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June 29, 2013

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Rise of complex society worsens income disparity

Nearly all soaring economic growth is, of necessity, accompanied by accelerating concentration of social wealth in the hands of the few.

Brink Lindsey's new book "Human Capitalism: How Economic Growth Has Made Us Smarter - and More Unequal" tries to explain the contradictions.

He argues that today's economic expansion is predicated on increasing complexity, which places ever higher demand on the participants' intellectual equipment.

As a result, the minority equipped with the right expertise and skills stand to reap the most rewards, while those without would likely remain trapped in poverty, social exclusion, and despair.

Here Lindsey views "human capital" - in the sense of commercially valuable knowledge and skills - as the main determinant of who gets ahead and who falls behind in American society.

Lindsey sees the rise of complexity as the salient feature of human progress, thus those who cannot attain prosperity must reflect on what disadvantages keep them from flying among the chosen.

"Stripped down to its bare essentials, the story of the rise of complexity is the story of a positive feedback loop in which the growth of the division of labor feeds the growth of knowledge, which in turn feeds the further growth of the division of labor - and off we go," Lindsey writes.

He then pays tribute to unprecedented degrees of analytical sophistication and rigor, entrepreneurial investment, competitive enterprise, and so on.

This naturally inclines the author to express his condolences to the peasants who continue to eke out a bare existence in small, isolated groups, clinging to their narrow-minded family values, and viewing the outside world with fear and distrust.


The one weapon that enables progressive economists to judge and lash out with such confidence is "standard of living," which can be crudely understood as a measure of availability of modern amenities.

For instance, a bear in a zoo enjoys higher living standard compared to a wild bear which has to endure hardships, or even risk his life, while looking for food.

Unfortunately the myriad metrics available to an economist today are inadequate to measure the satisfaction of an Alpine peasant compared to that of a New Yorker.

It does suggest how the standard narrative today is carefully scripted in serving economic complexity, as defined by growth, income, knowledge, or skills.

When this self imposed complexity is viewed as more preferable to clean air, water, and leisure, a typical citizen must spend most of his life trying to survive or thrive as cogs and wheels of a complicated machine.

The one thing that justifies the complexity is material abundance.

"It is this revolution, more commonly known as industrialization, that has carried us to the dizzying heights of economic abundance and social complexity we now occupy," Lindsey observes.

As that machine is churning out ever more products, we are morally bound to consume as much as possible - morally because sensitivity to economic incentives is essential for anyone who does not want to be left behind.

It is a pity that an average progressive opinion-leader today is no longer capable of surveying his environs except condescendingly from the dizzying height of prosperity.

When lasting prosperity becomes the dominating passion, human relationships have to evolve steadily to keep up.

The bonds based on nuclear family or extended family are too ineffective in economic terms, therefore they should be replaced by social bonds based on abstractions like common values, common interests, and common expectations about the many and varied roles we assume: as coworkers, commuters, consumers, suppliers, so on.

As we are not fully engaged in these roles, spending too much time in them can make us feel hollow and unsatisfied, but these "thin" identifies enable us to function efficiently as modern producers and consumers.

In bashing the fatalistic mentality of backward people, the book cited the example of a southern Italian peasant woman who, when asked why in her region some were rich and others were poor, replied: "Who knows about things which have to do with the creation of the world?"

But I doubt if a smart New Yorker might give a more meaningful answer when asked: Why can some fat cats on Wall Street make so much than an average worker?

Yes, financial professionals are generally better adapted to meeting the mental challenges of complexity.

As a matter of fact, some of them thrive on the complexity of ingeniously designed financial products.

There are hints at the inconvenient truth about success today stemming less from hard work and dedication than calculated recklessness.

Even in the US, the country that takes pride in its self-reliance, the prospects are grim for those not equipped with assets that can propel them to the center of the nation's power and influence.

The author admits that the socioeconomic status into which a person is born would be a fairly reliable predictor of his future earning power, and the surest path to becoming a well-educated and high-performing member of the socioeconomic elite is to pick the right parents. The author attributes this, simplistically, to different rearing styles.

Purpose of education

"The upshot of these developments is that the opportunity costs of being raised in a working-class culture have risen sharply in recent decades," the book claims.

By the way, these results dovetail with similar findings in China.

Throughout his descriptions about the glaring inequality around us, the author maintains the tone of optimism and enthusiasm, declaring confidently that some are left behind because they do not know how to manage modern complexity.

Of course, when they have learned to respond better to market incentives, they too can ride the prosperity side by side with the forerunners.

Complexity might be too simple a word to use here.

It does not take much imagination to see that the complexity of an assembly line job in comparison with traditional farming is fictitious. For both workers and the social elites, the tendency to be a specialist is hugely dehumanizing.

This debasing of human beings as "capital" no different than tools can only be rationalized in the abdication of moral principles that used to be the essence of education.

In his "The End of Education: Redefining the Value of School" (1995), author Neil Postman defines the crisis in American education, from means to ends.

For education to be meaningful, Postman contends, young people, their parents, and their teachers must have a common narrative, which provides a sense of personal identity, a sense of community life, a basis for moral conduct, and explanations of that which cannot be known.

"What makes public schools public," writes Postman, "is not so much that the schools have common goals but that the students have common gods."

The common gods today are economic utility, consumerism, technology and other similarly empty objectives.

Of course, these false gods are incapable of providing a rich and sustaining rationale for public education, or public discourse.


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