Epistemic status: wild-eyed inside view impressions, based on narrative and stereotype, mostly devoid of hard facts. I expect hard facts to change my view. [I also note that this story basically accords with my grey-tribe ideology / worldview.]

Over the past couple of weeks, I’ve started following twitter for the first time, and (relatedly) I’ve been reading a lot of Venkatesh Rao’s writing, which is mostly new to me. This combined with the fact that history in 2020 seems to be “moving faster” than it used to, has caused me to start thinking about society, and social class, and some other topics that I’ve not thought much about before.

This shitty post represents an outline of my current, tentative, view of what the heck is going on in the United States these days. As noted in the epistemic status, this synthesis is based on my subjective impressions watching the world unfold, more than rigorous analysis, and accordingly I’m missing a lot of complexity, at best, and totally off base at worst. But nevertheless, this kind of unrigorus making sense of things seems like a good starting point, to guide my empiricism.

Optimism and social stability

There’s a lot of talk about inequality, and the social unrest that income inequality foments. But I think that inequality of income, or of wealth, is a little bit of a red herring. I posit that social unrest mostly stems from pessimism about one’s personal life outcomes.

When folks expect their lot in life to improve, decade by decade, and when they have an expectation that if they work hard, their children can enjoy a better standard of living than they do, they’re pretty content. So long as that is true, they don’t care that much if other people are wealthier than them (especially people who live far away, but I think this is also true of literal neighbors).

Upsetting the social order is risky and dangerous, and is therefore an action of last resort. Most people don’t actually like violence and will avoid it if they can. If there are opportunities for social advancement, they’ll take them.

However, if those opportunities are lacking, for some reason or another, and people feel like they can’t get ahead, they’ll feel frustrated. They have a sense that something unfair is happening, and are likely to adopt the mindset of the pie fallacy: there’s only so much to go around, and one person’s wealth implies another person’s poverty.

In fact, while the pie-fallacy is a fallacy in the general case, the 0-sum mindset is a pretty accurate summary of one’s situation when there are not opportunities to improve your lot in life. Conditioning on that premise, your wellbeing does actually tradeoff against other people’s resources. If there’s some blocker to creating new value, the only thing left is redistribution, either by legal means like taxation, or illegal, like outright revolution.

I think that it is this frustration, of a lack of upward social mobility, much more than inequality specifically, that leads to revolution or attempts at redistribution.

Unfortunately, I think that a huge swaths of Americans actually find themselves in this position, of being unable to improve their lot. The American dream, that you can work hard for most of your life, so that your kids can have a better life than you feels like an empty promise.

In the red-tribe side of things, this looks like the factory worker in the rust belt, whose job was outsourced to a foreign country, leaving him without a clear away to support himself. And as the economic centers of his world dried up, he watched as his community became a shadow of its former vibrant self. For him, the American dream seems to have gone wrong somehow. Somehow he’s worse off than his father was.

On the blue-tribe side of things, this is embodied by the millennial in one of the costal mega-cities, working as part of the gig economy or in dismal retail, who is saddled with enormous college debt,  which somehow didn’t give her much career capital, and who is paying exorbitant rent to for a small room in a shared apartment, or, alternatively, still living with her parents. A child of the nineties, she thought, and her parents thought, that if she worked hard and went to a good college, the world was her oyster. But somehow it doesn’t seem to be working out that way.

I imagine that both of these people feel like they are running in place: they were promised that if they worked hard, they could have a good life. But instead they’re treading water.

Why

Why are we here? It seems like for a number of decades standards of living were rising, and people were doing better than their parents. Why did the American dream stop working?

I think that it is the result of a number of factors.

First, we need to keep in mind that “having a better standard of living than your parents did” was much easier for the Baby Boomers, because that was a lower bar to beat. The Boomer were born right after the Great Depression, and many of them were first or second generation immigrants. If your mom and dad walked off the boat with literally $10 in their pocket, and worked their way up from there, or if they were impoverished farmers whose crops failed in the dust bowl, it is a lot more likely that you’ll end up better off then them.

Second is the great stagnation. The boomers benefited from one of the biggest surges in economic growth in history, driven by the mass deployment of new technology, which created new industries. Riding that wave, life got better for a lot of people. If true growth is much slower now, less benefit will accrue to individuals.

But the biggest thing is that the new economy is exclusionary. Information technology and it’s derivatives, the industries in which almost all the growth we do have is concentrated, is fundamentally about scale, which means that outcomes are compressed into a power-law.

In one of my favorite essays of all time, How to Make Wealth, Paul Graham says, in order to make a lot of wealth, you need to have leverage, in the sense that your decisions scale. And that one of the best ways of getting leverage, is by developing technology.

What is technology? It’s technique. It’s the way we all do things. And when you discover a new way to do things, its value is multiplied by all the people who use it. It is the proverbial fishing rod, rather than the fish. That’s the difference between a startup and a restaurant or a barber shop. You fry eggs or cut hair one customer at a time. Whereas if you solve a technical problem that a lot of people care about, you help everyone who uses your solution. That’s leverage.

Doing work with computers, means that you have 0-marginal cost, which means that if you solve a problem once, you’ve solved it an arbitrarily-large number of times, so you can create a huge amount of value in one go.

But there’s a dark side of leverage, which is that it tends to shift the world towards winner-take all dynamics. A few people who are well suited to this new world (possessing an extreme entrepreneurial mindset, or technical chops, or excellent sales skills, etc.) thrive, producing huge amounts of value. But for the Americans that don’t fit that template, the work-a-day opportunities are becoming less and less attractive, because those roles provide less and less marginal value.

When the marginal costs of goods was non-0, that had a flattening effect on the power law, because even if you couldn’t design a ford car, you provided value to the final product by working on the assembly line. But today, the marginal cost of most everything in the new economy is 0.

Approximately speaking, everyone has been thrust, whether they like it or not, from Taleb’s Mediocristan into Extremistan. More of progress is dominated by a few super-winners, compared to a generation ago, when progress was, though still on a power law, more equitable.

[I feel like this doesn’t quite explain it. Like sure, wages are stagnating. But if costs were falling faster than wages, then in wouldn’t matter: you would be doing better year by year, just by dint of falling cost of living.

So part of the story is that, for some reason, the rents are too damn high, such that people have trouble just getting by.

Why’s that?

Maybe it has something to do with the fact that almost all of the economic opportunities are concentrated in a few mega-cities? You either have to live there, or be resigned to watching the world decay around you?

Does that mean that if zoning were different, so that there were ten times the number of apartments in SF, NYC, Chicago, DC, and Austin, this problem would basically go away, and people could basically rise with the rising tide of the economy? Or if the pandemic causes the world to decentralize, and people can pretty much live and work from anywhere in the world?

I guess I would be surprised if that were the result of either of those changes. Maybe because there are forces that are preying on people and therefore driving net income to some set point above subsistence, but below personal net-growth?

…

It might be that the high cost of living is a consequence of the huge disparities in production power: there are the heroes / robber barons of the new economy, who are mostly living in a few mega cities, and almost all the the wealth flows from there, so you have to be in the mega-cities to have access to any of the opportunities?

Also, don’t forget about the college debt which is part of what makes the cost of living high, and which has been driven up by other factors.]

Reaction

Whatever the cause, I now suspect that there are a lot of people that feel like whatever they do, there’s no way for them to get ahead. They feel, justifiably, disenfranchised.

It’s natural, in a situation where you feel trapped, to try and make sense of what is happening to you. There are a number of narratives that people adopt to orient to the situation that they find themselves in. But I think the two biggest ones are Trumpism, and Wokeism.

The archetypal disenfranchised red-triber is frustrated and confused that somehow things are getting worse for him and his peers. The literal person of Donald Trump exploits those feelings, and provides a narrative that America has been taken advantage of by other countries (for instance, Mexico, feeding us illegal immigrants, and China, who is cheating in trade deals), due to something like weakness on the part of the establishment and the coastal elites (who in any case, seem to alienate him or condescend to him at every turn). Under this narrative, these trends need to be reversed, to make America Great Again ™.

The archetypal millennial blue-triber, in contrast, feels frustrated and confused about how she can’t seem to get ahead. She buys into a narrative that the reason for this is systemic oppression: the problem is racism, the patriarchy, and capitalism, and broadly systems that serve their own interests by exploiting weaker groups. Under this story, what is needed is an overhaul of those oppressive systems.

Note of course that this sort of disenfranchised frustration isn’t the only thing feeding these two ideologies. Lots of people who, personally, have an optimistic trajectory might buy into or act in alignment with either one, for all the usual reasons, from virtue signaling, to tribal mimesis, to thinking seriously about the problems and their origins and coming to the conclusion that the Trumpist or the Wokists are basically correct.

But, I posit that the energy that is driving both movements comes from large swaths of people who feel like, whatever they do, they can’t get ahead. If there were ample individual economic opportunity, people wouldn’t care nearly as much about those problems.

Social media

On top of this, we introduced a new technology to the masses over the past decade and a half. Our social and political lives are organized by twitter and facebook.

This has a divisive, echo-chamber enforcing, effect. The Liberals and the Conservatives have always been at each others throats, railing against the other as an outright evil. But I imagine that there was something very different about the world when everyone watched Walter Cronkite on the news every night. There were strong, emotional disagreements, but everyone was, to a large extent, living in the same world.

No longer. Now, the media landscape is fractured, and virtually every event is spun to support one ideology or another. And now almost everyone has a voice in the conversation, due to social media, where before, there were defacto gate-keeper institutions.

Much more than we used to I think, we live in one of a number of parallel worlds that are layered on top of each other. My guess is that this aggravates tensions, by reinforcing one’s existing narrative. Then, because of the natural memetic incentives, this results in extreme othering and demonization of anyone with a meaningfully different set of priorities.

[It seems like there’s a lot more here, that it might be worth understanding in detail.]

Also, our institutions are falling apart, in the sense of loosing their legitimacy, and in the sense of losing their ability to function in pretty basic ways, for related reasons. Basically, it seems like in this cultural battlefield, every institution has to pick a side. This lack of space for “neutrality” edges out the possibility of non-ideological sense-making. (I’m not satisfied with that explanation. I feel like there is a much more detailed story of the incentives that have torn apart news papers and the universities, for instance.

Covid

On top of all this, we have a pandemic, itself litteraly-insanely politicized, forced a lot of people into enclosed spaces with minimal social contact, for months, and waited we went collectively stir-crazy.

Powder keg

Overall, this reads like a pretty concerning setup. I don’t have a good intuition for how robust the substructure of our world is, but it certainly seems like it is being tested more than any other time in my extremely short lifetime.

Seems maybe bad?