This seems strongly related to the problems of "elite overproduction" (Peter Turchin's credited with the phrase) and "embedded growth obligations" (as far as I can tell it's Eric Weinstein's phrase). I've written about the financial mechanisms by which the coalition that won WWII and the Cold War (frequently called "the West," which seems to be an euphemism for Christendom) became structurally committed to systematic overproduction of rentier elites here: http://benjaminrosshoffman.com/the-debtors-revolt/
There's really no way for the system to coherently intend to *reduce* rents, while also intending to increase the amount of measured financial wealth, number of "good jobs," etc in aggregate, when wealth / goodness-of-job is measured in terms of ability to command the labor of others; in such terms, one person can only get rich at the expense of another. Fixing this would require a radical change in how we measure well-being, e.g. we might favor more direct metrics like leisure time, healthspan, lifespan, and fertility rates.
We're likely all familiar with Parkinson's Law in this space, and it's helpful to understand the mechanisms by which the professional-managerial class organizes itself as a job-creation scheme for itself, e.g http://benjaminrosshoffman.com/parkinsons-law-ideology-statistics/
But fundamentally the basic mechanism in Christendom seems to be the coalition of shame: Most people only see ways to improve their station in life through complicity in injustice and dishonesty. This causes them to become ashamed, and when enough people in a firm or other organization not under acute performance pressure are ashamed, the ashamed become a natural political coalition that marginalizes the sorts of people who see accountability as a neutral or friendly force: http://benjaminrosshoffman.com/guilt-shame-and-depravity/
This sort of thing makes it difficult to discuss the problem, as it means that the dominant political coalition is temperamentally opposed to accountability! Such societies can only be meaningfully reformed through systematic accountability applied to the behavior of incumbent elites by some external force, followed by a systematic shift of power away from people with a track record of trying to weaken accountability mechanisms. Such reforms occur along a spectrum of mercy or punitiveness, with the gentlest viable reform approximately represented by South Africa - a Truth and Reconciliation Commission where people have to actually confess their crimes to receive immunity, combined with a formal and explicit reallocation of political power away from the old elite. Mao seems like a moderate, and Pol Pot represents the most hawkish position that has been implemented recently. So far, based on GDP per capita it seems like South Africa did well for a while but stalled out, China is doing very well, and Cambodia is not doing very well at all: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZA-KH-CN
And on the other hand, for life expectancy at birth, China > Cambodia > South Africa
A crude utilitarian calculation seems like the next step here: person-years created per year per capita, i.e. simply multiplying life expectancy at birth by fertility rate.
There’s a lot that metric leaves out of course, but I don’t expect it to do very poorly where people are doing okay, or very well for long where people are doing very poorly.
I think the increased/promised/threatened use of AIs to replace government workers (from to UK all the way South to Argentina these days) is only likely to accelerate this hollowing out (I just wrote a short thing here https://blog.rinesi.com/2024/06/paying-for-your-own-commodification/ inspired by this post but focused on intra-market competition, although the public case is the most concerning one).
I didn't get far till the old and failing peabrain dredged up a memory from when people read words on paper and those things called newspapers and books. Damn things were primitive then!!!
The memory was when the MBA minds started the virtual corporation and attacked the bloated management levels. Was that bloat part of the information processing system? Was that part of blinding the colossus?
Yes, basically - I go on about this for about a chapter and a half in "The Unaccountability Machine", and referred to it as "cerebral vandalism" on a podcast last week. But "blinding the colossus" is a really great phrase which I intend to steal
What is interesting to me about this argument is that I think you could say many of the same things about the professional services sector in the US *but* I would have said that the degradation of capacity in the legislature specifically was the key. Leaving aside the period from 2017 to 2020 in which there were arguably exogenous factors affecting the capacity of US administrative agencies, I don’t think those agencies generally suffered a loss of capacity over time from, say, 1994 to 2016. But the legislature absolutely did degrade in terms of both access to information and capacity to act. And US agencies are subject to a lot more exploitable veto points (in the form of judicial review) than the legislature is when it acts directly. But those are features of the US system that as I understand it the UK system doesn’t share. On the other hand, while the US has seen its share of privatization I don’t think it’s been as systematically corrosive as you describe in the UK (leaving aside maybe defense contractors as a special case) (and also I may be wrong about this). Does that cut in favor of a less institution-specific explanation? I should add that I am generally sympathetic to institutional stories, I’m just wondering whether this one fits the facts.
As I understand it (and my knowledge of the US regulatory state is very much biased toward financial services), the story in the USA is less of an emergent and institutional one, and much more a brute-simple one of intentional destruction by bad actors in the Republican Party. That was certainly what I concluded when I wrote a piece called "The Road To Silicon Valley", about the failure of Silicon Valley Bank - all the regulatory and supervisory failures there seemed to be the result of specific and intentional decisions by legislators to prevent the supervisors from collecting the information that they might have been able to use.
This is basically why I started counting from 1994 (I should also note an uptick in the process in 2010) although if we are talking US financial services deregulation going back to the 1990s it must be noted that Clinton not only signed Gramm-Leach-Bliley rather than vetoing it but (together with Summers) actively supported it.
It’s an oversimplification to say all deregulation is Republican, and it’s an oversimplification to say all deregulation is bad. Examples that flip the usual assumptions are voter registration / identification requirements, immigration (especially employer status check requirements), and many types of controlled substance regulation (such as rules about who can distribute and possess marijuana and for what reasons). All of which are absolutely regulatory systems from an analytical perspective, and which relate to issues of state capacity to monitor, control, and enforce laws. That said if a U.S. politician is *calling* something deregulation, it’s not a bad bet that it is politically coded conservative and is about degrading state capacity to protect consumer or investor welfare or public goods such as the environment.
My minimally functioning peabrain remembers Jimmy's era and de/regulation of natural gas as well as deregulating airlines via ending the CAB. Some have said letting the hoi palloi fly ruined airline travel.
Great piece. But in many parts of the economy, we *do* manage it and yet the professional services sector continues to grow. E.g. the general anti-avoidance rule for tax, principles-based financial regulation.
I don't think professional services are bad per se (although I wouldn't care to spend much time defending them), it's just really bad when they get out of control
My experience is more around the processes of outsourcing, and mostly relating to management consulting, so arguably a bit downstream of some of the things you are thinking about. One of the things Collington/Mazzucato touches on but didn’t have time (iirc) to rabbit hole was how fundamentally the outsourcing business altered the economics of the sector and restructured most firms. Kipping’s waves is the starting point in the literature iirc. Possibly useful here is that the restructuring (purpose of the system etc etc) very much implies permanent changes in priorities, including a different (eroded?) attitude to professional standards.
This seems strongly related to the problems of "elite overproduction" (Peter Turchin's credited with the phrase) and "embedded growth obligations" (as far as I can tell it's Eric Weinstein's phrase). I've written about the financial mechanisms by which the coalition that won WWII and the Cold War (frequently called "the West," which seems to be an euphemism for Christendom) became structurally committed to systematic overproduction of rentier elites here: http://benjaminrosshoffman.com/the-debtors-revolt/
There's really no way for the system to coherently intend to *reduce* rents, while also intending to increase the amount of measured financial wealth, number of "good jobs," etc in aggregate, when wealth / goodness-of-job is measured in terms of ability to command the labor of others; in such terms, one person can only get rich at the expense of another. Fixing this would require a radical change in how we measure well-being, e.g. we might favor more direct metrics like leisure time, healthspan, lifespan, and fertility rates.
We're likely all familiar with Parkinson's Law in this space, and it's helpful to understand the mechanisms by which the professional-managerial class organizes itself as a job-creation scheme for itself, e.g http://benjaminrosshoffman.com/parkinsons-law-ideology-statistics/
But fundamentally the basic mechanism in Christendom seems to be the coalition of shame: Most people only see ways to improve their station in life through complicity in injustice and dishonesty. This causes them to become ashamed, and when enough people in a firm or other organization not under acute performance pressure are ashamed, the ashamed become a natural political coalition that marginalizes the sorts of people who see accountability as a neutral or friendly force: http://benjaminrosshoffman.com/guilt-shame-and-depravity/
This sort of thing makes it difficult to discuss the problem, as it means that the dominant political coalition is temperamentally opposed to accountability! Such societies can only be meaningfully reformed through systematic accountability applied to the behavior of incumbent elites by some external force, followed by a systematic shift of power away from people with a track record of trying to weaken accountability mechanisms. Such reforms occur along a spectrum of mercy or punitiveness, with the gentlest viable reform approximately represented by South Africa - a Truth and Reconciliation Commission where people have to actually confess their crimes to receive immunity, combined with a formal and explicit reallocation of political power away from the old elite. Mao seems like a moderate, and Pol Pot represents the most hawkish position that has been implemented recently. So far, based on GDP per capita it seems like South Africa did well for a while but stalled out, China is doing very well, and Cambodia is not doing very well at all: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=ZA-KH-CN
But judging by fertility rates (a more biologically robust wellness metric less biased towards the perspective of elites) paints a different picture, with the relatively extreme cases of South Africa and Cambodia doing okay, and China doing relatively poorly: https://genderdata.worldbank.org/en/indicator/sp-dyn-tfrt-in?view=trend&geos=CHN_ZAF_KHM
And on the other hand, for life expectancy at birth, China > Cambodia > South Africa
A crude utilitarian calculation seems like the next step here: person-years created per year per capita, i.e. simply multiplying life expectancy at birth by fertility rate.
There’s a lot that metric leaves out of course, but I don’t expect it to do very poorly where people are doing okay, or very well for long where people are doing very poorly.
I think the increased/promised/threatened use of AIs to replace government workers (from to UK all the way South to Argentina these days) is only likely to accelerate this hollowing out (I just wrote a short thing here https://blog.rinesi.com/2024/06/paying-for-your-own-commodification/ inspired by this post but focused on intra-market competition, although the public case is the most concerning one).
Great to see your new book get a plug in Cory Doctorow’s latest newsletter!
https://pluralistic.net/2024/06/05/your-price-named/
I didn't get far till the old and failing peabrain dredged up a memory from when people read words on paper and those things called newspapers and books. Damn things were primitive then!!!
The memory was when the MBA minds started the virtual corporation and attacked the bloated management levels. Was that bloat part of the information processing system? Was that part of blinding the colossus?
Yes, basically - I go on about this for about a chapter and a half in "The Unaccountability Machine", and referred to it as "cerebral vandalism" on a podcast last week. But "blinding the colossus" is a really great phrase which I intend to steal
You may copyright the phase.
You gifted me a long time ago with the idea that good projects should not be sold with lies.
What is interesting to me about this argument is that I think you could say many of the same things about the professional services sector in the US *but* I would have said that the degradation of capacity in the legislature specifically was the key. Leaving aside the period from 2017 to 2020 in which there were arguably exogenous factors affecting the capacity of US administrative agencies, I don’t think those agencies generally suffered a loss of capacity over time from, say, 1994 to 2016. But the legislature absolutely did degrade in terms of both access to information and capacity to act. And US agencies are subject to a lot more exploitable veto points (in the form of judicial review) than the legislature is when it acts directly. But those are features of the US system that as I understand it the UK system doesn’t share. On the other hand, while the US has seen its share of privatization I don’t think it’s been as systematically corrosive as you describe in the UK (leaving aside maybe defense contractors as a special case) (and also I may be wrong about this). Does that cut in favor of a less institution-specific explanation? I should add that I am generally sympathetic to institutional stories, I’m just wondering whether this one fits the facts.
As I understand it (and my knowledge of the US regulatory state is very much biased toward financial services), the story in the USA is less of an emergent and institutional one, and much more a brute-simple one of intentional destruction by bad actors in the Republican Party. That was certainly what I concluded when I wrote a piece called "The Road To Silicon Valley", about the failure of Silicon Valley Bank - all the regulatory and supervisory failures there seemed to be the result of specific and intentional decisions by legislators to prevent the supervisors from collecting the information that they might have been able to use.
This is basically why I started counting from 1994 (I should also note an uptick in the process in 2010) although if we are talking US financial services deregulation going back to the 1990s it must be noted that Clinton not only signed Gramm-Leach-Bliley rather than vetoing it but (together with Summers) actively supported it.
Your post made me think of the current rethuglican party platform of "deregulation". Is that another attempt to blind the colossus?
It’s an oversimplification to say all deregulation is Republican, and it’s an oversimplification to say all deregulation is bad. Examples that flip the usual assumptions are voter registration / identification requirements, immigration (especially employer status check requirements), and many types of controlled substance regulation (such as rules about who can distribute and possess marijuana and for what reasons). All of which are absolutely regulatory systems from an analytical perspective, and which relate to issues of state capacity to monitor, control, and enforce laws. That said if a U.S. politician is *calling* something deregulation, it’s not a bad bet that it is politically coded conservative and is about degrading state capacity to protect consumer or investor welfare or public goods such as the environment.
My minimally functioning peabrain remembers Jimmy's era and de/regulation of natural gas as well as deregulating airlines via ending the CAB. Some have said letting the hoi palloi fly ruined airline travel.
Time has come to de-privatize
Great piece. But in many parts of the economy, we *do* manage it and yet the professional services sector continues to grow. E.g. the general anti-avoidance rule for tax, principles-based financial regulation.
I don't think professional services are bad per se (although I wouldn't care to spend much time defending them), it's just really bad when they get out of control
My experience is more around the processes of outsourcing, and mostly relating to management consulting, so arguably a bit downstream of some of the things you are thinking about. One of the things Collington/Mazzucato touches on but didn’t have time (iirc) to rabbit hole was how fundamentally the outsourcing business altered the economics of the sector and restructured most firms. Kipping’s waves is the starting point in the literature iirc. Possibly useful here is that the restructuring (purpose of the system etc etc) very much implies permanent changes in priorities, including a different (eroded?) attitude to professional standards.
Possibly interesting https://x.com/chrisbrooke/status/1798674442777727034?s=46&t=70glNE959s2yx26f2wj54w
that is actually incredibly useful to me right now, thanks so much
Ping me if you find yourself looking for more stuff in this area, I did quite a bit on it a while back so I can usually point a direction to look in.
I suspect that there is a similar analysis to be done of law firms , esp magic circle, but I haven’t seen it.