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  • Jose Arrieta

A Pseudotheory on the Pursuit of Equality and of Lost Prosperity

The following post comes in three parts: Personal, Market-based, Organizational. It provides a minimal explanation to the biggest societal changes of the past century. And as such is utterly flawed but somehow right as well. Or so my gut tells me.


Personal

So let's imagine we live in the 60s in the US. Lots is happening. Computers are expanding. Women can go to work and school. Black people also. The world as you know is collapsing.


Mr. Angry dude, a white Christian man feared for his future. He yell to the top of your lungs that "Divorce rates will go through the sky! Who will take care of the children? How can we pay for all the new jobs? Will I earn less?" Back then we hushed they hushed your calls.


Funnily though and clearly for the wrong reasons, Mr. Angry dude was right. Divorce rates went up, care work went down, and the proportion of households that can make ends meet with only one full-time working partner plummeted.


But was this bad? Hell no. Tell any woman or person of color if they'd rather go back to the good ol'days and you will get a slap in your face. The former Mrs. Angry dude now has her own name and brings home as much bread as good her new partner does. She even takes care of what the family really cares about in the long run (at least according to Dawkins), the children.


The children are much better off. Take me as an example. I did not experience this societal change. My mom quitted a high paying job when take care of me and my sister became more demanding. I rarely saw my dad growing up because he was looking for ways of bringing home some bacon from different countries in Central America. Decades later, my mom still calls herself a Kindergarden teacher even though she was so much more.


I was hurt by their choice. I still feel ashamed of the day I told my mom how hard was to take long buses home. As I became a feminist, it broke my heart to realize how I helped my mom cut my mom's wings. That I limited her choices.


When I was 15 I remember how I made it my goal that if I ever had a stay-at-home wife I would pay her half my salary to her social insurance so that she could retire with as much as I would. I felt it unacceptable for my mom to have no possibility for a safe and honorable retirement after decades of toil. Now I live in Germany and it is amazing to know that my teenage feminist dreams are common sense laws written in every marriage contract. But alas I diverge.


What I meant to say is that in breaking down gendered and racial segregation of jobs and opening out labor markets, Younger generations were left on average better off. Clearly, this change was not Pareto optimal, Mr. Angry dude was right.


The point I try to stress is that some of the things are not really ok. For example, think of two things that happened as more people went to the labor market.


1) Market: Labor rackets

As labor supply rose demand did as well. As a side effect the average hourly earnings of production and nonsupervisory employees (average worker wage from here on) more than halved in the quarter century after women and people of color were allowed to work. This decline led to households needing to supply more and more hours every year to the labor market for getting the same "real" wages.


Interestingly, the decrease in worker wages is senseful as more people flock to the market and out of the household doors, and unemployment skyrocketed. A way of keeping it stable was to delay increases in wages. By keeping the same metrics used before the social change, the decrease in worker wages was unnoticed. It took decades until people started to complain. One can imagine that politicians were busy doing something else. Oh the thinks one can think when one is a sheep!


Going back, the need to go provide more and more labor is not "all right". We are all human and the more we work outside the home the less we can work at home. This led richer people to invest in having people raise their children, take care of aging grandparents, and so on. This is not necessarily bad. But as a person who grew up around hired people at home, I'd argue that children and aging grandparents might prefer loved ones of all genders to take care of them.


2) Organizational: Progress without prosperity

Now, let's imagine that you are a manager in the sixties managing five people. You aim at minimizing mistakes and lowering costs as much as you can. The changes have made it so that you can increase your teams from dyads to trios. The appearance of computers helped on this as well as you can keep track of work much better now. Mistakes plummeted as this happened. three heads are better than two. as this happened. Your boss is happy you are given a raise and more people to supervise.


You now supervise a group of ten people. And to your boss, there was no real change in cost but there was a huge improvement in productivity. Your boss fires some of your peers who did not adapt. In fact, throughout the firm full layers of middle management are removed. The same is true in all firms across all countries. You are now way closer to the C-suite. Yet, you are still at the bottom of the managerial ladder. You can dream though.


Your boss gets huge bonuses. So does their boss and so on. The firm grows dramatically. But the decrease in mistakes has led to trouble. The firm forgot how to innovate. The firm invests in new units called Skunkworks. They are fun. People go there and just play around. Some of their ideas literally change the world after someone steals then. Yet, it does not really matter as the firm is rich. For now. So rich that the CEO is earning now truly amazing amounts. Decades ago HE (there is no she then) earned a few dozen times what your workers earn. Today, your CEO earns hundreds of times what your minions take home. You are thrilled because as you see it, you'll soon be up there with the great ones.


But will you? As the firm gets flatter, the rungs of the ladder get contested. More people vying for the higher rungs. Some of your colleagues are amazing. They outsource their facilities to India, Costa Rica, Nigeria... Utter genius! How can you compare?


Your employees are great at least. They are better educated than you. They have very expensive titles. Yet, somehow, even though they are super productive, you feel they start to hate you. If you don't go up, they do not go up either. Although the firm size balloons to crazy new levels they can not get out of the "shop floor". They are annoyed and start to leave and slack off. Quiet quitting they call it now, Marx called it alienation. You try to think of what to do, but you are just a peg in the huge machinery that is your multinational corporation.


Coda

Let's backtrack for a second. What happened here? Computer and equality --two great things-- led to profits --a useful thing. Yet, this prosperity bubbled up to the top and the busy bees below had no way of going up anymore. Households need to work longer for the same wages. Children see their parents less. Elderly are more precarious. Can we do anything?


Yes and No. First the positive. If you read that minimum wages are too low. Please accept it at face value. Even if they had increased since the dearths of the 90s, they are still lower than in the early 70s in real terms. Increases might lead to unemployment but the middle class has been robbed of the shared prosperity of the upper classes for a long time. And in absence of Robbin Hood CEOs that shared the wealth with all their workers, minimum wages are the only way for the middle and working class to get what is due to them. In the least, they should remain stable in "real" terms.

PS: Sometimes Marx is right and "Profits are The unpaid Wages of The Workers."

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