2014 August 12 Tuesday
US Hits New Record For Income Diversity
We all keep hearing that diversity is great. Here is another sign of increased American national diversity in a very interesting article in the Financial Times: The per capita income gap between the lower and higher ranked cities has reached a new record!
The research shows Boston – ranked at 10 – reporting a per-capita income 1.61 times that of Cincinnati ranked at 90. At its low point in 1976, the gap was 1.36 times, between San Francisco and El Paso.
I am fine with highly productive people getting paid much bigger piles of cash. But two things worry me. First, there is less shared experience, less shared interests, and less shared understanding that is needed to have a healthy society. Second, the (growing) lower classes really are less productive and less valuable as their jobs get automated and off-shored. Immigration is assuring that the lower classes will grow even bigger still. In spite of far lower costs of communication the people in these borders have less in common with each other. We used to be clustered around the middle. No longer. Middle class neighborhoods are shrinking.
This is the same America where Alan Block can't even get his internet service disconnected. If this is possible just how strange is it going to get?
This is not an accident. Comcast turned their customer services reps into sales reps. This is normal business practice. It isn't like they are even customer service reps any more. I think this is a weird kind of class warfare that is somehow related to the rising inequality and declining social capital measures.
Comcast is at it again with another customer who was smart enough to record his first call with a customer service rep. In a sign of the time PC Magazine has come out with an article on how to record your customer service calls.
By Randall Parker at 2014 August 12 08:50 PM
While America has always had a lot of regional diversity in the future these differences will become much more extreme. Traveling from say Minnesota to Southern California will be like visiting another country. People in America over the next 50 years will live in very interesting times.
Historically America has been considered a high-trust study. In the not so distant past in addition to having a relatively high level of trust in their fellow citizens, Americans also had a relatively high level of trust in government and other social institutions. All that is rapidily changing now. The America of the future will be a low trust society. Confidence in our social institutions and fellow citizens is steadily declining.
The PC-diverse plutocracy is metastasizing nicely for the shared benefit and delight of the elites. Ted Kennedy must be guffawing in his grave.
Part of the problem here is that the winners (smarter, richer, more educated, whiter, better-connected) have enormous power to write the rules of how our society works, on all kinds of different levels--laws, regulations, business practices, corporate policies, algorithms. And they overwhelmingly tend to write rules that benefit people like them, both inadvertently (it's hard to do good UI design for people with an IQ of 75 when you have an IQ of 120, which you probably do if you're designing a UI) and intentionally. And this increases inequality, and has the side-effect of grinding a lot of people not much like them up in the gears of the machine.
Another part of the problem is that my guess is a large fraction of the increased inequality has little to do with increasing the size of the pie, and a lot to do with figuring out how to get that huge slice of the pie that you've always known you deserve. Working scientists and engineers and doctors often make decent money (but scientists and doctors tend to get screwed over during their training, so they're not all *that* well compensated), but they seldom get rich, even though they're broadly expanding the size of the pie. (And the ones who are best at expanding the size of the pie are probably not the best compensated.) People in finance and law often make very good money (though plenty of low-level lawyers are barely keeping food on the table) while probably making the pie no bigger.
And finally, one common way to get a bigger slice of the pie is to increase the complexity of billing or rules or contracts in such a way that most normal human beings can't figure out what's going on--you can get a few extra dollars from a lot of people, mostly from the older, sicker, dumber, and poorer part of the spectrum. But hey, money wrung the sick, the halt, the lame, and the infirm spends just as well as any other money.
If one breaks income down, bigger slices go toward finance. Finance in turn harvests real assets during depression periods. This is centralizing defect in capitalism, that tends toward pyramid control and disenfranchises labor.
Debt instruments and savings are on the liability side of double entry ledger. Both of these types tend to demand usury, which grows at an exponential - especially if the debt instrument is refinanced to include previous "interest" now as principle. A real economy has a natural growth curve, something like a human that grows quickly to maturity then levels off. Start up businesses are fast growing until resource limits are met, and competition fills in.
Seasonal growth curves are S shaped, and this would be farming and the like, where things are in a type of equilibrium that is predictable (not growing).
So, the claims on money supply, the debt instruments, are not in alignment with reality. This is a root failure of capitalism. The money itself is defective. Once this is comprehended, then most other knock on effects start to make sense. Today we use credit money (banker money) almost exclusively, and this is a root problem.
Lower IQ people can be trained to be effective labor. During period from 1700-1900, the U.S. grew rapidly with a non formally educated population. Their IQ may have been reasonably high, but the fact remains, the economy grew rapidly with a different kind of poorly educated people than today. During WW2, there was plenty of economic goods and output, yet the population was poorly educated. In other words, this emphasis on IQ pales into insignificance when the larger variable of capitalism's defects are viewed in proper context.
Plenty of people can have jobs that pay a living wage doing low level work. Welfare for the rich is about 40 to 50% of our entire economic output. Strip away this rent seeking, then the economy becomes efficient, and social capital improves as an automatic extension. In the past we were much more efficient despite today's modern high tech robots and communication. A large component of the economy was gift based and not monetized then. The channels of production were saner, the money supply was more balanced, and labor was not being abused to the same degree.
Rents are costs above the real cost of production. They are everywhere one can look, if one knows how to look. For example, Medical in Japan is 1/3 the cost of the U.S. Therefore 70% of the higher medical costs of U.S. are wasted as heat and friction. This rampant rent seeking in almost all spheres, makes the U.S. economy high cost and high friction. Wall Street churns stocks to make dividends. Banking sector uses all kinds of rent schemes, blowing bubbles, and making bets, doing carry trades, conversions etc.
Capital gains are taxed much less than income. Big business takes their profits in flag of convenience countries like Panama and Liberia, thus avoiding taxes. Companies like Apple take profits in Ireland to avoid taxes. The tax burden is then shifted onto the productive. Don't mistake monetary inputs as related to productivity, there is not relation. Usually the relation in inverse, as financial gains are usually predatory and parasitic.
Local governments tax the middle class improperly and this shifts cost burden onto middle class in favor of both rich and poor. Of the two, welfare for the rich far exceeds welfare for the poor. In Mexico and U.S, growing Plutocracy and Oligarchy are disenfranchising land and resources from our birthright. This means economies are short circuited as means of production are shifted into the hands of the idle and increasingly pathological rich. These usury flows and stagnant capital gains then fund perversion and parasitism of government. Many in government are now pychopaths or are on the take, it is baked into the cake so to speak, this in order to get elected.
There will be revolution, and blaming the poor is ignoring real root causes. In some cases the poor are worthless dirtbags, but many do want jobs and want to be productive - the system slams doors in their faces, especially as their output is stolen from them via rent schemes at every turn.
My wife had a couple issues with our wireless provider so I've adopted the simple practice of telling customer service reps, no matter what the capacity, that I'm recording the phone call and I put them on speaker phone. A few times I've got a "you don't need to do that" and I respond with something like "I know", and then proceed with my question. I'm not actually recording anything, but I figure it can't hurt.
Actually, they aren't "sales reps" OR ""service reps". They are "retention reps" and work in the "retention department", a further suspecialty of modern American capitalism.