I was reading Matt Stoller’s newsletter this morning:
To put it into words, the problem we have is corruption in the government contracting world, aided by immense amounts of useless overpaid make work. In 2011, an antitrust attorney did a report on how we overpay for government contracting. In service of ‘shrinking government,’ policymakers chose to set up a system where instead of hiring an engineer as a government employee for, say, $120,000 a year, they paid a consulting firm like Booz Allen $500,000 a year for a similar engineer. The resulting system is both more expensive and more bureaucratic.
Here’s one example I grabbed from a public government contracting schedule. The rate negotiated by the government’s General Services Administration for Boston Consulting Group is $33,063.75/week to get a single relatively junior contractor.
I’m certainly with Matt on general disgust at the gorging of the trough by the contactor-consultancy complex, and have long favored rebalancing government employment away from contractors, back towards directly employed civil servants. So, yay. That’s the correct position, and it’s an easy one to take, so I take it.
But it is a bit too easy. The Boston Consulting Group may be charging $33,063.75 per week for the services of a single kind-of-bright conformist straight out of business school. But that kid, he isn’t getting paid $1.7M a year. He’s probably “only” paid 10% of that. From that take, his managers and their managers, their assistants and his, not to mention of course the firm’s shareholders, are all getting a piece of that sweet government slop. And all those guys and gals, they are living in places like Arlington, VA, and some of them have families and mortgages on houses they indebted themselves perhaps millions of dollars to inhabit.
There are people at the top of the American food chain who are stupid rich, for whom questions of making ends meet and financial security are laughably distant. People like that, they are easy to deal with. If it was “us” (whoever the fuck we are) versus only them, politics would be easy. We’d have taxed the billionaires to pay their fair share a long time ago.
But most of the people towards the top of the American food chain are not stupid rich, but stupidly rich. They “make” sums of money that by any fair reckoning, obviously in a global context but even in an American context, are huge. But they plow that affluence into bidding wars on incredibly (if artificially) scarce social goods. Nobody “needs” to live in Arlington (or my own San Francisco). No one’s kid “has” to go to private school (or for the more woke among us, notionally public schools rendered exclusive by the cost of nearby housing). If you make price your first priority in, say, shopping for preschool or daycare, perhaps you can find something reasonable.
But most of us, if we are no longer free, young, and single, if we are rich enough to pay the vig you have to pay to be sure your kid’s preschool will in fact be “safe” and “nurturing”, well, we pay it. If we haven’t rigged our housing choice so that the local public school is good enough, we pay up for a private school. If we can afford to be choosy, if we are really rich, we pay up for the private school that devotes significant resources to the searches and scholarships that deliver, in Nikole Hannah-Jones memorable words, a “carefully curated integration, the kind that allows many white parents to boast that their children’s public schools look like the United Nations.” It is extraordinarily expensive to be both comfortable and some facsimile of virtuous. You’ll never see as many rainbow flags as you see in Marin County.
The point of this is not that you should have sympathy for the Arlingtonians (or San Franciscans). Fuck ’em (er, us). But you are missing something important, as a matter of politics if nothing else, if you don’t get that the people who are your predators financially are, in their turn, someone else’s prey. Part of why the legalized corruption that is the vast bulk of the (dollar-weighted) US economy is so immovable is that the people whose lobbyists have cornered markets to ensure they stay overpaid are desperately frightened of not being overpaid, because if they were not overpaid they would become unable to make all the absurd overpayments that are now required to live what people of my generation (and race, and class) understood to be an ordinary life. It’s turtles all the way down, each one collecting a toll and wondering how it’s gonna pay the next diapsid.
Perhaps the most straightforward examples of all this, much more sympathetic than Boston Consulting Group swindlers, are doctors. It’s well and good to rail against health insurance companies and big pharma, and really, fuck ’em so hard they disappear into perpetual orgasm and we never have to encounter them again. But we know that healthcare in the US is exorbitantly expensive compared to anywhere else, and we also know, even if it is not shouted as loudly in political stump speeches, that a big part of this is that doctors are paid roughly twice as much in America as they are paid elsewhere in the developed world.
But what would it mean, really, to cut US doctors’ salaries in half? In theory, if you are the most imperceptive sort of economist, it means they could live as well as doctors do in Europe, which is not so bad. US doctors are paid twice as much in what is imaginatively described as “real terms”, so they should be able to purchase the same goods and services with their income as their European peers do. Where’s the problem?
But economists’ “real terms” do not measure the realest terms at all, the social relations in which the dance of our production and consumption is embedded. If you cut doctors’ salaries in half tomorrow, they would have to sell their mortgaged, absurdly expensive homes. At half their present salary, doctors would no longer be able to afford to live amongst “peer” professions like lawyers, management consultants, middling corporate executives, and the employees of surveillance monopolists. Doctors would fall precipitously from the social class, embedded in geography and consumption habits, to which many of them even now cling only precariously. More calamitously, they would lose the capacity to produce or reproduce membership in that social class for their children, often the most expensive amenity American professionals seek to purchase.
Doctors in France don’t have this problem because they live in a society less stratified than the one that we are unfortunate to inhabit. In societies in which the lives and prospects of the rich and less rich are not so divergent, people can afford to be a bit less rich. After all, even in the United States, the problem is not scarcity in a straightforward economic sense. We can build, to a first approximation, as much great housing as we want. The skills required to care for and educate kids are reproducible. They could be elastically and economically supplied. The scarcity of a slot at Harvard (and that slot’s many antecedents, all the way back to birth) has little to do with some ingrained incapacity to educate wonderful teachers.
The solution to the problem of “positional goods”, which are inherently zero-sum and inelastically supplied, is supposed to be the infinite multiplicity of social dimensions over which we can measure our positions (ht Arjun Narayan). The most famous exposition of this view is perhaps David Brooks’ from On Paradise Drive:
“Know thyself,” the Greek philosopher advised. But of course this is nonsense. In the world of self-reinforcing clique communities, the people who are truly happy live by the maxim “Overrate thyself.” They live in a community that reinforces their values every day. The anthropology professor can stride through life knowing she was unanimously elected chairwoman of her crunchy suburb’s sustainable-growth study seminar. She wears the locally approved status symbols: the Tibet-motif dangly earrings, the Andrea Dworkin-inspired hairstyle, the peasant blouse, and the public-broadcasting tote bag… Meanwhile, sitting in the next seat of the coach section on some Southwest Airlines flight, there might be a midlevel executive from a postwar suburb who’s similarly rich in self-esteem. But he lives in a different clique, so he is validated and reinforced according to entirely different criteria and by entirely different institutions… [H]e has been named Payroll Person of the Year by the West Coast Regional Payroll Professional Association. He is interested in College Football and tassels. His loafers have tassels. His golf bags have tassels. If he could put tassels around the Oklahoma football vanity license plate on his Cadillac Escalade, his life would be complete.
It’s hard to know, from this excerpt, which of these two is richer, the anthropology professor or the payroll guy. Both crouch together in the eternal middle class of unreserved coach seating on a Southwest Airlines flight. And in that skyward netherworld, On Paradise Flight, Brooks would be right. When there are not objective correlates of anyone’s definition of positional status, each of us can choose whichever measure of position flatters us most. We need agree only that is it gauche to try to impose our values on others for us all to live as happiest and best, quietly pitying our inferiors even as we cheerfully pass along a bag of pretzels.
But what it means to live in a stratified society, precisely what it means to live in a stratified society, is that there are objective correlates to position along dimensions that individuals and communities cannot themselves choose. There are positional dimensions whose importance is a social fact, not arbitrary, but real as social facts are, by virtue of their consequences. In such a society, positional goods with desirable correlates, inherently scarce and inelastically supplied, become extremely valuable. In some societies, those goods may be rationed by custom, or by heredity, by caste or race. But to the degree that a society is “liberal” and capitalist, they will be price-rationed, as they largely (but incompletely) are in our American society.
In a stratified, liberal capitalist society, the ability to command market power, to charge a margin sufficiently above the cost of inputs to cover the purchase of positional goods, becomes the definition of caste. When goods like health, comfort, safety, and ones children’s life prospects are effectively price-rationed, individuals will lever themselves to the hilt to purchase their place. The result is a strange precariot, objectively wealthy, educated and in a certain sense well-intended, who justify as a matter of defensive necessity participation in arrangements whose ugliness they cannot quite not see. In aggregate, they are predators, but individually they are also prey, and they feel embattled. So long as the intensity of stratification endures, they will feel like they have little choice but to participate in, even to collude to entrench, the institutions that secure their market power and their relatively decent place.
Reforming government contracting, controlling medical costs, breaking up big-tech, opening the professions to international competition, these sound technocratic, even “pro-market”. But under present levels of stratification, the consequences of these things would be a revolution, whole swathes of society accustomed to status and political enfranchisement would find themselves banished towards a “normal” they used to only read about, opiate crises and deaths of despair, towards loss of the “privilege” it has become some of their custom to magnanimously and ostentatiously “check”. Did I say they? I mean we, of course.
But of course, not doing these things means continuing to tolerate an increasingly predatory, dysfunctional, stagnant society. It means continuing deaths of despair, even as we hustle desperately to try to ensure that they are not our deaths, or our children’s. Even for its current beneficiaries, the present system is a game of musical chairs. As time goes on, with each round, yet more chairs are yanked from the game.
The only way out of this, the only escape, is to reduce the degree of stratification, the degree to which outcomes depend on our capacity to buy price-rationed positional goods. Only when the stakes are lower will be find ourselves able to tolerate, to risk, an economy that delivers increasing quantity and quality of goods and services at decreasing prices, rather than one that sustains markups upon which we, or some of us, with white knuckles must depend.
Lower the stakes.