The neoliberal myth of human capital
Which involves atomization of workers, each of which became a "good" sold at the "labor market".
Neoliberalism discard the concept of human solidarity. It also eliminated government support of
organized labor, and decimated unions.
Under neoliberalism the government has to actively intervene to clear the way for the free "labor
market." Talk about government-sponsored redistribution of wealth under neoliberalism -- from
Greenspan to Bernanke, from Rubin to Paulson, the government has been a veritable Robin Hood in
Human capital, as defined by the Organisation for Economic Development and Cooperation is the knowledge,
skills, competences, and other attributes embodied in individuals that are relevant to economic activity
(OECD 1998). The term coalesces around the concepts of the use of skills in an economy and the need
for "personal investment" to develop these and that this investment, like capital itself, should bring
Human capital has now become a core plank of neoliberal ideology. One of the first theorists of human
capital, Gary Becker, of the Milton Friedman Chicago School of Economics (2002:3) explains:
Human capital refers to the knowledge, information, ideas, skills, and health of individuals.
This is the ‘age of human capital’ in the sense that human capital is by far the most important form
of capital in modern economies. The economic successes of individuals, and also of whole economies,
depend on how extensively and effectively people invest in themselves.
‘Investing in themselves’ stands for education, now understood as the crucial enabler of the development
of human capital.
This fake concept of "Human capital" allows education and neoliberalm to be woven together ever more
tightly and brainwash student into neoliberal thinking more effectively. This link is not new:
formal public schooling has always served, primarily, the interests of capital. Critics of neoliberal
education have a tendency to present the present phase of the industry-education takeover as something
qualitatively different, a new ‘rule of terror’ and the eclipse of democracy (Giroux 2004).
But justifiable outrage against the present effects of neoliberalism tends towards implying that
there was a previous, kindlier version of capitalism which took education seriously and left the autonomous
sphere of culture and learning alone. There was none.
History shows that education has never been free of the ideological constraints, and never was an
ideologically neutral zone. The introduction of universal education in the late nineteenth century owed
more to the pressures exerted by the needs of industry whose increasing complexity required specific
literacy and mathematical skills, than it did to motivations of democratic inclusion. Universal compulsory
schooling provided other important social benefits to controllers of capital. It socialized children
into the discipline and expectations fostered by industrial capitalism and acted as a valuable shock
absorber to the social upheavals being wrought by industrialization (Bowles and Gintis 1976:27).
Higher education, at a later phase of capitalism in the 20th century, played a different social role.
It was reserved for potential employers, professionals, top public servants and managers and formed
the top rung of education whose main function was to train the ruling class to rule. Samuel Bowles and
Herbert Gintis refer to this process as the ‘correspondence principle’ in education whereby education
replicates in various ways class division (Bowles and Gintis 1976: 130-132; see also Belamy Foster 2011:8).
Universities, they claimed, function mainly as select institutions to replicate the top end of society,
and, under the aegis of intellectual achievement and meritocracy, legitimise social hierarchy. The Italian
socialist, Antonio Gramsci, provided, I think, a more subtle elaboration of the role of universities
in capitalism. He described how modern capitalism required a different kind of leaders to the cultural,
formal-juridical graduates from the classical universities. It needed an intellectual and technical
university combined, one which would produce both professionals and teachers but also specialised functionaries
and managers for scientific industrial production (Gramsci 1971: 28). While there was always a gulf
between university graduates and the working class, universities as they widened their social functions,
Gramsci points out, also produced independent thinkers and radical critics of the system (1971: 342).
This seeming contradiction, as well as accounting for how universities can simultaneously represent
the establishment and give voice to radical opposition, constitutes a dynamic in capitalist education
that a literal reading of the ‘correspondence principle’ would seem to ignore.
In many countries including Ireland, university remained highly selective right up until relatively
recently. In 1960, just 5% of Irish students who completed secondary education went on to college; twenty
years later it was still only 20% (DES 2011: 35). The official view of a university then was th
Human capital encapsulates this binding together of knowledge and expertise with their function and
value in the economy. Knowledge is reclassified as an economic category and human endeavour linked to
productivity: the greater its outcomes, the greater its value. Where workers become human capital they
are also reduced to the level of a commodity to be sold to a willing buyer (Perelman 2011:11). A person’s
potential to learn things becomes something measurable in terms of returns on investment, and someone’s
labour a quantifiable thing that can be priced, bought on the labour market.
This representation of human beings, knowledge and work has specific ideological effects. Human capital,
when it was first coined by Becker in the 1960s, was considered to be too debasing to be used publicly.
The term was seen, correctly, as objectifying people and only suitable to refer to anonymous ‘others’.
Even today, despite the apparent wide acceptance of the term, it is, in practice, only used in official
documents and hardly at all in ordinary conversation. (Who, indeed, would spontaneously describe themselves
as human capital?) When Samuel Bowles and Herbert Gintis criticised, from a Marxist perspective, the
use of the term in the context of education in America in the 1970’s, they argued that human capital
· treats labour as a produced means of production whose characteristics depend on the total configuration
of economic forces,
· centres on differentiation in the labour force and
· brings basic social institutions previously relegated to the purely cultural and superstructural
spheres into the realm of economic analysis
· formally excludes the relevance of class and class conflict to the explication of labour market
(Bowles and Gintis 1975:74-75)
Their study highlights how capital, as applied to individuals, invites identification with
guaranteed returns on a fixed sum of money (with money being taken as something with which individuals
are miraculously endowed). The metaphor erases social relations. Capital here, unlike how Marx described
it, is drained of class content Neoliberalism, human capital and the skills agenda in higher education
102 | P a g e 102
and becomes a given, separate from the society in which it was produced7. Likening human work to
this understanding of capital reduces what is a potential to something already existing, and makes quantifiable
that which is unquantifiable. Furthermore, neither waged or salaried work in capitalism have a fixed
or stable value; rather, both tend to be subject to what the employer, taking account of labour supply,
will pay. One might say, therefore, human capital is not very like capital - even in the neoliberal
understandings of the term - nor very human.
7 For Marx, capital as a material product divorced from social relations, was part of ‘vulgar economics’
which could not explain where wealth came from: ‘capital is not a thing, it is a definite social relation
of production pertaining to a particular historical social formation’ (Marx 1991: 953)
8 As of 2011, Irish universities charge registration fees rather than tuition fees. Historically
these have been low but the cutbacks in education have seen them rise to as much as €000 per year
The ideological function of human capital is that it draws education closely into the ambit of the
economy and also transforms the notion of education. When the neoclassical school of economics first
focused on human capital, they did so as part of measuring the link between levels of education and
earning potential or ‘the activities that influence future real income through the imbedding of resources
in people’ or ‘investing in human capital’ (Becker 1962: 9). The adoption of the human capital frame
positions education on the first rung of the education-jobs-rewards ladder. Learning thus becomes something
primarily aimed at increasing an individual’s earning potential and, by extension, something for which
an individual, not society, is responsible. Investment becomes thus not an investment for all society
but an investment for the individual, a financial commitment which will supposedly pay dividends to
the individual in the future. It follows that if human capital is an investment for an individual, an
individual should be responsible for paying for it.
The Hunt Report describes as ‘essential’ the introduction of a direct contribution from students8.
‘The only realistic option’, it goes on to say, is ‘to support growth in participation and to require
students or graduates to directly share in the cost of their education, reflecting the considerable
private returns that they can expect to enjoy’ (DES 2011:16). The assumption in the human capital template
is that earning potential afforded by higher education is the only consideration for students. The Hunt
Report, in this respect, follows the trend elsewhere. For example, the 2010 Browne report on Higher
Education in Britain adopts the same train of thought. Students are understood to be consumers of Higher
Education and they ‘are best placed to make the judgment about what they want to get from participating
in higher education’ and the major element of this is in terms of which courses will lead to higher
earnings (Collini 2010).
However, education seen as an individual investment completely ignores, from a variety of viewpoints,
the social dimension to education. As argued in the last section, class privilege and the special access
that it affords to higher education is decisive in the securing of better paid employment. What’s more,
education as an investment assumes that it is instrumentalism alone that drives people to become educated.
Concerns about employment prospects are very important, but so too, from a broader social perspective,
is the question of learning. Narrow skill-getting for an imagined job is a poor and alienating representation
of the rounded lived experience of education. Equally, over reliance on the student to know in advance
what her learning
experience will be omits the element of the unknown present in all learning. The student’s ability
to assess accurately where the learning process will take her or what exactly will be learnt can, of
necessity – from the standpoint of the student - only be a partial judgement. ‘Student choice’, despite
the accepted refrain that it has now become, focuses only on one side of the education process, and
is an impoverished, transactional view of what the education process involves.
If education human-capital-style is about looking after oneself, it follows that it is also about
greater competition between individuals. Human capital inevitably stresses skill differentiation. The
social, cooperative, creative component of education reconverts into a narrow, self-seeking activity
whose end results will ultimately pit one person against another on the labour market. William Morris,
writing in the 1880s, noted amid the erosion of craftsmanship in assembly line capitalist production,
how education was becoming debased and wrote, with striking prescience (1888):
.. just as the capitalists would at once capture this education in craftsmanship, suck out what little
advantage there is in it and then throw it away, so they do with all other education. A superstition
still remains from the times when 'education' was a rarity that it is a means for earning a superior
livelihood; but as soon as it has ceased to be a rarity, competition takes care that education shall
not raise wages; that general education shall be worth nothing, and that special education shall be
worth just no more than a tolerable return on the money and time spent in acquiring it.
In our times, debt has replaced ‘a tolerable return’ on the money spent on education, but the same
critique of functionalist and alienating education applies.
Besides human capital presenting a drab grey view of education, its reasoning does not correspond
to how the world, or capitalism, actually works. The prime mover of economic growth, unlike what neoclassical
economics dictates, is not individual enterprise but capital investment for the profit motive. When
capital, as a result of the crisis, is not being put into production of goods and services, it might
be argued, following the logic of capitalism, that education should diversify into broader objectives
or concentrate on less employment specific outlets, even as these dry up. Similarly, it might be argued
that the breakneck speed of expansion of higher education should be reviewed and alternatives discussed.
Instead, official pronouncements advocate that the numbers of those designated to acquire skills in
higher education is not only to be continued, but expanded. ‘If Ireland is to achieve its ambitions
for recovery and development within an innovation-driven economy, it is essential to create and enhance
human capital by expanding participation in higher education (DES 2011: 10). Skill development is still
regarded as the aim of higher education even if it is far from clear exactly how skills are going to
kick-start the economy or where the capital investment, in a world-wide slump, is going to come from.
In reality, the very functionalist priorities for higher education which may have seemed to make
sense in the boom days of the Celtic Tiger, repeated now in the chill winds of a slump run the risk
of heightening the spectre of economic failure. Brown and Lauder point out the political disadvantage,
from the point of view of policy makers and governments, of stressing the overlap between education
and the Neoliberalism, human capital and the skills agenda in higher education
104 | P a g e 104
economy. Creating the expectation that supplying skills will bring jobs, especially when it will
be individual families who will be making further sacrifices to get their children into higher education,
leads inevitably to political disillusion. They state that (2006:50):
…an unintended consequence of the application of human capital ideas to public and economic policy
is that it is creating increasing problems in the management of expectations. The developed economies
are in danger of creating a heady cocktail of discontent: students and their parents may find that a
degree fails to deliver the standard of living they have been led to expect and employers will have
too many overqualified and disgruntled employees.
In Ireland, expectations around skills and human capital as a magnet for investment and the creator
of jobs have become the mantra of official government policy. The elements of ‘a heady cocktail of discontent’,
which turned out to be true for Britain (Swain 2011), are also present in Ireland. While emigration
may have siphoned off some of this, it remains to be seen how, in the longer term, Irish young people,
and their indebted parents, will respond politically to the bitter reality of widespread graduate unemployment.
Education policy, capital and the state.
The official policy for higher education in Ireland may be driven by international capital and its
desire to ensure the smooth supply of labour in the future, but for implementation and legitimisation,
it is dependent on a local state. In the case of the Hunt Report in Ireland, international capital and
national policy are interwoven to such an extent that it is difficult to disentangle the two.
The strategy group which devised the report for the government was chaired by Dr. Colin Hunt, now
Director of the Irish branch of the Australian financial corporation, Macquarie Capital Advisers, an
organization which has interests in the privatisation of education. The other report group members were
from the World Bank, Irish Government Departments and Advisory Boards, members of boards of multinationals
in Ireland, and just two Presidents from Institutes of Higher Education (DES 2011: 39). Despite the
declared wish to consult with those working in universities and ‘engage with wider society’, there was
just one practising academic (from Finland), out of the total of 15 group members, and no representative
from community or wider social or cultural organisations.
The process by which reports such as these become national policy is interesting. The 2004 OECD report
on Higher Education was adopted, with no amendments, by the Irish cabinet a few months after publication
(Holborow 2006:93). The Hunt report, having been endorsed by the current Labour Minister for Education,
Ruairi Quinn, and publicly posted on the Irish Department for Education and Skills’ website, it too
has effectively become government policy (Quinn 2011). Naomi Klein (2007) speaks of the way corporate
think tanks forge theories that become the real shock doctrines of government, and there are striking
similarities in what she writes for education. Parliamentary processes, involving elected representatives
who draft bills, who discuss, amend and vote in full view of the public on what will become law, are
105 | P a g e
cursorily dispensed with, it seems. Corporate ‘expert’ reports have supplanted public policy. Between
the publishing of the Hunt Report and now, it should be remembered, a general election took place with
a change of government; yet through all of this, the Hunt Report remains the point of reference for
Irish Higher Education Policy. The corporate take-over of public policy, with corporate interests and
the state speaking as one, represents considerable democratic deficit.
In Ireland, the way in which higher education policy has also come to include industrial relations
in the education sector is another example of the overlap between corporate reports and public policy.
One of the most detailed sections of the Hunt Report is devoted to the ‘effective deployment of resources
in higher education’ and deals very specifically with Human Resources issues (DES 2011:118-9). Educational
policy has now come to include the neoliberal view of cutting the cost of education through paring back
on the salaries and working conditions of those who work in education. The section of the report which
deals with this bears a striking resemblance to those found in the present Public Service Agreement
(Dept. of Finance 2010). Greater productivity through tracking of individual performance, a comprehensive
review of contracts to include a broader concept of the academic year, adjustments to existing workloads
and the introduction of flexibility and mobility to deal with structural changes are all to be found
in the same detail as in the Public Service Agreement. If the ‘modernisation of work practices’, ‘comprehensive
review of contracts’ and ‘greater managerial discretion to deal with ‘under-performance’ now forms of
part of educational policy, it is not difficult to see that both policy and politics in neoliberal thinking
merge as one. Yet again, neoliberal directives in education assume the starting point to be the point
of view of the employer and subordinate the interests of those who work in education – the academics
and the administrators - to their interest-laden dictates.
What these developments show is that corporate dominance occurs not through by-passing the state
but by enlisting the state as its ever more effective instrument. In education, even in neoliberal,
privatising times like our own, the state continues to play a crucial role. It has often been argued
by those critical of neoliberal globalisation that today’s world is ‘transnational’, driven by a transnational
capital class (Sklair 2010); that in the age of neoliberalism, education is controlled by global actors
such as the IMF or the World Bank (Robertson and Dale 2009:33); or that the new global system was ‘deterritoralised’
and that nation states in today’s world have a lesser role (Hardt and Negri 2001). Such interpretations
underestimate the fact that corporate monopolies in competition with others depend on their own national
states for competitive advantage and that states and capital are economically, structurally and politically
interdependent. Nowhere is this fact more evident than in the educational arena. Capital needs states
for facilities that are not necessarily provided by the market: the vital infrastructures and the social
foundations – including a national education system - provides capital with an ongoing and suitably
skilled supply of labour power (Harman 2009: 264-270). Sidelining the importance of the state in contemporary
capitalism makes too many concessions to the state-free view of the world promoted by neoliberal ideology.
Neoliberal governments, contrary to their pronouncements, have actually overseen a rise in state spending
and influence (Béland 2010; Harman 2007). Small government is a flourish of ideological rhetoric which
has been revealed as such as states intervene with gusto in Neoliberalism, human capital and the skills
agenda in higher education
106 | P a g e 106
the debt crisis. As has been pointed out, the lengths to which states would go in the protection
of large chunks of capital, particularly those tied up in finance, makes nonsense of the idea that the
neoliberal state stands to one side to let the market do its work (Callinicos 2009; Žižek 2009). The
invention of the word ‘sovereign’ debt, through which private banking debt became public responsibility,
deftly captures the tightness of the state-capital overlap. In education, too the state is indulging
in ideological hyperbole when it argues that education needs to be more and more privatised. Alongside
the neoliberal pronouncements extolling a withdrawal of the state in education, in practice the state
remains decisively hands on. Educational systems, even in neoliberal times, are still overwhelmingly
funded by the state, dependent on state policy, and centralised under state moderated curricula and
exams. Education also fulfils a socialising role that the state ignores at its peril. As Lipman points
out, governments are keenly aware that too much state withdrawal from education could create a ‘crisis
of social reproduction’ as the functions of education - social stability, political legitimisation,
and the reproduction of the labour force – are not guaranteed in private hands (Lipman 2011:124). Governments
know that they cannot afford to underestimate the wider social role that education plays and sometimes
they seek to engineer developments in education to suit specific political ends. For example, in Ireland,
the Hunt Report’s specific call for a further doubling of the capacity of higher education in the next
twenty years (DES 2011: 10) may carry political advantages for the government of the day. For example,
having young people registered in college may be preferable, for political reasons, than having that
number of young people on the dole.
Education and the wider movement of resistance to austerity
Neoliberal dictates in education and financial pressures on students are the ingredients that elsewhere
have led to student radicalism. In Ireland, the exclusive emphasis on the skills-for-jobs perspective,
against the backcloth of ever higher rates of student participation in third level education and sharply
rising graduate unemployment, makes the crisis in Irish Higher Education potentially more acute. It
was the presence of just such pressure points which made student explosions erupt – in 1968 but also
in Britain in 2011 - and it is not unreasonable to expect that higher education in Ireland will be affected
by the same tensions between education and the economy.
In Ireland, which has seen the implementation of one of the severest austerity programmes, resistance
across the working class movement, up until now, has been sporadic. In February, and then in November
2009, large demonstrations and well supported public sector strikes involved thousands of students,
teachers and lecturers in a united show of opposition to the Government. In 2011 however, the trade
union leaders’ complicit agreement to cutbacks in the public sector tended to drive resistance to a
more localised level, although by early 2012 that appeared to be changing as widespread resistance to
local household charges grew.
This paper has attempted to lay out a critique of the neoliberal view of education, not from the
belief that it suffices to show how capitalism distorts education but because of an awareness that in
the present crisis, the controllers of capital attack on every front – including a concerted ideological
campaign to regain the ground that they have lost over the debt crisis (Žižek 2009; Holborow 2012).
Gramsci, writing in a 107 | P a g e
similar period of crisis in the 1930s argued that struggle against the existing order had to take
place on all fronts, the ideological as well as the practical and organisational. He explained (1971:178)
A crisis occurs, sometimes lasting for decades. This exceptional duration means that incurable structural
contradictions have revealed themselves … and that, despite this, the political forces which are struggling
to conserve and defend the existing structure itself are making every effort to cure them, within certain
limits, and to overcome them. These incessant and persistent efforts ... form the terrain of the 'conjunctural'
and it is upon this terrain that the forces of opposition organise.
Gramsci’s insight is apt for the present situation – the crisis is protracted and the ruling class
is persistently taking advantage of its uncertainties to drive through their own agenda of protecting
profits at the expense of workers’ living standards. Gramsci is sometimes quoted to justify a ‘counter-hegemonic
strategy’ that prioritises critical analyses, cultural practices or rather broadly defined ‘social movements
and pedagogic work’ (Apple, Au and Gandin 209:14) over and above specific questions of social class
and the role of education in the capitalist system as a whole. Gramsci’s writings, which included the
question of education, discussed the necessary strategies and tactics to achieve, not just a shift of
policy, but, following his experience during the occupation of the factories in 1919-21, the need for
social revolution. Immediately after the passage quoted above, Gramsci warns of the twin dangers, in
revolutionary movements, of an ‘excess of economism’ which sees trade union struggles alone as sufficient
and also (perhaps particularly relevant to some strands of Critical Education) to the danger of an ‘excess
of ideologism’ in which there is an exaggeration of voluntarist or individual elements (Gramsci 1971:
178-9 ). His perspective for revolutionary change is one that sees the organisational and the ideological
as part of an integrated whole.
Following Gramsci’s perspective, we can say that degree of success of any challenge to neoliberalism
in education depend on the robustness of resistance in the wider working class movement and its ability
to mobilise against the current assault from the rule of capital. Identifying neoliberalism as the specific
ideology of a section of the capitalist class is vital to understanding what is happening in higher
education. Neoliberalism is not just an aberration, an excess of the market mindset, the voluntaristic
take-over of the university by market fundamentalism that needs to be ‘reigned in’ (Mautner 2010:22).
It is an ideology in the sense that Marx used the term when he referred to ruling ideas which are ‘are
nothing more than the ideal expression of the dominant material relationships, the dominant material
relationships grasped as ideas’ (Marx and Engels 1974:64). The ‘human capital’ notion is one such expression
of the dominant material relationships, and, in this way, central to the embedding of neoliberalism
in higher education. During the boom, neoliberalism provided a unique ideological template which fused
ultra- individualism with the needs of the capitalist economy. In the context of the present great depression,
I hope I have shown here, the underlying ideological imperatives of human capital become sharply exposed
and this realisation can play a role in bolstering resistance both to the neoliberalisation of education
and to the logic of capitalism itself. Neoliberalism, human capital and the skills agenda in higher
108 | P a g e 108
Marnie Holborow is a lecturer
First, for neoliberals, humans are only and everywhere homo economicus. This was not so
for classical economists, where we were market creatures in the economy, but not in civic, familial,
political, religious, or ethical life. Second, neoliberal homo economicus today takes shape as
value-enhancing human capital, not as a creature of exchange, production, or even interest. This is
markedly different from the subject drawn by Smith, Bentham, Marx, Polanyi, or even Gary Becker.
likbez said in reply to Dan Kervick...
My impression is that "human capital" is one of the most fundamental neoliberal myths. See, for
example What Exactly Is Neoliberalism by Wendy Brown
As for people betraying their own economic interests, this phenomenon was aptly described in "What's
the matter with Kansas" which can actually be reformulated as "What's the matter with the USA?".
And the answer he gave is that neoliberalism converted the USA into a bizarre high demand cult. There
are several characteristics of a high demand cult that are applicable. Among them:
- - "The group is preoccupied with making money."
- - "Questioning, doubt, and dissent are discouraged or even punished."
- - "Mind-numbing techniques (for example: meditation, chanting, speaking in tongues, debilitating
work routines) are used to suppress doubts about the group or its leader(s)." Entertainment and,
especially sport events in the US society serves the same role.
- - "The group's leadership dictates – sometimes in great detail – how members should think,
act, and feel." Looks like this part of brainwashing is outsourced to economy departments ;-)
- - "The group is elitist, claiming a special, exalted status for itself, its leader(s), and
members (for example the group and/or the leader has a special mission to save humanity)."
- - "The group has a polarized, "we-they" mentality that causes conflict with the wider society."
- - "The group's leader is not accountable to any authorities (as are, for example, clergy with
- - "The group teaches or implies that its supposedly exalted ends justify means (for example:
collecting money for bogus charities) that members would have considered unethical before joining."
- - "The group's leadership induces guilt feelings in lower members for the lack of wchivement
in order to control them."
- - "Members are expected to devote inordinate amounts of time to the group."
- - "Members are encouraged or required to live and/or socialize only with other group members."
It is very difficult to get rid of this neoliberal sect mentality like is the case with other
high demand cults.
Monday, November 30, 2015 at 12:42 PM
cm said in reply to likbez...
What has any of this to do with human capital? "Capital" is basically a synonym for productive capacity,
with regard to what "productive" means in the socioeconomic system or otherwise the context that
is being discussed.
E.g. social or political capital designates the ability (i.e. capacity) to
exert influence in social networks or societal decision making at the respective scales (organization,
city, regional, national etc.), where "productive" means "achieving desired or favored outcomes for
the person(s) possessing the capital or for those on whose behalf it is used".
Human capital, in the economic domain, is then the combined capacity of the human population in
the domain under consideration that is available for productive endeavors of any kind. This includes
BTW e.g. housewives and other household workers whose work is generally not paid, but you better
believe it is socially productive.
"Human capital, in the economic domain, is then the combined capacity of the human
population in the domain under consideration that is available for productive endeavors of any kind.
This includes BTW e.g. housewives and other household workers whose work is generally not paid, but
you better believe it is socially productive."
This is not true. The term "human capital" under neoliberalism has different semantic meaning: it presuppose
viewing a person as a market actor.
See discussion of the term in http://www.jceps.com/wp-content/uploads/PDFs/10-1-07.pdf
Neoliberalism and Human Capital The
The making of human capital is increasingly seen as a principal function of
higher education. A keyword in neoliberal ideology, human capital
represents a subtle masking of social conflict and expresses metaphorically the commodification of
human abilities and an alienating notion of human potential, both of which sit ill with the goals
of education. The recent National Strategy for Higher Education to 2030 (the Hunt Report) which appeared
in Ireland in January 2010, is a representative example of official articulation, on the part of
government and corporations, of the human capital/skills agenda in post-crash Ireland. Human capital,
now commonplace across official discourse in Ireland, is a complex ideological construct which, in
the educational arena, gives voice to two specific interests of capital: the provision of a workforce
ever more narrowly suited to the current needs of employers and the intensification of competition
between individuals in the labour market. The construct subtly reinvents socio-economic processes
as acts driven solely by individuals and reconstitutes higher education as an adjunct of the economy.
However, this paper argues, a skills-driven higher education can neither deliver large numbers of
high value jobs nor overcome the deeper causes of the present crisis. This raising of false expectations,
alongside a crudely reductionist view of education, sets limits on the unchallenged hegemony of this
particular strand of neoliberal ideology. In the current recession, during which the state is attempting
to shift the burden of educational funding from public to corporate and individual contributions,
those involved in higher education need to provide a robust political economy critique of human capital
ideology in order to strengthen practical resistance to it.
Neoliberalism, human capital and the skills agenda in higher education
leave a comment "
The making of human capital is increasingly seen as a principal function of
higher education. A keyword in neoliberal ideology, human capital represents
a subtle masking of social conflict and expresses metaphorically the commodification of human abilities
and an alienating notion of human potential, both of which sit ill with the goals of education. The
recent National Strategy for Higher Education to 2030 (the Hunt Report) which appeared in Ireland in
January 2010, is a representative example of official articulation, on the part of government and corporations,
of the human capital/skills agenda in post-crash Ireland. Human capital, now commonplace across official
discourse in Ireland, is a complex ideological construct which, in the educational arena, gives voice
to two specific interests of capital: the provision of a workforce ever more narrowly suited to the
current needs of employers and the intensification of competition between individuals in the labour
market. The construct subtly reinvents socio-economic processes as acts driven solely by individuals
and reconstitutes higher education as an adjunct of the economy. However, this paper argues, a skills-driven
higher education can neither deliver large numbers of high value jobs nor overcome the deeper causes
of the present crisis. This raising of false expectations, alongside a crudely reductionist view of
education, sets limits on the unchallenged hegemony of this particular strand of neoliberal ideology.
In the current recession, during which the state is attempting to shift the burden of educational funding
from public to corporate and individual contributions, those involved in higher education need to provide
a robust political economy critique of human capital ideology in order to strengthen practical resistance
Chronicles of a Capitalist Lawyer Human Capital and Neoliberalism
considered as a part of Law and Economics development at the University of Chicago.
Within Becker's theory, human is viewed as a rational being that always wants to maximize his own
interest. It does not mean that human has a perfect capacity of calculating the entire costs and
benefits of his action. It simply means that when they are making their decision, they pay attention
and respond to incentives, and thus, to certain extent, human behaviors are predictable.
A separate note though, even Becker agrees with Foucault that a perfect rational men is a fictional
concept. What matters is that the theory is useful to understand the world in an insightful way by
taking certain aspects of human behavior and make a simple model. After all, all theories are fictions,
and a good theory of fiction is the one that works the best among many other fictions.
Then, why this kind of theory is liberating? According to Foucault, economists are seekers of truth,
their analysis is not based on moral or legal issues, rather they focus on human behavior and incentives,
and they also prioritize liberty (through free market concept). This is important for Foucault who
sees the possibility of maintaining order without any coercion or doctrine as presupposed by laws
But the Neoliberalism view of Gary Becker is not totally free from any problem. Although it may be
a liberating theory it can also be used to suppress the people and here we are moving to Gary Becker
theory of Human Capital which is an essential part of Neoliberalism. Becker believes that human capital
is very important, i.e. investing in people, making them to be a better and more productive person
which will contribute to the welfare of the society.
The problem with that view, at least according to Harcourt and Foucault, is that once human is viewed
as a part of capital, the government may favor certain group above other groups, discriminating and
investing only in people who will produce the highest benefits and left the ones who are bad to suffer
in the slumps. An example would be the case of mass incarcerations in the United States that target
most of African Americans and poor people based on various criminal actions. Eugenics can also be
a problem here since there was a time where the Government of US actually allow the sterilization
of imbeciles and people with mental disorders.
Furthermore, viewing human as only a part of capital production could be degrading, i.e. human is
viewed like a machine with the sole purpose of producing more capital and whose value is solely determined
on how much capital will be produced and accumulated by him in the long run. I take this as the modern
critics of Neoliberalism and Capitalism in general.
Becker's response was simple. His theory on human capital is established to liberate the people and
while he agree that some aspects of economics theory on production and capital can be used to analyze
issues on human capital, human capital is still a separate subject (and thus the reason why he makes
a separate class on human capital in the University of Chicago).
From any point of view, human cannot be fully compared with machines. We can put machine in the warehouses
and easily disassemble them whenever we want, we can't do that with human. Furthermore, the theory
put a lot of stress in building human capital so that everyone may reap the benefit of social welfare.
It includes investment in education, on the job training, health, etc.
The most interesting response from Becker is that his theory of human capital focuses on efficiency,
but most of the time, things that are efficient, are also equitable. Through his theory, Becker want
to show that human is the most important part of our capital. By investing in people, we hope that
they can develop themselves and free to make their own life decisions without any interference. He
also notes that there is an underinvestment in poor people and that is actually an inefficient thing
to do, since better human capital always lead to better welfare maximization.
I completely agree with Becker's notion. This is indeed the main purpose of introducing the concept
of human capital, preserving freedom and reducing paternalism, finding the most efficient way to
allocate resources among the people. And I think this should be the main idea of Neoliberalism. It
is just too bad that politicians and even some academics are using this concept in such a misleading
way that they confuse the original concept of Neoliberalism that focuses on liberation and freedom
of the people with crony capitalism, dictatorism, and the freedom to do anything without any legal
liabilities which are not even parts of original concept of Neoliberalism.
Neoliberal Restructuring of Public Education
When President Obama appointed Arne Duncan, former-CEO of Chicago Public Schools, to head the
U.S. Department of Education in 2008, he signaled an intention to accelerate a neoliberal education
program that has been unfolding over the past two decades. This agenda calls for expanding education
markets and employing market principles across school systems. It features mayoral control of school
districts, closing "failing" public schools or handing them over to corporate-style "turnaround"
organizations, expanding school "choice" and privately run but publicly funded charter schools, weakening
teacher unions, and enforcing top-down accountability and incentivized performance targets on schools,
classrooms, and teachers (e.g., merit pay based on students' standardized test scores). To spur this
agenda, the Obama administration offered cash-strapped states $4.35 billion in federal stimulus dollars
to "reform" their school systems. Competition for these "Race to the Top" funds favored states that
passed legislation to enable education markets.
Race to the Top, although originating in U.S. government, is actually part of a global neoliberal
thrust toward the commodification of all realms of existence. In a new round of accumulation by dispossession,
liberalization of trade has opened up education, along with other public sectors, to capital accumulation,
and particularly to penetration of the education sectors of the periphery (e.g., Latin America, parts
of Asia, Africa). Under the Global Agreement on Trade in Services, all aspects of education and education
services are subject to global trade.4
The result is the global marketing of schooling from primary school through higher education. Schools,
education management organizations, tutoring services, teacher training, tests, curricula online
classes, and franchises of branded universities are now part of a global education market. Education
markets are one facet of the neoliberal strategy to manage the structural crisis of capitalism by
opening the public sector to capital accumulation. The roughly $2.5 trillion global market in education
is a rich new arena for capital investment.5
In the United States, charter schools are a vehicle to commodify and marketize education. Charter
schools are publicly funded but privately operated. They eliminate democratic governance, and, although
they may be run by nonprofit community organizations or groups of teachers or parents, the market
favors scaling up franchises of charter school management organizations or contracting out to for-profit
education management organizations that get management fees to run schools and education programs.6
For example, EdisonLearning, a transnational for-profit management organization, claims it serves
nearly one-half million students in twenty-five states in the United States, the United Kingdom,
The market mechanisms and business management discourses and practices that are saturating public
education in the United States are all too familiar to teachers and students worldwide. Globally,
nations are restructuring their education systems for "human capital" development to prepare students
for new types of work and labor relations.8
This policy agenda has been aggressively pushed by transnational organizations such as the World
Bank, International Monetary Fund, and Organization for Economic Cooperation and Development. Objectives
and performance targets are the order of the day, and testing is a prominent mechanism to steer curriculum
and instruction to meet these goals efficiently and effectively.
In the United States, the neoliberal restructuring of education is deeply racialized. It is centered
particularly on urban African American, Latino, and other communities of color, where public schools,
subject to being closed or privatized, are driven by a minimalist curriculum of preparing for standardized
tests. The cultural politics of race is also central to constructing consent for this agenda. As
Stephen Haymes argues, the "concepts 'public' and 'private' are racialized metaphors. Private is
equated with being 'good' and 'white' and public with being 'bad' and 'Black.'"9
Disinvesting in public schools, closing them, and opening privately operated charter schools in African-American
and Latino communities is facilitated by a racist discourse that pathologizes these communities and
their public institutions. But "failing" schools are the product of a legacy of educational, economic,
and social inequities experienced by African Americans, Latinos/as, and Native Americans.10
Schools serving these communities continue to face deeply inequitable opportunities to learn, including
unequal funding, curriculum, educational resources, facilities, and teacher experience. High stakes
accountability has often compounded these inequities by narrowing the curriculum to test preparation-producing
an exodus of some of the strongest teachers from schools in low-income communities of color.11
Neoliberalization of public education is also an ideological project, as Margaret Thatcher famously
said, to "change the soul," redefining the purpose of education and what it means to teach, learn,
and participate in schooling. Tensions between democratic purposes of education and education to
serve the needs of the workforce are longstanding. But in the neoliberal framework, teaching is driven
by standardized tests and performance outcomes; principals are managers, and school superintendents
are CEOs; and learning equals performance on the tests with teachers, students, and parents held
responsible for "failure." Education, which is properly seen as a public good, is being converted
into a private good, an investment one makes in one's child or oneself to "add value" in order better
to compete in the labor market. It is no longer seen as part of the larger end of promoting individual
and social development, but is merely the means to rise above others. Democratic participation in
local schools is rearticulated to individual "empowerment" of education consumers-as parents compete
for slots in an array of charter and specialty schools. In Chicago, twelve thousand parents and students
attended the 2010 "High School Fair" sponsored by Chicago Public Schools, and six thousand attended
the "New Schools Expo" of charter and school choice options. The political significance of this neoliberal
shift stretches beyond schools to legitimize marketing the public sector, particularly in cities,
and to infuse market ideologies into everyday life.
- 20200102* The Purpose Of Life Is Not Happiness: It s Usefulness Happiness as an achievable goal is an illusion, but that doesn t mean happiness itself is not attainable by Darius Foroux ( Aug 22, 2019 , getpocket.com ) [Recommended]
- 20191005* Everything is fake in the current neoliberal discourse, be it political or economic, and it is not that easy to understand how they are deceiving us. Lies that are so sophisticated that often it is impossible to tell they are actually lies, not facts ( Oct 05, 2019 , economistsview.typepad.com ) [Recommended]
- 20190926 : The decrepitating of the world's society can be traced back to the crap, contemporary economics, the purview of the Ivy league. Somehow, labor arbitrage was accepted as a worthy objective. America lost it's way. ( Sep 26, 2019 , economistsview.typepad.com )
- 20190922 : Is the Unemployment Rate Tied to the Divorce Rate ( Science of Relationships )
- 20190922 : Game of musical chairs became more difficult: the US economy seems to put out fewer and fewer chairs. ( Nov 23, 2015 , economistsview.typepad.com )
- 20190922 : Paul Krugman: Despair, American Style ( Nov 09, 2015 , economistsview.typepad.com )
- 20190922 : The Despair of Learning That Experience No Longer Matters by Benjamin Wallace-Wells ( Apr 12, 2017 , economistsview.typepad.com )
UPDATED What is Neoliberalism
Nothing requires a greater effort of thought than arguments to justify the rule of non-thought.
-- Milan Kundera
16 · 12:18:45 PM
Nice one, Philoguy. Nice one, Philoguy.
Only thing I would add, putting on my cultural studies hat for a second, is that neoliberalism
reinforces all of these economic presecriptions with a theory of the individual subject, who is deemed
to be responsible for negotiating their place in the market. This is crucial, because an isolated
subject who is responsible for their own assets and liabilities cannot be considered a victim of
This can be summed up in the notion of human capital, which circulates in neoliberal ideological
circles: in the reckoning of human capital, an individual is an "entrepreneurial self," an "enterprise
of one" who must essentially "sell" themselves within a broader marketplace of ideas. By this reckoning,
there is no such thing as an unemployed person: someone who is unemployed is, according to this thinking,
in transition between a less profitable activity and a more profitable one.
This, of course, doesn't acknowledge that the worker was kicked to the curb by machinations beyond
her control. Instead, it implies that the worker herself failed to recognize the unprofitable nature
of the previous job, and now must vote with her feet, find employ in a different place. But the responsibility
for this lies squarely with her (so the thinking goes): if she remains unemployed, it's because she's
holding out for a job in which her wage demands see eye to eye with the corporation's own. Barring
this, she is someone who is failing to "perform," someone who is unable to sell herself to the marketplace
in an effective way.
All of this helps to explain a great deal about our present circumstances. Minimum- or living-wage
legislation is opposed by neoliberal ideologues on the grounds that it is a destructive interference
in the individual's quests to negotiate a wage with prevailing market forces. The whole legacy of
"welfare reform," complete with manifestations of "workfare" in various Western countries, comes
out of the idea that welfare provisions are an unnatural distortion of the labor market that rewards
"entrepreneurial selves" for being unproductive. Austerity measures are deemed good not only for
the fiscal bottom line for corporations, but impose a moral accounting that establishes the grounds
for a proper neoliberal subject, one who isn't coddled by well-meaning but destructive policies of
Both the macrolevel and microlevel of neoliberalism work in lockstep with one another; the dissemination
of ideas about the ideal worker, "liberated" from the old impediments of a bureaucratic postwar compact,
help to cushion the blow of austerity measures great and small, from interest rate "shock doctrine"
to corporate downsizing.
Recommended 49 times
Remove Comment | + Children
16 · 01:02:46 PM
I love irony, hence can't help but get a kick from I love irony, hence can't help but get a kick
this little phrase: "the dissemination of ideas about the ideal worker,... help to cushion the
blow of austerity measures great and small..." I hope not too many take the bit of text as an endorsement
of the "virtues" of fuckyourneighbor Gekkothinking.
"... "The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well." ..."
"... Recently I read Not Fade Away by Laurence Shames and Peter Barton. It's about Peter Barton, the founder of Liberty Media, who shares his thoughts about dying from cancer. ..."
For the longest time, I believed that there's only one purpose of life: And that is to be happy. Right? Why else go through all
the pain and hardship? It's to achieve happiness in some way. And I'm not the only person who believed that. In fact, if you look
around you, most people are pursuing happiness in their lives.
That's why we collectively buy shit we don't need, go to bed with people we don't love, and try to work hard to get approval of
people we don't like.
Why do we do these things? To be honest, I don't care what the exact reason is. I'm not a scientist. All I know is that it has
something to do with history, culture, media, economy, psychology, politics, the information era, and you name it. The list is endless.
We are who are.
Let's just accept that. Most people love to analyze why people are not happy or don't live fulfilling lives.
I don't necessarily care about the why .
I care more about how we can change.
Just a few short years ago, I did everything to chase happiness.
- You buy something, and you think that makes you happy.
- You hook up with people, and think that makes you happy.
- You get a well-paying job you don't like, and think that makes you happy.
- You go on holiday, and you think that makes you happy.
But at the end of the day, you're lying in your bed (alone or next to your spouse), and you think: "What's next in this endless
pursuit of happiness?"
Well, I can tell you what's next: You, chasing something random that you believe makes you happy.
It's all a façade. A hoax. A story that's been made up.
Did Aristotle lie to us when he said:
"Happiness is the meaning and the purpose of life, the whole aim and end of human existence."
I think we have to look at that quote from a different angle. Because when you read it, you think that happiness is the main goal.
And that's kind of what the quote says as well.
But here's the thing: How do you achieve happiness?
Happiness can't be a goal in itself. Therefore, it's not something that's achievable. I believe that happiness is merely a byproduct
of usefulness. When I talk about this concept with friends, family, and colleagues, I always find it difficult to put this into words.
But I'll give it a try here. Most things we do in life are just activities and experiences.
- You go on holiday.
- You go to work.
- You go shopping.
- You have drinks.
- You have dinner.
- You buy a car.
Those things should make you happy, right? But they are not useful. You're not creating anything. You're just consuming or doing
something. And that's great.
Don't get me wrong. I love to go on holiday, or go shopping sometimes. But to be honest, it's not what gives meaning to life.
What really makes me happy is when I'm useful. When I create something that others can use. Or even when I create something I
For the longest time I foud it difficult to explain the concept of usefulness and happiness. But when I recently ran into a quote
by Ralph Waldo Emerson, the dots connected.
"The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some
difference that you have lived and lived well."
And I didn't get that before I became more conscious of what I'm doing with my life. And that always sounds heavy and all. But
it's actually really simple.
It comes down to this: What are you DOING that's making a difference?
Did you do useful things in your lifetime? You don't have to change the world or anything. Just make it a little bit better than
you were born.
If you don't know how, here are some ideas.
- Help your boss with something that's not your responsibility.
- Take your mother to a spa.
- Create a collage with pictures (not a digital one) for your spouse.
- Write an article about the stuff you learned in life.
- Help the pregnant lady who also has a 2-year old with her stroller.
- Call your friend and ask if you can help with something.
- Build a standing desk.
- Start a business and hire an employee and treat them well.
That's just some stuff I like to do. You can make up your own useful activities.
You see? It's not anything big. But when you do little useful things every day, it adds up to a life that is well lived. A life
The last thing I want is to be on my deathbed and realize there's zero evidence that I ever existed.
Recently I read
Not Fade Away by Laurence Shames and Peter Barton. It's about Peter Barton, the founder of Liberty Media, who shares his
thoughts about dying from cancer.
It's a very powerful book and it will definitely bring tears to your eyes. In the book, he writes about how he lived his life
and how he found his calling. He also went to business school, and this is what he thought of his fellow MBA candidates:
"Bottom line: they were extremely bright people who would never really anything, would never add much to society, would leave
no legacy behind. I found this terribly sad, in the way that wasted potential is always sad."
You can say that about all of us. And after he realized that in his thirties, he founded a company that turned him into a multi-millionaire.
Another person who always makes himself useful is Casey Neistat
. I've been following him for a year and a half now, and every time I watch his
YouTube show , he's doing something.
He also talks about how he always wants to do and create something. He even has a tattoo on his forearm that says "Do More."
Most people would say, "why would you work more?" And then they turn on Netflix and watch back to back episodes of Daredevil.
A different mindset.
Being useful is a mindset. And like with any mindset, it starts with a decision. One day I woke up and thought to myself: What
am I doing for this world? The answer was nothing.
And that same day I started writing. For you it can be painting, creating a product, helping elderly, or anything you feel like
Don't take it too seriously. Don't overthink it. Just DO something that's useful. Anything.
Darius Foroux writes about productivity, habits, decision making, and personal finance. His ideas and work have been featured
in TIME, NBC, Fast Company, Inc., Observer, and many more publications. Join
his free weekly newsletter.
More from Darius Foroux
This article was originally published on October 3, 2016, by Darius Foroux, and is republished here with permission. Darius Foroux
writes about productivity, habits, decision making, and personal finance.
Join his newsletter.
likbez -> anne... ,
October 05, 2019 at 04:40 PM
Let me serve as a devil advocate here.
Japan has a shrinking population. Can you explain to me why on the Earth they need
This preoccupation with "growth" (with narrow and false one dimensional and very
questionable measurements via GDP, which includes the FIRE sector) is a fallacy promoted by
Neoliberalism proved to be quite sophisticated religions with its own set of True
Believers in Eric Hoffer's terminology.
A lot of current economic statistics suffer from "mathiness".
For example, the narrow definition of unemployment used in U3 is just a classic example of
pseudoscience in full bloom. It can be mentioned only if U6 mentioned first. Otherwise, this
is another "opium for the people" ;-) An attempt to hide the real situation in the neoliberal
"job market" in which has sustained real unemployment rate is always over 10% and which has a
disappearing pool of well-paying middle-class jobs. Which produced current narco-epidemics
(in 2018, 1400 people were shot in half a year in Chicago (
); imagine that). While I doubt that people will hang Pelosi on the street post, her
successor might not be so lucky ;-)
Everything is fake in the current neoliberal discourse, be it political or economic, and
it is not that easy to understand how they are deceiving us. Lies that are so sophisticated
that often it is impossible to tell they are actually lies, not facts. The whole neoliberal
society is just big an Empire of Illusions, the kingdom of lies and distortions.
I would call it a new type of theocratic state if you wish.
And probably only one in ten, if not one in a hundred economists deserve to be called
scientists. Most are charlatans pushing fake papers on useless conferences.
It is simply amazing that the neoliberal society, which is based on "universal deception,"
can exist for so long.
Mr. Bill ,
September 22, 2019 at 09:55 PM
The decrepitating of the world's society can be traced back to the crap, contemporary
economics, the purview of the Ivy league. Somehow, labor arbitrage was accepted as a worthy
objective. America lost it's way.
Paine -> Mr. Bill... ,
September 23, 2019 at 06:12 AM
Joe stiglitz is an honored product of the ivy system
And he has conducted a 50 year demolition of standard micro economics as taught in the 101 class rooms of collegiate AMERIKA
Yes it is, but only for couples with low level of marital satisfaction.
"... They also looked at marital breakup more generally, focusing on when couples decided to end their relationships (not necessarily if or when they got divorced). Their findings revealed that when men were unemployed, the likelihood that either spouse would leave the marriage increased. What about the woman's employment status? For husbands, whether their wife was employed or not was seemingly unimportant-it was unrelated to their decision to leave the relationship. It did seem to matter for wives, though, but it depended upon how satisfied they were with the marriage. ..."
"... When women were highly satisfied, they were inclined to stay with their partner regardless of whether they had employment. However, when the wife's satisfaction was low, she was more likely to exit the relationship, but only when she had a job. ..."
The first study considers government data from all 50 U.S. states between the years 1960 and 2005.1 The researchers predicted
that higher unemployment numbers would translate to more divorces among heterosexual married couples. Most of us probably would have
predicted this too based on common sense-you would probably expect your partner to be able to hold down a job, right? And indeed,
this was the case, but only before 1980. Surprisingly, since then, as joblessness has increased, divorce rates have actually
How do we explain this counterintuitive finding? We don't know for sure, but the researchers speculate that unemployed
people may delay or postpone divorce due to the high costs associated with it. Not only is divorce expensive in terms of legal fees,
but afterward, partners need to pay for two houses instead of one. And if they are still living off of one salary at that point,
those costs may be prohibitively expensive. For this reason, it is not that uncommon to hear about estranged couples who can't stand
each other but are still living under the same roof.
The second study considered data from a national probability sample of over 3,600 heterosexual married couples in the U.S. collected
between 1987 and 2002. However, instead of looking at the overall association between unemployment and marital outcomes, they considered
how gender and relationship satisfaction factored into the equation. 2
They also looked at marital breakup more generally, focusing on when couples decided to end their relationships (not necessarily
if or when they got divorced). Their findings revealed that when men were unemployed, the likelihood that either spouse would leave
the marriage increased. What about the woman's employment status? For husbands, whether their wife was employed or not was seemingly
unimportant-it was unrelated to their decision to leave the relationship. It did seem to matter for wives, though, but it depended
upon how satisfied they were with the marriage.
When women were highly satisfied, they were inclined to stay with their partner regardless of whether they had employment.
However, when the wife's satisfaction was low, she was more likely to exit the relationship, but only when she had a job.
"... A good economy compensates for much social dysfunction. ..."
"... More than that, it prevents the worst of behaviors that are considered an expression of dysfunction from occurring, as people across all social strata have other things to worry about or keep them busy. Happy people don't bear grudges, or at least they are not on top of their consciousness as long as things are going well. ..."
"... This could be seen time and again in societies with deep and sometimes violent divisions between ethnic groups where in times of relative prosperity (or at least a broadly shared vision for a better future) the conflicts are not removed but put on a backburner, or there is even "finally" reconciliation, and then when the economy turns south, the old grudges and conflicts come back (often not on their own, but fanned by groups who stand to gain from the divisions, or as a way of scapegoating) ..."
"... "backwaters of America, that economy seems to put out fewer and fewer chairs." ~~Harold Pollack~ ..."
"... Going up through the chairs has become so impossible for those on the slow-track. Not enough slots for all the jokers within our once proud country of opportunities, ..."
"... George Orwell: "I doubt, however, whether the unemployed would ultimately benefit if they learned to spend their money more economically. ... If the unemployed learned to be better managers they would be visibly better off, and I fancy it would not be long before the dole was docked correspondingly." ..."
"... Perhaps you are commenting on the aspect that when (enough) job applicants/holders define down their standards and let employers treat them as floor mats, then the quality of many jobs and the labor relations will be adjusted down accordingly, or at the very least expectations what concessions workers will make will be adjusted up. That seems to be the case unfortunately. ..."
Avraam Jack Dectis said...
A good economy compensates for much social dysfunction.
cm -> Avraam Jack Dectis...
A bad economy moves people toward the margins, afflicts those
near the margins and kills those at the margins.
This is what policy makers should consider as they pursue policies that do not put the citizen above all else.
"A good economy compensates for much social dysfunction."
More than that, it prevents the worst of behaviors that are considered an expression of dysfunction from occurring, as
people across all social strata have other things to worry about or keep them busy. Happy people don't bear grudges, or at least
they are not on top of their consciousness as long as things are going well.
This could be seen time and again in societies with deep and sometimes violent divisions between ethnic groups where in
times of relative prosperity (or at least a broadly shared vision for a better future) the conflicts are not removed but put on
a backburner, or there is even "finally" reconciliation, and then when the economy turns south, the old grudges and conflicts
come back (often not on their own, but fanned by groups who stand to gain from the divisions, or as a way of scapegoating)
Dune Goon said...
"backwaters of America, that economy seems to put out fewer and fewer chairs." ~~Harold Pollack~
Going up through the chairs has become so impossible for those on the slow-track. Not enough slots for all the jokers within
our once proud country of opportunities, not enough elbow room for Daniel Boone, let alone Jack Daniels! Not enough space
in this county to wet a tree when you feel the urge! Every tiny plot of space has been nailed down and fenced off, divided up
among gated communities. Why?
Because the 1% has an excessive propensity to reproduce their own kind. They are so uneducated about the responsibilities of
birth control and space conservation that they are crowding all of us off the edge of the planet. Worse yet we have begun to *ape
"We've only just begun!"
"Many of us know people who receive various public benefits, and who might not need to rely on these programs if they made
better choices, if they learned how to not talk back at work, if they had a better handle on various self-destructive behaviors,
if they were more willing to take that crappy job and forego disability benefits, etc."
George Orwell: "I doubt, however, whether the unemployed would ultimately benefit if they learned to spend their money
more economically. ... If the unemployed learned to be better managers they would be visibly better off, and I fancy it would
not be long before the dole was docked correspondingly."
cm said in reply to William...
A valid observation, but what you are commenting on is more about getting or keeping a job than managing personal finances.
Perhaps you are commenting on the aspect that when (enough) job applicants/holders define down their standards and let
employers treat them as floor mats, then the quality of many jobs and the labor relations will be adjusted down accordingly, or
at the very least expectations what concessions workers will make will be adjusted up. That seems to be the case unfortunately.
"... In a recent interview Mr. Deaton suggested that middle-aged whites have "lost the narrative of their lives." That is, their economic setbacks have hit hard because they expected better. Or to put it a bit differently, we're looking at people who were raised to believe in the American Dream, and are coping badly with its failure to come true. ..."
"... the truth is that we don't really know why despair appears to be spreading across Middle America. But it clearly is, with troubling consequences for our society... ..."
"... Some people who feel left behind by the American story turn self-destructive; others turn on the elites they feel have betrayed them. ..."
"... What we are seeing is the long term impacts of the "Reagan Revolution." ..."
"... The affected cohort here is the first which has lived with the increased financial and employment insecurity that engendered, as well as the impacts of the massive offshoring of good paying union jobs throughout their working lives. Stress has cumulative impacts on health and well-being, which are a big part of what we are seeing here. ..."
"... Lets face it, this Fed is all about goosing up asset prices to generate short term gains in economic activity. Since the early 90s, the Fed has done nothing but make policy based on Wall Street's interests. I can give them a pass on the dot com debacle but not after that. This toxic relationship between wall street and the Fed has to end. ..."
"... there was a housing bubble that most at the Fed (including Bernanke) denied right upto the middle of 2007 ..."
"... Yellen, to her credit, has admitted multiple times over the years that low rates spur search for yield that blows bubbles ..."
"... Bursting of the bubble led to unemployment for millions and U3 that went to 10% ..."
"... "You are the guys who do not consider the counterfactual where higher rates would have prevented the housing bubble in 2003-05 and that produced the great recession in the first place." ..."
"... Inequality has been rising globally, almost regardless of trade practices ..."
"... It is not some unstoppable global trend. This is neoliberal oligarchy coup d'état. Or as it often called "a quite coup". ..."
"... First of all, whether a job can or is offshored has little to do with whether it is "low skilled" but more with whether the workflow around the job can be organized in such a way that the job can be offshore. This is less a matter of "skill level" and more volume and immediacy of interaction with adjacent job functions, or movement of material across distances. ..."
"... The reason wages are stuck is that aggregate jobs are not growing, relative to workforce supply. ..."
"... BTW the primary offshore location is India, probably in good part because of good to excellent English language skills, and India's investment in STEM education and industry (especially software/services and this is even a public stereotype, but for a reason). ..."
"... Very rough figures: half a million Chicago employees may make less than $800 a week -- almost everybody should earn $800 ... ..."
"... Union busting is generally (?) understood as direct interference with the formation and operation of unions or their members. It is probably more common that employers are allowed to just go around the unions - "right to work", subcontracting non-union shops or temp/staffing agencies, etc. ..."
"... Why would people join a union and pay dues when the union is largely impotent to deliver, when there are always still enough desperate people who will (have to) take jobs outside the union system? Employers don't have to bring in scabs when they can legally go through "unencumbered" subcontractors inside or outside the jurisdiction. ..."
"... Credibility trap, fully engaged. ..."
"... The anti-knowledge of the elites is worth reading. http://billmoyers.com/2015/11/02/the-anti-knowledge-of-the-elites/ When such herd instinct and institutional overbearance connects with the credibility trap, the results may be impressive. http://jessescrossroadscafe.blogspot.com/2015/11/gold-daily-and-silver-weekly-charts-pop.html ..."
"... Suicide, once thought to be associated with troubled teens and the elderly, is quickly becoming an age-blind statistic. Middle aged Americans are turning to suicide in alarming numbers. The reasons include easily accessible prescription painkillers, the mortgage crisis and most importantly the challenge of a troubled economy. The Center for Disease Control and Prevention claims suicide rates now top the number of deaths due to automobile accidents. ..."
"... The suicide rate for both younger and older Americans remains virtually unchanged, however, the rate has spiked for those in middle age (35 to 64 years old) with a 28 percent increase (link is external) from 1999 to 2010. ..."
"... When few people kill themselves "on purpose" or die from self-inflicted but probably "unintended" harms (e.g. organ failure or accidental death caused by substance abuse), it can be shrugged off as problems related to the individual (more elaboration possible but not necessary). ..."
"... When it becomes a statistically significant phenomenon (above-noise percentage of total population or demographically identifiable groups), then one has to ask questions about social causes. My first question would be, "what made life suck for those people"? What specific instrument they used to kill themselves would be my second question (it may be the first question for people who are charged with implementing counter measures but not necessarily fixing the causes). ..."
"... Since about the financial crisis (I'm not sure about causation or coincidence - not accidental coincidence BTW but causation by the same underlying causes), there has been a disturbing pattern of high school students throwing themselves in front of local trains. At that age, drinking or drugging oneself to death is apparently not the first "choice". Performance pressure *related to* (not just "and") a lack of convincing career/life prospects has/have been suspected or named as a cause. I don't think teenagers suddenly started to jump in front of trains that have run the same rail line for decades because of the "usual" and centuries to millennia old teenage romantic relationship issues. ..."
"There is a darkness spreading over part of our society":
Despair, American Style, by Paul
Krugman, Commentary, NY Times: A couple of weeks ago President Obama mocked Republicans who are "down on America," and reinforced
his message by doing a pretty good Grumpy Cat impression. He had a point: With job growth at rates not seen since the 1990s, with
the percentage of Americans covered by health insurance hitting record highs, the doom-and-gloom predictions of his political
enemies look ever more at odds with reality.
Yet there is a darkness spreading over part of our society. ... There has been
a lot of comment ... over a new paper by the economists Angus Deaton (who just won a Nobel) and Anne Case, showing that mortality
among middle-aged white Americans has been rising since 1999..., while death rates were falling steadily both in other countries
and among other groups in our own nation.
Even more striking are the proximate causes of rising mortality. Basically, white Americans are, in increasing numbers, killing
themselves... Suicide is way up, and so are deaths from drug poisoning and ... drinking... But what's causing this epidemic of
In a recent interview Mr. Deaton suggested that middle-aged whites have "lost the narrative of their lives." That is, their
economic setbacks have hit hard because they expected better. Or to put it a bit differently, we're looking at people who were
raised to believe in the American Dream, and are coping badly with its failure to come true.
That sounds like a plausible hypothesis..., but the truth is that we don't really know why despair appears to be spreading
across Middle America. But it clearly is, with troubling consequences for our society...
I know I'm not the only observer who sees a link between the despair reflected in those mortality numbers and the volatility
of right-wing politics. Some people who feel left behind by the American story turn self-destructive; others turn on the elites
they feel have betrayed them. No, deporting immigrants and wearing baseball caps bearing slogans won't solve their problems,
but neither will cutting taxes on capital gains. So you can understand why some voters have rallied around politicians who at
least seem to feel their pain.
At this point you probably expect me to offer a solution. But while universal health care, higher minimum wages, aid to education,
and so on would do a lot to help Americans in trouble, I'm not sure whether they're enough to cure existential despair.
There are a lot of economic dislocations that the government after the 2001 recession stopped doing much about it. Right after
the 2008 crash, the government did more but by 2010, even the Democratic president dropped the ball. and failed to deliver. Probably
no region of the country is affected more by technological change that the coal regions of KY and WV. Lying politicians promise
a return to the past that cannot be delivered. No one can suggest what the new future will be. The US is due for another round
of urbanization as jobs decline in rural areas. Dislocation forces declining values of properties and requires changes in behavior,
skills and outlook. Those personal changes do not happen without guidance. The social institutions such as churches and government
programs are a backstop, but they are not providing a way forward. There is plenty of work to be done, but our elites are not
willing to invest.
DrDick -> bakho...
The problem goes back much further than that. What we are seeing is the long term impacts of the "Reagan Revolution."
The affected cohort here is the first which has lived with the increased financial and employment insecurity that engendered,
as well as the impacts of the massive offshoring of good paying union jobs throughout their working lives. Stress has cumulative
impacts on health and well-being, which are a big part of what we are seeing here.
Thuggee doom and gloom is about their fading chance to reinstate the slavocracy.
The fever swamp of right wing ideas is more loony than 1964.
Extremism is the new normal.
bmorejoe -> ilsm...
Yup. The slow death of white supremacy.
Peter K. -> Anonymous...
If it wasn't for monetary policy things would be even worse as the Republicans in Congress forced fiscal austerity on the economy
during the "recovery."
sanjait -> Peter K....
That's the painful irony of a comment like that one from Anonymous ... he seems completely unaware that, yes, ZIRP has done
a huge amount to prevent the kind of problems described above. He like most ZIRP critics fails to consider what the counterfactual
looks like (i.e., something like the Great Depression redux).
Anonymous -> sanjait...
You are the guys who do not consider the counterfactual where higher rates would have prevented the housing bubble in 2003-05
and that produced the great recession in the first place. Because preemptive monetary policy has gone out of fashion completely.
And now we are going to repeat the whole process over when the present bubble in stocks and corporate bonds bursts along with
the malinvestment in China, commodity exporters etc.
Peter K. -> Anonymous...
"liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system.
High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted,
and enterprising people will pick up from less competent people."
sanjait -> Anonymous...
"You want regulation? I would like to see
1) Reinstate Glass Steagall
2) impose a 10bp trans tax on trading financial instruments."
Great. Two things with zero chance of averting bubbles but make great populist pablum.
This is why we can't have nice things!
"3) Outlaw any Fed person working for a bank/financial firm after they leave office."
This seems like a decent idea. Hard to enforce, as highly intelligent and accomplished people tend not to be accepting of such
restrictions, but it could be worth it anyway.
likbez -> sanjait...
" highly intelligent and accomplished people tend not to be accepting of such restrictions, but it could be worth it anyway."
You are forgetting that it depends on a simple fact to whom political power belongs. And that's the key whether "highly intelligent
and accomplished people" will accept those restrictions of not.
If the government was not fully captured by financial capital, then I think even limited prosecution of banksters "Stalin's
purge style" would do wonders in preventing housing bubble and 2008 financial crush.
Please try to imagine the effect of trial and exile to Alaska for some period just a dozen people involved in Securitization
of mortgages boom (and those highly intelligent people can do wonders in improving oil industry in Alaska ;-).
Starting with Mr. Weill, Mr. Greenspan, Mr. Rubin, Mr. Phil Gramm, Dr. Summers and Mr. Clinton.
Anonymous -> Peter K....
"2003-2005 didn't have excess inflation and wage gains."
Monetary policy can not hinge just on inflation or wage gains. Why are wage gains a problem anyway?
Lets face it, this Fed is all about goosing up asset prices to generate short term gains in economic activity. Since the
early 90s, the Fed has done nothing but make policy based on Wall Street's interests. I can give them a pass on the dot com debacle
but not after that. This toxic relationship between wall street and the Fed has to end.
You want regulation? I would like to see
1) Reinstate Glass Steagall
2) impose a 10bp trans tax on trading financial instruments.
3) Outlaw any Fed person working for a bank/financial firm after they leave office. Bernanke, David Warsh etc included. That includes
Mishkin getting paid to shill for failing Iceland banks or Bernanke making paid speeches to hedge funds.
Anonymous -> EMichael...
Fact: there was a housing bubble that most at the Fed (including Bernanke) denied right upto the middle of 2007
Fact: Yellen, to her credit, has admitted multiple times over the years that low rates spur search for yield that blows bubbles
Fact: Bursting of the bubble led to unemployment for millions and U3 that went to 10%
what facts are you referring to?
EMichael -> Anonymous...
That FED rates caused the bubble.
to think this you have to ignore that a 400% Fed Rate increase from 2004 to 2005 had absolutely no effect on mortgage originations.
Then of course, you have to explain why 7 years at zero has not caused another housing bubble.
Correlation is not causation. Lack of correlation is proof of lack of causation.
pgl -> Anonymous...
anne -> anne...
"You are the guys who do not consider the counterfactual where higher rates would have prevented the housing bubble
in 2003-05 and that produced the great recession in the first place."
You are repeating the John B. Taylor line about interest rates being held "too low and too long". And guess what - most economists
have called Taylor's claim for the BS it really is. We should also note we never heard this BS when Taylor was part of the Bush
Administration. And do check - Greenspan and later Bernanke were raising interest rates well before any excess demand was generated
which is why inflation never took off.
So do keep repeating this intellectual garbage and we keep noting you are just a stupid troll.
September 17, 2015
Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century
By Anne Case and Angus Deaton
Midlife increases in suicides and drug poisonings have been previously noted. However, that these upward trends were persistent
and large enough to drive up all-cause midlife mortality has, to our knowledge, been overlooked. If the white mortality rate for
ages 45−54 had held at their 1998 value, 96,000 deaths would have been avoided from 1999–2013, 7,000 in 2013 alone. If it had
continued to decline at its previous (1979‒1998) rate, half a million deaths would have been avoided in the period 1999‒2013,
comparable to lives lost in the US AIDS epidemic through mid-2015. Concurrent declines in self-reported health, mental health,
and ability to work, increased reports of pain, and deteriorating measures of liver function all point to increasing midlife distress.
This paper documents a marked increase in the all-cause mortality of middle-aged white non-Hispanic men and women in the United
States between 1999 and 2013. This change reversed decades of progress in mortality and was unique to the United States; no other
rich country saw a similar turnaround. The midlife mortality reversal was confined to white non-Hispanics; black non-Hispanics
and Hispanics at midlife, and those aged 65 and above in every racial and ethnic group, continued to see mortality rates fall.
This increase for whites was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic
liver diseases and cirrhosis. Although all education groups saw increases in mortality from suicide and poisonings, and an overall
increase in external cause mortality, those with less education saw the most marked increases. Rising midlife mortality rates
of white non-Hispanics were paralleled by increases in midlife morbidity. Self-reported declines in health, mental health, and
ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured
deteriorations in liver function, all point to growing distress in this population. We comment on potential economic causes and
consequences of this deterioration.
ilsm -> Sarah...
Murka is different. Noni's plan would work if it were opportune for the slavocracy and the Kochs and ARAMCO don't lose any
Maybe cost plus climate repair contracts to shipyards fumbling through useless nuclear powered behemoths for war plans made
Someone gotta make big money plundering for the public good, in Murka!
DeDude -> CSP...
The answers to our malaise seem readily apparent to me, and I'm a southern-born white male working in a small, struggling Georgia
1. Kill the national war machine
2. Kill the national Wall Street financial fraud machine
3. Get out-of-control mega corporations under control
4. Return savings to Main Street (see #1, #2 and #3)
5. Provide national, universal health insurance to everyone as a right
6. Provide free education to everyone, as much as their academic abilities can earn them
7. Strengthen social security and lower the retirement age to clear the current chronic underemployment of young people
It seems to me that these seven steps would free the American people to pursue their dreams, not the dreams of Washington or
Wall Street. Unfortunately, it is readily apparent that true freedom and real individual empowerment are the last things our leaders
desire. Shame on them and shame on everyone who helps to make it so.
You are right. Problem is that most southern-born white males working in a small, struggling Georgia town would rather die
than voting for the one candidate who might institute those changes - Bernie Sanders.
The people who are beginning to realize that the american dream is a mirage, are the same people who vote for GOP candidates
who want to give even more to the plutocrats.
sanjait -> kthomas...
The kids in Seattle had it right when WTO showed up.
Why is anyone suprised by all this?
We exported out jobs. First all the manufacturing. Now all of the Service jobs.
But hey...we helped millions in China and India get out of poverty, only to put outselves into it.
America was sold to highest bidder a long long time ago. A Ken Melvin put it, the chickens came home to roost in 2000.
So you think the problem with America is that we lost our low skilled manufacturing and call center tech support jobs?
I can sort of see why people assume that "we exported out jobs" is the reason for stagnant incomes in the U.S., but it's still
tiresome, because it's still just wrong.
Manufacturing employment crashed in the US mostly because it has been declining globally. The world economy is less material
based than ever, and machines do more of the work making stuff.
And while some services can be outsourced, the vast majority can't. Period.
Inequality has been rising globally, almost regardless of trade practices. The U.S. has one of the more closed economies in
the developed world, so if globalization were the cause, we'd be the most insulated. But we aren't, which should be a pretty good
indication that globalization isn't the cause.
cm -> sanjait...
Yes, the loss of "low skilled" jobs is still a loss of jobs. Many people work in "low skilled" jobs because there are not enough
"higher skill" jobs to go around, as most work demanded is not of the most fancy type.
We have heard this now for a few decades, that "low skilled" jobs lost will be replaced with "high skill" (and better paid)
jobs, and the evidence is somewhat lacking. There has been growth in higher skill jobs in absolute terms, but when you adjust
by population growth, it is flat or declining.
When people hypothetically or actually get the "higher skills" recommended to them, into what higher skill jobs are they to
I have known a number of anecdotes of people with degrees or who held "skilled" jobs that were forced by circumstances to take
commodity jobs or jobs at lower pay grades or "skill levels" due to aggregate loss of "higher skill" jobs or age discrimination,
or had to go from employment to temp jobs.
And it is not true that only "lower skill" jobs are outsourced. Initially, yes, as "higher skills" obviously don't exist yet
in the outsourcing region. But that doesn't last long, especially if the outsourcers expend resources to train and grow the remote
skill base, at the expense of the domestic workforce which is expected to already have experience (which has worked for a while
due to workforce overhangs from previous industry "restructuring").
likbez -> sanjait...
"Inequality has been rising globally, almost regardless of trade practices."
It is not some unstoppable global trend. This is neoliberal oligarchy coup d'état. Or as it often called "a quite coup".
sanjait -> cm...
"Yes, the loss of "low skilled" jobs is still a loss of jobs. Many people work in "low skilled" jobs because there
are not enough "higher skill" jobs to go around, as most work demanded is not of the most fancy type.
We have heard this now for a few decades, that "low skilled" jobs lost will be replaced with "high skill" (and better
paid) jobs, and the evidence is somewhat lacking. "
And that is *exactly my point.*
The lack of wage growth isn't isolated to low skilled domains. It's weak across the board.
What does that tell us?
It tells us that offshoring of low skilled jobs isn't the problem.
"And it is not true that only "lower skill" jobs are outsourced. Initially, yes, as "higher skills" obviously don't exist
yet in the outsourcing region."
You could make this argument, but I think (judging by your own hedging) you know this isn't the case. Offshoring of higher
skilled jobs does happen but it's a marginal factor in reality. You hypothesize that it may someday become a bigger factor ...
but just notice that we've had stagnant wages now for a few decades.
My point is that offshoring IS NOT THE CAUSE of stagnating wages. I'd argue that globalization is a force that can't really
be stopped by national policy anyway, but even if you think it could, it's important to realize IT WOULD DO ALMOST NOTHING to
cm -> sanjait...
I was responding to your point:
"So you think the problem with America is that we lost our low skilled manufacturing and call center tech support jobs?"
With the follow-on:
"I can sort of see why people assume that "we exported out jobs" is the reason for stagnant incomes in the U.S., but
it's still tiresome, because it's still just wrong."
Labor markets are very sensitive to marginal effects. If let's say "normal" or "heightened" turnover is 10% p.a. spread out
over the year, then the continued availability (or not) of around 1% vacancies (for the respective skill sets etc.) each month
makes a huge difference. There was the argument that the #1 factor is automation and process restructuring, and offshoring is
trailing somewhere behind that in job destruction volume.
I didn't research it in detail because I have no reason to doubt it. But it is a compounded effect - every percentage point
in open positions (and *better* open positions - few people are looking to take a pay cut) makes a big difference. If let's say
the automation losses are replaced with other jobs, offshoring will tip the scale. Due to aggregate effects one cannot say what
is the "extra" like with who is causing congestion on a backed up road (basically everybody, not the first or last person to join).
"Manufacturing employment crashed in the US mostly because it has been declining globally. The world economy is less
material based than ever, and machines do more of the work making stuff."
Are you kidding me? The world economy is less material based? OK maybe 20 years after the paperless office we are finally printing
less, but just because the material turnover, waste, and environmental pollution is not in your face (because of offshoring!),
it doesn't mean less stuff is produced or material consumed. If anything, it is market saturation and aggregate demand limitations
that lead to lower material and energy consumption (or lower growth rates).
In the aftermath of the financial crisis, several nations (US and Germany among others) had programs to promote new car sales
(cash for clunkers etc.) that were based on the idea that people can get credit for their old car, but its engine had to be destroyed
and made unrepairable so it cannot enter the used car market and defeat the purpose of the program. I assume the clunkers were
then responsibly and sustainably recycled.
cm -> sanjait...
"The lack of wage growth isn't isolated to low skilled domains. It's weak across the board.
What does that tell us?
It tells us taht offshoring of low skilled jobs isn't the problem."
This doesn't follow. First of all, whether a job can or is offshored has little to do with whether it is "low skilled"
but more with whether the workflow around the job can be organized in such a way that the job can be offshore. This is less a
matter of "skill level" and more volume and immediacy of interaction with adjacent job functions, or movement of material across
distances. Also consider that aside from time zone differences (which are of course a big deal between e.g. US and Europe/Asia),
there is not much difference whether a job is performed in another country or in a different domestic region, or perhaps just
"working from home" 1 mile from the office, for office-type jobs. Of course the other caveat is whether the person can physically
attend meetings with little fuss and expense - so remote management/coordination work is naturally not a big thing.
The reason wages are stuck is that aggregate jobs are not growing, relative to workforce supply. When the boomers
retire for real in another 5-10 years, that may change. OTOH several tech companies I know have periodic programs where they offer
workers over 55 or so packages to leave the company, so they cannot really hurt for talent, though they keep complaining and are
busy bringing in young(er) people on work visa. Free agents, it depends on the company. Some companies hire NCGs, but they also
"buy out" older workers.
cm -> cm...
Caveat: Based on what I see (outside sectors with strong/early growth), domestic hiring of NCGs/"fresh blood" falls in two
- Location bound jobs (sales, marketing, legal, HR, administration, ..., also functions attached to those or otherwise preferring
"cultural affinity") - which are largely staffed with locals, also foreigners (visa as well as free agent (green card/citizen))
- "Technical functions" and "technical" back office (i.e. little or no customer contact) - predominantly foreigners on visa
(e.g. graduates of US colleges), though some "free agent" hiring may happen depending on circumstances
Then there is also the gender split - "technical/engineering" jobs are overweighed in men, except technical jobs in traditionally
"non-technical/non-product" departments which have a higher share of women.
All this is of course a matter of top-down hiring preferences, as generally everything is either controlled top-down or tacitly
allowed to happen by selective non-interference.
cm -> sanjait...
"You could make this argument, but I think (judging by your own hedging) you know this isn't the case. Offshoring of
higher skilled jobs does happen but it's a marginal factor in reality. You hypothesize that it may someday become a bigger
factor ... but just notice that we've had stagnant wages now for a few decades."
I've written a lot of text so far but didn't address all points ...
My "hedging" is retrospective. I don't hypothesize what may eventually happen but it is happening here and now. I don't presume
to present a representative picture, but in my sphere of experience/observation (mostly a subset of computer software), offshoring
of *knowledge work* started in the mid to late 90's (and that's not the earliest it started in general - of course a lot of the
early offshoring in the 80's was market/language specific customization, e.g. US tech in Europe etc., and more "local culture
expertise" and not offshoring proper). In the late 90's and early 2000's, offshoring was overshadowed by the Y2K/dotcom booms,
so that phase didn't get high visibility (among the people "affected" it sure did). Also the internet was not yet ubiquitous -
broadband existed only at the corporate level.
- 15-20 years ago it was testing and "low level" programming, perhaps self contained limited-complexity functions or modules
written to fairly rigid specifications, or troubleshooting and bug fixes implemented here or there.
- Then 10-15 years ago it advanced to offshore product maintenance, following up on QA issues, small development projects,
or assisting/supporting roles in "real" projects (either conducted offshore or people visiting the domestic offices for weeks
- This went on in parallel with domestic visa workers from the first 15-20 years ago wave either being encouraged or themselves
expressing a desire to go back home (personal, career, family reasons etc.) and "spread the knowledge" and advancing into technical/organization
- Then 5-10 years ago with clearly grown offshore skills (my theory is that people everywhere are cut from the same cloth,
and we are now at 10+ years industry experience in this narrative), the offshore sites started taking on ownership of product
components, while all the "previous" functions of testing, R&D support, tech pub (which I didn't mention earlier), etc. remained
and evolved further. Also IT (though IT support is more timezone bound and is thus present in all time zones).
Since then there has been little change, it is pretty much a steady state.
BTW the primary offshore location is India, probably in good part because of good to excellent English language skills,
and India's investment in STEM education and industry (especially software/services and this is even a public stereotype, but
for a reason).
Syaloch -> sanjait...
Whether low skilled jobs were eliminated due to offshoring or automation doesn't really matter. What matters is that the jobs
disappeared, replaced by a small number of higher skill jobs paying comparable wages plus a large number of low skill jobs offering
The aggregate effect was stagnation and even decline in living standards. Plus any new jobs were not necessarily produced in
the same geographic region as those that were lost, leading to concentration of unemployment and despair.
sanjait -> Syaloch...
"Whether low skilled jobs were eliminated due to offshoring or automation doesn't really matter. "
Well, actually it does matter, because we have a whole lot of people (in both political parties) who think the way to fight
inequality is to try to reverse globalization.
If they are incorrect, it matters, because they should be applying their votes and their energy to more effective solutions,
and rejecting the proposed solutions of both the well-meaning advocates and the outright demagogues who think restricting trade
is some kind of answer.
Syaloch -> sanjait...
I meant it doesn't matter in terms of the despair felt by those affected. All that matters to those affected is that they have
been obsoleted without either economic or social support to help them.
However, in terms of addressing this problem economically it really doesn't matter that much either. Offshoring is effectively
a low-tech form of automation. If companies can't lower labor costs by using cheaper offshore labor they'll find ways to either
drive down domestic wages or to use less labor. For the unskilled laborer the end result is the same.
Syaloch -> Syaloch...
See the thought experiment I posted on the links thread, and then add the following:
Suppose the investigative journalist discovered instead that Freedonia itself is a sham, and that rather than being imported
from overseas, the clothing was actually coming from an automated factory straight out of Vonnegut's "Player Piano" that was hidden
in a remote domestic location. Would the people who were demanding limits on Freedonian exports now say, "Oh well, I guess that's
OK" simply because the factory was located within the US?
Dan Kervick -> kthomas...
I enjoyed listening to this talk by Fredrick Reinfeldt at the LSE:
Reinfeldt is a center-right politicians and former Swedish Prime Minister. OF course, what counts as center-right in Sweden
seems very different from what counts as center-right in the US.
Perhaps there is some kind of basis here for some bipartisan progress on jobs and full employment.
I'm sure this isn't caused by any single factor, but has anyone seriously investigated a link between this phenomena and the
Veterans probably aren't a large enough cohort to explain the effect in full, but white people from the south are the most
likely group to become soldiers, and veterans are the most likely group to have alcohol/drug abuse and suicide problems.
This would also be evidence why we aren't seeing it in other countries, no one else has anywhere near the number of vets we
cm -> William...
Vets are surely part of the aggregate problem of lack of career/economic prospects, in fact a lot of people join(ed) the military
because of a lack of other jobs to begin with. But as the lack of prospects is aggregate it affects everybody.
Denis Drew said...
" At this point you probably expect me to offer a solution. But while universal health care, higher minimum wages, aid to
education, and so on would do a lot to help Americans in trouble, I'm not sure whether they're enough to cure existential despair."
UNOINIZED and (therefore shall we say) politicized: you are in control of your narrative -- win or lose. Can it get any more hopeful
than that? And you will probably win.
Winning being defined as labor eeking out EQUALLY emotionally satisfying/dissatisfying market results -- EQUAL that is with
the satisfaction of ownership and the consumer. That's what happens when all three interface in the market -- labor interfacing
indirectly through collective bargaining.
(Labor's monopoly neutralizes ownership's monopsony -- the consumers' willingness to pay providing the checks and balances
on labor's monopoly.)
If you feel you've done well RELATIVE to the standards of your own economic era you will feel you've done well SUBJECTIVELY.
For instance, my generation of (American born) cab drivers earned about $750 for a 60 hour (grueling) work week up to the early
80s. With multiples strip-offs I won't detail here (will on request -- diff for diff cities) that has been reduced to about $500
a week (at best I suspect!) I believe and that is just not enough to get guys like me out there for that grueling work.
Let's take the minimum wage comparison from peak-to-peak instead of from peak-to-trough: $11 and hour in 1968 -- at HALF TODAY'S
per capita income (economic output) -- to $7.25 today. How many American born workers are going to show up for $7.25 in the day
of SUVs and "up-to-date kitchens" all around us. $8.75 was perfectly enticing for Americans working in 1956 ($8.75 thanks to the
"Master of the Senate"). The recent raise to $10 is not good enough for Chicago's 100,000 gang members (out of my estimate 200,000
gang age minority males). Can hustle that much on the street w/o the SUBJECTIVE feeling of wage slavery.
Ditto hiring result for two-tier supermarket contracts after Walmart undercut the unions.
Without effective unions (centralized bargaining is the gold standard: only thing that fends off Walmart type contract muscling.
Done that way since 1966 with the Teamsters Union's National Master Freight Agreement; the long practiced law or custom from continental
Europe to French Canada to Argentina to Indonesia.
It occurred to me this morning that if the quintessential example of centralized bargaining Germany has 25% or our population
and produces 200% more cars than we do, then, Germans produces 8X as many cars per capita than we do!
And thoroughly union organized Germans feel very much in control of the narrative of their lives.
cm -> Denis Drew...
"thoroughly union organized Germans"
No longer thoroughly, with recent labor market reforms the door has likewise been blown open to contingent workforces, staffing
agencies, and similar forms of (perma) temp work. And moving work to nations with lower labor standards (e.g. "peripheral" Europe,
less so outside Europe) has been going on for decades, for parts, subassembly, and even final assembly.
Denis Drew said...
Very rough figures: half a million Chicago employees may make less than $800 a week -- almost everybody should earn $800
... putative minimum wage? -- might allow some slippage in high labor businesses like fast food restaurants; 33% labor costs!
-- sort of like the Teamsters will allow exceptions when needed from Master agreements if you open up your books, they need your
working business too, consumer ultimately sets limits.
Average raise of $200 a week -- $10,000 a year equals $5 billion shift in income -- out of a $170 billion Chicago GDP (1% of
national) -- not too shabby to bring an end to gang wars and Despair American Style.
Just takes making union busting a felony LIKE EVERY OTHER FORM OF UNFAIR MARKET MUSCLING (even taking a movie in the movies).
The body of laws are there -- the issues presumably settled -- the enforcement just needs "dentures."
cm -> Denis Drew...
Union busting is generally (?) understood as direct interference with the formation and operation of unions or their members.
It is probably more common that employers are allowed to just go around the unions - "right to work", subcontracting non-union
shops or temp/staffing agencies, etc.
cm -> Denis Drew...
Why would people join a union and pay dues when the union is largely impotent to deliver, when there are always still enough
desperate people who will (have to) take jobs outside the union system? Employers don't have to bring in scabs when they can legally
go through "unencumbered" subcontractors inside or outside the jurisdiction.
cm -> cm...
It comes down to the collective action problem. You can organize people who form a "community" (workers in the same business
site, or similar aggregates more or less subject to Dunbar's number or with a strong tribal/ethnic/otherwise cohesion narrative).
Beyond that, if you can get a soapbox in the regional press, etc., otherwise good luck. It probably sounds defeatist but I don't
have a solution.
When the union management is outed for corruption or other abuses or questioable practices (e.g. itself employing temps or
subcontractors), it doesn't help.
Peter K. said...
There was a good discussion of this on last Friday's Real Time with Bill Maher.
Surprisingly, I pretty much agree with David Frum's analysis -- and Maher's comment that Trump, with his recent book, "Crippled
America", has his finger on the pulse of this segment of the population. Essentially what we're seeing is the impact of economic
stagnation upon a culture whose reserves of social capital have been depleted, as described in Robert Putnam's "Bowling Alone".
When the going gets tough it's a lot harder to manage without a sense of identity and purpose, and without the support of family,
friends, churches, and communities. Facebook "friends" are no substitute for the real thing.
"...since the late 1970s, we've been at full employment only 30 percent of the time (see the data note below for an explanation
of how this is measured). For the three decades before that, the job market was at full employment 70 percent of the time."
We need better macro (monetary, fiscal, trade) policy.
Maybe middle-aged blacks and hispanics have better attitudes and health since they made it through a tough youth, have more
realistic expectations and race relations are better than the bad old days even if they are far from perfect. The United States
is becoming more multicultural.
Credibility trap, fully engaged.
Fred C. Dobbs said...
The anti-knowledge of the elites is worth reading.
When such herd instinct and institutional overbearance connects with the credibility trap, the results may be impressive.
cm -> Fred C. Dobbs...
White, Middle-Age Suicide In America Skyrockets
Psychology Today - May 6, 2013
Suicide, once thought to be associated with troubled teens and the elderly, is quickly becoming an age-blind statistic.
Middle aged Americans are turning to suicide in alarming numbers. The reasons include easily accessible prescription painkillers,
the mortgage crisis and most importantly the challenge of a troubled economy. The Center for Disease Control and Prevention claims
suicide rates now top the number of deaths due to automobile accidents.
The suicide rate for both younger and older Americans remains virtually unchanged, however, the rate has spiked for those
in middle age (35 to 64 years old) with a 28 percent increase (link is external) from 1999 to 2010. The rate for whites in
middle-age jumped an alarming 40 percent during the same time frame. According to the CDC, there were more than 38,000 suicides
(link is external) in 2010 making it the tenth leading cause of death in America overall (third leading cause from age 15-24).
The US 2010 Final Data quantifies the US statistics for suicide by race, sex and age. Interestingly, African-American suicides
have declined and are considerably lower than whites. Reasons are thought to include better coping skills when negative things
occur as well as different cultural norms with respect to taking your own life. Also, Blacks (and Hispanics) tend to have stronger
family support, community support and church support to carry them through these rough times.
While money woes definitely contribute to stress and poor mental health, it can be devastating to those already prone to depression
-- and depression is indeed still the number one risk factor for suicide. A person with no hope and nowhere to go, can now easily
turn to their prescription painkiller and overdose, bringing the pain, stress and worry to an end. In fact, prescription painkillers
were the third leading cause of suicide (and rising rapidly) for middle aged Americans in 2010 (guns are still number 1). ...
When few people kill themselves "on purpose" or die from self-inflicted but probably "unintended" harms (e.g. organ failure
or accidental death caused by substance abuse), it can be shrugged off as problems related to the individual (more elaboration
possible but not necessary).
When it becomes a statistically significant phenomenon (above-noise percentage of total population or demographically identifiable
groups), then one has to ask questions about social causes. My first question would be, "what made life suck for those people"?
What specific instrument they used to kill themselves would be my second question (it may be the first question for people who
are charged with implementing counter measures but not necessarily fixing the causes).
Since about the financial crisis (I'm not sure about causation or coincidence - not accidental coincidence BTW but causation
by the same underlying causes), there has been a disturbing pattern of high school students throwing themselves in front of local
trains. At that age, drinking or drugging oneself to death is apparently not the first "choice". Performance pressure *related
to* (not just "and") a lack of convincing career/life prospects has/have been suspected or named as a cause. I don't think teenagers
suddenly started to jump in front of trains that have run the same rail line for decades because of the "usual" and centuries
to millennia old teenage romantic relationship issues.
"... If returns to experience are in decline, if wisdom no longer pays off, then that might help suggest why a group of mostly older people who are not, as a group, disadvantaged might become convinced that the country has taken a turn for the worse. It suggests why their grievances should so idealize the past, and why all the talk about coal miners and factories, jobs in which unions have codified returns to experience into the salary structure, might become such a fixation. ..."
April 12, 2017 at 06:41 AM
The Despair of Learning That Experience No Longer Matters
April 10, 2017
The arguments about Case and Deaton's work have been an echo of the one that consumed so much of the primary campaign, and
then the general election, and which is still unresolved: whether the fury of Donald Trump's supporters came from cultural and
racial grievance or from economic plight. Case and Deaton's scholarship does not settle the question. As they write, more than
once, "more work is needed."
But part of what Case and Deaton offer in their new paper is an emotional logic to an economic argument.
If returns to experience are in decline, if wisdom no longer pays off, then that might help suggest why a group of mostly
older people who are not, as a group, disadvantaged might become convinced that the country has taken a turn for the worse. It
suggests why their grievances should so idealize the past, and why all the talk about coal miners and factories, jobs in which
unions have codified returns to experience into the salary structure, might become such a fixation.
Whatever comes from the deliberations over Case and Deaton's statistics, there is within their numbers an especially interesting
The Last but not Least Technology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
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