Sunday, January 26, 2014

The Pride Deficit

The Pride Deficit

President Obama is going to deliver his State of the Union address Tuesday, and by all accounts, he is going to focus on the problem of growing inequality and lack of opportunity.  That is a laudable topic, and I would imagine he is going to deliver some wonderful rhetorical flourishes wrapped around a package of small-bore initiatives. There will be a Republican Response (in fact, there are several) trotting out their many grievances and their wish list.  Neither the President’s agenda, nor that of the GOP, is going anywhere for the balance of Mr. Obama’s term.

Meanwhile, at Davos, they are holding the annual World Economic Forum.  There, the immensely wealthy and/or immensely powerful, and the people who analyze and cover them, come together to take in, and exchange, splendid views.  Coincident with Davos was the release of a report by Oxfam that indicates that the combined net worth of the 85 richest people in the world (some of whom are in attendance) is equal to that of the bottom 3.5 billion.   That is a number that seems too absurd to grasp. Expand that to the top 1%, and their aggregate wealth is $110 trillion, or 65 times the amount of the bottom half.  If you like to play with numbers (and redistributionist fantasies) try the math and take just 1/3 of that $110 trillion dollars and spread it around a little.  It is enough to equal or exceed the average annual per capita income of nearly 100 countries.

The Oxfam report is not particularly complimentary to the ultra-wealthy, and goes on at some length about the government aided kleptocratic tendencies of some of them.  Perhaps it is best thought of as part call to action, and part shaming exercise.

But perhaps the question isn’t who has the money, or how much they have. As Harry Frankfurt argued in Equality as a Moral Ideal.”  A concern for economic equality, construed as desirable in and of itself, tends to divert a person's attention away from endeavoring to discover-within his experience of himself and of his life-what he himself really cares about and what will actually satisfy him, although this is the most basic and the most decisive task upon which an intelligent selection of economic goals depends.”

Frankfurt is largely focused on how much—his thesis is that a person allocates his personal resources like time, effort and energy into the things he values the most.  Some want more money and they work more. Others want to retire earlier or take more vacations or spend more time with their family, or work in a less stressful and economically rewarding environment.  Both choices can be seen as “intelligent selection of economic goals.”  The moral duty of society is to provide an opportunity for everyone to gain a sufficiency--according to the individual’s own lights--not the same amount.

But what Frankfurt doesn’t address is how the masses get there.  His piece was written in 1987, in what can be thought of as the early stages of a wrenching change in the American economy that largely eliminated our traditional manufacturing base, and the good jobs and benefits that went along with them.  For the last thirty years, while the 1% has charged ahead, the great working and middle classes of this country have, at best, treaded water. The goal of “sufficiency” and “satisfaction” now seems quite distant for many.

The aspirational aspect of Frankfurt’s thesis didn’t anticipate two enormous tectonic forces at work in our society today that are eroding satisfaction.  The first is the growing impact of what conservatives derisively term “the nanny state”--a web of social services including Medicaid, unemployment insurance, and SNAP.  These programs help the poor, but, stripped to their essence, they give them something for nothing—money without obligation, and also without hope.  The second is the rise of soul-destroying labor that leaves one only with a modest paycheck and without any connection to the product being sold or the business that produces it.  It is money without pride of workmanship or community.

I think you can’t solve the first problem without finding success in the second.  The sociologist Saskia Sassen has noted a growing trend to “expel” people from the economy; effectively to place them at the margins, either receiving handouts or in jobs with little hope for economic advancement or emotional resonance. You deepen the connection to capitalism by valuing people as workers and consumers.  You loosen those bonds by transitioning from a manufacturing economy--one that makes things, to an “extractive” economy--one that takes things from the ground or rearranges assets. When governments weigh in, as they invariably do, to enable the wealthy to get wealthier, they further estrange, and even impoverish, the vast majority of citizens.

Sassen’s challenge hasn’t gotten any easier to resolve, because as Stephen Rattner noted in Sunday’s New York Times, “The Myth of Industrial Rebound” there isn’t going to be a manufacturing revival.  The economics of offshore manufacturing are just too compelling, and the few jobs we do “create” here tend to be heavily subsidized by taxpayer-funded incentives. 

Where does this leave us?  I first read Sassen’s paper when attending a conference at Columbia University’s Center on Capitalism in Society; “Philosophical Foundations of Economics and the Good Economy:  Individual Values, Human Pursuits, Self Realization and Becoming” in September 2011.  Edmund Phelps, the Director (and the winner of the Nobel Prize in Economics in 2006) made some introductory remarks and included something that I reacted strongly to at the time.  He said, in effect, that government policies that favored the wealthy were not per se bad, if part of the object of government was to help foster an atmosphere where the individual may achieve self-realization and growth. 

Phelps, I thought, was legitimizing the fact that governments almost invariably favored the economic elites—by extension he was making a quintessentially Republican trickledown argument.  In retrospect, I can see I was applying a linear egalitarian concept (the rich already have enough) to a far more complex issue.  What Phelps was looking for was a “Good Economy”—one that has dynamism, a free flow of capital for those of entrepreneurial spirit, rewards for innovation, and as its bedrock, the opportunity for work that has meaning and value beyond that of just profits.  He isn’t interested in eviscerating labor.  Instead, he and Sassen wanted the same thing—a high participation rate in a vibrant economy.

The difference between them may come down to trust.  Sassen sees the results of globalization and debridement of the manufacturing sector and places them in the context of an increasingly self-absorbed economic elite.  The rich not only haven’t earned our trust, they continue their efforts to further stack the deck. Phelps, on the other hand, trusts in an innovative and vibrant market to provide enough alternatives to render those advantages irrelevant to the average person.

I’m rooting for Phelps, because his ideas are closer to elevating the individual to earn, on his own, what he desires.  But for that to work, we need more than just a new class of entrepreneurs, because not everyone is cut out to run their own business.  We also need a culture change so the employee can have pride in what he is doing and the company he works for. That means a management that doesn’t claw at every dime in profit, doesn’t treat staff like chattel and customers as marks to sell the cheapest junk for the most money.

At the end of his Prize Lecture, Phelps sums up: “My conclusion is that a morally acceptable economy must have enough dynamism to make work amply engaging and rewarding; and have enough justice, if dynamism alone cannot do the job, to secure ample inclusion.”

Those are the words I’d like to hear on Tuesday from Mr. Obama and his opponents.

I have a feeling I am not alone.

Michael Liss (Moderate Moderator)

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