A Listing Ship

Let’s imagine two hypothetical scenarios:

Scenario A:

In order to have 100% employment, the Government of Earth decides to put all people to work and pay them money, which they will print. The jobs don’t matter, what matters is that everyone is working and everyone is getting paid. The simplest job they can think of is digging holes in the ground and filling them back up. Over and over. They print a bunch of money and hand it out. And of course, everyone starves to death because no one was actually doing anything useful and there’s nothing to spend the money on.

Scenario B:

In order to produce as much as possible and perform every job necessary, humans build tools, automations, and AI to do all the required work for them. Eventually even the work required to design, build, and service the machines. There is 100% unemployment. Everything we need is there for sale, but no one has a job, there’s no money, and so everyone starves to death because they can’t buy the simplest of things, even though it’s all right there.

Neither of these scenarios will ever happen, of course, but what if I told you that the economy we live in right now (and perhaps for the last four thousand years or so) was a push-and-pull between these two extremes? One side is attempting to provide work for the sake of work, without asking much whether or not those jobs are needed, and the other side is trying to produce as many goods as possible while paying the least amount in wages, without worrying about where their consumers are going to come from. And the interplay between these two forces create a very messy, very ugly, very painful balance that is way better than either of the extremes.

That’s the economy. It’s made up of people, and people are batshit insane, which is why any of it works and also why it often fails. Adam Smith called these complex interplays of human psychology “The Invisible Hand.” Modern capitalists just say, “Let the markets figure it out.”

Let the markets figure it out.

But the markets are people. CEOs are people trying to maximize profits, but also people looking to maximize their income. Workers are people trying to maximize efficiency, which is another way of saying making as much money as possible doing the least amount of work. CEOs are pulling us toward scenario B, where everything gets done but you have to deal with as few employees as possible. Workers are asking for scenario A, where someone will please pay them to lean on a shovel. In the long run, both sides are saved from their idiotic impulses by the balancing force of the other. In fact, both sides RELY on the other side being an idiot in the opposite direction.

But what happens when half the idiots start to lean, ever so slightly, in the wrong direction?

That’s what’s happening today, and you can see the effects in a single graph:

Red shows union membership going down. Blue shows concentration of wealth going to the top 10%. It’s easy to focus on the diverging lines on the right, but what’s striking is the convergence on the left. Unions grew and suddenly the idiots from A could lean fully against the idiots from B.

There are many possible reasons for the divergence, but let me suggest one that captures quite a few of them, and we can see it again in a single image:

The first lottery in the US was the New Hampshire lottery in 1964. Other states quickly followed, and the lottery system blew up in the 70s. Of course, the “rag to riches” dream is thousands of years old — but the subliminal advertising of the 70s and 80s was pervasive and deep in ways that only advertisers and psychologists understand. Shows like THE JEFFERSONS and BEVERLEY HILLBILLIES became the most-watched TV every week. SILVER SPOONS was one of my favorite shows growing up. All presented a sudden leap up in prosperity. In churches around the country, which began growing into the mega-churches we see today (again, really taking off in the 80s), the message was: pray hard enough and you’ll get rich quick like me, your pastor.

Hold that thought while we return to the hypotheticals above.

When the capitalists from B make fun of A, they point to make-work unions and inefficiencies. These are folks like my dad who used to point to construction sites at all the folks standing around, leaning on a shovel, while one person worked. “Inefficient,” he’d say. Paying people who weren’t actually doing anything drove him crazy. In a dream world all the things would get done without paying anyone. Another fun example from this group is one I used to parrot: there was a time when electric trains had steam engineers onboard. The union contracts stipulated that every train must have a steam engineer, and even when the rail companies made the switch to electric, they were forced to honor those contracts and pay someone to sit and do nothing. As absurd as this sounds, we do it today with teachers who can’t be fired but are so bad at their jobs they now get paid to sit in a room and scroll through social media all day. Scenario B folks love trotting out this example because it triggers an emotional reaction that draws folks into their orbit.

Here’s how the push and pull of A and B work in the economy, and how it affects people: Bob, a Hollywood CEO looks at his meager earnings and tries to figure out how to make more profits. Profits drive up the stock price and Bob’s pay package, so doing this is good for the company, the shareholders, and also for Bob and his family. One easy way is to acquire another company that is doing the same kind of work. After the merger, Bob can lay off people who were leaning on their shovels a bit too much, get everyone working a little harder, and combine the profits of two companies into a bigger stream. Even the semblance of doing this can drive up the stock price and get Bob a big bonus. And it gives Bob something to do! Makes him feel like a CEO. Everyone wins except for the people who are laid off, but they’ll go find other jobs and even they will be fine in the long run.

Rinse and repeat. Publishing houses get winnowed from the hundreds down to five. Disney owns Pixar, Marvel, and Star Wars. Mass layoffs, mergers, unpaid overtime, strenuous work conditions are the invisible hands of scenario B, all tugging in one direction. These are the hands of ultimate efficiency. What about scenario A? What are they doing to push back?

The workers in scenario A, let’s remember, are trying to get paid more while doing less. These are the forces that got us a 5-day work week (and are now winning 4-day work weeks in places like Iceland, New Zealand and elsewhere). These are the forces who would strike if work conditions got too inhumane or pay didn’t keep up with the cost of living. Entire industries would be shut down in order to get better contracts (we just saw this with port workers, and my industry did it last year in the Hollywood strikes). Non-union workers do this in an invisible, distributed way every time they refuse to take a job for low pay or negotiate a higher salary. Millions of little decisions add up, but big change usually comes from big, coordinated efforts.

Here’s where things get really fucked up. The folks in scenario A have been convinced to fight on behalf of the scenario B people. Middle class folks are no longer pulling for what’s in their best interests; they are now pushing the CEO hype. So we’ve gone from push-pull to push-push. Shit’s getting really pushy over here. Scroll up to see the union graph to get an idea of how powerful and pervasive this shift has become.

Of course, these undermining efforts have always been attempted, but nobody nailed them quite like Ronald Reagan and Margaret Thatcher. They didn’t just rule the 80s, they became symbols for the decade where “Trickle Down Economics” entered common parlance. The idea of trickle down economics is you give corporations big tax cuts, and now they can use that extra money to hire more people, expand their businesses, grow the economy. It all trickles down to the workers. Except … it doesn’t. It never has and it never will.

Because that would require CEOs to wake up one day and decide to move to scenario A. They’d have to hire people to dig holes and fill them and be happy with that. Employing more people would suddenly be their #1 priority. Spending more money on wages would have to drive them. But it isn’t. It doesn’t. They are pushing in the opposite direction. CEOs will never hire people who aren’t needed; shareholders would lose their minds if they ever said otherwise.

You know what does necessitate more hiring? A 4-day workweek. Or sales going up because you have more customers. How do you get more customers? Have more people out there with more money to spend. If that sounds like a chicken and egg problem, it is. But there’s an easy way to get this going in a positive direction and two easy ways to screw it all up.

One easy way to screw it all up is to print money and hand it out to folks. This drives up the cost of goods, because everyone is suddenly a little richer. If we gave every human a million bucks today, would we all be richer? Kinda. But you wouldn’t go to work for $15 an hour with a million in the bank, would you? And that coffee shop would be insane to continue charging $5 for a mug of joe when the owner knows every customer has money burning a hole in their pockets. So prices jump up IMMEDIATELY. Wages take longer, because of contracts and the annoyance of quitting / looking for a job / negotiating with the boss.

The other way to screw up the chicken and egg problem is to have money pool up and not get used. It works like this: A CEO gets a big $40,000,000 bonus one year. They decide to invest some of this in art, which they store in a free port warehouse. They park a bunch in the stock market. They buy a lot of land. They get a car collection and a few extra homes. Some of these actions create a little work (someone builds a home, sells a car, gets an art commission, uses capital from stock price increase). But a lot of that money sits idle, doing nothing. It pools up. There are oceans of this money pooling up, no longer circulating through the economy. More and more every year.

Economists refer to the rate that money moves through the economy as “velocity.” When money moves, you get a healthy economy. When it pools up, you have problems. The more it moves, the more people benefit. If you give middle class and poor people money, they spend it. Almost all of it. It moves back into the market. The chicken and egg problem disappears because there’s always another egg and more chickens. Velocity of the money supply might be one of the most important things for a healthy, equitable economy, but it’s difficult to measure and rarely mentioned. (It’s often expressed as a ratio of GDP to money supply, each of which is also hard to measure and not as sexy as S&P GO UP).

Let’s set economics aside for a moment and talk politics. When folks went to the polls this November, they based their vote on many different factors, but the one that may have had the biggest impact is the feeling of getting left behind. Costs have gone up and wages have lagged. Largely because we’ve been printing money and handing it out during a global pandemic. The results were predictable. Prices shot up. The political fallout should also have been predictable: For the first time, every democracy revolted against its current leadership. You can see that here:

Here’s how to read the above graph, which tells a very important and clear story. Dots ABOVE the black line show how much parties in power increased their vote share from the previous election. Dots BELOW the line show how much parties in power lost vote share. It’s a measure of WE AREN’T HAPPY LET’S TRY SOMETHING DIFFERENT. In a century we’ve never seen such global levels of “try something different.”

This wasn’t a move from liberal to conservative. France and the UK went the other way. This was a move from what-are-we-doing-now to anything-else-please. Of course, the irony is that the problems caused in the US were caused by the guy we just voted into office (he insisted his name be printed on the checks that caused the inflation). But that doesn’t matter to the invisible hands. The economy is all psychology, and let me remind you that this is a balance between two groups of idiots leaning on each other.

The tragic and dangerous reality is that we are now mostly all idiots arguing for scenario B. We are my dad, wishing someone would fire those people who happened to be on their 5-minute break when he drove by. Or were waiting for the pipes to be shut off before they resumed digging. Like my dad, we see the patterns we already believe in. Drive past a busy construction site, and there’s nothing to anger us and get our attention. No bias to reinforce. Keep moving, nothing to see here.

We’ve become anti-union in a time when we need them more than ever. We’ve become anti-strike when they are proven effective. We shrug at CEO pay hitting absurd levels, because we also drive past LOTTO billboards with billion-dollar payouts. It all seems arbitrary and fair, right? And hey, it could happen to us someday. Look at Trump and Elon. It happened to them. If I simp for them online, maybe they’ll notice me and pull me up along with them. I could buy an imaginary cyber currency at just the right time and be rich AF. That will be me one day. I don’t want future me to pay lots in taxes. Government is dumb and inefficient and would waste my money.

That’s my dad. Like Elon, he had cherry-picked examples of government waste. And when the savings and loans fiasco broke out, or Enron collapsed, or Bernie Madoff raked it in, or another recession wiped out millions of families, those were the exceptions. That’s how bias works. Exceptions on one side are THE RULE and on the other side, we don’t talk about them.

Well, we should talk more. About economics. About the history of labor and capital balancing one another out. About the bullshit stories that group B has sold of efficiency, waste, deregulation, the dangers of socialism, the promise of getting-rich-quick, and the allure of trickled wealth. One side has done a much better job of talking about these things, and it’s got too many idiots leaning the wrong way. As someone who has spent a lot of time on boats, let me tell you that this rarely ends well.

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