The White House Council of Economic Advisers can officially report that we live in the best of all possible economic arrangements. That’s the conclusion, anyway, of its recent treatise on “The Opportunity Costs of Socialism,” which finds that Maoist agricultural policy, if adopted, for some reason, in the United States in 2018, would probably reduce our national grain output per capita.
There was no specific impetus for the creation of the seventy-page report, besides the occasion of Karl Marx’s two-hundredth birthday and the steady flurry of public opinion surveys showing support for socialism on the rise among young Americans. It’s hard to imagine any of the voters who sent the outspoken Democratic Socialist Alexandria Ocasio-Cortez to Congress in November finding much merit in the report’s criticism of the First Five-Year Plan, but its authors still do their best to present America’s economic system in the most favorable light.
The council’s anti-socialist broadside also bears witness to a wider unease among our economic masters. They seem mindful that Americans have grown ungrateful for all the bounty capitalism has bestowed on them—just look at how poorly the Trump tax cut and traditional economic indicators, which all looked to favor the incumbent party, fared in the 2018 midterms. This mounting disquiet reveals itself in periodic attempts like these to tell the American masses, in essence: Look how great you have it. Don’t you know there are people starving in Venezuela?
The problem with this argument is that there are places in the world where the economic arrangements are a bit closer to Marx’s vision of utopia than they are to Milton Friedman’s, but where almost no one at all is starving. Faced, for example, with the irksome track records of the Nordic countries—with their high taxes-and-transfers and happy populations—the CEA offers the parable of the pickup truck. Figure 6, “Weekly Cost of Owning and Operating a Pickup Truck, by Country,” shows that an American has earned enough to “cover the cost” of a truck after a mere 4.4 hours of work per week. Meanwhile, at the other drudgery-laden extreme of things, your poor average Finn will need to put in 11.9 hours at the office to enjoy the best-in-class torque, towing, and payload of a mid-sized Ford Ranger—a model selected, the report helpfully notes, “because the larger pickups are difficult to obtain, park, and so on in a Nordic country.” (Another point for capitalism!)
As critics like Matt Bruenig quickly pointed out, the analysis relies on ignoring the benefits Nordic residents receive in exchange for paying the higher taxes that make truck ownership seem less “affordable.” But such mere empirical concerns are beside the actual point of the comparison, which is, of course, not economic but cultural: Who wants freedom from economic precarity if there’s nowhere to park your truck?
The right has been trying to sell Americans on consumption-based standards of freedom for years. Indeed, the CEA’s report on the baleful impact of socialism makes much more sense when one remembers that the current head of the agency is Kevin Hassett, a longtime fixture at the American Enterprise Institute, one of the foremost think tanks of the American conservative movement. (Hassett’s also the coauthor, with rabid supply-sider James Glassman, of one of the most ridiculous books of all time, 1999’s Dow 36,000.) This is the level of persuasion one expects from a person whose career has largely been devoted to persuading rich people to subsidize the production of dubious research praising the system that allowed them to get rich.
These think tanks specialize in that sort of “me or your lying eyes” approach to selling Americans on American-style capitalism (which you’d think, if it were working correctly, wouldn’t need so much marketing help). That’s why the Heritage Foundation, perhaps the most influential conservative think tank, periodically tells us that there’s no real poverty in America—or at least that while there might be some, it is, all in all, pretty pleasant poverty—in reports with titles like 2011’s “Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today?”
That report’s “Key Takeaways” are as follows:
1. The typical poor household, as defined by the government, has a car and air conditioning, two color televisions, cable or satellite TV, a DVD player, and a VCR.
2. By its own report, the typical poor family was not hungry, was able to obtain medical care when needed.
3. The typical average poor American has more living space in his home than the average (non-poor) European has.
Whatever claims one makes for capitalism writ large as an engine of innovation, they certainly don’t hold for this brand of aggressive capitalist apologetics. Indeed, the 2011 Heritage report is essentially a rewrite of the organization’s 2007 report, “How Poor Are America’s Poor? Examining the ‘Plague’ of Poverty in America.” (That report, in fact, is cited in the 2011 report as the source of the claim about the average poor American’s living space.)
Curiously, the assiduous Heritage poverty researchers don’t seem to have stirred themselves to ask if anything happened in the United States between 2007 and 2011—a complete economic meltdown triggered by the housing sector, say—that might have affected the housing conditions of a large number of poor Americans. And sure enough, the same findings were regurgitated again in 2014’s “The War on Poverty After 50 Years,” which also uses the same pre-recession survey of American housing sizes as the basis for its claims that our paupers live in mansions compared to the average Swede.
Shut Up and Stream
All of these reports—and scores more pieces of commentary making the exact same arguments and citing the exact same figures—were authored or co-authored by Robert Rector, who has been shaping conservative arguments on poverty since joining the Heritage Foundation in 1984. He’s been called the “intellectual god-father” of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, also known as welfare reform. Considering his part in that triumph of bipartisanship, which really did, as Bill Clinton promised, “end welfare as we know it,” it’s clear why Rector is so invested in the argument that to be poor in twenty-first century America is a cakewalk—he’s responsible for creating a whole new population of poor people.
Specifically, as the scholars Kathryn J. Edin and H. Luke Shaefer reported in their 2015 book $2.00 a Day, the number of American households subsisting on almost no cash income at all doubled in the decade-and-a-half following welfare reform. Edin and Shaefer counted 1.5 million households surviving on less than $2 a day in 2011. They did not count how many of those households had color televisions because you can’t eat a color television.
These think tanks specialize in that sort of “me or your lying eyes” approach to selling Americans on American-style capitalism.
You can’t even really sell one for cash because the reason they are so common even in the poorest households is that TVs have become incredibly cheap. That’s the story that allows this alternate narrative of American prosperity to keep reproducing itself. Over the last several decades, thanks to regular advancements in technology and supply chain logistics, capitalism has indeed made it possible for many more Americans, including the poor and especially the middle class, to afford what once seemed like luxuries.
The tendency for American capitalism to justify itself by the gadgets it is capable of making affordable is an old one. It was the basis of the notorious 1959 “kitchen debate” between Vice President Richard Nixon and Soviet Premier Nikita Khrushchev, which took place at an exhibition of American technological wizardry set up in the heart of Moscow. The American pavilion featured the latest in American time-saving household appliances, and the debate almost immediately took on a legendary character in the United States, where we told ourselves that Soviet citizens were entranced by our washing machines and Polaroid cameras. The Americans faked the automated kitchen, of course—there was a guy behind a two-way mirror making the proto-Roomba move and turning on the “automated” dishwasher, Joe Maxwell, one of the industrial designers responsible for the kitchen, told Gizmodo decades later—as part of the mission was to convince the Russians that things being marketed to middle-class Americans, including things that were years away from any sort of commercial viability, were commonplace in homes across the country. (The Soviet exhibition in the United States, meanwhile, featured a modest three-room apartment. And Sputnik.) While the Soviets were suitably impressed with the quality of our kitchen appliances, this message left in the exhibition’s visitors’ book seems pertinent: “A shortcoming: you show what you produce, but you do not show what you produce it with.”
At the time, the (real, non-automated) dishwashers would have been manufactured in the United States, to be sold to middle-class families to help wives more efficiently carry out their unpaid domestic labor while their husbands were at work manufacturing dishwashers. The government subsidized the construction and (for white families) debt-financed purchasing of large suburban homes so that there would be somewhere to put all the dishwashers—and so that the people who built homes would have enough homes to build to afford their own dishwashers and large suburban homes. This was called “capitalism.” (The Council of Economic Advisers report on socialism quotes the late economist Sherwin Rosen’s dismissive description of Sweden as a place where “a large fraction of women work in the public sector to take care of the children of other women who work in the public sector to care for the parents of the women who are looking after their children.” Just think of all the surplus labor going to waste caring for people instead of being expropriated by the owners of capital!)
Eventually, the sort of people who own household appliance companies saw the return on their investments begin to stall out, due to inflation and labor power, so that system was phased out in favor of one in which many people still got large, debt-financed homes, but there were fewer dishwasher manufacturing jobs. The dishwashers got a lot cheaper, though, to help the new arrangements seem more palatable.
Fast, Cheap, and Out of Control
Yet still, despite the dirt cheap vacuums and flat-screen TVs, something seems wrong. People keep complaining about “income inequality” and writing books about how grindingly difficult it is for an alarmingly large number of Americans to get by.
Conservatives seem to have noticed that their primary argument—why do you feel so poor when you have such a large TV?—has had trouble making inroads among people who actually experience life in the United States and who don’t work within the think tank–lobbying firm–Council of Economic Advisers circuit. They’ve noticed, too, that while TVs, for example, are quite cheap, things essential to live—and things essential to “get ahead” in the United States—are only becoming more expensive.
The American Enterprise Institute even produced a chart illustrating the problem. It shows the prices of things like new cars, clothing, toys, and TVs staying steady or dramatically falling relative to the inflation rate, while food, housing, child care, and—especially—medical care skyrocket in price. If you want an explanation of why non-wealthy Americans feel so stretched thin even in a time of supposed abundance, there it is. They can afford to get their kids toys but not bachelor’s degrees.
The zombified condition of the traditional bulwarks of American achievement and opportunity—home ownership, higher education, secure and pension- supported labor—is another key reason that the Heritage Foundation has been churning out the same basic report over the past thirteen years. It’s much harder to make that standby conservative argument about poverty, that those stuck in the ghettos remain poor only because they blow all their money on televisions and Cadillacs, when the costs of televisions and Cadillacs are declining while the costs of the things they’re “supposed” to be spending money on instead, like textbooks and tutors, are soaring further out of reach. AEI, for its part, suggests that the problem might be that the government is making the expensive things expensive while free markets keep the cheap things cheap. And for once, a right-wing think tank may have stumbled onto something resembling the truth—at least in part.
You can see a whole generation of misguided economic policy in the economics profession’s failure to account for the social and psychological context of consumer spending.
While the profit motive is the singular factor making health care so much more expensive in the United States than in any other wealthy nation, it’s not totally incorrect to say that higher education and housing are more expensive because of government intervention. The rising costs are one effect of a misguided effort to expand access to the good life by expanding lender access to government-backed debt instead of simply giving people homes and degrees.
If the liberal political class is still dedicated to its ostensible solution to stagnation—tell your kids to borrow against their future earnings to attain the credentials necessary to enter the professional class, and hope housing values just keep going up forever this time!—the unfettered free-market types are working on a sales pitch for settling for much less.
What Price Pizza?
These takes become more difficult to produce every year, so let’s give some credit to men like John Tamny, the director of the Center for Economic Freedom at FreedomWorks (a second-rate, right-wing think tank that briefly enjoyed some prominence as a primary driver of “tea party” opposition during the Obama administration), who are still putting in the work. His recent Forbes offering, “Surging Wealth Inequality Is A Happy Sign That Life Is Becoming Much More Convenient,” truly goes the extra mile to make a set of objectively dystopian living conditions seem fun and exciting. After some potted history about how the Rockefellers and other heroic entrepreneurs earned their Gilded Age fortunes by “improving the living conditions of the greatest number of people,” we move on to a celebration of an innovation truly on par with Rockefeller’s vertical integration of the oil business: self-driving, self-cooking pizzas.
Pizza Hut is planning a “pizza-making robot prototype that cooks pizzas on the way to customers’ homes,” according to a USA Today story quoted by Tamny. The idea thrills Tamny, who imagines a fleet of automated cars producing automated pizzas, serving a hungry human face, forever:
Technology is increasingly solving what was once a distance and time problem, along with one associated with not always reliable drivers. Translated, driverless cars and automated pizza-makers can’t call in sick, can’t give customers attitude, don’t require sleep, plus they realistically can’t quit. The days of 24-hour pizza delivery aren’t too far off.
OK, but . . . what happened to those lazy, unreliable people who used to make and deliver the pizzas?
The only reason to pursue fully automated pizza delivery is to cut down on labor costs so that people whose employers have cut down on labor costs can still afford to buy pizza. Tamny, not coincidentally, is the author of a 2018 book called The End of Work. There is a rich socialist history of predicting (and celebrating) the end of work, but those celebrations usually involve the material needs of the nonworkers still being met. The libertarian version of that utopia, as far as I can tell, assumes you can enjoy self-driving pizza cars without worrying about paying rent because you, like the author, happen to have a sinecure at a pro-market think tank.
OK, but . . . what happened to those lazy, unreliable people who used to make and deliver the pizzas?
The disrupted vision of the end of work, in other words, is simply underemployment, mitigated by the escapist pleasure of eating pizza in front a $150, forty-inch TV. But if that’s all the future economy has to offer millions of Americans, shouldn’t the pizza and TV suck a bit less?
That’s what’s especially galling about self-driving pizzas replacing pensions: how quietly crummy the tidal wave of affordable gadgets is. We live in a secretly janky future. Everyone not employed by a gadget blog can see that the self-driving cars are about as ready for prime time as the automated kitchen appliances in that phony fifties home. Household furnishings and clothing have become cheaper by becoming shittier and less durable. Moore’s Law, the driver of technological advancement for half a century, is dead, and each new generation of gadgets can no longer promise to astound us. Everyone can afford a TV that is larger and sharper than even the most expensive TVs of the past, but that is in many respects worse at being a TV.
Any vintage video game enthusiast or hardcore home theater nerd would tell you—indeed you would likely not be able to stop them from telling you—that, years after cathode-ray tube television technology became “obsolete,” even many of today’s high-end televisions can’t compete with a quality CRT in terms of black levels in dark scenes, video game controller input lag, and motion blur or judder. Most modern TVs are technologically incapable of natively displaying video shot at twenty-four frames per second, the standard frame rate of nearly every film ever produced since The Jazz Singer in 1927. It is effectively impossible, on almost every new TV, to watch a movie as it was intended to be seen.
But that hardly matters when you can’t even watch a movie made prior to 2006 to begin with. The 2004 Wired magazine story that became Chris Anderson’s airport-bookstore smash The Long Tail, which posits a glorious future of unlimited consumer entertainment, was illustrated with a movie marquee reading “Now Playing: Every Movie Ever Made.” The Wired art department didn’t account for licensing fees. Fourteen years later, Netflix and Amazon are creating hundreds of hours of “film” and “television” content at a ridiculous rate purely so that they can eventually stop paying the rights-holders to “every movie ever made” prior to the digital revolution. AT&T, shortly after acquiring the entertainment monolith Time Warner, announced that it would shutter FilmStruck, the niche streaming service that featured classic, art-house, and international cinema offerings that basically don’t exist on the more popular services. According to a spreadsheet created by data researcher Stephen Follows, even relatively recent hit movies like True Lies, Cocoon, and The Cannonball Run are totally unavailable digitally, to say nothing of smaller films by canonical American directors like Mike Nichols’s Silkwood or David Lynch’s Wild At Heart. Netflix choked the life out of the home video market by promising instant online access to everything ever made, and then, like any other monopoly, reduced the quality of its service and raised the price after conquering the market.
That’s the other part that is galling. Even the affordability of our gadget-cluttered dystopia is exaggerated. It’s more expensive than ever to amuse yourself to death. The average cable television bill has increased 74 percent, adjusting for inflation, since 2000. The license-holding entertainment companies that streaming platforms like Netflix and Amazon no longer wish to direct so much revenue to are all launching their own competing services. Soon you’ll need to choose between a dozen separate subscription-based streaming platforms to watch the shows you want to watch. In this respect as in so many others, our outlets for media culture are coming to mimic the dismal economic state of the web, where whatever you’re paying your internet service provider each month to gain access to the future’s miraculous storehouse of information must now be supplemented with additional fees to individual publications as paywalls proliferate.
You can still buy an antenna to receive free over-the-air television. You can check out DVDs from your local library. You can open an incognito window to read that Frank Bruni column everyone on Twitter is dunking on. You’re free to turn a $5 grocery bill into a week’s worth of vegetarian chili instead of ordering a pizza tonight, too, but eventually you’re going to cave. Everyone is talking about the new season of BoJack Horseman and Game of Thrones! You’re really going to hang an antenna in your window at just the right angle to catch a Young Sheldon repeat you can’t even pause, just to save a few bucks?
Losing Your Linen Shirt
The economist Robert H. Frank has argued in his book Falling Behind that income inequality is not just a problem of “envy” but one materially making the lives of non-wealthy people worse. Writing just before the Great Recession, Frank rejected the inherited wisdom of professional economists, who “assume that each person’s consumption spending is completely independent of the spending of others.” Instead, he likened the effect of a rising class of super-rich consumers, coupled with stagnation for everyone else, to an arms race: people buy homes they can’t quite afford because of the perverse link between real estate values and public school quality, and people feel compelled to buy larger cars than they might have otherwise (a mid-sized Ford Ranger, perhaps)because wealthier people with even larger cars make comparatively smaller ones feel less safe.
Adam Smith himself understood that consumption had an essential social quality. Frank quotes this passage from The Wealth of Nations:
A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-laborer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.
Smith’s reflections on the pliable workings of relative value within a given consumer market had a great influence on Marx—in Capital, he describes the “necessary wants” of a worker as depending “to a great extent on the degree of civilization of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free laborers has been formed.” One only wishes that our own cohort of pro-market economists who style themselves devotees of Smith were anywhere near so attentive to his actual thought.
Indeed, you can see a whole generation of misguided economic policy in the economics profession’s failure to account for the social and psychological context of consumer spending. People don’t necessarily revolt when things are bad, but they might when things aren’t getting better, or are getting demonstrably worse. That failure—the presumption that people would settle for LCD TVs as a new generation of robber barons shot cars into space because they couldn’t figure out what else to do with the staggering amount of money they have—has been a hugely consequential one.
Death by Shock Therapy
Ex–Cold Warriors still fondly recall the kitchen debate. They still chuckle at the crummy cars and televisions the Soviet citizenry had to endure as Americans innovated cruise control and Betamax tapes. But during the periods when life was stable in the Soviet Union, its people were reasonably satisfied. The years since the end of Communism, on the other hand, have been devastating to a generation of Russians. As Masha Gessen wrote for The New York Review of Books in 2014:
In the seventeen years between 1992 and 2009, the Russian population declined by almost seven million people, or nearly 5 percent—a rate of loss unheard of in Europe since World War II. Moreover, much of this appears to be caused by rising mortality. By the mid-1990s, the average St. Petersburg man lived for seven fewer years than he did at the end of the Communist period; in Moscow, the dip was even greater, with death coming nearly eight years sooner.
Many of those deaths were violent or self-imposed. Deaths from injuries and poisoning are five times higher in Russia than in Western Europe. “We would never expect to find premature mortality on the Russian scale in a society with Russia’s present income and educational profiles and typically Western readings on trust, happiness, radius of voluntary association, and other factors adduced to represent social capital,” the economist Nicholas Eberstadt writes. In her review of scholars’ attempts to explain the story of the Russian death rate, Gessen wonders if the problem might be a sort of inherited cultural despair—whether “Russians are dying for lack of hope.”
Millions of former Soviet citizens now have access to the consumer bounty Americans lorded over them during the Cold War. It has not helped them adapt to life without a safety net. However often those notoriously unreliable Lada cars might have broken down, an inferior product line drove many fewer Russians to drink themselves to death than economic shock therapy did.
The Council of Economic Advisers would like them to be grateful for all the room our large country has provided for them to park their trucks.
The year after Gessen wrote that piece, Princeton economists Anne Case and Angus Deaton published their paper showing that, after declining for decades, the mortality rate for middle-aged white Americans had been steadily climbing between 1999 and 2013. They updated their report in 2017, with data showing that non-college-educated white American men were increasingly dying of “diseases of despair,” meaning mainly drug and alcohol abuse and suicide.
The connecting thread in both the Russian and American cases seems to be decline in living standards—not absolute deprivation. By historical and international standards, there are much worse things to be than a member of the stagnant or declining middle class in America, or even post-Soviet Russia—nearly everyone we’re talking about probably has televisions and refrigerators among other cheaply produced pieces of gadgetry. But people seem to choose to obliterate themselves not when their current situation is dire, but when there is no apparent path to a better one.
Non-college-educated white American men are also, we’re told, President Trump’s base. His Council of Economic Advisers would like them to be grateful for all the room our large country has provided for them to park their trucks.
Bad Days and BlackRock
Our betters remain optimistic about the future. Axios, the political news operation for power brokers who read at a third-grade level, recently delivered this sunny prognosis, in a post headlined “Everything is (relatively) awesome”:
While current headlines might make you think that geopolitics is going to hell in a handbasket, things right now are better than normal around the world—at least from the market’s perspective—according to BlackRock’s latest global risk update.
In other words, the good news was that the future looked slightly safer for international investors than it had before, thanks to what BlackRock’s analysts deemed a diminishing likelihood of imminent nuclear war. Axios helpfully summarized “The Good” (“The biggest threat on the board—a complete breakdown between Russia and NATO—remains the least likely to take place”) and “The Bad”:
Emerging countries are marked by continued upheaval. Some, like Brazil and Mexico, are set or likely to have populist leaders in place soon. And Turkey is facing a continued currency crash and isolation from the international sphere amid the increasingly authoritarian rule of President Recep Tayyip Erdogan.
Or to render the gist of things in a rhetorical register a bit less evasive than Axios’s trademark semaphoric house style: Be Smart—liberal democracy is in retreat, millions more people live in authoritarian states, and right-wing ethnonationalism threatens to sweep across vast swaths of the world, but, in the short term, your portfolio should continue to beat expectations.
There are signs of glorious progress closer to home too. In his rhapsody on the self-cooking pizza, our friend John Tamny writes:
The more convenient life is, the more unequal are the living. But as opposed to a sign of hardship, the happier truth is that life is truly cruel when the talented aren’t getting rich. That’s when we know that no one is devising ways to make our lives easier, cheaper, healthier, more productive, and everything else good.
As if inspired to prove him right, Donald Trump’s FDA voted in November to approve another way to make our lives easier: Dsuvia, a new “sublingual formulation of sufentanil,” a synthetic opioid that is, according to the health care industry publication Medscape, “five to ten times more potent than its analogue, fentanyl.” Behold still another ingenious, just-in-time consumer innovation—a more convenient and efficient means of obliteration. Perhaps inevitably, the kitchen debate has repaired to the morgue.