They can’t get no satisfaction; trying to understand life in the US
Ex president Trump was impeached for a second time; an historic “achievement”. The failure of his attempts to subvert the democratic process can be viewed as a success story: Decency, truth and democracy prevailed; the Republic did not succumb. I am relieved, of course, but it is a worrying indication of the state of politics in the USA, and the location of public opinion, that members of congress who voted against his impeachment, or failed to find him guilty, are treated as if those are valid positions. Just as worrying is the fact it’s seen as within the bounds of normality that they have yet to recant the baseless claims that the election result is suspect. The debate between Democrats and Republicans is no longer a discussion between two equally valid but opposing viewpoints of political economy. The ex president’s actions throughout his term, and particularly after he was defeated at the polls, introduced a new moral jeopardy into the traditional political debate; there is nothing normal, by the standards of global democracies, about the refusal of congress as a whole to accept that truth, or their apparent willingness to sweep the whole mess under the carpet and move on.
One of the toughest problems that the country faces is that it only has two political parties of consequence and one of them no longer seems to believe in: the constitution; the political mechanisms of its democracy; or the absolute moral difference between forcing people to live by your values, even if that means using undemocratic methods to do so, and persuading people to accept your values and policies through debate and the electoral process.
The fact that 74 million votes were cast for Donald Trump, and that he easily held the 232 electoral college votes of 24 states, has left many people in the US and elsewhere perplexed. How could so many voters choose four more years of corruption, incompetence, open hatred of the “other” and erosion of society? As an immigrant, a legal resident, (and thus a bystander in the election), I was astonished that it was as close as it was; and that’s in spite of living here for a decade. How do so many people end up so monumentally angry that they think four more years of Donald Trump as president is a good idea? umair haque has done an incredible job of documenting many of the reasons, but I think an additional part of the answer lies in an obscure piece of economic theory from the 1970s.
Positional wealth: At this point I need to offer a disclaimer — I’m not an economist, so my analysis here is that of an interested amateur not a trained expert. That said, I think peoples’ inability to secure positional wealth accounts for why, particularly in the USA, there’s a chronic long term lack of satisfaction with public policy. In fact, not just lack of satisfaction, actual anger. I’m not saying that there aren’t many other powerful factors at work too. Here on Medium, Umair Haque has been documenting the underlying issues for some time; white people, in the majority, vote for the conservative option in presidential elections. In that light the weight of votes for Donald Trump in 2016 and 2020 is simply a continuation of the historical norm. In his book “What’s the matter with Kansas?” Thomas Frank explores the same territory at length, through the lens of the political history of one state.
However, an underappreciated factor ratcheting of US political economics farther and farther to the right is the overall failure of economic growth to deliver satisfaction. This truth and its implications are things that neither the Republicans nor Democrats want to deal with because they entail the need for a more comprehensive change to the political economy of the country than either party (or at least the mainstream of the Democratic party) is willing to conceive. The analysis which underlies this opinion was developed by the British economist the late Sir Fred Hirsch, in “The Social Limits to Growth”. Hirsch’s theory is built around the recognition that wealth has both positional and material attributes and that while both are important for satisfaction, traditional measures of economic growth focus only on material attributes. Not only has growth measured in this limited way not delivered satisfaction, Hirsch’s thesis is that it cannot. And, there’s worse news for free market capitalism. In the way that growth is used as a political device— as the panacea for all that ails us — being wedded to its importance all but guarantees dissatisfaction for the majority over the long term.
Hirsch (writing in the mid 1970s) starts with an observation: despite decades of economic growth in western democracies (and remember, we’ve had four more decades since then, which serve as a kind of validation of what Hirsch said in 1977) many people feel dissatisfied with their economic situation. Over the decades reviewed by Hirsch (and the 40 years since) economic growth has been one of the key debating points in politics in the USA and elsewhere. Things are bad, we’re told, when economies are not growing; life will be better when growth is higher. Political success at the national scale is often measured by whether you achieve better growth in GDP than the other side did last time they had their hands on the till(er). But if growth’s so great and we’ve had so much of it, Hirsch asks, how come we’re not satisfied?
To answer his own question, he first notes that economic growth simply doesn’t work as a means of providing satisfaction. Its narrow concept that more is more doesn’t apply to all of the economic goods and services that people consume, or the satisfaction obtained from that consumption. The problem is, he contends, that theories of growth fail to differentiate material goods from positional goods. Material goods include the things we can produce more of in a growing economy. Their supply typically increases to meet demand, prices fall as demand increases, and they become available to nearly everyone. They’re also the sorts of things which have mainly private benefits: my consumption, doesn’t affect yours, or the satisfaction you derive from it.
If you’re severely poor, it’s likely your immediate needs will be focused on material goods, like food, water, warmth, clothes, etc. As an economy grows it tends to lift more and more people out of the kind of absolute poverty that is defined by a lack of access to such material wealth; as the economy grows basic needs are increasingly met. In that sense, and to that extent, growth does indeed lead to higher welfare and more human happiness; but there’s a but. As our basic material needs are met, satisfaction, for most of us, depends increasingly on positional wealth as well as material wealth. And in a society that places as high a value on individualism and the virtues of competition as the USA does, positional wealth is likely to be especially valued. Hirsch lays out the reasons why this is a problem for those who think that more wealth of the kind generated by growth automatically means more satisfaction.
Imagine that you’re not so poor that life is a scrabble for subsistence. You can eat, you’ve got clothes on your back, maybe even a few of the things that are considered markers of normal life in a modern industrial society — a tv, a fridge? Furniture. Maybe you’ve got a car, there’s some beer in that fridge and cable service for your tv. Perhaps you even have some disposable income once in a while. Probably not every week, maybe not every month, but once in a while. Because your life isn’t just a struggle for existence you have a moment or two to lift your head and look ahead of you in the economic queue, to see what the people further ahead have — if only you had some of that stuff too, you’d be happier, more satisfied, like they are, right? It looks as though if you earned just a bit more, you’d be in the same bracket as those other people. And doesn’t every politician of either party say that because the economy is growing, wages are rising, and so won’t you be there at the threshold of satisfaction any time now? Won’t growth pick you up and carry you over the income threshold into the land of positional happiness? Nope.
No? Why Not? Because it picked everybody else up too, including the people who were already ahead of you, and they carried the threshold for entry to Club Satisfied right along with them. They’re still ahead of you and you’re no closer to being satisfied with your positional wealth than you were when everyone was 2.5% “poorer” last year. Frustrating, huh? You were sold a bill of goods. But it’s worse, it’s actually much worse.
Not only do you have to improve your position at a faster rate than everyone else to improve your relative position, even if you do, when you arrive in the economic promised land you might well find that a whole load of other people did the same; and now you’ve got to share the thing you coveted with more people than you bargained for, because you and all the other new arrivals added to the crowd who were there already.
So, for goods/services for which supply is basically fixed (for example hotel rooms in exclusive resorts), or those for which supply will not increase sufficiently to meet demand, competition for ownership/consumption ensures that increased demand leads to increased competition, which drives up prices; and in any competition of that kind the people who were already ahead of you have a clear advantage no matter how much the economy grows. Bad huh? It is. But there’s more. There is also the problem that growth tends to increase demand for goods for which the condition of use is part of the value (e.g. traffic-free roads, empty ski slopes, tranquil natural beauty spots).
Finally managed to scramble faster than everyone else so that you’ve got leisure time to take a holiday by the ocean or up in the mountains? Yeah, me too. And I want to put my towel on the same patch of sand you do, and ski on the same pristine run (actually, I don’t want to do either of those things but someone does; you get my point). So, those positional markers of wealth you coveted from back there? You’re not going to get the satisfaction from them you thought you would, because my consumption of my newly-earned share affects your consumption of your share. As Hirsch said, everyone can’t have what the few have, because if everyone tries to do that we trample whatever it is we thought we wanted to pieces and none of us get the satisfaction we thought we would. In other words, positional wealth often has public goods attributes and so it’s no wonder that the growth-based paradigm of more is more doesn’t give us a good model for how to enjoy it well. As disappointing as that news is, it gets worse, sadly.
The same economic forces that make the competitive scramble for positional wealth such a guaranteed disappointment, also make the conditions for entry into positional groups constantly harder and harder to obtain. This is a kind of social analog of the Red Queen theory in evolutionary biology. The theory comes from the Red Queen character in Lewis Carroll’s Through the Looking Glass, who tells Alice that in Looking Glass Land it takes all the running you can do just to stand still. As an example applied to the scramble for positional wealth, think about the kind of jobs which didn’t used to need a college degree — how many of them now expect applicants to have a degree? What about jobs that used to require a degree — how many now expect some kind of graduate school qualification?
Everything said so far degrades the value obtainable by the many from growth even when the shape of the wealth distribution curve stays constant as the economy grows. But, in addition to the danger that growth might not deliver on its promise of happiness as the whole curve slides towards more wealth overall, over the last few decades we haven’t even been able to share equitably in the growth of the economy, and the COVID-19 pandemic has intensified that effect. An increasing share of the wealth generated by all our economic activity has been ending up in the pockets of a very small fraction of the population, as analysts such as Branko Milanovic, and others have documented in great detail. The economy has been growing, but you probably haven’t even been able to experience the kind of frustration that Hirsch warned about. The economy has been growing but many Americans have been getting poorer in absolute terms. Even the sort of positional markers of wealth they aspired to a few years ago seem to be getting harder to attain. More people are slipping back towards absolute poverty, where even their material needs aren’t met. No wonder people are pissed off. It turns out the American dream, was only ever that — a dream — for the many. The ensuing sense of frustration and betrayal feeds into the sadly familiar story of how fascism and intolerance gain purchase in a society.
Reluctant Collectivism Hirsch didn’t have any easy answers for these issues, and that may be one reason why his work is not better known. He did point out that industrialized democracies (in the late 1970s) seemed to be coming round to the idea, albeit reluctantly, that the answers weren’t going to be found in making the pie bigger, but by dividing it more equitably — what he referred to as our reluctant collectivism. We flirted with the idea, but a couple of years after The Social Limits to Growth was published Margaret Thatcher’s Conservatives were elected in the UK and Ronald Reagan’s first term began in the USA not long after that; any notion of a progressive agenda for redistribution was killed off and the political landscape in both countries lurched to the right, marginalizing anything that looked the tiniest bit like socialism and any kind of progressive agenda from the left. If you want to get a sense of how far the shift to the right was, consider that Tony Blair — Tony Blair! — was elected as Labour party Prime Minister when the Conservatives were finally forced out of office over a decade after Thatcher’s first term started.
