so the Ass could not hear him, "I've got a fine scheme in nay head. If you promise not to hurt me, I will lead that foolish creature yonder into a pit where he can't get out, and you can feast at your pleasure."

The Lion agreed and the Fox returned to the Ass.

"I made him promise not to hurt us," said the Fox. "But come, I know a good place to hide till he is gone."

So the Fox led the Ass into a deep pit. But when the Lion saw that the Ass was his for the taking. he first of all struck down the traitor Fox.

Traitors may expect treachery.

"Plan Bay Area is Racist" - testimony from Walnut Creek 4/22/2013 (This is the "disruption" that the MTC wants to avoid in public meetings).

FABLE: THE GOOSE AND THE GOLDEN EGG

There was once a Countryman who possessed the most wonderful Goose you can imagine, for every day when he visited the nest, the Goose had laid a beautiful, glittering, golden egg.

The Countryman took the eggs to market and soon began to get rich. But it was not long before he grew impatient with the Goose because she gave him only a single golden egg a day. He was not getting rich fast enough.

Then one day, after he had finished counting his money, the idea came to him that he could get all the golden eggs at once by killing the Goose and cutting it open. But when the deed was done, not a single golden egg did he find, and his precious Goose was dead.

Those who have plenty want more and so lose all they have.

Who Rules America?

Joel Kotkin's new book fingers Silicon Valley as the new elite. Is he right?

In The New Class Conflict, Joel Kotkin argues that the socially and politically ascendant groups in contemporary America are the oligarchs of Silicon Valley and a complex of elite journalists, think-tank pundits, and academics that he dubs the clerisy. The nouveaux riches of the tech world are increasingly intent on remaking society in accordance with their own passions, reports Kotkin, an urban studies scholar at Chapman University. The clerisy, meanwhile, promotes and provides ideological legitimation for elite goals. The effect of the two groups' efforts, he concludes, is to concentrate wealth and power in a shrinking number of hands, leaving the middle class stranded and subject to ever more evident economic decline.

Kotkin does not claim that either group is a monolith. Different factions within each class compete for access to wealth and political influence, and they also exhibit some differences in cultural commitment. But overall, Kotkin suggests, there is a persistent pattern: Contemporary elites are socially liberal but relatively blasé about the bread-and-butter impact of a broad range of policies that drive a growing wedge between those at the top and everyone else.

Thus, for example, tech leaders press a green agenda whose elements include support for mass transit and opposition to suburban living. Such policies implement the oligarchs' moral and æsthetic preferences, and sometimes they create business opportunities for the oligarchs' class (as when they invest in and promote putatively green technologies). But the same policies pose risks for the well-being of many ordinary people, by constricting their options and limiting their access to resources.

Similarly, while Bill Gates may call for higher taxes on the rich, many tech firms (Kotkin points to Twitter and Apple) seem quite happy to ensure that tax burdens fall not on them but on the middle class. (Gates's own Microsoft, for instance, has "shaved nearly $7 billion off its U.S. tax bill since 2009 by using loopholes to shift profits offshore.")

Despite its social liberalism, Kotkin suggests, the tech industry is visibly focused on business models in which disregard for privacy is central. Some commercial intrusions (sometimes compatible with contractual and property rights, sometimes not) may be annoying but relatively benign. But the industry has also generally appeared quite willing to facilitate surreptitious state monitoring of multiple facets of interpersonal communication as well.

Kotkin also criticizes the tech industry for business models that disregard people's privacy. These range from annoying but relatively benign commercial intrusions, such as the collection of browsing data to enhance the targeting of on-line advertisements, to cooperation with the National Security Agency's monitoring of our communications. Kotkin also highlights the tech industries' expansion into the broader media world, where their money is being used both to reinvigorate existing media outlets (such The New Republic and the Washington Post) and to create new ones (such Pierre Omidyar's First Look media, home to Glenn Greenwald's The Intercept). In this way, he argues, they create new platforms that allow their allies in the clerisy to enforce environmental and social orthodoxy.

What might a libertarian make of Kotkin's analysis?

Class used to be a significant theme in libertarian political commentary. Though Karl Marx's account of class conflict is better known, Marx acknowledged his indebtedness to earlier French classical liberal theorists of class, such as Augustin Thierry, Charles Comte, and Charles Dunoyer. Class analysis also figured powerfully in the rhetoric of many later libertarians, notably Karl Hess and Murray Rothbard during their alliance with the New Left (and, with a more right-wing populist flavor, in Rothbard's later work as well).

For Marxists, class position is determined by economic actors' relationship with the means of production. The ruling class rules, on this view, because it controls capital, while other classes are subordinate to it because they depend on access to the assets the rulers control. In libertarian class theory, by contrast, class position is a function not of the resources you own but your relationship with the state. Dominant classes are constituted by their relationship with political power. The source of their resources is their ties to the state, and the use to which they frequently put those resources is the manipulation of the state to achieve their goals.

Libertarians and Marxists will frequently identify the same groups as making up the dominant social classes: top elected or appointed officials, for instance, or dominant figures in the military-industrial complex. But while the Marxist might treat a Pentagon contractor as a member of the ruling class simply because of the resources she or he owns, the libertarian would explain the contractor's wealth and class position by stressing the role of the state's war machine and its incestuous ties with the "defense" industry.
Today, unfortunately, you're more likely to encounter class analysis in the discourse of the Marxist left, and perhaps the Tea Party right, than in that of classical liberals and libertarians. Perhaps this is a function of a desire to avoid unsavory associations. Often, I fear, it reflects an instinctive valorization of the successes of those who have made it in today's marketplace, no matter how unfree those markets may be. The worry seems to be that using the rhetoric of class to criticize influential groups in our society will somehow give aid and comfort to those who promote a politics of envy and resentment. But I think this worry is unwarranted. It is possible to acknowledge the creativity and determination of people who actually succeed by contributing to the welfare of others through creativity and peaceful, voluntary exchange while also criticizing social stratification and the abuse of power.

Kotkin is not a libertarian, but his account overlaps helpfully with a libertarian critique of contemporary class relationships. He tends to focus on members of the Silicon Valley elite's attempts to gain political power—for themselves personally and for their class. But it's worth emphasizing that the tech world's ties with the state are much more pervasive than those created by intermittent political campaigns, or even by their campaign donations.

The concentration of wealth in Silicon Valley would be unimaginable without a patent and copyright regime, created by political fiat, that confers monopoly power on a limited number of actors who can use this power to extract wealth at exorbitant rates from businesses and consumers dependent on their products and services. "Intellectual property" rights shore up Silicon Valley firms' control over software and other elements of their businesses, offering the premiums monopolies always make available to those who hold them. The creativity and drive of Valley entrepreneurs is real, but so is the mark-up that intellectual property laws allow them to charge.

The Valley's links with the NSA, and other profitable government contracts, also concentrate wealth in hands of the oligarchs, who are actively involved in vigorous D.C. lobbying. So do Bay Area land use regulations that dramatically raise the cost of living, limit access to housing and commercial space to the wealthiest people and firms, and route wealth to those who have already managed to gain access to land in the region.
The clerisy obviously depends on the state for influence, too. Elite journalists succeed by maintaining access to key political players, generally secured using fawning coverage and stenographic reporting of official positions. Pundits link the media with political elites and work for think tanks that frequently contract with state entities to provide rationales for the policies the establishment favors. Academics frequently rely on state-proffered grants to conduct research. State-mandated licensing requirements channel people into higher education when they might otherwise be inclined to seek alternate means of training. Tax money funds many academic institutions, and tax-secured student loans feed the wealth of universities.

Thus, the class groupings on which Kotkin focuses are (as I have no reason to think he would deny) creatures of the state. The cultural, political, legal, social, and economic environment misshaped by the oligarchs and the clerisy is a product of government intervention.

Kotkin understandably and rightly challenges the results of this intervention. In stark contrast to many contemporary commentators, he emphasizes that economic growth is crucial if the decline in middle-class and working-class living standards is to be reversed. High-minded talk about "sustainability" often serves as an excuse to leave the wealth of elites undisturbed while refusing to pursue policies with the potential to boost the incomes of everyone else. Kotkin stresses that those who care about reversing class polarization must support growth-oriented policies. He also emphasizes the snobbery and disregard for middle-class preferences and aspirations evident in elite groups' disaffection for the suburbs—though he does not address the ways, such as highway subsidies and the use of eminent domain, in which suburban development has been a function not only of consumer demand but also of policy outcomes designed to benefit developers. Silicon Valley isn't alone in its ability to play the lobbying game.

 

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FABLE: THE WOLF AND THE HOUSE DOG

There is nothing so precious as Liberty

There was once a Wolf who got very little to eat because the Dogs of the village were so wide awake and watchful. He was really nothing but skin and bones, and it made him very downhearted to think of it.

One night this Wolf happened to fall in with a fine fat House Dog who had wandered a little too far from home. The Wolf would gladly have eaten him then and there, but the House Dog looked strong enough to leave his marks should he try it. So the Wolf spoke very humbly to the Dog, complimenting him on his fine appearance.

"You can be as well-fed as I am if you want to," replied the Dog. "Leave the woods; there you live miserably. Why, you have to fight hard for every bite you get. Follow my example and you will get along beautifully."

"What must I do?" asked the Wolf.

"Hardly anything," answered the House Dog. "Chase people who carry canes, bark at beggars, and fawn on the people of the house. In return you will get tidbits of every kind, chicken bones, choice bits of meat, sugar, cake, and much more beside, not to speak of kind words and caresses."

The Wolf had such a beautiful vision of his coming happiness that he almost wept. But just then he noticed that the hair on the Dog's neck was worn and the skin was chafed.

"What is that on your neck?"

"Nothing at all," replied the Dog.

"What! nothing!"

"Oh, just a trifle!"

"But please tell me."

"Perhaps you see the mark of the collar to which my chain is fastened."

"What! A chain!" cried the Wolf. "Don't you go wherever you please?"

"Not always! But what's the difference?" replied the Dog.

"All the difference in the world! I don't care a rap for your feasts and I wouldn't take all the tender young lambs in the world at that price." And away ran the Wolf to the woods.

There is nothing worth so much as liberty.

Why Long Lines at Motor Vehicle Departments Never Disappear

When millennials stand in MVA lines, do they wonder what their experience will be when the government takes a more significant role in their lives?

Wednesday, March 20, 2019

Imgur: MikeSierraTango3Kilo

 

Barry Brownstein

Politics DMV Cars Big Government Inefficiency Democratic Socialism Millennials Capitalism Competition

The first time I stood in a long line at the Motor Vehicle Administration (MVA) in suburban Baltimore was 1979. Since then, much has happened in my life: I taught thousands of students, got married, raised a family, and moved away from Baltimore. Recently, my son, living in the Baltimore area, needed help with the subtleties of car buying, and I went to assist.

In a free market, consumers shape their experience by selecting products that serve them well, not offering or accepting bribes.

Compared to today, cars manufactured in 1979 were unsafe and unreliable. My ‘79 Volkswagen Rabbit developed a head gasket problem in the first 15,000 miles, but warranties in 1979 covered only one year or 12,000 miles. There were no airbags. Today, car manufacturers compete on safety; collision avoidance features, unimagined in 1979, shaped my son’s car choice.

The car-buying experience has completely changed, too. In 1979, buyers had limited information and often endured unpleasant negotiations with salesmen. Increased competition due to the ascendance of Japanese automobiles and a dramatic increase in information available to car buyers have made it simpler to get a great deal on a car without even setting foot in a showroom.

MVA Déjà Vu

After completing the new car purchase, we drove to the MVA to turn in my son's old plates. The address had changed, but the bleak Soviet-style interior remained intact. Just as in 1979, one line almost out the door snaked toward a check-in counter. When you made it to the counter, you then sat in one of the long rows of chairs until it was your turn.

Like Soviet-era bread lines, you got in line, waited, and hoped for a favorable outcome.

There were few signs. No attendants were there to answer questions. Like Soviet-era bread lines, you got in line, waited, and hoped for a favorable outcome.

My son was anxious to return to his job and insisted we leave. His plan was to return the next day to get in line an hour before the MVA opened at 8:30 a.m. Well before 8:30, many supermarkets and home improvement stores are open to accommodate early shoppers, but MVA managers set hours without having to meet the demands of customers.

As my son stood in the early morning cold, he chatted with others. Some shared stories of previous attempts to obtain MVA services, having abandoned their positions in line after waiting for hours. One told of a three-hour wait. They are lucky; in California, all-day waits are not uncommon.

Government Inefficiency 

Support for socialism among millennials and Generation Z is on the rise. When millennials stand in MVA lines, do they wonder what their experience will be when the government takes a more significant role in their lives?

Dreaming of a revolutionary republic, do the millennials who support democratic socialists imagine they will be proclaimed heroes of the republic and ushered to the head of the breadline? Or, like their hero Bernie Sanders, do they believe that breadlines are a “good thing”? Will they feel true equality when, along with their neighbors, they share the heartache of not getting enough food to feed their starving children?

If the democratic socialists are successful, long lines, shortages, and bribes will become the new norm in America.

In short, why are some craving the MVA experience in more areas of their lives? Why do they not heed historical evidence of failed socialists’ regimes? Do they believe the next time it will be different? Do they believe the lines will disappear when the right people, with pure hearts like they imagine themselves to have, are in charge?

It’s fine to imagine the right people working at the MVA, but even the right people cannot create an efficient MVA.

Without the Profit Motive, Good Decisions Are Impossible

Democratic socialists such as Alexandria Ocasio-Cortez imagine a better world where decision-makers are not constrained by having to earn a profit. In his book Bureaucracy, Ludwig von Mises explains why decision makers can never make good decisions when they operate without the market signals of profit and loss:

It is true that under socialism there would be neither discernible profits nor discernible losses. Where there is no calculation, there is no means of getting an answer to the question whether the projects planned or carried out were those best fitted to satisfy the most urgent needs; success and failure remain unrecognized in the dark. The advocates of socialism are badly mistaken in considering the absence of discernible profit and loss an excellent point. It is, on the contrary, the essential vice of any socialist management. It is not an advantage to be ignorant of whether or not what one is doing is a suitable means of attaining the ends sought. A socialist management would be like a man forced to spend his life blindfolded.

The personnel at the Maryland MVA seemed indifferent; moving the line along did not seem to be part of their decision-making calculus. If supervisory personnel were on duty, they didn’t pitch in; they remained hidden in their back offices. In each of us is the capacity for empathy, as well as indifference and even cruelty. What makes one individual access the best qualities that humanity can offer while those qualities lay dormant in another individual?

At your local supermarket, if lines get too long, it is not uncommon to hear the “all personnel to the front” announcement. There is a palpable sense of urgency to serve customers. Mises explains that in successful organizations, managers understand consumer sovereignty:

[The manager] is not simply a hired clerk whose only duty is the conscientious accomplishment of an assigned, definite task. He is a businessman himself, a junior partner as it were of the entrepreneur, no matter what the contractual and financial terms of his employment are. He must to the best of his abilities contribute to the success of the firm with which he is connected.

Consider a buyer for the supermarket who often listens to the pitches of potential suppliers. Suppliers don’t offer her bribes; they know to offer her features valued by her customers. Does she set standards for customer experience and accept poor performance from her assistants? Again, Mises explains why the buyer’s decisions must respond to the needs of customers:

He will not waste money in the purchase of products and services. He will not hire incompetent assistants and workers; he will not discharge able collaborators in order to replace them by incompetent personal friends or relatives. His conduct is subject to the incorruptible judgment of an unbribable tribunal: the account of profit and loss. In business there is only one thing that matters: success. The unsuccessful department manager is doomed no matter whether the failure was caused by him or not, or whether it would have been possible for him to attain a more satisfactory result. An unprofitable branch of business-sooner or later-must be discontinued, and its manager loses his job.

The MVA manager is under no such constraints. Why try to fire an incompetent civil service employee when you’d be subjecting yourself to endless hearings? Why argue to open earlier and close later to accommodate customers when you’d be told: “That’s not the way it’s done here”?

“Consumers are merciless” when they are not well served, but only “in an unhampered market society,” writes Mises. At the MVA, those who wait suffer silently and follow the directives of those who care little about their welfare.

Bureaucracy Deadens the Soul

During my teaching career, I taught MBA classes on-site at a government agency. Many of those career employees were impressive. They held high-level positions; they were brilliant thinkers and dedicated learners. Yet, among these relatively young individuals was a running joke; they could recite exactly how many years and months they had until retirement. And to a person, they did retire at the earliest possible date. These individuals had far more autonomy than the government workers Mises wrote about in 1944. Nonetheless, core truths apparently remain:

Government jobs offer no opportunity for the display of personal talents and gifts. Regimentation spells the doom of initiative. The young man has no illusions about his future. He knows what is in store for him. He will get a job with one of the innumerable bureaus, he will be but a cog in a huge machine the working of which is more or less mechanical. The routine of a bureaucratic technique will cripple his mind and tie his hands. He will enjoy security. But this security will be rather of the kind that the convict enjoys within the prison walls. He will never be free to make decisions and to shape his own fate. He will forever be a man taken care of by other people. He will never be a real man relying on his own strength. He shudders at the sight of the huge office buildings in which he will bury himself.

How you do anything is how you do everything. In never learning to care for customers at the MVA, employees never learn to rely on their own best qualities. Because their own abilities and sensibilities lie dormant, they don’t know they are suffering along with those they “serve.”

In a free market, consumers shape their experience by selecting products that serve them well. In the Soviet Union and other socialist countries, citizens shaped their experience by offering or accepting bribes.

Next time it won’t be different. If the democratic socialists are successful in shifting more of the economy into government provision of services, long lines, shortages, and bribes will become the new norm in America.