We are rapidly approaching the ten-year anniversary of the greatest financial disaster to strike the modern world since the 1930s. I hope people in education, technology, futures, and policy fields will reflect on this and how it reshaped our time.
To help spur that process along, let me point to and excerpt from a new article by the brilliant John Lanchester. “After the Fall” offers elegantly phrased, remarkably accessible, and ultimately infuriating observations on how the financial crash happened, and how national and financial leaders mishandled it. This is important and rewarding reading for anyone in education – heck, for anyone alive in 2018.
I really recommend reading the whole article, but to whet your appetite I’ll pull out a few key pieces.
Lanchester begins by reminding us of the role academics played in the whole financial crisis, namely the arrogance of leading people in macroeconomics and their influence over policymakers and industry. (If you want more of this, please watch Inside Job, the best documentary on the crisis, and laced with bleakly hilarious academic comedy)
He then reminds us of the connections between the financial disaster, economic inequality, and popular resentment. Here’s one damning paragraph:
Life expectancy in the United States is also falling, with the first consecutive-year drop since 1962-63; infant mortality, the generally accepted benchmark for a society’s development, is rising too. The principal driver of the decline in life expectancy seems to be the opioid epidemic, which took 64,000 lives in 2016, many more than guns (39,000), cars (40,000) or breast cancer (41,000). At the same time, the income of the typical worker, the real median hourly income, is about the same as it was in 1971. Anyone time-travelling back to the early 1970s would have great difficulty explaining why the richest and most powerful country in the history of the world had four and a half decades without pandemic, countrywide disaster or world war, accompanied by unprecedented growth in corporate profits, and yet ordinary people’s pay remained the same. I think people would react with amazement and want to know why.
He also offers this observation about Generation Z and its different experience of the world, due to the crash and its aftermath:
I notice, talking to younger people, people who hit… twenty since the crisis, that the idea of capitalism being thought of as morally superior elicits something between an eye roll and a hollow laugh. Their view of capitalism has been formed by austerity, increasing inequality, the impunity and imperviousness of finance and big technology companies, and the widespread spectacle of increasing corporate profits and a rocketing stock market combined with declining real pay and a huge growth in the new phenomenon of in-work poverty.
Think of the way many young Americans support(ed) Bernie Sanders, and young Brits cheer on Jeremy Corbyn. (Don’t miss the 20-year-old Napoleon heuristic.)
Lanchester also cites that very important Milanović book on global inequality (my notes here). Remember that Milanović found that over the past 50 years incomes increased across the board in the developing world, but in the developed world middle class incomes flatlined while the rich saw their taking soar. This is represented by the famous “elephant graph”:
Elephant: see the body to the left and middle, and the trunk at the right edge?
Lanchester offers this fascinating and illuminating counterfactual:
What if the governments of the developed world turned to their electorates and explicitly said this was the deal? The pitch might go something like this: we’re living in a competitive global system, there are billions of desperately poor people in the world, and in order for their standards of living to improve, ours will have to decline in relative terms. Perhaps we should accept that on moral grounds: we’ve been rich enough for long enough to be able to share some of the proceeds of prosperity with our brothers and sisters. I think I know what the answer would be. The answer would be OK, fine, but get rid of the trunk. Because if we are experiencing a relative decline why shouldn’t the rich – why shouldn’t the one per cent – be slightly worse off in the same way that we are slightly worse off?
His conclusion – his way of summoning up everything we’ve learned about the crash and its aftermath – specifically calls out education and its role in facilitating inequality:
If changes benefit an economy as a whole, they need to benefit everyone in the economy – which by implication directs government towards policies focused on education, lifelong training, and redistribution through the tax and benefits system. The alternative is to carry on as we have been doing and just let divides widen until societies fall apart.
There’s more. Strongly recommended. Hopefully we’ll have more such discussions.
I’d argue it’s not even that the one percent will be worse off. It’s not a zero sum game and the one percenters certainly have much to gain from public works, happier employees, etc., even if not all immediately and not necessarily measurably.
The one percent certainly benefit from having a larger pool of happier, better educated workers to choose from and associate with, and the innovation that people in general get is much greater from more people being able not only to pursue higher education but also to build businesses and perform research.
Pretending that poor people must be kept poor so rich people can more easily have their personal planes isn’t really the issue so much as classism. Look to the very rich that were irritated at the newly minted millionaires created during the dot-com boom. There were some fun quotes from the superrich about how annoyed they were that so many other people also had elite memberships and planes and such and it simply wasn’t as special to have those things any more. I enjoyed reading these pampered princes sniffing that their favorite islands were suddenly so crowded.