Part 2- Lifecycle for the Median Person in West is Damaged Beyond Repair

In the previous post of this series, I wrote about how a number of systemic changes caused by adoption of neoliberal policies in western countries over past 3-4 decades had slowly destroyed the foundations of post-WW2 lifecycle for most people living in those countries. While it took some time for most people to appreciate the extent of this slow motion destruction of previous status quo, neither the majority nor the ’elite’ minority who are pushing these changes have grasped its final consequences. Oddly enough, there is no shortage of “credentialed” public intellectuals and other assorted charlatans who pretend to have a solution for some superficial aspects of this problem. To better understand what I am getting at, it is necessary to first address a seemingly unrelated topic- namely, complex systems with emergent properties such as human societies. The important part is that any significant changes in such systems are not reversible and often have unpredictable effects. This is especially true if the changes disrupt a previously stable and functional equilibrium.

With this in mind, let us go over how the two major classes of socio-economic changes in past 3-4 decades interact with each other. But before that, let us address why large societies cannot exist without a very high degree of stability and predictability. It comes down to ensuring continued popular participation in the system. If people see their co-operation or sacrifices not being reciprocated and rewarded, most of them will slowly stop playing by the established rules and conventions which keep the system going. This becomes an even bigger issue if there is a widespread feeling that the system is trying to actively deprive them of the essentials for a normal life. This trend towards disconnection will occur regardless of how hard any “elites” try to impose their will on the people. A recent example of this phenomenon is how two decades of economic stagnation under state communism in East Europe led to their downfall, despite numerous attempts by their ‘elites’ to prevent that outcome.

The success and popularity of any social system is linked with its ability to reliably provide a good, or visibly improving, quality of life for its median resident. The vast majority of people don’t care whether they live in a monarchy, dictatorship, one-party system, multi-party democracy or anything else as long they have a good or improving standard of life, well-maintained infrastructure and hope for a better or at least stable future. While people can tolerate acute temporary setbacks, even if they are quite severe, they will stop caring about a system which is chronically unable to deliver on its explicit and implicit promises. The above mentioned collapse of state communism in Eastern European countries during the late 1980s had a lot to do with people finally losing faith in a system of governance which had not delivered any real improvement in their quality of life since the late-1960s.

Now let us apply this same logic to the worsening situation in western countries over past three decades. As is well documented, from the end of WW2 to mid-1980s, the system in western countries was able to provide an unprecedented high quality of life, even for their median resident and this trend continued in some places into the 1990s. Many people forget that the system as it exists in western countries today was largely built after 1945. Prior to that, western countries did not have many public universities, well-funded public K-12 schools, universal healthcare, social security, public highway networks and other large public work projects in addition to many other things we take for granted today. Furthermore, all these institutions were built on a few basic and reasonable assumptions from the first four decades after 1945, which have since been heavily compromised by neoliberalism. The important part is that the post-WW2 status quo was sustainable in its original form, but neoliberalism and corporatism screwed things up and created the dystopic situation we are witnessing today.

So how do the two sets of problems, mentioned in previous post, interact to create a much larger set of problems? The first set is the result of progressive shirking of their social responsibility by public and private institutions. This has led to many negative changes for the median person such as the loss of job and career security, reduction in disposable income and purchasing power combined with excessively high increases in cost of basics such as education, housing and healthcare. At this point, some might say that many of these negative changes are specific to USA, and this is partially true. Ruinously high costs for healthcare are almost completely exclusive to USA. High cost for university education is a more mixed bag, since some countries such as Germany, France etc still have almost free tax-payer funded universities, but an increasing number of countries in the West such as Canada, UK, Netherlands etc no longer have inexpensive university education. Others such as high cost of housing (far exceeding wage inflation) are now almost universal in the West as are job and career instability and persistent decreases in disposable income for median person.

If we combine these negative changes, with those seen in the area of family and other interpersonal relationships which occurred over same time period- a dark picture emerge. To illustrate this interaction- let us talk about something mundane like the average length of a residential mortgage. While such mortgages existed before 1945, the modern 25 to 30 year mortgage is a product of the post-WW2 era. Prior to 1945, mortgages were much shorter (5-10 years) and often required hefty (40-50%) down payment. With that in mind, let us talk about why its length in most western countries has been 25-30 years for past 7-8 decades. Simply put, this was the length of time for which the vast majority of people could be expected to have a stable and decent income with some surplus. Given that most people who reached working age in first 4-5 decades after 1945 were in a stable job or career by their mid to late 20s, a 25-30 year mortgage made sense since it would give provide about a decade of leeway for tem to be able to own their house by the time they were in their mid-60s.

However this length of time was also based on a few other unspoken assumptions such as an expectation that majority of marriages would not end in acrimonious divorces, loss or change of job would not affect income to a substantial extent, most employers would also pay defined benefit pensions and the cost of raising children including for their higher education would be low. If you look around today or anytime in past twenty-something years, the vast majority of these assumptions are no longer true for the median person. Sure.. there are still some people with stable, well-paid jobs with real pensions, but they are the minority. To make matters worse, the relative financial penalty from divorces has increased over the decades even though the rates have not changed much since the 1980s. The cost of raising children including higher education has also gone up a lot to the point where it even affects people with otherwise stable and well-paying jobs. Then there is also the issue of how housing costs has exceeded wage inflation since at least the 1990s.

To make matters worse, these problem are not restricted to USA, UK or Canada. Even countries which did not go as far down the neoliberal path have these problems- albeit to a somewhat lesser degree. This is also linked to a general decline in the quality of life for median person. Many people today don’t realize that the titular family in the well-known cartoon show ‘The Simpsons’ which debuted in late 1980s was considered working class and not especially well off. Today, a stable family with three children supported mostly by the income of one parent living in a 3-4 bedroom old-ish house in a fairly safe neighborhood with a better than mediocre school would be considered upper-middle class. Furthermore, the father in that cartoon only has a high school education and got a stable job at a nuclear power plant after being hired and trained straight out of high school. While almost inconceivable today, the condition of the Simpson household was the norm in USA as late as 1980s, when it premiered.

But why any of this matters, some might ask. It comes down to basic and foundational assumptions about the lifecycle of median person which are necessary to sustain and run functional institutions in the future. To put it bluntly, a lot of the institutions in western countries from healthcare, social security, investment funds, funding for schools and universities etc are still grounded in the lifecycle of the median person from 1945-1985 being the norm. They cannot keep running in a safe and sustainable manner if the overall system inputs change beyond a certain margin of safety. In the next part of this series, I hope to address the consequences of delays in entering the workforce, unstable jobs and careers, low and decreasing fertility rates and social atomization are making it even worse.

What do you think? Comments?