Does Populism Work?

George Turner says:

I would posit that what we want to avoid is having current economic winners write rules that ossifies everyone’s current position so the pecking order isn’t further adjusted, so the rich and powerful can stay on top indefinitely. That’s a very common outcome when the rule of law is weak or non-existent and rule by force is the norm. It’s pretty much the whole basis for inherited monarchies.

Yet it’s also not good to go after the accumulation of capital because that’s how parents who make good decision pass wealth to their children, and if people can’t do that then what’s the point of working or building anything?

What we’re dealing with is the Pareto power-law distribution, which in part says that wealth will have a very unequal distribution. That’s not because of capitalism, that’s because of the nature of creativity, competence, and industriousness, and probably first showed up about the time we started hunting game or making clay pots.

There are areas where it won’t have much of an effect, where productive output correlates to pounds of meat on task, such as chopping firewood or digging ore with picks and shovels, and that’s part of what Marx focused on, thinking capitalism is the problem. If coal miners should all get paid the same because they produce pretty much the same output, why should the mine owner be piling up the cash?

But try applying that logic to a remotely creative enterprise, keeping in mind that figuring out where to put a mine and how to run it requires lots of creativity and competence, unlike, say, collecting firewood off the forest floor, a field where you won’t find many business moguls because competence and creativity aren’t required. Everyone just wanders out and collects downed wood with pretty much equal skill, and they don’t need planning, infrastructure, and management.

As you get into fields where competence, talent, and creativity are the dominant factors, you get very unequal distribution curves, even where the biological basics are virtually the same.
Take music. We’re all built for equal competence at it. Within a fairly narrow range, we have the same vocal apparatus, the same ability with language, the same hand-eye coordination. But we don’t earn equal incomes as musicians. The vast majority of the population could only possibly make money at it because people would pay them to stop trying.

The percentage of the population who could get paid to play at even a small venue is really rather tiny, and the number who could get signed to a record deal or fill an arena on a world tour is freakishly small. You could probably name a good many of those, and that’s on a planet of 10 billion people who in theory are very equally equipped to become a singing legend or guitar hero.

If you looked at IRS tax forms sorted to show income from playing music, you’d see a staggering inequality. The same is true of art. If you started from both ends of the distribution curve, how many starving artists’ incomes, a measure of output value, would you have to add up to equal one Andy Warhol? Is this because artists and musicians are all right-wing uber capitalist autocrats, or is it because talent and competence in a particular creative field have wildly unequal distributions?

The left, in thinking the problem is capitalism, is trying to solve the wrong problem. The income distribution problem is due to the Paretto distribution and shows up in every form of social organization, including Marxism.

But capitalism doesn’t limit us to just the one curve. We have tons of rich people who aren’t artists and musicians. Yes, we have professional athletes, too. But even in athletics, where the fastest person isn’t that far above average, completely unlike art and music, we don’t pay everyone at some rate linearly related to speed. The average teen girl can run the 100 meter dash about 73% as fast as Usain Bolt, but they’re not going to make 75% as much as his Forbes estimated $34 million in income.

That’s because simply running isn’t actually worth anything, at least remotely like what an athlete can make, but winning at something interesting is. If you were running a delivery service in Manhattan, the pay calculus would be quite different, and Usain might get paid about the same as the teen girls. So he doesn’t work as a runner for a delivery service, though he’d probably be happy to star in a commercial for one – for a ridiculous amount of money. And keep in mind that he’s just a sprinter, not a capitalist plutocrat in pin stripes plotting to depress the wages of teen girls.

And then of course we have the rest of the economy that accounts for all the non-entertainment income. In each little sector there’s a Paretto distribution, because under capitalism, if you can’t find your niche, you can make a whole new niche. Steve Jobs and Bill Gates did that. Some guy in New York put a pair of coffee urns and paper cup dispensers on his backpack and started making six figures working the morning rush hour at the subway station. I don’t know what he does the rest of the day but the short answer is that he could just watch TV because he’s created a more lucrative hourly niche than most of the Ivy League graduates rushing to their Wall Street jobs.

So in every state, there are countless niches and countless Paretto distributions, and the variance between average state incomes often is due to simple geography, as people are free to move around or replicate new ideas going on in other states, such as frozen yogurt, overpriced coffee, or Uber.

Populism rises when people get the feeling that the elites in charge are dumber and more self-serving than everyone else. If the emperor has no clothes, why the heck is he still emperor? Who are those goofballs around him, and why do we feel they’re screwing us?

The Tea Party was a populist wave aimed at the country club GOP, who seemed more concerned with their own perks and the DC cocktail circuit than what was affecting main street or the jobs down at the plant.

The Democrats are currently having a socialist populist wave from hipsters in Brooklyn who can’t understand why barmaids with international studies degrees don’t make as much as UN diplomats or Usain Bolt. That’s not going to spread much further than Brooklyn, but it might gut their party nationally if their centrists fail to rein it in.

I think part of what’s driving them is that whenever the people at the bottom of the Pareto curve are doing really badly, social unrest follows. The French and Russian Revolutions were exactly that.

To avoid those bad things we have all sorts of charity and government aid programs, and those will always be with us because not everyone is going to be very productive in a technologically sophisticated economy. There are many people who are too hard to train, or who have other serious physical or emotional health issues. Some hard-core socialist regimes have addressed the problem by simply eliminating such people, but that’s off the table as a moral or civilized solution and can’t really fix the problem because the talent distribution curve will always have a bottom, even in Sweden, and even in Lake Wobegon.

Normally white urban elites, who seem to be the core of the far-left movement, would be the last people fomenting socialist revolution. But now they’re buried under massive student debt because the universities who kept feeding them fantasies about socialist utopia were
simultaneously driving them into the abject poverty of having massively negative net worth.

On paper, ignoring potential future income, they’re worth vastly less than homeless people, and they probably have some innate sense that something must be very wrong. So they want people who aren’t going to an elite college to pay the way for those that do, I suppose on the notion that the non-college graduates at least aren’t under water with debt. The demand that high-school graduate assembly line workers should pay for the factory owner’s Harvard or Boston College degree is quite a leap, and it’s not going to fly. But it could spark an entirely different populist movement of older, centrist Democrats who might rebel against domination by socially elite Brooklyn hipsters demanding free stuff, more stuff, and more free stuff.

Time will tell.Report