The Real Class War

The Real Class War, by Julius Klein.

This is a bit heavy, but this is the engine room of politics, where real things happen and opinions are shaped. Most politics is motivated my money and status, with economic conditions usually the prime (if subconscious) driver of an individual’s outlook. What’s in it for me?

Understanding these issues gives more insight than knowing the downstream froth and bubbles of who won which election. Although set in the US, it applies pretty much across the West.

However one defines the working class [the economically “left behind”?], it has scarcely any political agency in the current system and no apparent means for acquiring any. …

While a restive working class might provide fertile ground for po­litical upheavals, any fundamental transformation of Western politics will necessarily be led by increasing numbers of the “elite” who defect from the dominant policy consensus and rethink their allegiance to establishment paradigms. …

The socioeconomic divide that will determine the future of poli­tics, particularly in the United States, is not between the top 30 per­cent or 10 percent and the rest, nor even between the 1 percent and the 99 percent. The real class war is between the 0.1 percent and (at most) the 10 percent — or, more precisely, between elites primarily dependent on capital gains and those primarily dependent on profes­sional labor. …

While the top 5 or 10 percent may not deserve public sympathy, their underperformance relative to the top 0.1 percent will be more politically significant than the hol­lowing out of the working or lower-middle classes. Unlike the work­ing class, the professional managerial class is still capable of, and re­quired for, wielding political power. …

Since going off gold in the 1970s, our current paper money is manufactured out of thin air by banks to lend to customers to buy assets, which then go up in price. Hence the great bubble in all asset prices that began 1982 but has gone wobbly under the extreme debt load since the GFC in 2008. Debt want up in a parallel bubble. In an asset bubble, the returns of capital are much greater than the return on labor.

At bottom, the economy that has been constructed over the last few decades is nothing more than a capital accumulation economy. As long as returns on capital exceed returns on labor, then the largest capital holders benefit the most, inequality rises, and wealth becomes more and more narrowly concentrated. …

 

 

The performance gap of elites versus the working and middle classes has widened, but professionals outside the very top are unlikely to match the wealth accumulation of their parents. …

Many positions that require advanced degrees, large student loans, and living in expensive cities barely pay $100,000 a year. The streets of Cambridge, Massachusetts, are filled with large numbers of scientists with doctorates from pres­tigious universities working at top biotech firms or research institutes, but living seven to a house with little hope of accumulating savings. The career prospects of journalists and academics — ironic casualties of the “information economy” — are declining even more relentlessly.

When members of these professions write about embittered working-class Trump supporters in declining industries, they may as well be writing about themselves. Indeed the conspicuous embrace of “elite values” by journalists and academics is often little more than an aspi­rational attempt to remain connected to an economically distant elite — just as educated millennials’ conspicuous consumption of “ex­periences” often serves as a necessary distraction from the grim reality that most will never be able to own a home. …

Since 2000, the combination of stagnation, widening inequality, and the increasing cost of maintaining elite status has arguably had a more pronounced impact on the professional elite than on the working class, which was already largely marginalized by that point. Elites outside of the very top found themselves falling further behind their supposed cultural peers, without being able to look forward to rapid­ly rising incomes for themselves.

This underappreciated reality at least partially explains one of the apparent puzzles of American politics in recent years: namely, that members of the elite often seem far more radical than the working class, both in their candidate choices and overall outlook. Although better off than the working class, lower-level elites appear to be experiencing far more intense status anxiety.

Fueling the sharp and hard recent increase in political correctness and enforcement is much greater moral virtue-signaling competition by not-so-wealthy professionals:

As Matthew Yglesias has pointed out, “In the past five years, white liberals have moved so far to the left on ques­tions of race and racism that they are now, on these issues, to the left of even the typical black voter.” Identity issues are often considered separate from economics, yet economic anxieties are almost certainly contributing to these trends among white liberal professionals. What­ever the underlying merits of “woke” critiques and causes might be, these postures are mainly adopted in intra-elite competition for posi­tions and influence.

The personal trajectory of Elizabeth Warren, an avatar of this class in many ways, almost perfectly represents the political trajectory of the professional class: first they abandoned the Republican Party and then continued to move further into the left wing of the Democratic Party. …

The professional class follows its economic interest: left and statist under the new deal 30’s, right under Reagan, then left from Bill Clinton onwards:

The recent leftward movement of the upper middle class recalls the rightward drift that occurred in the 1970s and 80s. … By the seventies, middle-class opportunities in domestic gov­ernment and academia were shrinking. … If the federal government and the universities were no longer expanding, it was time to find a new patron for the intellectual vanguard of the professional middle class, and the neoconservatives hoped to find one in an obvious place — the corporate elite. … Republicans offered the professional class one increasingly attractive inducement: a chance to become, essentially, financial managers in the new shareholder economy. In the 1980s, these “yuppies” contributed to two Reagan landslides. …

Yet only a few years later, the Democrats under Clinton took these voters back. The Clinton Democrats left Reagan’s economic changes intact, and even accelerated them. But they gave professionals greater scope to manage “postmaterial” concerns that suited their cultural sensibilities, mainly by expanding the so-called nongovernment sector — NGOs, multilateral institutions, government-spon­sored enterprises, and other organizations that received private fund­ing for nominally public purposes. These institutions provided elite jobs and conferred prestige on the professional class, while adding a gloss of legitimacy to a financialized economy.

In the Clinton era, rising neoliberal professionals acquired not just wealth but a new public power and significance … The Republicans could only offer “greed is good” reruns, yet another book on Tocqueville, and a thin veneer of old-line WASP affectation on top of a party increasingly reliant on déclassé “values voters.”

Elite professionals flocked to the Democrats in droves and all but abandoned the Republican Party. The cost, however, was the loss of the traditional Democratic working-class base, to which the new agenda was often hostile both economically and culturally. …

Today … upper-middle-class opportunities in the corporate and financial sectors are under pressure, and these elites are slow­ly but inexorably returning to the state. Their interests remain distinct from those of the working class, but they are increasingly aligning with labor rather than capital. …

The left professionals are also deluding themselves:

Another obstacle for left-wing upper-middle-class radicals is their own debilitating false consciousness, which easily exceeds the confu­sion frequently ascribed to the working class. Instead of frankly acknowledging their own professional class interests, they project their concerns onto the working class and present themselves as altru­istic saviors — only to complain about a lack of working-class enthusiasm later. This blindness often prevents them from recognizing where their interests diverge from the purported beneficiaries of their projects and impedes their ability to effect any larger political realignment. It also exacerbates the temptation to double down on parts of the current paradigm — such as enlarging the NGO racket — which only strengthens the billionaires in the long term.

The right, lacking the professionals, became the stupid party:

The Republican Party, on the other hand, faces a very different problem — the absence of any significant professional elite, which abandoned the party long ago. …

The alienation of elite labor:

Professional class opposition to the political and economic status quo will almost certainly continue to intensify. Beyond economic pres­sures, at least two additional sources of elite anxiety will push in this direction: the emptiness of today’s professional careers and the obtuseness of the billionaire class.

As working-class jobs have become more precarious and demeaning, professional jobs have become more meaningless and depressing. Anthropologist David Graeber has defined an entire category of “bullshit jobs” and traced their proliferation throughout the corporate world and other sectors. In large part, these are make-work positions for professional elites that exist primarily to pad the prestige of those above them. These jobs are not simply menial or dull, and they are often well-paying, but they are utterly pointless and some­times even internally acknowledged as such. …

Contrary to the pervasive mythology of entrepreneurialism and crea­tivity, it is glaringly obvious to today’s professional elite that the neoliberal economy is allocating capital, and especially talent, very poorly. …

  • The legions of finance drones making utterly pointless discounted cash flow models could be far better employed designing a serious industrial policy.
  • The engineers currently laboring over algorithms to make social media more addic­tive should be funded to focus on more productive technological advances.
  • All the effort now devoted to coming up with new pricing strategies for old drugs could be directed at real medical problems, like increasing resistance to antibiotics.
  • The vast resources invested in unprofitable ride-hailing apps and real estate arbitrage could have been used to solve America’s ever-increasing public infrastructure and housing challenges. …

Slogans about “changing the world” have long since morphed into PowerPoint slides on “widening the moat.” Elites climb 99 per­cent of the way up an ever-greasier pole only to spend most of their time focusing on cutting costs and increasing share buybacks — or marketing taxi services, vaping products, and food delivery as “tech­nology.”

Government bureaucracies, to be sure, are as sclerotic and frustrat­ing as ever. But the opportunity to restructure and revitalize the state —t he only way to address the most important issues of the present — appears far more exhilarating to growing numbers of talent­ed elites than any other alternative. …

And the winners of the asset inflation lottery:

Adding insult to injury … is the absolute degeneracy of the American billionaire class. As if the present political and economic dysfunction were not enough to prove their corruption, our exalted plutocrats seem intent on publicly displaying their vacuousness.

Many of these people presumably possess some narrow technical ability, though if so, it is less and less evident. But they conspicuously lack any self-awareness, much less insight into issues of broader human concern …

Conservative donor gatherings are somehow even more pathetic. Most of the attendees are there only because they are not smart enough to recognize that the Democratic Party offers a far more effective reputation laundering service. The rest are probably too senile to know where they are at all. There is often a special irony to these events: an uninspiring ideologue is usually on hand to repeat a decades-old speech decrying Communism — recounting the horrors experienced in countries ruled by a self-dealing, incompetent nomen­klatura and marked by a decaying industrial base, crumbling infrastructure, poor education system, a demoralized populace, low confi­dence in public institutions, falling life expectancy, repeated foreign policy failures, a vast and arbitrary carceral system, constant surveillance, and even massive power outages in major cities. Imagine that.

The bold thinkers of Silicon Valley are at least as delusional. Mark Zuckerberg must be the only person in the world who still pretends to believe his self-serving banalities about “connecting people” through social media. Jeff Bezos publicly muses about the difficulty of finding a useful way to deploy his “financial lottery winnings,” while Amazon stations ambulances outside its warehouses to treat employees who collapse from exhaustion. …

What is remarkable about today’s oligarchy is not its ruthlessness but its pettiness and purposelessness. An all-consuming megalomania might at least produce some great art as a side-effect. But this collec­tion of mediocrities cannot even do that. Their political activities — whether pushing for a slightly lower tax rate or throwing money at a self-serving brand of faux progressivism — are too small-minded to be anything other than embarrassing. This class has no idea what to do with its wealth, much less the power that results from it. It can only withdraw and extract, socially and economically, while the political justifications for its existence melt away.