Great Problems: The Economic Classes and their Respective Plights

This is the third essay in a series on the great problems of our age. See part 1 and part 2.

To understand American economic conditions, it is helpful to generalize Americans into four economic classes:

  • The Underclass Those scraping by at the fringes of economy, often subsisting on crime or welfare.
  • The Plebs The interchangeable parts in the machinery of the economy. Because plebs are so easy to replace, they earn low wages and have little job security.
  • The Rat-racers Those who have found a career track that offers leverage and rewards inside knowledge. The inside knowledge makes it harder to replace the rat-racer, thus earning them higher salaries. But they must grind out long work hours to maintain their competitive edge.
  • The Rentiers Those who have achieved complete economic security. They no longer need to work to live, instead they work for personal fulfillment.

Please note that the above classes are economic classes, not social classes. A hipster coffee shop barista and a high school dropout janitor both belong in the same pleb economic class, but they are in very different social classes.

Let's examine each class in detail.

The Underclass

Underclass members live outside the formal economy. Some may loiter at the corner stoops selling drugs. Some may lack homes, eat from soup kitchens, and sleep in store doorways. Some roam the neighborhood as bandits. Some live off food stamps and welfare. Some go on disability and live off government checks.

The underclass are ensnared in a multi-layered trap that keeps them from rising up into the pleb class.

Underclassers did not grow up in homes where parents instilled middle class culture and values. They may have never learned to dress for a job interview, to show up at work on time day after day, and to follow the rules set by the boss. Decades of hood life have bred in vulgar language and a contempt for authority. The underclass street culture has an honor culture. A man must show strength and retaliate for slights or else he becomes an easy target and attracts more abuse. In any confrontation, you have to stand your ground and not show weakness. This attitude does not work well with managers.

As the economy shifts to a service economy, worker traits such as appearance and attitude matter more than physical skill. Underlcass workers with their attitude problems provide negative value to employers, and thus may not be employable at any wage.

The street life generally pays less than minimum wage and is more dangerous than coal mining, but there is a certain status to running with your bros. It is cooler to tell a girl you are in a gang than to tell her you flip burgers at Mickey D's. Thus many young men would often rather stick to the street life than to go clean.

Many underclass have criminal records, and more employers now blanket exclude convicted criminals. One drug possession conviction can earn a man a lifetime of exclusion from employment.

Many underclass live off of government welfare rather than crime. Underclass single mothers often live off a combination of welfare (TANF), food stamps and Medicare. Older men often live off of disability. These folk often face a financial trap. Government benefits cut out very sharply with income, and often all the benefits cut out at nearly the same income levels. As a result, a welfare recipient will often net less total income and benefits as their wage rises. A person who receives disability insurance also gets Medicaid. If they leave disability to take a full time job at McDonald's, they will lose their health care. As a result, they are better off staying on disability. They remain idle and their job skills atrophy.

The poverty trap can be eliminated in two in ways. Benefits can be reduced for the poorest, or the benefits can be phased out much more slowly, thus raising total welfare spending overall. Progressives oppose the former, conservatives oppose the latter. Thus nothing is done to fix the problem.

Fixing the plight of the underclass requires both carrots and sticks.

On the stick side, underclass neighborhoods need fair, consistent policing. Crime control deserves its own essay and so I won't discuss it further here. People should not be allowed to subsist forever on food stamps, unemployment or sham disability claims. All recipients of government checks should be required to take a "job of last resort."

On the carrot side, entrance to the pleb class must be made more accessible and more attractive. Plebs face low wages and job insecurity themselves. If the underclass try and move up, they will be at the very bottom rung of the pleb class. By increasing the rewards of working, and increasing the supply of jobs, moving into the pleb class will be a more attractive and achievable option. We'll discuss how this can be done in the pleb section of this essay.

But simply creating the opportunity for gainful employment will not be enough. Progressive social workers have tried all sorts of programs to get underclass members into the normal work force, few have worked. Attitude problems still prevent many underclassers from getting jobs.

What's actually needed is to subject the unemployable to a regime of paternalistic authority to remold their values and attitudes. Basically, you need to give them the middle class parenting that they never had. Society used to have institutions that did this - the church, justices of the peace, orphanages, work houses, etc.. Most middle white class white people owe their values to the paternalistic authority of the church and nobles, which was applied centuries ago, and then passed on from parent to child.

The problem is that this plan is acceptable to neither progressives nor conservatives. "Paternalism" and "authority" are dirty words to progressives. The institutions needed would have to be government institutions, and the idea that government is the solution is anathema to conservatives1. Thus both sides oppose such institutions and nothing is done.

Other people's writings about the underclass

The underclass are the subject of the TV show The Wire. I recommend reading the non-fiction book that inspired the TV show: The Corner - A Year in the Life of an Inner City Neighborhood. Also check out Wilson's The Truly Disadvantaged, Banfield's The Unheavenly City, David Kennedy's Don't Shoot. The underclass have also been called the lumpen-proletariat by Marx.

The Plebs

Pleb occupations exhibit two defining traits:

1) With a bit of training, anyone can do a pleb job. Any American of normal intelligence could learn the job via self-study and on the job training in under a year.

2) The job has little leverage. At a leveraged job, a workers performance can cause dramatic swings in the firms profits. A world class brand manager, executive, or programmer can create millions or tens of millions of dollars in additional profits compared to their average peer. But a world class assembly line worker or nursing home orderly creates little more profit for their firm than an average worker.

Example pleb jobs include: assembly line worker, garbage man, truck driver, landscaper, construction worker, house painter, pool cleaner, line cook, barista, store clerk, customer support representative, quality assurance technician, nursing home orderly, kindergarten teacher, parole officer, police officer, child care worker, hair dresser. 2

Plebs have been repeatedly kicked in the teeth over the past 40 years.

First, globalization has added billions of unskilled laborers to the worker pool. The car assembler in Michigan now competes against millions of auto workers across Asia. If globalization also had created equal competition for rat-race jobs, and also had increased the worldwide output of natural resources, then the net economic impact on plebs would wash out. But this has not happened. The rise of China has added hundreds of millions of worker to the worldwide economy, but little more oil or arable land to the economy. Thus the peasants in China who forty years ago who consumed no oil or lumber, now compete against American plebs to acquire purchasing power for oil, food, and other goods.

Second, mechanization and automation have eliminated many pleb jobs. For example, the rise in use of shipping containers and computer aided loading tools reduced the employment of dock workers by over 80%. Some neoliberals believe that productivity improvements always help the worker in the long run, after the economy has a chance to reallocate the displaced to new jobs. This can happen, but there is no guarantee the worker will come out ahead in the end. Labor saving innovations will not increase the overall output of many essential goods, because the production of many goods is bounded by available natural resources, not labor. If the invention does not increase the total production of resources, and the owner of capital uses his savings from the new labor-saving technology to purchase more resource intensive goods (more meat in the diet, jet fuel intensive vacations, etc.) the price of resources is bid up while the bargaining power and wages of labor declines. Machines can make the laborer worse off.

Third, the mass immigration of pleb-class workers from Mexico and other countries has driven down the wages of plebs. This is supply and demand 101 - when poor workers willing to work for low wages move into town and look for jobs as clerks, cooks, landscapers, etc, the increased supply of labor will push down the wages of the class of workers competing with them for jobs.

Fourth, women entering the work force has the same impact as mechanization and immigration. Women entering the work force has not increased the supply of houses, wheat, oil, or electricity. The output of economics goods such as food and oil is not bound by the quantity of pleb labor. Adding more pleb labor adds little more to output, it only introduces more competition for jobs and drives down the average wage.

The income statistics show the decline: CPI adjusted median income for white, 24-35 year old white males has declined by 21% over the last 40 years. Median income for white males of all ages has been flat.

The CPI has many problems. I myself am a hater. Some claim that the CPI understates economic growth because it does accurately take into account the benefit of innovations like the internet and free google books for everyone.

The reality is that pleb purchasing power of information, communication, and entertainment has greatly increased. One hour of labor earns far more in terms of TV, games, movies, books, phone calls, news, etc. than the same hour earned in 1971.

But worker purchasing power of the basic necessities of life has declined sharply. A basket of goods can be created using the base necessities of life: the cheapest car on the market that will get you to work, a plot of land to buy a house on, lumber to build the home, a one night stay in the hospital, bread, beef, broccoli, gasoline to power your car, etc.. When you build a price index from these goods, worker purchasing power has in fact declined. In some cases, such as health care, both quality and price has increased dramatically. But there is no available option to purchase a discount version and trade some quality for a lower price.

Sixty years ago a pleb might live in a tight-knit, urban, ethnic community. The neighborhood would have very low crime, safe schools, and strong churches. Censorship laws promoted family values in movies and on TV. The upper class would live blocks away from the lower class. In ensuing decades, a combination of demographic changes, "urban renewal" projects, and legal changes rocked this world. The great migration brought into the city a poor, uneducated African-American population from the south. This migrant population had a much higher rate of criminal behavior. Housing projects and forced integration mixed this population into the ethnic white enclaves. Legal changes made policing much less effective. Crime in these neighborhoods rose dramatically. Court rulings and policy changes stripped public school teachers of tools to discipline unruly children.

After these changes, the only way a person could avoid a high-crime neighborhood was to move to a neighborhood where the underclass cannot afford to live. If a parent wants to send their kid to a school where class is not continually interrupted by underclass children, they must send their kid to a school with no underclass children. That means they must buy a home in a school district where the underclass are priced out. Parents use the coded, politically correct language of "finding a neighborhood with good schools." But in reality, school spending, pedagogy, and teacher qualification do not differ much between the underclass inner city and suburban neighborhoods. What parents are really doing is "finding a neighborhood with good students".

Schools no longer view instilling traditional morality and character as part of their mission. The Hays code that guided movie censorship is long gone. As a result, parents must take on the full burden of controlling their children's media intake. Parents must live in neighborhoods where the other parents uphold the same values, otherwise their children will pick up the wrong values from their friends.

Some plebs manage to work extra hard, stress finances to the max, and buy their way into a classier neighborhood. But they will live on the edge - a layoff or furlough could bankrupt them. Their landlord will boot them right back into the underclass neighborhood.

Many plebs cannot afford to exit the underclass neighborhood. They live in neighborhoods with high crime, drug dealers on the street, and wild schools. They might get mugged on the street. Their children may end up falling into drugs or a gang. Their daughter might follow her friends and get knocked up at 17. The pleb who remains in the underclass neighborhood lives in constant danger of falling into the underclass.

Charles Murray wrote a recent book Coming Apart that documents how plebs decline into the underclass. Commenter Graham Seiter follows up with his personal observation:

In 1960 Fishtown was a very Catholic neighborhood in which the men worked, the women stayed home, and the kids went to Catholic school. My ex-wife was one of them. What they considered to be social problems were excess drinking, quite a bit of it, fist fights and a bit of philandering. Young people, however, knew what was expected of them. They got married, before or after becoming pregnant, and provided families for kids. It was a moral expectation that was generally observed. People had responsibilities and took them seriously. They did not accept welfare, they answered the call when they were drafted, and they participated in church and civic organizations.

Fishtown in 2010 is a very different place. People simply don’t feel an obligation to either work or get married. There are many never married people, and many out of wedlock children. A lot of the guys are just bums - don’t work, don’t want to work, don’t want to get married, and waste their time watching television. An inordinately large number have figured how to game the system by qualifying for Social Security disability. Their attitude is that work is for chumps. Quite a few of them have drinking and drug problems, but Murray does not consider these disabilities to be nearly as important as the lack of any of the four foundations in their lives. No more religion, no social connections with the community, either no marriage or an unsatisfactory marriage, and no vocation.

Current attempts to Help Plebs

The Republican plan for the plebs is to cut taxes - especially taxes on the rich. Cutting taxes on the plebs by a few percentage points will make the plebs better off by a couple hundred dollars. But that hardly compensates for the decline in wages and job security.4 Cutting taxes on the rich does nothing for plebs. If the government spends one less dollar on hiring bridge builders, and that dollar goes to a rich person who spends that dollar on a gardener, then the pleb is in the same position as before. If lack of venture capital investment or lack of bank lending was a blocking factor for the formation of new companies, then cutting taxes could help form more companies. But there is a surplus of venture capital and surplus of money willing to be loaned. The limiting factor for business creation is the base rate of technological progress and the availability of profitable business opportunities.

Progressives advocate for laws making it easier to form unions. These laws would help immovable workers at highly profitable companies, such as the janitors at Google. But unions do not help the clerks at Sears (which has no profits) or the assembly line workers at some company where management is debating whether to move off shore.

Progressives blame current unemployment on austerity and lack of fiscal stimulus. I partially agree with this view, but the broader structural problems still exist and were present before the downturn in 2008.

Progressives and neo-liberals advocate spending more money on education and sending everyone to college. The idea is that graduating college is positively correlated with obtaining a higher income, rat-racer job. Therefore sending everyone to college will result in everyone earning a higher income. This logic is completely specious and has proven to be disastrously wrong.

The number of available high-paying, rat-racer jobs is limited by the structure of the economy. You cannot simply have everyone move from store clerk to store manager, from product assembler to product manager, from customer service to corporate counsel. These ratios are fixed based on the nature of the technology of production. 3

If more plebs go to law school, it’s not going to magically create more jobs for high paid attorneys. The wages and working conditions of lawyers will be pushed down. The graduates at the less prestigious law schools will be unable to find work entirely. As more people have gone to the law school in the past decades, most graduates find themselves either out of work or at low paying jobs struggling to pay off loans.

If more people attend college, they will not all magically become Bain consultants and brand managers. The application process for the high paying career tracks will simply become more competitive. Hiring managers will require more prestigious degrees, exclusive internships, and higher GPA’s. Those not making the cut will end up unemployed living at home, or forced to find a job stocking super market shelves.

A century ago, top firms would hire workers for prestigious white collar jobs straight out of high school. Once the masses started attending high school, the firms changed their recruiting practices to hire out of college instead. Now that the masses have started going to college, hiring practices are changing once again to require prestigious colleges and grad programs. More schooling helps on an individual basis but is a treadmill for society as a whole.

Schooling improves wages, but the aspect of school that improve wages require very little money. A prestigious college is valuable because it links you to a social network of high earners and provides a stamp of approval that gets your resume noticed in the pile. Most actual education is done via self-study, self-practice, and on the job training. Spending some money for teaching/mentorship can definitely aid in the self-study, but the effect quickly maxes out.

Further reading about plebs

David Shipler's The Working Poor describes the life of the bottom part of the pleb class. Barbara Ehrenreich's Nickeled and Dimed describes her attempt to live the life of a pleb.

The Rat-Race Class

Rat-racer occupations have two defining traits:

1) While the basics of the job can be taught, the capability to perform the job at a high level cannot be taught. Elite performance requires some rare combination of on the job experience, natural talent, a creative knack, and social connections.

2) The job has leverage. A world class rat-racer can create orders of magnitude more profits for the company than their average peer. A subpar rat-racer can do enormous damage. Thus a company is willing to pay top dollar for proven talent.

Example rat-race occupations: brand manager, McDonald's franchise owner, lawyer, doctor, accountant, product manager, executive assistant, consultant, any middle management or executive position, engineer, product manager, graphic designer, professional athlete, star actor, etc.

The supply of rat-race jobs is highly inelastic. The quantity of available jobs is fixed based on the nature of the productive structure. You only need X number of executives for every Y truck drivers. General motors only needs X number of brand managers for every Y number of automotive assembly line workers. You only need Z number of in house corporate counsel per head the company employs.

The only rat-race job category that is slightly elastic is that of engineering, as engineers can create new categories of employment and change the structure of production altogether. However, even the elasticity of engineering jobs is commonly overstated - graduating 10X more software engineers will not create 10X as much software engineering employment, and will not increase the rate of innovation by 10X. The economy cannot support 10 Googles or 10 Facebooks. And the pace of underlying technological innovation that allows new products to be created is limited by mythical man month considerations (adding more engineers to a project does not necessarily make it go faster) 5

Rat-racers earn much higher incomes than plebs because their talents are both scarce and valuable. A company cannot just pick any old bloke off the street and replace a rat-racer. This scarcity gives the rat-race real bargaining power.

Lazy reporters will describe rat-racer occupations as "jobs that require education". That is actually the inversion of the truth. College is required for these jobs, but not education. You can learn to be a machinist in a classroom, but you cannot learn how to be a middle manager in school. For the vast majority of rat-race jobs, the actual skills are learned on the job. Little taught in undergraduate is really needed or applicable. The rat-race job recruiters use the college diploma as a filter for intelligence, ability to jump through hoops, and polish. Those who skip college, or those who cheap out and go to East Iowa State College, will never make it through the recruiters filters. Nor will they have the social connections to bypass recruiters and get the attention of a hiring manager. Thus attending college is practically mandatory in order to obtain a high-paying, rat-racer career. Obtaining a top rat-race career - such as a consultancy at McKinsey - requires attending a prestigious school.

Rat-racer career tracks have a competitive, winner-loser dynamic. If a marketer at Nike works long hours to develop a brilliant marketing campaign, the marketers at Reebok must respond in kind or lose market share. If a sales rep at Oracle works extra hours to gain a sale, so must the sales rep at SAP. If a staff attorney at a top law firm slacks off, there are hundreds of new graduates and attorneys at lesser firms waiting to jump in rank.

Even engineers who create new new wealth for society still face a competitive, winner-loser dynamic in their particular endeavor. Market opportunities exist outside the control of any one engineer. The opportunity to create an online social network existed based on the ubiquity of computers and broadband internet. But the nature of social networks dictates that it will be a winner take all market ( you want to be on the social network your friends are on). Any company attacking that market needed to work harder and smarter than all the other competitors. Most technology products have a a winner take-all dynamic, because engineering costs are one time and up front, but the product can be sold thousands of millions of times.

Rat-racers earn nice incomes, but they cannot trade their income for leisure. Two rat-racers working 20 hours a week cannot do the work of one rat-racer working 40 hours a week. Rat-racer jobs require accumulated inside knowledge, connections, and communication. It is much more efficient to concentrate that knowledge in one person. Furthermore, leveraged jobs require 100% effort. If a product manager works fewer hours than competitors, the product will suffer versus competitors and the company might lose millions or tens of millions in market share. Nor is it easy for the product manager to work three years and then take two years off. The product manager will lose touch with industry developments and his social network will go stale.

I once thought French employment laws were overly restrictive. I thought workers should have the freedom to choose their own balance between income and vacation. But mandatory vacation laws solve a collective action problem. I cannot take a vacation unless my competitor takes a vacation. If we both take vacations, we both win. The French work fewer hours, yet almost match the U.S. in per capita output. The extra hours worked by Americans are a result of the competitive thrashing of the rat-race, and produce no greater good for society.

Every rat-racer fears dropping out of the race. If a rat-racer fails to put in enough effort, he will fall into the pleb class. I have seen it happen to friends. Maybe they take it easy at work and get laid off. Maybe they do not build the needed career connections. They might have had slightly lower SAT scores, and gone to a less prestigious school, and then failed to get the high powered finance job. They take a crappier job and end up laid off during a downturn in business. Desperate for a job they end up bartending or painting houses.

The first few years as a rat-racer are precarious. The worker has not built up unique skills and connections, and is therefore replaceable. Because a rat-race career takes time to establish, rat-racers do not feel comfortable starting families until they near thirty. At that point, their career still requires long hours to maintain, so balancing work and children can be stressful. Thus rat-racers rarely have more than two children.

Rat-racers do not want themselves or their children to fall down into the pleb class. So rat-racers must buy expensive homes so that the plebs and the underclass are priced out of the town and its schools. By sending their kids to school and college with other rat-racers, parents can prevent their kids from making friends with underclassers, and ensure their kids pick up the proper polish. However, since rat-racers are bidding against other rat-racers for slots in these towns and schools, the price of the rat-race life keeps going up. Entering the rat-race life used to only require attending college. Now it can require paying for grad school, plus supporting the child through unpaid internships. Having more than two children is quite out of the question - children are too expensive and take up too much time. Given that many rat-racers never feel the urge to have children at all, the total fertility for rat-racers is well below replacement.

Rat-racers are good, smart, hard-working folk.6 That their work ethic is driving them to extinction is tragic and long term catastrophic. The plight of the rat-racer is one of the great problems of our age.

The Rentier Class

Rentiers have locked in complete economic security and no longer need to do unpleasant work in order to survive. Examples of rentiers include: Cashed out entrepreneurs, Wall Street types who banked their salary and now no longer need to work, small business owners who have grown a profitable business that now runs itself, super star athletes who invested their earnings well, etc.

The rentier class is not limited solely to those who have amassed independent wealth. I count as rentiers tenured professors who love their jobs and who can pick their own research topics. A staff engineer at Google who can pick and choose projects might also count as a rentier.

The Rentier Class has no plight. They are the winners. As the structure of the economy has shifted to more of a winner-takes-all dynamic, the rentiers have benefited greatly.

Within the Rentier Class there are gradations of rich:

Lower Gentry do not have to work for a living. But their yearly dividend provides little more income than the typical rat-racer salary. Thus their spending habits are upper-middle class/rat-racer. They do not behave like the rich in the movies. Their acquaintances would not think them of being "rich". Lower gentry requires $2-$8 million in net worth.

Middle Rich can afford multiple homes and fancy cars. They can also afford not only to support themselves, but to also employ other people. The ambitious will fund companies or foundations. Middle rich have $8-$100 million in net worth.

Upper Rich can own yachts and mansions and fly around in private jets. Those who wish to fund projects can fund truly ambitious companies. Upper rich is what you think of rich when you view life styles of the rich and famous. Upper rich have $100+ million in net worth.

Davos Rich are the highest class. Not not only are they super-rich, but they have parlayed their wealth into real political and cultural influence.

"Keeping up with the Jones" never ends, so within each group above there are gradations based on the size of your yacht, size of your private jet, etc.

Note that many of the middle-rich have a choice: They can continue to work long strenuous hours as rat-racers in order to live a lifestyle that is one notch higher. Or they can cut back on work and settle into a more genteel life, but at the cost of cutting back on the more extravagant expenses such as mansions and ski homes. Many choose the rat-race as they are addicted to the lifestyle and their career.7

Social Classes

The above classes are all economic classes. Economic classes are defined by the nature of the person's occupation.

The country can also be divided into social classes. Social classes are defined by networks of friendship and dating. The status of social classes is defined by who admires/envies/copies whom.

SWPL class

This is the class described by the Stuff White People Like Blog.
SWPL's are educated, urban, Bohemian, progressives. The social network centers around the upper tier universities and the "blue"/progressive urban centers.

Common activities of this class include: listening to NPR, drinking locally roasted coffee, attending an upper tier college, voting for Obama, shopping at Whole Foods, drinking a micro brew, or engaging in some activity to raise awareness.

The class is mostly white, but there is a substantial minority of Asian members, and a smaller minority of black and Hispanic members. SWPL's are 'white' in the sense of what a black person from the hood says when he accuses his buddy of 'acting white'

Rat-racer SWPL's can be called Yuppie's, but not all Yuppies are SWPL's. Pleb SWPL's are known as hipsters. Hipsters have opted out of the rat race and would rather have a lower earning and casual life working at coffee shops and bike repair shops. David Brooks also wrote about older rat-racer SWPL's, calling them "Bourgeois Bohemians" (Bobo's). Other people have called them "Brahmins" or "Eloi".

Amerikaner (A.K.A. Red State Whites, Tea Partiers)

Amerikaners reside in the South, Midwest, and the outer suburbs of blue state urban centers.

Stereotypical Amerikaner activities include: drinking mass-market lager beer, watching NASCAR, listening to Rush Limbaugh or Fox News, hunting, playing hockey, owning a gun, attending a high school football game, owning a gas guzzling car, driving that car everywhere instead of walking or biking, tinkering on cars, attending a traditionalist Christian church, eating at chain family restaurants like Applebee's, sending off family members to the military, etc.

Charles Murray's recent book "Coming Apart" includes a quiz titled, "How thick is your bubble?" The quiz is slightly misnamed. It actually tests, "How much contact with Amerikaner culture do you have?"

Politically, Amerikaners refer to the government as "them". An Amerikaner will say: I don't like it when the government raises taxes. While a SWPL views the government as "us" and says: We need to raise taxes to that everyone pays a fair share. As a result, Amerikaners respond better to small government political government rhetoric (since the government is an "other", why would you want to pay any more money to it, any more than you want to pay a higher cable bill to Comcast?).

High earning, Amerikaner, rat-racers could be called country clubbers or optimates. Young urban optimates share the "yuppie" moniker with young urban SWPL's. Lower earning pleb Amerikaners can be called be proles.

Optimates often follow the trends set by SWPL's. SWPL's enjoy hanging out at a independent coffee shop drinking expensive, high quality, fresh roasted coffee. Starbucks picked up on the trend, turned it into a cookie cutter experience, and marketed it to Amerikaners across the country. Optimates or their children who attend SWPL universities or move to SWPL cities gradually succumb to social pressure and start voting for Obama or driving a Prius instead of a BMW (Occasionally the shift goes the other way - a SWPL tires of the social activism of his college days, finds a hierarchical capitalist job, and enjoys spending his salary on fancy goods).

Ethnic Social Groups

Every ethnic group in the United States - Mexican, Chinese, black, south Asian, etc, has its own social group distinct from Amerikaners and SWPL's. These groups usually live in their own ethnic communities and have their own culture. Economically, these social groups are usually either pleb or underclass.

When ethnic group members rise up to rat-race jobs they almost always assimilate into the SWPL class. Or rather, I should say that in order to get a rat race job an ethnic minority must first assimilate into the SWPL class. Progressives who denounce the existence of "structural racism" are not entirely wrong. Rat-race employers desire employees who demonstrate polish and cultural fit. If you interview for a Gen-Y, SWPL, rat-race job, and judiciously break out the LOLCat speak, people will laugh and mentally award points. If you come in speaking ghetto ebonics, you will accrue negative points.

  1. Conservatives who want believe the problem can be solved by private churches, forget that when the churches historically solved these problems, the church was linked with the state and had actual authority to whip people into shape against their own wishes. 

  2. A few additional notes on pleb occupations. The class I describe does not match up traditional definitions that delineate based on white collar versus blue collar or jobs that require a degree versus jobs that do not require a degree. The delineation is based on replaceability - on time to learn the job and leverage.

    A kindergarten teacher legally requires a college degree, and thus might not seem like a pleb job. But the degree requirement is unnecessary. The job could easily be learned in less than a year of self-study and apprenticeship. Thus the job is plebeian.

    The line between pleb and rat-racer can be blurry. A customer support representative is a pleb. But somewhere during the promotion track to senior support rep, to team manager, to director of support the rep has joined the rat-race class.

    Sales jobs can be either pleb or rat-race. Sales tracks at a technology company are usually rat-race jobs. An experienced sales rep who can accrued inside knowledge and tactics over time in order to win big deals that a commodity sales rep could never win. Used car sales is a pleb job.

    Craft workers can also be either pleb or rat-race. A junior carpenter is a pleb. But a master contractor who runs his own firm is a rat-racer.

    Guild Plebs or Union Plebs are a special case of pleb. A guild pleb has the same problem of performing undifferentiated labor. But the guild pleb has a unionized or government job and thus earns a higher wage and greater bargaining power.

    Among guild plebs, the best off are the federal government employees. The federal government can infinitely print money and faces no external budget constraints and so workers are in the least danger of layoffs.  

  3. Some people argue that we could educate every person as an engineer. Engineers create new products and technology, and there is no limit to the products created. There are several fallacies with this argument. Let's use robotics as an example. Could we educate the next generation so that instead of working as truck drivers and line chefs, they could be engineering driver-less cars and automated fast food restaurants?

    First, not everyone has the innate cognitive ability to push forward the vanguard of technology. I doubt even 10% of the population has the potential, maybe not even 1%.

    Second, even if everyone could go into tech, adding more bodies will not necessarily speed up the pace of technological growth by a significant factor. There is a well known fallacy in software called the mythical man month. Adding more people to a project has diminishing returns, as more time is spent on communication and keeping everyone on the same page. If you add a few more software engineers to Google's self-driving car project the development pace might speed up a bit. You can parallelize the project to some extent. But at some point people are tripping over each other's changes in the code, and spending more time communicating than producing. The pace does not go any faster. You could have a dozen completely independent teams working on self-driving cars. But this is not additive - the pace goes only at the rate of the fastest team, not the pace of all teams added together. Thus at some point adding redundant teams is just wasting money.

    Third, while there is an infinite number of technologies that can be invented, there is a finite number of R&D paths that show real promise towards creating a profitable or socially useful result. Many research paths and products must wait, pending on the development of supporting technologies. I think you could max out the pace of innovation with less than 5% of the population working in research. Research might max out at employing less than 1%.  

  4. It should also be noted that cutting tax rates without cutting spending is not really cutting taxes at all, it is just tax shifting. Deficit spending is equivalent to printing money and spending it, thus, the tax is shifted from an income tax to a seigniorage tax. The government spending competes with the plebs spending, and drives up the costs of goods, instead of losing 5% of income, the workers income loses 5% of its purchasing power. 

  5. See the above footnote about whether every person can be an engineer. 

  6. If I do say so myself. I am, myself, of course, a rat-racer.  

  7. In Bonfire of the Vanities, Tom Wolfe brilliantly describes the mind set of the rich person still caught up in the rat-race. The character Sherman McCoy thinks to himself:

    “I’m already going broke on a million dollars a year! The appalling figures came popping up into his brain. Last year his income had been $980,000. But he had to pay out $21,000 a month for the $1.8 million loan he had taken out to buy the apartment. What was $21,000 a month to someone making a million a year? That was the way he had thought of it at the time-and in fact, it was merely a crushing, grinding burden-that was all! It came to $252,000 a year, none of it deductible, because it was a personal loan, not a mortgage. (The cooperative boards in Good Park Avenue Buildings like his didn’t allow you to take out a mortgage on your apartment.) So, considering the taxes, it required $420,000 in income to pay the $252,000. Of the $560,000 remaining of his income last year, $44,400 was required for the apartment’s monthly maintenance fees; $116,000 for the house on Old Drover’s Mooring Lane in Southampton ($84,000 for mortgage payment and interest, $18,000 for heat, utilities, insurance and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes... The tab for furniture and clothes had come to about $65,000; and there was little hope of reducing that, since Judy was, after all, a decorator and had to keep things up to par. The servants…came to $62,000 a year…the abysmal truth was that he had spent more than $980,000 last year. Well, obviously he could cut down here and there-but not nearly enough-if the worst happened!