Among my latest catch is S.D.Goitein's book on the Cairo Geniza documents. Goitein notes that in the 10th century Jewish women never worked outside of their homes, but in the 11th they started to "uncover their faces" and earn money as seamstresses or tending small shops. This social change is reflected in the marriage contracts (the ketubah) that started to deal with the issue if the wife's income was hers or to be administered by her husband. Goitein finds no signs of an early feminist movement demanding gender equality; the cause of the change is other. Poverty. Jews living in Muslim lands were becoming less prosperous to the point that the taboo of women going out of the home to earn money could not be maintained anymore.
What about our times? Women in the nineteen fifties and sixties rarely worked. But nowadays a couple cannot survive without two incomes! Is this generation poorer that their parents and grandparents? How could that be possible when they have larger homes, more cars, color TVs and spend their vacations in Europe, etc.?
My conclusion is that the current generation is poorer, since they need women to work outside and even so they barely can afford a child. There is no other name for it. Poverty.
32 comments:
Elizabeth Warren (the Indian chief) wrote a book to the effect that the extra money generated by women working had all been sucked up by the increased price of housing.
K
I think K has already given a partial answer.
We are poorer. The life costs are not dominated by gadgets or vacations - at least not for middle class.
What you can not afford with one income and former generations could are : accommodation, transportation,
health care, schools for kids, utilities etc.
So we are poorer as you noticed.
Modern society is so very complex that we can't even calculate if we are poorer or not.
We as a society at social/economic command level are brain dead.
The only justification for this is a huge missalocation of capital at global level.
We pursue activities which do not generate wealth. It would be cheaper for society if many people would just stay at home and drink or do drugs instead of prawling around and doing what in a rational analysis would be called wealth destruction or just waste. Like that oxygen thief K mentioned above.
The only way out - it happened before - is a massive reduction of complexity. In history it is called collapse. No other way of reforming the system is possible.
Even if we know that is the only way out no rational human would want to live through the correction. So we will fight it and add new levels of complexity until well it will fall on our heads.
There is an analysis about this subject by this one :
http://en.wikipedia.org/wiki/Joseph_Tainter
"Tainter argues that sustainability or collapse of societies follow from the success or failure of problem-solving institutions[3] and that societies collapse when their investments in social complexity and their "energy subsidies" reach a point of diminishing marginal returns. He recognizes collapse when a society rapidly sheds a significant portion of its complexity."
He gives a scientific explanation for J's observation.
PS. J is always a fountain of wisdom. That is why I come so often here. THX.
Short description J would recognize immediately, already wrote about some aspects he noticed. Here are some scientific explanations for J's empirical observations:
http://dieoff.org/page134.htm
So yes we are poorer and will become even poorer the more we struggle.
The law of diminishing returns applied in real time. And we are on the negative side for some decades already.
When I was younger I greatly desired to live through times like this. Because I could not understand how can people be so very dumb when what happens around them is very obvious. So many historic cases and I could not understand their behavior.
Now I'd like to take that request back , unfortunately the Almighty somehow heard me and will offer me the experience I craved. :(
Yes. Modern life is very complex and confusing and it is almost impossible to calculate if we are poorer or wealthier. My uncle in Argentina used to close down the factory for a whole month (January) and all 300 workers took a month paid vacation. Everybody went to visit relatives in the countryside or the sea. Who can afford today such relaxed lifestyle?
Inflation! In 1970 $10 per hour was a very good wage. Today It's poverty. Officially it now takes $59.13 to equal that $10 (use WolframAlpha). In California inflation comes nowhere near predicting housing price increases. The house that sold $60,000 house in 1976, now costs over $1 million, but official (Headline) inflation says it should cost only $242,000 (again use WolframAlpha). I'm talking about the very same house, these are real numbers. We not only have inflation, but it's not reported correctly-- the government fiddles the numbers to disguise the impact of the stealth tax. This is why women now work. Even two incomes don't compensate for the price increases which is why people feel poorer. We are now poised for another round of massive money creation. The U.S. Federal Reserve is now contemplating "QE3," the so-called quantitative easing, which is double talk for money creation. The European Central Bank is also contemplating money creation (even though that would be illegal) to rescue bond holders. Eventually we will get even more inflation which will also be misreported. Check Shadowstats.com to get the unfiddled numbers.
The Government in Argentina is shamelessly falsifying inflation data and stealing the money of all salaried employees and pensioners depending from indexed income. Even the World Bank stopped is using its own indexes. What is amazing that Argentines are taking it well and the Peronist government is popular.
Why people is becoming poorer when all industrial production indices are saying that we are getting richer?
zarkov: I was in the USA in 1970 and I used to pay 7 dollars per day for the hotel room. I good lunch cost 2 dollars. I had 1000 dollars and travelled four months all over North America and returned with unspent traveller cheques.
Why people is becoming poorer when all industrial production indices are saying that we are getting richer?
Hmmmm because hmmm we are not getting richer. We have a lot of activity but we are not creating wealth.
J asks,
"Why people is becoming poorer when all industrial production indices are saying that we are getting richer?"
If the production indices are adjusted for inflation, then they would be overestimates because official numbers understate the true inflation.
J wrote,
"I was in the USA in 1970 and I used to pay 7 dollars per day for the hotel room. I good lunch cost 2 dollars."
Indeed. Official inflation says you should pay $42 for a hotel room. That's off by at least a factor of 3.
In 1966 there was a popular travel book for Americans by Eric Frommer called Europe on Five Dollars a Day. You could tour Europe then for $5/day (sans airfare) just barely. A more realistic figure would have been $7/day. Five 1966 dollars is $35.36 in 2012 dollars according to official inflation. You could not even pay for a hotel let alone everything else on $35.36. A more realistic figure would be $200/day. Again we see how much official inflation underestimates the true rise in prices. I could understand some difference, after all the prices of individual items vary a lot. But when you see errors that amount to factors of 3, 4 or even 5, you know something's wrong. Americans have been getting poorer not richer over the last 40 years. They tried to maintain their standard of living with debt. Our elites blame the "one percent" (our modern day Kulaks) conveniently forgetting about the inflation tax.
Huge amounts of value and opportunity cost are soaked up in intraspecies competition-eg, bussing and colonization of middle class neighborhoods via a proxy feral underclass, making the old residents relocate, etc.
What B describes is a major driver of housing costs because the need to escape the feral underclass worsens land and housing scarcity in the metropolitan areas where there are both the most jobs and the most lumpen, minorities and 3rd world immigrants. Education costs are also related to the feral underclass problem. Since employers can't give IQ tests and have to sweat the possibility of disparate impact judgments if they give competency tests, they have to use much-more-expensive educational credentials to sift through candidates. Going to college then becomes a necessity for success, and the federal govt subsidizes the cost of education. Since they are guaranteed to get paid no matter what, the colleges can charge as much as they want, and that has happened.
And don't forget the costs that ever more complex regulations add. Environmental regulations are used to prevent housing construction, further raising housing prices. Regulation also affects cost of manufacturing and services. The businesses have to pass those on to the purchasers as much as possible.
Steve Sailer posted about this issue earlier this week. Apparently, Elizabeth Warren (of the Fauxcahontas scandal) and her daughter, a former McKinsey consultant wrote about the role of competition for housing in good school districts being the primary factor behind increased real estate prices and decreased discretionary income. Sailer lifts a direct quote from Warren's book from one of his old V-Dare articles:
"Even as millions of mothers marched into the workforce, savings declined, and not, as we will show, because families were frittering away their paychecks on toys for themselves or their children. Instead, families were swept up in a bidding war, competing furiously with one another for their most important possession: a house in a decent school district… "
The Cherokee lady pointing out the price of diversity.
The Cherokee lady pointing out the price of diversity.
And also, let's not forget intraspecies sabotage and class warfare directed at family and social structure (as Teo pointed out.) Once you've broken the bonds of the family by liberating people of their linkage to their children and grandchildren (now raised by others,) parents (living on their own/through assisted care/in nursing homes,) and neighbors/relatives, you've monetized a huge amount of transactions that used to be free of charge. You used to have to give your parents a place to live, listen to their bullshit, etc., but in exchange they would watch and help raise your kids, help out with the maintenance of the property and so forth. Now, we have Mexicans to maintain the property and babysit and Philipinos to watch the old folks, while TV takes care of the social interaction bit, and all that shit costs. Instead of your handy neighbor who'd help you change your brake pads for a case of beer and a favor owed, you can take your vehicle to the mechanic, who will charge you as much as you make in a day's work (half a day's work if you're doing well.) Instead of being free to teach your kids the skills they need to go to college, you can hire some test prep company for $100/hour, 2/3 of which they will keep and give the rest to some asshole who will read out of a book. Instead of growing some of your food for fun (or having the old folks puttering around in the backyard,) you will get it all from a supermarket which buys it from Chile and keeps it in cold storage.
Everyone is atomized and specialized, everything is monetized. The derivatives of future growth have been leveraged to the hilt, and let's not think about what happens if future growth doesn't show up, ok?
I think we are starting to add so ideas.
Like:
1. "J said...
The Cherokee lady pointing out the price of diversity."
2. B
"And also, let's not forget intraspecies sabotage and class warfare directed at family and social structure (as Teo pointed out.) Once you've broken the bonds of the family by liberating people of their linkage to their children and grandchildren (now raised by others,) parents (living on their own/through assisted care/in nursing homes,) and neighbors/relatives, you've monetized a huge amount of transactions that used to be free of charge." etc etc long and interesting post
This is the cost of complexity.
3,4...
Now we could talk about the fact that complexity was sponsored by other factors to keep on going.
Like very cheap concentrated energy easy to obtain in large quantities. After peak oil no longer the case.
A younger population raised by more or less traditional communities. No longer the case.
Etc etc
Everyone (well, not everyone but some) can see the problems, but what is the solution? We're not going to get women out of the workplace again, we're not going to wean off of energy, we're not going to go back to living in villages, etc. At least until it all collapses into a big smelly heap. We'll just keep driving toward the abyss.
K`
John Robb and John Taylor Gatto have the right idea. Resilient communities, demonetization of as many transactions as possible, maximal local production, homeschooling. Making money in some virtual way if possible. Nicholas Nasim Taleb talks about structures that are robust, ie, thrive in chaotic conditions. This is a very good time to start building them.
To K.
Precisely. There is nothing anyone can do.
And even if possible - just as a theoretical approach - how many of the normal people would want the correction?
I for example hope it to be postponed as long as possible. I pretty much enjoy my life and the " reduction of complexity " scares me to death.
I believe you have to be pretty mad to desire the correction , or extremely stupid so that you're not able to understand the implications.
It's like the fact we all know we are going to die. But we are in no hurry to see this fact happening.
The energy status of the world got analysed by the US Army. It's a report which can be found very easily about peak oil/peak energy.
And they predicted the same as you - "We'll just keep driving toward the abyss."
If you try to stop others will just crush you. It's gonna be a race to the bottom.
And probably we are going to fight each other for the dwindling resources. The energy wars have already begun. Neither the US empire nor the rest will die quietly. We'll have to fight it out.
PS. Enjoy the good life as long as it lasts. As of hiding I have thought about it and hmmmm I don't think there are many places whre you can do it. Maybe Chile but you got to be mad to change your life and relocate your family on such flimsy premises.
"John Robb and John Taylor Gatto have the right idea. Resilient communities, demonetization of as many transactions as possible, maximal local production, homeschooling."
Those are fantasy discussions.
If society can not keep th modern administrative machinery those areas will go to feudalistic dystropia very fast.
And to subsistance agriculture.
"Nicholas Nasim Taleb talks about structures that are robust, ie, thrive in chaotic conditions. This is a very good time to start building them."
Yes they exist. But not in fantasy. And were tried and tested during the ages. It's feudalism with war lords and subsistance agriculture.
It ain't pretty.
It's Somalia without the possibility of buying any modern stuff. Or rather A song of Ice and Fire. Check it out and see what life was for the smallfolk.
That is the reality of human society not some sort of hippy dreaming.
Robb and Gatto are hardly college philosophy major idealists given to flights of fancy. Check out their biographies.
Modern administrative machinery sucks at doing its job in those places where people are not naturally law-abiding (Detroit...and a large chunk of almost every other major city in the US.) Its primary real (as opposed to nominal) function is to suck up the maximum amount of resources and prestige into itself. It does not leverage modern technology properly and emulates sadism in its dealings with normal citizens. Most of its functions could either be automated or offloaded onto a communal court such as a Beit Din.
As for Somalia-you know, somehow I doubt a community with an average IQ of 100 or more is susceptible to Somali behavior.
Subsistence agriculture? I doubt it. More likely, people will be able to produce a significant proportion of what they consume leveraging modern technology to automate the most labor-consuming tasks.
As for feudalism-it is much, much preferable to what we have today. Sadistic irresponsible bureaucrats operating via committees. I've met Afghan tribal leaders, and I've met bureaucrats. I much prefer the tribal leaders for decency and common sense.
Finally, 90% of your beloved modern stuff is not that hard to manufacture locally. A Fab Lab costs about $50K and can make everything from furniture to plastic parts to simple electronics (Arduinos and their peripherals.) Another several hundred thousand, and you can do selective laser sintering in metal, growing metal parts with practically no geometrical restraints, and cut metal and other materials with a CNC plasma cutter/water jet. And these prices will fall hard in the next decade. Modern stuff does not come from trees which only grow in China, thank G-d.
A fab lab does not stand free. Where do you get the raw materials for it? The electricity to run it. The medium of exchange and the markets to buy the raw materials and sell the finished products. The transport to get them to and from the fab. The capital to build the fab. The security to operate it. Etc. etc. - it's all a very tightly woven fabric and when it unravels, everything falls apart.
Maybe you could also suggest backyard steel smelters. These worked for Mao, right?
K
You can source a lot of the raw materials locally. Power is really not much of an issue, because it is cheap and will continue to be so-natural gas and coal stocks are being discovered all the time, and it is not hard, if you live in a wooded area, to get energy from wood. DIY bio is growing as well. Security is locally sourceable-you will need to provide it somehow, fab lab or not.
You are misrepresenting the idea-of course there will be a market to bring in raw materials and sell finished goods. A Fab Lab is not a luddite idea. But it will not be the all-pervading market of today. Something like the artisanry of the Middle Ages, but empowered with digital technology.
As for the smelters-that's a misguided comparison. By 1950s standards, my iPhone should take up a house and massive amounts of energy to power. Just like computing tech has advanced, so has fabrication tech. And they are continuing to advance. In 10-20 years, you will be able to make metal parts as precisely as an aerospace manufacturer does today, in a machine which costs the same as one of today's SUVs.
Finally, one more thing. Things will not collapse, end of the world-style. They will degrade, like they did in Argentina and Russia. At some point, the profitability curves of importing shit from China and making it locally will intersect, and that point will come sooner than you think.
I think you are underestimating the point where the curves intersect, assuming the current system of global trade continues (i.e. as long as you can put containers on boats). You would think that, for example, it would not make sense to make toothpicks in China, or drinking straws or things like that - they are low value to begin with and have a low labor component. Yet I see this stuff from China all the time. As long as the cost of a shipping container is less than overall savings (not just labor, but rent, regulatory costs, hassles, etc.) then the containers will keep coming. As things deteriorate in the US, local costs will only go UP - generator power is more expensive than grid power, now you will have to pay to bribe the local officials and protection rackets, etc.
K
You are assuming that China will nit be affected by the systemic disruption. But China is completely reliant on export to the US and Europe. Further, it is more energy dependent on the outside world. Finally, all that gives China its competitive advantage is lax laws and large amounts of semi-skilled labor. But the US and Europe have many people producing things on the gray market, which, combined with digital fabrication tech, will allow the circumvention of laws. And as for the semi-skilled labor, well, here you go:
http://buildyourcnc.com
Be sure to check out their Pick And Place machine.
The economies of scale dictate that large scale factory production (wherever located) will always displace artisanal production (except for specialty items like chocolate where people PREFER the artisan goods - even then the artisanal production is insignificant in total volume). In the early days of IBM "compatible" PC's ('80s -90s) there were tons of local computer shops that would assemble their own systems from components (this is not rocket science - I have built up systems too - basically all you need is a screwdriver and a little skill in plugging in the correct wires). Even though it was entirely feasible to assemble computers locally, eventually Dell, HP, etc. (mainly because of their massive buying power) were able to sell fully assembled computers more cheaply than these shops could even buy the individual components, and the shops largely disappeared.
K
You are taking an isolated scenario and extrapolating univerally. Sometimes economies of scale work, sometimes they don't. For instance, you'll notice that most of the apps available for your phone are written by either individuals or very small companies. America's economic golden age, as well as that of Britain, was characterized by many small companies. China originally prospered due to having an atmosphere conducive to small-scale production and entrepreneurship. Large corporations suffer from a huge OODA loop, an ever-expanding middleman bureaucracy, Pournelle's Law, etc. There's a reason that dinosaurs died out.
You'll notice that your phone itself is made by one of a handful of huge corporations...
I agree with you about all of the disadvantages of large organizations, but the advantages are in many cases so great that they overcome them. The dinosaurs are dead but GM lives.
K
All true... for now. But you started out by pointing out that the current situation is unsustainable. Of course an open source phone for $20 is not as cool as an iPhone 15 for $200+$120 a month for two years. But it's a lot cooler than no phone. Also, consider that the reason China makes all this stuff and sells it to us so cheaply is that we have a monopoly on producing the world's reserve currency. Once that goes away due to runaway inflation and competing currency platforms (gold, ecurrency, ecurrency backed by gold,) the equation changes. Check out Russia in 1993, for instance. Everything was available...if you had the money. Which no one did.
The difference this time will be that although the easy money won't be there, the production capacity will, and once those cubes cross, there will be no going back.
The essence of capitalism is, as we know, creative destruction. One year Blackberries are the hottest thing since sliced bread, the next year you can't give them away. So, as I've said before, it's pretty safe to assume that the way things are now is not the way they'll be in 10 or 20 years (though note that Ford and GM have been among the world's top auto makers for close to a century and show no signs of going away soon.) Technological developments only accelerate the pace ( the old Bell dial phones lasted for decades and rarely changed).
BUT, as I've said before, although we know what will be gone (most of what exists now) we don't really know what will replace it. We can only guess and those guesses usually turn out to be wrong. Open any issue of Popular Science from a couple of decades ago and you'll see all the educated guesses that turned out to be totally wrong ... turbine powered cars, flying cars, vacations on the moon, etc. And things that were NOT guessed at, or that people could imagine but had no way to implement - that you could store all your phonograph records on a chip with no moving parts and the size of a fingernail, that your position on earth at all times could be easily and cheaply determined by triangulation with a network of orbiting satellites, etc. So the odds are pretty good that your guesses (and mine) are totally off base.
K
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