Friday, September 23, 2011

Mass disability and the middle class

My paper magazine has another article on the Argentinification of America - Can the Middle Class Be Saved? - The Atlantic.

I'll skim it sometime, but I doubt there's much new there. We know the story.  The bourgeois heart of America is fading. In its place are the poor, the near poor, the rich and the near rich.

I have thought of this, for years, as the rise of mass disability. In the post-AI world the landscape of American employment is monotonous. There's work for people like me, not so much for some I love. Once they would have worked a simple job, but there's not much call for that these days. Simple jobs have been automated; there's only room for a small number of Walmart greeters. Moderately complex jobs have been outsourced.

Within the ecosystem of modern capitalism a significant percentage of Americans are maladapted. I'd guess about 25%; now 35% thanks to the lesser depression.

There are two ways to manage this - excluding the Swiftian solution.

One is to apply the subsidized employment strategies developed for adults with autism and low IQ. Doing this on a large scale would require substantial tax increases, particularly on the wealthy.

Another approach is to bias the economy to a more diverse landscape with a greater variety of employment opportunities -- including manufacturing. This is, depending on whether you are an optimist or realist, the approach of either modern Germany or Nehru's India. This bias compromises "comparative advantage", so we can expect this economy, all else being equal, to have a lower than maximal output. Since in our world the benefits of total productivity flow disproportionately to the wealthy (winner take all), this is equivalent to a progressive tax on an entire society.

So, either way,  the solution is a form of taxation. Either direct taxation and redistribution, or a decrease in overall growth.

I suspect that we will eventually do both.

See also:

1 comment:

Anonymous said...

Why do you suspect we will eventually do both?

Is it optimism? I'm not optimistic about such an egalitarian change.

I suspect we're more likely to continue to slide into a 3rd world state where the middle class ceases to exist.

The wealthy are too powerful for a political solution to ever be considered, such as a progressive tax.