How America is reverting back to the feudal age

How America is reverting back to the feudal age, by Joel Kotkin.

The ultra-rich represent an emergent global aristocracy — or rather, a new oligarchy. Fewer than 100 billionaires now own as much as 50 percent of the world’s assets, the same amount that around 400 billionaires owned a little more than five years ago. …

Today the predominant and most influential group consists of those atop a handful of mega-technology firms. … Seven of the world’s 10 most valuable companies come from this industry. Tech giants have produced eight of the 20 wealthiest people on the planet. Among the na­tion’s billionaires, all those under 40 live in the state of California, with 12 in San Francisco. In 2017, the tech industry pro­duced 11 new billionaires, mostly in California. Only China, home to nine of the world’s top-20 tech firms, presents any kind of challenge to their domination. …

Universities are the new cathedrals. Stanford, in Silicon Valley. Coastal hills and the radio telescope in the background.

The high-tech middle ages:

Rather than epitomizing American ingenuity and competition, the tech oligarchy increasingly resembles the feudal lords of the Middle Ages. … The ascendant tech oligarchy has exploited the “natural monopolies” of Web-based business. Their “super-platforms” depress competition, squeeze suppliers and reduce opportunities for potential rivals, much as the monopolists of the late 19th century did. Firms like Google, Facebook and Microsoft control 80 to 90 percent of their key markets and have served to further widen class divides not only in the United States but around the world.

Once exemplars of entrepreneurial risk-taking, today’s tech elites are now entrenched monopolists. Increasingly, these firms reflect the worst of American capitalism — squashing competitors, using inden­tured servants from abroad for upwards of 40 percent of their Silicon Valley workforce, fixing wages and avoiding taxes — while creating ever more social anomie and alienation.

The tech oligarchs are forging a post-democratic future, where opportunity is restricted only to themselves and their chosen few. …

Rather than encouraging and accommodating families, today’s oligarchs promote a largely childless college campus environment, where they even pay female workers to freeze their eggs. Traditionally companies liked employees with families. Not so much in the brave new tech world, which demands long hours and little time off for such things as raising children.

As for the rest of the population, the prospects are even bleaker. In the tech hub of San Francisco, the middle-class family is almost extinct. The city has lost 31,000 home-owning families over the past decade. It leads the state in economic inequality. The evidence of massive inequality, pervasive homelessness and social dysfunction fills the streets.

Silicon Valley, located in the suburbs south of the city, has also become profoundly less egalitarian. It is increasingly divided between an entrenched ultra-wealthy class and a dependent poor class, work­ing largely in the service industries. By 2015, some 76,000 millionaires and billionaires called Santa Clara and San Mateo coun­ties home, while many in the area struggle to feed their families and pay their bills each month. Nearly 30 percent of Silicon Valley’s residents rely on public or private assistance.

Wired magazine’s Antonio García Martínez describes the contemporary Valley as “feudalism with better marketing.” In Martínez’s view, a plutocratic elite of venture capitalists and company founders sits above the still-affluent cadre of skilled professionals — well paid, but living only ordinary middle-class lives, given taxes and high pri­ces. Below them lies a vast population of gig workers, whom Martínez compares with sharecroppers in the South. And at the very bottom lies an untouchable class of homeless, those addicted to drugs and criminals.

The new cultural overlords:

This new feudal order rests on a new clerisy, which has now taken the cultural and intellectual role exercised by the old First Estate. Al­though largely secular, these worthies take on the role of ecclesiastical authorities from medieval times, seeing themselves as anointed to direct human society …

The political rise of this cultural overclass has been building for more than 50 years. As early as the 1960s, presidential historian Theodore White spoke of the “the new priesthood . . . of action intel­lectuals” that shaped the John F. Kennedy administration. This ming­ling of intelligentsia and power reached a pinnacle during the presi­dency of Barack Obama, whose administration was staffed al­most exclusively with products of the nation’s elite universities.

Whereas the old First Estate justified its control based on spiritual dogma, the modern clerisy bases much of its power on its reading of “science.” Its members claim that, rather than mere factionalism, they represent an “objective” perspective above personal considerations. “When scientists say they want to live up to their social responsibilities, what they usually say is that they want more power than they have,” once observed Irving Kristol. “It means they want to run things, to take charge. It’s always nicer to run things than to be run by them.” …

The Google founders developed their search engine at Stanford

The ultimate engine of the clerisy’s power, and the prime incubator of its orthodoxy, lie in the universities … As elite universities have become more expensive and more critical to success, they have become, if anything, more socially exclusive, widening the gap between themselves and smaller, less well-posi­tioned institutions. … The days of rising up from a minor college to a position of influence and high status increasingly belong to the past.

Equally troubling, the clerisy, again like its medieval counterparts, has adopted a role as an enforcer not of free thought but of “pro­gressive” orthodoxy. These trends are particularly acute in fields that most impact public policy and opinion. …

Aspiration? Not any more.

Three-quarters of American adults today won’t grow up to be better off than their parents. According to Pew, a majority of parents think their children will be financially worse off than they are. …

In the United States, homeownership among the post-college cohort (ages 25–34) dropped to 37 percent in 2016, down from 45.4 percent in 2000, according to Census Bureau data. …

The way things look now, the battle will be over who pays for an ever-expanding welfare state, not how to expand the middle class. This is likely to shift our politics increasingly in an authoritarian direction. As the great historian Barrington Moore noted, “no bourgeois, no democracy.”

In a country where the middle ranks are shrinking, the elites more powerful, and ideological polarization is on the rise, the prospects for democracy, even in its greatest homeland, could be grim indeed.

Much of this is simply due to the way money is manufactured in society, and who gets to use it first. Fix banking, and the trends to inequality and consolidation — which are fuelled by newly created money at trivial interest rates — will wane. Let’s see what happens after the chaos of the bursting debt bubble, though that might take a while.