Thursday, November 27, 2025

Economic polarization is the economics term for mass disability - causes of the global crisis

I've been posting about mass disability since at least 2008. Recently I learned that the formal economics term for a related concept is "economic polarization" and David Autor wrote about this in 2010:
Two forces have polarized the U.S. workforce over the past several decades. The first is increased demand for skilled workers, alongside U.S. education levels that have not kept pace in providing those skills, which has caused a sharp rise in wage inequality. The second is expanding job opportunities in both high-skill, high-wage occupations and low-skill, low-wage occupations, while available middle-skill, middle-wage white-collar and blue-collar jobs have contracted. This has been detrimental to the earnings of workers without a four-year college education, and particularly for male workers

The difference between me and 2010 David Autor is I'm very confident more education won't help. Even nations with essentially free post-secondary education don't enroll and graduate more than about half of eligible candidates. Not every person can do every job -- and that is the big thing liberal economists got wrong in the 90s. Macroeconomic models assume interchangeable workers. An economy can grow quite well even as more and more young people realize they cannot possibly attain a middle-class-lifestyle (now $70-90K/year for a single young adult). At some point this becomes lethal to democracy.

This polarization process is not new. In its current form it dates back to early IBM mainframes emptying offices of human database transaction systems.  It accelerated with the internet, and was syngergistic with globalization, and has now reached a critical state.

It's not the only cause of the American crisis. The slow century long rural collapse affects many nations, but America's over-representation of rural voters means we all feel their pain. Trump's genius was, at least transiently, concentrating LIVs (low information voters, aka non-college, aka working class, etc etc) in one party. LIV concentration meant the MAGA took over the GOP -- and got rid of anyone competent to meet their needs. The rapid rise of women from 1970 to 2000 was a social stressor that amplified the effect of economic polarization on young men. Regulatory ratchets, where each regulation has an initial positive return but removing them becomes a career-ending struggle, infected American governance. Corruption increased dramatically in the 90s and beyond, amplified by the ability of the internet to reach more vulnerable people. The collapse of the journalism business model broke our ability to understand ourselves.

The good news is all these things have many potential fixes. The bad news is that economists and sociologists, who should be driving our discussion, have been largely inert or in denial. But the fixes are possible nonetheless and occasionally I see glimmers of understanding among the commentariat.

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