The State of America

I came upon this article modern malaise: a theory.

In the 80s Thatcher and Reagan broke down trade barriers and ceded government power to banks and corporations. This created a consumer world driven by debt, where everything was assessed by utility. Politics essentially “became a wing of management, saying that it could stop bad things from happening instead of imagining how things could be better.”
Consumer debt has fallen since the peak in 2007-2009 or so.

Not necessarily so, consumer debt has fallen or stayed the same for the poor or middle class:

Rather spending seems to be driven by the wealthy, upper-middle class, who don’t need as much debt to consume and boost the overall economy.

Now politics feels like pantomime, with both parties bickering over social issues while neither has the political will to meaningfully affect the economy. Curtis: “Online psychodramas create waves of hysteria that make it feel like the world is transforming. In fact, nothing actually changed in the last four years. Trump made himself a pantomime villain, and we booed rather than imagine an alternative.”

Agree. I think the power of the federal government to affect change peaked in 2001-2008 or so, first with the massive buildup of the homeland security and defense apparatuses following 911, and then in 2008-2009 during the financial crisis, in which the federal government again possibly overextended its reach into the private sector. In 1998, the DOJ sued Microsoft, but no major tech company has been challenged in such a manner since. [This proved to be a huge waste of money and time as Microsoft eventually prevailed, only making tiny concessions, which could explain the reluctance to do it again.] Since 2010 with the ratification of Obamacare, the federal government has significantly stopped having influence as far as social policy is concerned. Rather, much of its power is through surveillance, legal, and administrative functions, like the FBI, NSA, IRS, SEC, etc. Or the Supreme Court, such as the overturning of Roe v. Wade. This is a point I have made many times this year. Although Biden’s executive order on student loan forgiveness is evidence that the executive branch can still pack a punch, more so when the dems are in charge especially.

Money became our religion, and now money is starting to run dry, as the world’s largest economies slow in their growth. Both democracies and dictatorships are in a moment of crisis.

Money is like a religion, but scant evidence to suggest it’s running dry. As stocks and home prices boom since 2020, there is more wealth than ever before. Although after a 12-year uninterrupted wealth creation boom from 2009-2021, the S&P 500 is down 25% for 2022 on inflation fears. So things have cooled off for now. But it doesn’t seem to take much to get things started again. The big question is how much more does inflation go up. Will 2023 be a repeat of 2022, or will annual inflation return to the long-run 2-3% historical average, which is the fed’s objective.

Purchasing power hasn’t changed in the past 40 years, according to the Pew Institute: “Today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.

Again, you have to look at the top 10% or so. That is where the purchasing power is coming from…Disneyland season passes, pricey NFL tickets, lifted trucks, expensive elective cosmetic procedures, home renovations, and so on. Indeed Ford, Tesla, and Restoration Hardware stock boomed in 2020-2021, during Covid, due to this sudden surge in purchasing power among the wealthy.

All meritocratic platforms are winner-take-all, with the top 1% of performers collecting a vastly disproportionate share of rewards. Look at Substack and Only Fans. This is not a conspiracy engineered by anyone: when anyone is allowed to compete, only a small percentage of people tend to capture most of the profit.

It’s been like this for a long time, and recent trends have only accelerated this. The Ivy League is more important and competitive than ever before; Covid has not changed this at all. Same for top 50 schools overall. Same for high-stakes testing, math competitions, top tech & finance jobs, etc…everything is more competitive and difficult. More people applying, smaller percentage of people getting in. The winners get bigger and richer, whether it’s top Substack or YouTube content creators, or top tech stocks such as Apple, Google, Microsoft, and Amazon.

America is a nation of extremes, with the best talent, and on the other extreme, high obesity rates and dumbing-down (such as a recent viral story about a comically-designed New York State algebra test). Yet considerable progress has been made in math, medicine (certain cancers are now curable), physics (like James Webb telescope) , computer sci, AI (like Stable Diffusion, machine learning), etc. By almost any objective measure, the caliber of math research today is greater than in the past. Today’s child prodigies are starting college at earlier and earlier ages, much like how the mile times and weightlifting records also keep being beaten. Yet record number of Americans are obese and out of shape. Despite the alleged dumbing-down of math curriculums in public schools, calculus in high school is much more common: 50 years ago it used to be only 5% of high schoolers took calculus; now as many as 25%.

Kevin Drum in 2019 noticed this bifurcation:

YouTube guys routinely lifting weight that 50-60 years ago would have set records, juxtaposed with reports of how men are getting weaker. I think rather there is a greater bifurcation between the smart and the dull, the fit & strong vs the fat or weak…High school seems dumbed down because it’s designed to accommodate a lot of dull kids. This is what people on either side of the left/right spectrum fail to understand when they complain about mediocre national test scores: America’s education system is like a huge funnel, whereas in other countries it’s more like a sieve.

The American dream, the idea that anybody could make a good living for themselves and their family through nothing but hard work, has become far less realistic. You know the Steinbeck line about how Americans think they’re temporarily embarrassed millionaires instead of exploited proletariat. But they don’t believe that anymore, do they?

It’s still realistic if you have a high IQ, choose a good career, and have a good work ethic…people in tech, consulting, finance, healthcare, law, etc. making record income even after accounting for student loan debt and inflation (the so-called college-to-STEM pipeline). [In an upcoming post I show that young people with degrees are in a better financial position compared to boomers, despite the nostalgia and the tired narrative of how poor millennials and gen-z are.]

Reddit ‘FIRE’ subs are full of such individuals in their 20-40s doing just that, not uncommonly with millions of dollars in finance, medicine, coding, law, etc.

But for those at the middle/left-side of the IQ distribution, maybe not so much. They tend to rely more so on lottery-like systems of success/promotion compared to more meritocratic ones. So it’s less about saving and investing but more about trying to get rich quick, like with crypto or meme stocks, which almost always ends badly for these people.

This clearly isn’t true, since people obviously aren’t free: they’re controlled by socioeconomic circumstances.

And also biological constraints, like IQ again. But I have also read many stories on Hacker News and Reddit of people born in the lower-middle class or worse circumstances rising up due to high intelligence and getting scholarships and landing decent-paying jobs. There is so much financial aid, scholarships, and other programs (such as Medicaid, subsidized housing, etc.) that economic factors cannot account as much for wealth inequality compared to in the past. Top colleges love to give scholarships to low-income high-achieving kids. This means that biological factors such as IQ play a bigger role. In this sense, biological inequality is tantamount to economic inequality.

I don’t want to completely dismiss the opposing side here. All else being equal, a gifted kid growing up in a rich household is at an advantage over that same kid from a poor neighborhood or a broken family, yet I think many on the left are mentally frozen in time in the 60s. A lot has changed, even poor kids have good nutrition, internet, TVs, electronics, access to healthcare, good clothes, smartphones, etc. 85% of households in the US have broadband internet access. Same for smartphones. The poorest of countries have smartphone penetration.

This is evident even in the crisis feminism is going through today: the failure of neoliberalism “girlbosses” is really about the way that the economy fails almost everybody today, the way that labor has become hyperspecialized and therefore alienated from meaning. I think that’s also why people resent tech so much: because so much money flows through tech, and people outside the industry perceive the people inside it as undeserving.

Tangentially related to the article, what does it mean for something to be in a crisis? This word gets thrown around a lot. ‘Neoliberalism failed because poor people and poor countries still exist.’ ‘Democracy is in a crisis because some people didn’t agree with the outcome of the 2020 election.’ ‘Geopolitics is in a crisis because of the slowest war ever’ (even though similar and worse conflicts existed in the ’90s). It’s not that there is a crisis but that it’s crisis when the desired outcome fails to materialize. Trump winning is a crisis of democracy despite being democratically elected. Trump failing to concede in a timely manner is a ‘Constitutional crisis’ (even though he did concede later without incident) despite AL Gore also not conceding.

I think ‘hustle’ and ‘girlboss’ culture are opposite sides of the same coin, as new ‘religions’ in America for otherwise secular people. Instead of people posting Bible quotes/passages on social media, people post success affirmations. It serves the same sort of function of providing hope, belonging, and meaning in life. The same sort of secularism qua religion is observed with pets serving as substitutes for children, the growing importance of Halloween as a cultural event among young people and surpassing Christmas or Easter, social activism as being the new evangelism, college as the new ‘megachurch’, etc.

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