On Necessity of Being a Multi-Millionaire under Late Capitalism
Some time ago, I wrote an article about how ‘The Simpsons’ show is now a marker for the gradual demise of middle-class in USA. People today are often surprised that the Simpson family lifestyle, as depicted in the first 8-9 seasons of that animated show, was not only possible, but considered normal until the early 1990s- when that show debuted. However, today the idea of a guy who barely completed high school having a stable job which pays enough to support a wife and three kids, owns a modest house and a couple of second-hand cars would be considered fantasy. So what happened between early 1990s and today? How did we go from a point where a stable middle-class existence was the unquestioned norm in western countries, including USA, to one where most people have become heavily indebted precariats with almost zero chance of a better life in less than three decades? And why is this shift especially obvious in Anglosphere countries.
To better understand what I am getting at, let me tell you a little story about why I chose my current line of study. Firstly, I liked the area and am good at it. However, there was a second crucial reason- employment in Pharma provided a guaranteed stable upper-middle class lifestyle for many decades (starting from end of WW2 to mid-2000s). Even academics in biomedical research could expect a very nice and stable upper-middle class lifestyle, if a bit less well compensated than industry. For example, one of my previous academic mentors (born in 1946) became a tenured professor by 32, got married, had three kids who he put through university, bought a reasonable house and expanded it, purchased a second vacation property, drove fairly decent cars etc, took long vacations, did a few sabbaticals, got a steady stream of acceptable grants and ultimately retired with a nice guaranteed pension.
The relevant thing is that he was able to achieve all of this with an income equivalent of between 70-120k/yr adjusted to inflation. While his wife did work for some years, she made about 40% of what he made even in the best years. In other words, it was possible to enjoy a nice and stable upper-middle class lifestyle for somewhere between 100-150k/ yr even if you had three children to raise and put through university. While it helped that the city was not in coastal California, my point still stands and he was not alone in being able to have that lifestyle. As late as end of 1990s and early 2000s, this lifestyle was considered normal for someone in academia- at least in the parts where I lived. Industry paid better, and starting salaries of 80-90k after a PhD were common- even in late 1990s. Most ended up making the equivalent of somewhere between120-160k for the majority of their careers. Did I mention that jobs in these corporations used to be far more stable?
The point I am trying to make is as follows: it was perfectly possible for a couple making about 200k/ yr with one or both in pharma or allied sectors to live a very comfortable and nice lifestyle in expensive parts of USA such as MA, NJ, NYC or the west coast (Bay Area, San Diego, Seattle). Furthermore, these jobs came with solid healthcare insurance packages and proper defined-benefit pensions. As some readers know, this has not been the case in the Pharma sector since 2009- but that is another story. Now let us ask another simple question: how was Pharma capable of providing such nice working conditions for many decades and why did all of this come to an end by early 2000s? Pharma did not suddenly become less profitable, did it? So why did it start to change its business model, starting in the 1990s.
To understand what went wrong in Pharma and most other sectors all over the West, we have to ask another simple question- who corporations are run for and by whom. For the first few decades after end of WW2, corporations were run to simultaneously achieve two goals- profit for owners of capital AND well-paid stable employment for everyone else. The idea was that a high standard of living would keep people from getting interested in more 'radical' ideologies such as socialism and full-blown communism. But once state communism fell in Eastern Europe by 1989, the West (especially in Anglosphere countries) had no reason to balance the interests of capital AND employees. It is therefore not surprising that neoliberalism, which first started in the late 1970s, did not really take off until 1991. While this explains why the majority of “deregulation” in western economies started after 1991- leading us to the next question: what is neoliberalism and how do we best define this elusive term?
In my opinion, neoliberalism is best defined as an ideology which pretends to profess belief in "free markets", "free trade" and other totems of classical liberalism such as individualism while actually transferring power and money from elected governments to unelected corporations using excuses based on the lies concocted by economists and other so-called "social scientists". According to these dishonest parasites, government deficits and 'printing money' is very bad if used to fund the needs of average people but smart and correct if they are used to make corporations and a few rich people even richer. Similarly, allowing monopolies and oligopolies to exist and expand is a great idea as long as their servants can lie and pretend that it does not result in customers being overcharged or otherwise exploited. Pretending to care about ‘black lives’ or ‘diversity’, even if the same corporations are involved in trying to suppress and steal wages or screw their employees in other ways is another manifestation of this worldview.
This is the real reason why large corporations seem to be so enthusiastic about supporting "woke" activism, “LGBTQ” and “diversity”. It is all about maintaining a bullshit public image which nobody but their own inner circle even pretend to believe. Now let us get back to the title of this article, specifically about how it is absolutely necessary to be a multi-millionaire to enjoy living under the conditions of late capitalism aka financialism aka neoliberalism. A few months ago, I calculated the amount of income, and wealth, necessary for somebody in 2023 to live like that professor could until mid 2000s- in the same city. After some calculations I came to the conclusion that the lifestyle in question would require a total pre-tax income of around 300k. Note that the pay range for positions he occupied during those decades corresponds to 80-140k/ year when adjusted for inflation- and is the current range of salary for same at that university.
To make matter more interesting, he (as an assistant professor) and his wife at the start of their careers would have had to spend over 50% of their combined take-home paycheck to service the mortgage for the median home in this city in 2023. Note that the median age for getting tenure in USA (along with other countries in West) is now in the early-40s, unlike then when it was in early-30s. Also they could no longer afford to buy purchase a vacation home. In other words, he simply could not have enjoyed the lifestyle he had when he joined the same university 25 years after he did or today. And this is not just true for him and other academics but also those in previously safe professions such as Pharma, Biotech, Big Law and even programming. The median job in Pharma now lasts somewhere between 2-5 years, with the upper range reserved for medium to large companies. The burnout rates for overworked lawyers at high-paying Big Law forms is also rather high and a significant minority permanently leave the profession with 15 years even if they finally become partners- which is the lawyer equivalent of academic tenure. Best of luck planning your life around such jobs!
But what about jobs at IT Giants in Silicon Valley? While Google and FaceBook pay 200-250k/ yr for new hires in the Bay Area, we cannot ignore the tax regime in California and the cost of living in Bay Area. Try finding a decent ‘starter’ house within 30 minute drive to work in the Bay Area which costs under a million. You would be lucky to get a decent condo for that price. The costs of housing in zipcodes with "good schools" is even more eye-watering as is the insane costs of a four-year undergrad at one of the prestigious universities in California- even if the student has received a few good scholarships. Stanford now charges 90k/ year for an undergraduate degree and others with similar name recognition are not much cheaper. And we are not even getting into other issues such as corporate age discrimination, non-existent career security, the risk of divorce leading to financial ruin etc. Things are so bad that only a few professions can reliably make enough money to live a secure upper-middle class lifestyle as it existed just twenty years ago. In the next part, I will try to do into how financialism aka neoliberalism has destroyed affordable housing, healthcare, education and a whole lot more while boomers were cheering for deregulation in 1990s. You will also see more examples of how being a multi-millionaire is a now almost a necessity under the current regime of late capitalism.
What do you think? Comments?