Friday, February 1, 2013

Life After Blue: The Middle Class Will Beat The Seven Trolls | Via Meadia

Life After Blue: The Middle Class Will Beat The Seven Trolls

Does the American middle class (and by extension, the middle class in other advanced democracies) have a future in a post-blue world? That is the basic question at the heart of American politics;. As I've noted, 4.0 liberals think that it doesn't, and think that the defense of the blue social model is the only way to protect the social achievements of the twentieth century.

They're wrong. The post-blue future for the middle class is bright, and instead of using the weight of the state to shore up a declining blue system to defend an embattled middle class we need to use that power to promote the transition to a 21st-century political economy and a reinvigorated middle class—larger, richer and more in charge than ever before. This is not a call to dismantle the state; there really are important things that government has to do in a complicated and interconnected society. It's a call to transform, retool and repurpose the state so that it becomes an engine for progress rather than an anchor trying to hold us in place.

The 4.0 liberals' analysis that the information revolution will destroy the middle class is not correct, but there are some big sources of middle class angst out there today as globalization and automation (both children of the information revolution) chew away at what remains of the blue social model. Think of them as the Seven Trolls of the information age.

First, the continuing decline in manufacturing jobs due to automation and outsourcing has contributed to a generation long stagnation and in some cases decline in the real earnings of American blue collar workers.

Second, the contraction of the public sector and the likelihood of more cuts as fiscal stringency bites combine to cause worries for the millions of people who work in those fields.

Third, the same forces that attacked blue collar wages and employment in the last generation are now being felt by professionals; lawyers, journalists and professors now share some of the stress steelworkers have known for decades, and they don't like it, and are very good at squealing.

Fourth, the entitlements on which many middle class people have based their long term planning look shaky; programs like Medicare and Social Security (in addition to many state and local government pension plans) look less stable than many would like.

Fifth, the services on which middle class people depend—health care and higher education above all—keep skyrocketing in price to the point that many middle class people wonder whether they or their children will be able to afford the essential services of middle class life.

Add to that the worries about federal deficits and debts (Troll 6) and the palpable unease about the financial system (Troll 7), and it's easy to see why the middle class feels harassed and defensive.

These problems are real and they are serious; people are not wrong to worry. But attempts to perpetuate the blue model don't help. Many of the seven trolls are the results of the high cost blue model approach to governance, the health system and higher education, and in any case the forces ripping the blue model apart are too strong and too deeply rooted in the way our economy works to be stopped.

Yet if the worries are real, the pessimism is excessive. The information revolution destroys jobs, but it also creates them, and we are already in the early stages of a jobs explosion. And as it proceeds, the information revolution is likely to propel the rise of a middle class that is more productive, better educated, more autonomous and more interested in and capable of civic leadership than the Fordist middle class of the late industrial age.

The new jobs will be different from the old jobs, and this is one of the reasons many fear the economic transition we're in. There are a lot of people on both the right and the left who think that in a country that doesn't "make stuff" there won't be any jobs. If it isn't a widget that you can grab in your hand and do something with, it isn't real. This is nonsense. Two hundred years ago people thought that the only real jobs involved growing food, and that people who made non-necessary consumer goods were engaged in a socially parasitic activity. Nobody in 1800 could have imagined the plethora of manufactured goods that gave people jobs once the industrial revolution took hold: mass produced Elvis on velvet portraits? Fuzzy dice to hang from car mirrors?

Appetites change, but humanity's hunger for novelty, diversion, convenience and status remains with us. Once food became abundant, only the very poorest people in the developing world tried to increase their daily caloric intake; these days, our demand isn't for the calories necessary to sustain life but for a better eating experience: fresher food, healthier food, locally sourced food, grass fed beef, more convenient food, better prepared food and so on. The agricultural business, once the prime business of humanity requiring up to 90 percent of the population, is now just the foundation for a much larger economy in which the actual food, the calories consumed, by no means play the largest part.

The industrial revolution transformed agriculture from the core business of the human race into just one of many things that we do. The information revolution is doing the same to manufacturing. More and more of the value in the products we purchase isn't in the raw materials or the assembly; very little of the value that we buy when we purchase a tablet computer was created on the factory floor. The design, the software, the connectivity, the apps constantly grow in importance: metal, plastic and wiring accounts for a smaller and smaller percentage of the value in the stuff that we buy. Design, software and engineering become more important as manufacture slips into a secondary status. (We still need factories, just as we still need farms—but fewer and fewer people will be working in them and less and less of our GDP will be bound up in their products.)

The jobs of the future are going to be about life's sizzle rather than about life's steak, and that's a good thing. We will spend less and less time and effort manufacturing stuff, while more time and resources will go into the production of experiences, the creation of ambience, and the personal services that make life richer, more engaging, more rewarding.  As a species, we will be putting more of our time and effort into culture, leisure and the quest for meaning, and less into the grunt work of coaxing potatoes and pig iron out of the earth.

This doesn't mean there won't be tons of jobs, even if super-smart robots are doing a lot of the manufacturing work and computers are handling the heavy data processing. People like people, like interacting with people, like engaging with people and like being helped and attended by people. Yes, kids can find out all they need to know about college admissions from reading catalogs and going online, but most parents and students would still rather work with a good counselor who can help them figure out how to evaluate the information and help them feel good about the decisions they are making. Yes, couples today can use the internet to plan a wedding with more ease than their grandparents could, but most of those who can afford the service would welcome the help of a wedding planner.

The design of a "wedding experience" isn't a thing in the way that a can opener is a thing, but it is no less real for all that. It is value that people will pay for, just as a beautifully prepared meal served in a well designed restaurant by an appropriately dressed and trained waiter is a value worth paying for. Moreover, there will be a difference between weddings that people will be willing to pay for; a wedding designed by a hot wedding planner using the hot brands will be more expensive (and will be seen to be worth the expense by many) than something more generic put together by a no-name planner.

There are all kinds of things that we don't have now that we would like: personal nutritionists, who put together family menus that match up the health needs of the different members of the family, the priorities (how much time is there for cooking), and the food budget; who arrange to purchase the food and have it delivered. Many of us could use a service that would help us analyze calling plans, cable plans, and other aspects of our lives to help us figure out the right technology and the best price for the services we really need. We'd like educational consultants—especially as the school choice movement gives more K-12 alternatives and as higher ed is reshaped by on-line tech. We'd like personal agents who help keep our job life on track, alerting us to openings in our field, advising us about changes that will affect our field and helping us figure out what to do when our set of job skills threatens to become obsolete. We'd like personal ombudsmen (ombudspersons?) to manage billing and credit issues, or to handle problems with products we've bought. Those of us with older parents would welcome people who helped out as we negotiate the various problems and options they have – including the ins and outs of Medicare.

All of these jobs exist today, but they are priced at a level that only the rich can afford. As the information revolution unrolls, it will be possible to offer more and more of these and other services to more and more people at prices the average family can afford. In the advanced countries, the 21st century will be about making life richer, more interesting, and easier to negotiate. As the information ecosystem becomes richer and more complex, there will be more and more room for people to make a living by helping each of us manage this complexity more effectively so as to benefit from the wealth of possibilities around us without being swamped and overwhelmed.

Some worry that the IT revolution will simply deepen the income polarization that its early stages have helped build. Certainly creative and inventive people will be able to use the wonders of the emerging information ecology to design clever apps and products that make them a lot of money. But just as in the end ordinary workers captured a large share of the rising productivity of the manufacturing era, so ordinary people are likely to do well in the information era. For one thing, as software gets better, it takes less skill to access the wealth of possibilities that the information age opens up. There was a time when only very smart people could solve simple problems on a computer. Now, five year olds can do very clever things with computers. As the machines get smarter and the software is better designed, people need less technical background and native intelligence to do something useful with them.

In some ways, computers are equalizers. The nurse with a smart box can do some of the diagnostic and intake work that used to require an MD; the orderly with a smart box can do things like manage a medication schedule for elderly patients that used to require an RN. An illiterate can operate a McDonalds cash register where numbers have been replaced by pictures of the item being sold. A good looking person with formidable people skills but not a lot of talent for formal education can be a very effective economic actor when armed with the right kind of smart box.

At the same time, we are likely to see a continued relative decline in the costs of basic manufactured goods and foodstuffs relative to the price of services. Automation and globalization are contributing to the commoditization of manufactured goods. IT is also making raw materials easier to source and acquire (think of the role of IT in making hydraulic fracking and horizontal drilling possible, opening the door to another generation or more of relatively cheap fossil fuels). IT will promote a continuing redesign of manufactured products in ways that reduce the amount of raw materials needed to produce cars, refrigerators and other goods. Food prices have been falling relative to the price of manufactured goods for two hundred years during the industrial revolution; it's likely that manufactured goods will show the same pattern going forward.

This means that even if money wages remain relatively stable, purchasing power will grow for most of the people in the new economy. We can also expect declines in the cost of many of the services that the middle class needs—like education and health care, where IT has the potential to improve outcomes and reduce costs at substantial rates over long periods of time.

The Seven Trolls won't kill the middle class; the sooner we leave the blue model behind us and migrate to the broad and sunny uplands of the information economy of the 21st century, the more secure, the more affluent and the more all-embracing the middle class will be.

Sent from my iPhone

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