The West appears headed for disaster. In every developed nation the generation coming of age is encountering the same problem: they simply are not needed. Not for jobs, not to serve their societies, not as parents. Even were they needed, they are woefully unprepared.
At the same time, every Western country finds itself sinking deeper into debt as a result of redistributive social policies. Almost all have run significant budget deficits for years, and most are well past every historical estimate of unstainable debt to GDP ratios. They survive by printing money. Through their willingness to support each other’s lies, and the gullibility of their citizenry, they have so far gotten away with it.
Politicians and most journalists focus on what can be done about any given problem. They don’t deal well with problems that have no solutions. Yet, the problems that beset the developed world are clearly in that category. Government cannot solve them. Government intervention postpones, but ultimately exacerbates them. When governments fail, it will be up to us as individuals to cope with them. Moreover, if our grandchildren are to be anything like us, we will somehow have to live through the problems as families and societies, whether or not the present geopolitical superstructures under which we live remain in place.
The mildest prognostications assume that present governmental systems and social arrangements will endure. All they need is help getting over the current rough patch. Our leaders advocate Band-Aid solutions like Quantitative Easing, in the (stated, if not believed) expectation that all will soon again be right, and that the citizenry can be mollified at least until the present generation of politicians leaves office.
Stronger prognostications call ever more loudly for measures such as secession from the United States, a return to the gold standard, and abolition of the European Union and the Euro. Their advocates assume that the populations are viable, but greatly in need of shedding excessive and burdensome government, and returning to fundamentals.
The problems nobody wants even to voice, because they have no solutions, are numerous. One is demographic. Western nations have experienced, invited even, a staggering ethnic diversity that will be impossible to undo. They have endorsed many decades of dysgenic policies, resulting in fewer people, especially fewer highly capable people, in each successive generation. Industrialization and computerization has fundamentally changed the workplace, reducing the job opportunities, even eliminating the need for labor contributions from the growing percentage of unexceptional individuals.
Tensions are building through the profound disconnects among:
- The value of different individuals’ contributions to society,
- The shrinking ratio of highly productive to less productive members of society
- The fraction of productivity available to support government and the unproductive
- The debt that is being accrued to paper over these differences.
The chances of an explosive release of that tension seem relatively high, and assumptions we might make with regard to the continuity of governments and social arrangements after such a release are probably optimistic. We are thinking in the wrong frame of reference, government. The real question is, how will we survive as individuals, families, and communities?
The history of the problem, beginning with the Agricultural Revolution
Hunter gatherers have always lived close to the edge. There are no stores of excess wealth in tribal society. Without agriculture, there is not much mechanism for creating wealth. Nonetheless, some hunter gatherers can achieve quite an advanced age. They live fairly healthy lives in their forests where the biggest foes they have to fight are carnivores, disease, and the greatest threat of all, their fellow man.
With the advent of agriculture we started to live in towns and cities and we started to accumulate stored wealth. Agriculture is a more efficient way of amassing the calories to feed ourselves. Soon we were building houses and warehousing excess grain.
There had always been leaders in tribal society. Somebody needed to make the decisions and lead the efforts of war and defense. Now, with stored wealth, the leaders had some material to work with. The king could appropriate wealth from one set of members of society and use it to pay other members to serve as warriors, or builders, or whatever purpose he wanted to put the labor. We see that leaders of some very ancient societies such as the Babylonians and the Egyptians found enough excess labor in their civilizations to build huge monuments to themselves.
The upshot was that while the average man may not have lived much better, he was more productive. Government managed to sweep away the bulk of the fruits of that excess productivity, and spend it to the glory of the governing class. This established a pattern which has remained unbroken through the history of civilization. Despite all, the common man’s lot has slowly improved.
Roman citizens, if not their slaves, had quite nice material surroundings. When one visits Roman ruins anywhere, such as the distant outposts in Germany, one finds the floor plans of the houses look like they would be livable by today’s standards. Sanitation and baths were not at all bad. Better than a child’s summer camp of today.
Material well-being has improved gradually and unevenly through the ages. Houses became larger, diets became more varied and trade brought more goods to the common man. And kings were always able to appropriate some of the surplus from society either to their own use, building grand castles and living in a sumptuous style, and/or expanding their kingdoms through warfare. The amount of wealth that was available to support armies was quite impressive.
The Industrial Revolution
Since the Industrial Revolution, our excess productivity has so far outstripped our needs that we were able to expand our populations at a rapid pace. This explosive population growth ended in the 20th century in Western Europe and North America. In Latin America it has slowed rapidly over the last two decades, and it appears to be slowing even in Africa and in the Middle East. The innovativeness of European and North Asian peoples allowed all world populations to expand and to improve their material lot.
There have been several accelerating trends since the dawn of the industrial age: productivity, the size of government, and the erosion of individual self-sufficiency.
Productivity allowed per capita consumption to rise, even if the average person doesn’t do the consuming. This was true with the harnessing of chemical energy in the 19th century, and it is especially true with the automated application of algorithms through the programmed computer in the 20th, to automate repetitive jobs.
Marx described the dehumanizing effect of 19th century capitalism on workers. The capitalist first invests in plant and equipment. It takes entrepreneurial skill to organize the capital and the skills required to build a factory. It takes skilled planners and craftsmen to construct the buildings, the machine tools, the transportation and communications connections. Once complete, this capitalized labor repays itself many times over in increased productivity.
The newly productive worker less often has to plan or to deal with exceptions. Even though the factory’s overall productivity was many times that of an equal number of craftsmen, working in a factory demanded fewer skills of the individual. The premium for intelligence was diminished… no special wit was required to succeed on a factory floor. Pay relative to other strata of society diminished accordingly, although productivity has facilitated a significant increase in absolute pay, that is, buying power.
Capitalists and workers both benefited from increases in productivity. The biggest beneficiary of all, however, was government. It quickly learned to appropriate the excess wealth. They armed and fought wars, as always. Moreover, the bureaucrats expanded their purviews by finding hitherto unrecognized needs for government services.
Government education grew dramatically around the turn of the 20th century. Income tax was introduced in the USA in 1913. In the first part of the twentieth century government began to interest itself in public health, retirement income, healthcare, unemployment insurance and support of the disabled. Progressives trumpeted a “social gospel” to the effect that society was productive enough that none of its members should be left in poverty. As they attained some of their objectives, progressives added others. They decreed that there should be a minimum level of support for pensioners, and there should be universal medical insurance. Nobody, however little they contribute to the common weal, should have to die or be forced into penury because of their medical problems.
All advanced democracies expanded the level of economic security they offered their citizens. It was good politics, an idea whose time had come. In democracies, the beneficiaries usually constituted a voting majority. Socialist regimes, democratic or not, purported that they represented the interests of the common man.
In the West social programs were financed through taxes on business and individuals. Under communism the state assumed the role of the capitalist, on the assumption that surplus wealth generated through superior organization of resources belonged to all the people. In all Western societies there was some mix of public and private ownership. Communications and transportation, natural monopolies, tended to be public, and factories private.
At the dawn of the computer age, the last third of the twentieth century, the populations of Western Europe, North America and North Asia were far more prosperous than at any time in their history. Taxes generally amounted to somewhere between 30% and 60% of middle class income, yet what was left after taxes was adequate for an enviable lifestyle. Tax monies nourished flourishing bureaucracies.
It is the nature of bureaucracy to expand to consume the resources available. Individuals in government have a constant desire to increase the size of their fiefdoms and thereby acquire more power and income. The process feeds on itself. People outside government have few tools to curtail its growth. Every program finds a constituency in the private sector which is enthusiastic about seeing their sector of government grow. Farmers benefit from food giveaways. Defense contractors benefit from wars. Poor people benefit from increased social programs. Technology companies benefit from the war on cancer, war on AIDS, and the war on drugs. Whatever merit such “wars” have, they benefit careers inside government and investors in companies doing business with government.
The computer revolution
On the productivity front, computers have ushered in a second revolution. The Industrial Revolution had created a workplace which generally required no special skills or intelligence. The bulk of the thinking had been done by the people who designed the factory in the first place. Management handled the rest, with the intent that the factory hand would not have to call on his own judgment very often. A century-old Navy expression captures the idea clearly: “Designed by geniuses for execution by idiots.” Today, computers are advancing that concept with a vengeance.
In printing, the Linotype operators for newspapers had to be highly skilled. Each key they pressed resulted in a metal die falling into a tray, these trays to be manually arranged into an entire newspaper page. A mistake setting a line of type was quite expensive to fix.
Reporters had adopted typewriters around the turn of the 20th century. Every article wound up being typed several times: by the reporter, the editor, and again by the Linotype operator. But in the 1960s computers eliminated the duplicate effort. They could store the story as typed by the reporter, after which the editor could merely change what was stored in the computer. The last step was to create a punched paper tape version of the article to drive the Linotype machine, quickly and without errors. The revolution eventually eliminated the jobs of highly paid, highly unionized workers. It didn’t just make their work mindless, it made it unnecessary. In the decades since the whole process has become seamlessly integrated, and the paper medium itself has become obsolete.
Computer automation is having similar effects in most spheres of business. Retail groceries use automated cash registers to control inventory. Computers send a message automatically when the shelves need to be restocked. The computers tell the suppliers automatically when to send groceries to the store. The groceries are picked automatically within a warehouse and assembled by machines to be loaded on trucks. Computers tell the truck driver what route to take, when and where to buy fuel. The numbers and skills of people involved continue to fall dramatically. Self checkout , eliminating checkers, is one of the latest innovations.
Computers are making a strong push into areas which were thought to be immune to automation, such as medicine and education. A doctor can dictate medical notes just as I am dictating this article. His notes become part of an electronic medical record, and may also be used to form prescriptions for a patient and to drive patient billing. Artificial intelligence, exemplified by IBM’s Watson, is being used to help doctors make diagnoses. Computers are being used to perform surgical operations. Even the most highly paid specialists, if they perform the same skilled operation over and over, are in danger of being replaced by machines. The only people who appear indispensable are the people who instruct the machines how to do things in the first place. This is capital investment in the 21st century: telling machines via computer code how to perform repetitive processes, however complex.
Automation has totally eliminated a number of jobs. Not just dumbed them down, but gotten rid of them. Middle-class citizens with no special education or skills, and nothing exceptional in the way of intelligence, find that there are fewer and fewer jobs that are suited to them. Eighty percent of Americans work in the service sector, many for low wages as clerks, cooks, and drivers. Computers are applying relentless pressure even in these sectors.
The problems are permanent
People have lost the skills their ancestors possessed. Most cannot work the land, build houses, fix their own cars, or do the other things that would be required to sustain themselves without the support of the advanced civilization around them. Their labor is redundant, superfluous in the society as it is structured, and they do not know how to go back in time. Less developed societies retain an advantage. In the backwoods of Honduras or Ukraine the common man still knows how to build a house, dig a well, and raise food. They may not be highly productive, but they have the self-esteem that comes with the ability to perform needed work.
Agitators and politicians lead us to believe our stagnation is due to some sinister plot by bankers, plutocrats and the other political party. Jobs are being sent offshore, financiers are ripping off the common man. This is unlikely a conscious plot, but simply the confluence of a number of trends:
- The two-century-old trend towards industrialization
- The half century old wave of computerizing repetitive operations
- The dysgenic secular trend in intelligence. Within all races and ethnicities, the less intelligent are having the most children. Among ethnicities, the more intelligent are having the fewest children overall. Herbert Spencer’s prophesy of a century and a half ago has been fulfilled: “The ultimate result of shielding men from the effects of folly is to fill the world with fools.”
- The diminishing quality of education, the result of less capable students, less capable teachers, and diminished classroom discipline resulting from changes in the norms of society.
The net is that a shrinking percentage of the population is needed to do, or even capable of doing, things that their fellow man needs done. Productivity has made human labor increasingly unnecessary. The superfluous people are smart enough, however, to recognize that they are not needed. Their vain attempts to invest their lives with meaning through drugs, alcohol and violence and other antisocial behavior, announcing their presence rather than passively whiling away their lives in front of the boob tube, is part of the problem. If we were honest with ourselves, we could offer them some form of Huxley’s soma rather than a war on drugs.
A related question is, what needs to be done? What does a person really need in order to survive? Taking into account the great increases that have been realized in productivity, how much labor does it take to meet a human being’s needs?
Our most fundamental need is housing. A $200,000 house is certainly adequate for the average American family. The house will last 50 years or more. The capital cost, in present dollars, would then be about 200,000/50 = $4,000 per year. If labor costs $20 an hour, it would take 10,000 hours’ capital investment to house a family (manufacture all the materials and build it), or 200 hours of labor per year.
Agriculture has become vastly productive. Crop yields have increased and machinery has greatly reduced the number of people required to feed the entire population. The American farm population has fallen to about one percent, and yet they produce enough to feed ourselves and export a good deal as well. By the simplest arithmetic, if one person works 2,000 hours per year, and one percent of the population is able to feed everybody else, then the per capita labor expended to grow food is about 20 hours per year. The labor expended processing and distributing that food may be several times greater, but all in all it probably takes no more than 100 hours of labor per year to feed a person.
The same kinds of arguments can be made for transportation and communications. Due to the vast economies of scale of modern enterprise, it does not take that much labor to provide a single person with everything he needs in life.
Taken altogether, by virtue of our collective productivity we should be able to live adequately working quarter-time and lead comfortable lives indeed if we were to work full time. However, strong countertrends appear to have prevented that outcome in most parts of the world, and reversed or at least stalled them in the industrial democracies.
One countertrend is that we have maintained the rough equation between labor and rewards. The Industrial Revolution served to reduce labor from the level of skilled crafts to repetitive factory operations. The computer revolution accelerated that trend, and eliminated the need altogether in many cases. Modern societies have more labor than they need. A significant function of modern governments is to attempt to arrange income streams for people whose labor is not in demand. In the United States they do this by providing loans to students, food stamps to the poor, medical care to the indigent, unemployment payments, outright welfare, and disability. For all that, however, the truly productive minority continues to receive a disproportionate share of society’s income.
A second countertrend is consumption-related debt. Very few individuals are free to manage their own lives, having encumbered the proceeds of their future labor to feed current desires for consumption. Most people do not have financial freedom. This is a significant shift from a half century ago, before the advent of revolving credit, when most debt was in the form of home mortgages and auto loans. The debt was generally to local banks, which held the notes, handled their own collections and were liable for defaults. Government was not generally involved in initiating or guaranteeing such loans, and especially not in dictating loan policy to banks. Fifty years ago debt was in the form of private contracts between what was assumed to be two rational parties. People didn’t generally contract for or receive debt they could not support. Government has since stepped in to question the motives and mental capacity of both borrower and lender, and almost forced the majority of citizens to become debt slaves.
A third countertrend is the growing appetite of government and private sector entities that depend on government. A large fraction of society’s production is confiscated through taxation and reallocated to serve the supposed public good. The reallocation is almost invariably inefficient. The bureaucrats are numerous, well paid and not very effective. The private sector companies contracted to carry out government programs are likewise inefficient. Their incentive is not to satisfy their ultimate clients, the taxpayers, but the government agents who oversee them. Government oversight is generally weak. The civil service system is not designed to select on the basis of specific talents, the incentives for doing outstanding work are weak, and pleasing the politicians serves them better than serving the beneficiaries. Most sectors of the economy have coopted government to some degree. Those in which the government is most heavily entwined – banks and medicine, for example – are manifestly inefficient. Other sectors such as education and defense are for the most part creatures of the government in the first place.
The trend lines are coming close to crossing
For several decades already the productive subset of the citizenry of every western country has been under increased pressure. They are declining in numbers: Sarrazin says that in Germany there are roughly half as many grandchildren as grandparents among ethnic Germans. The brightest of those who might be productive have been drawn into unproductive sectors of the economy such as government, banking, and finance. Although increases in productivity have allowed the economy to grow despite their loss, inflation-adjusted average income and per capita GDP are relatively stagnant as an increasingly lower fraction of the workforce is doing the actual production.
An increasing number of people are coming of age who will never play a productive role in society. In many countries their numbers are augmented by unskilled, often illegal immigrants. They suffer greater lacks of education and even basic intellect than prior generations, at a time when the overall number of job openings in the productive sector is shrinking, and those that remain demand increasing levels of both intellect and education. Politicians in Europe and America deplore this “lost generation” as if it is something government policy could fix. It appears, however, to be for the most part an unavoidable result of demographics on one hand and technical advances on the other.
Politicians, journalists, and all who influence policy are obliged to be optimistic. They do not talk about problems that cannot be solved. They steadfastly ignore the wisdom of their grandparents, substantiated by a century of intelligence research, that different ethnic groups differ significantly in average intelligence. They refuse to believe that the workplace changes brought by industrialization and computerization are permanent and irreversible. However, as Philip Dick wrote, “Reality is that which, when you stop believing in it, does not go away.” We appear to be on a collision course with a few awkward realities, chief among which is that the majority of the population in advanced democracies is economically either superfluous or parasitic. When push comes to shove, and it becomes widely recognized that society does not generate enough excess wealth to support everybody, some will be left out. It will be painful.
Government policy has so far not remedied any of the above-named problems. Government is aggressively expanding, in the belief that it can attract smart and selfless civil servants who can reorder society and put things right again. Their refusal to acknowledge insoluble problems, and formulation of policy as if they could be solved, has only made matters worse. Immigration policy imagines that the unassimilable can be assimilated. Education policy assumes that the unintelligent can be educated. Labor policy assumes that the jobs which have been taken over by automation can somehow be recovered or replaced, stimulating a renewed need for human labor. None of that will happen. What then?
When empires collapse
It is impossible to predict what will happen when an old order – ironically, in this case, the “New World Order” – collapses. Predictions about the collapse of the Soviet Union, post-Soviet society and the post-Soviet world order were all dramatically wrong. Most predictions are constrained by the obstinate refusal to abandon cherished principles. A prognosticator loses his audience once he puts aside the belief in democracy, the equality of ability among human populations, the belief that most humans are capable of performing useful labor within some productive sector of society, the belief that most humans are smart enough to manage their own affairs, and the expectation that there will be no revolutionary change, that future governments and social orders will evolve smoothly from the present. Yet those scenarios seem, upon reflection, among the more probable.
Predictions that violate these expectations will simply not be read. However, we as individuals need to be prepared to survive in any eventuality. Those who accept the credo of the Abrahamic religions, that our purpose on earth is to “be fruitful and multiply”, need to prepare their children and grandchildren to prosper in what may be a very different world. When it becomes impossible to envision any way to preserve the present order, it is necessary to project disorder. The challenge is not to fix the present system, but to survive whatever succeeds it.