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Recovering backpacker, Cornwallite at heart, political enthusiast, catalyst, writer, husband, father, community volunteer, unabashedly proud Canadian. Every hyperlink connects to something related directly or thematically to that which is highlighted.

Thursday 26 January 2012

Capitalism on the Brink

-          David Rubenstein

Where We Stand – at the Precipice

For Government, the cost of social services continues to escalate.  In particular, greater understanding of human health, new therapies and technologies that allow more people longer, more productive lives have ballooned health care expenditures.  People demand access to these opportunities, but frankly, can’t afford what they cost individually or if they can, aren’t interested in footing someone else’s bill as well.  With rising social service costs, (including health care) and following a wave of economic stimulus distributed in response to the recent Global Recession, governments the world over and at all levels are looking at unsustainable levels of red ink.

Business, for its part, is watching the future unfold with an understandable level of apprehension.  Those that rely on government support or government contracts can’t know with certainty what will happen to the bread and butter of their business.  The Global Economy is acting like a force of gravity, shifting manual and scripted verbal work away from where they have been based towards those countries with the cheapest labour and lowest social responsibility requirements.  Yet, as the Knowledge Economy ramps up and networked technology expands, location matters less when it comes to cognitive skill.  Business doesn’t have to work where they live, but can still apply for government assistance.

At the same time, people are losing faith in the traditional economic model.  For the 99%, capitalism has become a dirty word.  For the people at the top of the spectrum, the anguish being felt by the majority is being seen from the 10,000 foot level.  They can’t relate – as such, they suspect the 99% are likely exaggerating their plight.  Quit whining” is an increasingly popular refrain – one whose paternalistic, condescending tone does not sit well with everyone else.

Trapped in a cycle of debt and uncertainty, hiring in places like Canada is contracting. Even worse, training opportunities – the biggest driver in the Knowledge Economy – is shrinking.  Public service positions are contracting.  Existing EI programs that may have worked well in the past are ill-equipped to manage the increasing demands they are facing.  People at all levels believe that something’s gotta give.

Caught in the centre of this maelstrom of economic uncertainty is the much-maligned middle class.  As the employment opportunities (many of them public service positions) for which this class trained for prior to entering the workforce dwindle, middle-class folk must either up their training independently, up their salesmanship or become innovatively entrepreneurial (all of which take money and an assumption of risk to achieve).  The alternative is to see themselves sink into the swelling ranks of the lower class.  The stress this pressure places on families is only exacerbating the problem.  For those fighting for a shrinking pool of mid-range employment positions, striking down one’s opponents becomes almost essential in gaining advantage.  As the saying goes, I don’t need to outrun the bear, I just need to outrun you.

1)      Connectivity

o   It’s all about who you know” – background checks are the norm, but require less effort when your considerations focus on known commodities.  Personal networks and the savvy to expand those networks are heavily influenced by socio-economic factors

2)      Ability to market oneself (or detract from competitors)

o   This includes “charm” and broader communicative abilities, but also delves heavily into the hard-wired preferences of the person hiring.  It is still the norm that more attractive and more demonstrably confident people get the best jobs, regardless of task performance ability.  This makes sense from a biological evolutionary perspective but not a social evolutionary one

3)      Skills and experience

o   Which are impacted heavily by genetic and social factors

4)      Capacity to develop new skills and willingness to try on new experiences

o   Also determined to a large extent by realities beyond the control of the individual

Notice the trend?  There is a heavy leaning on contextual (socio-economic) or biological factors on the part of employers – in other words, hiring is stigmatized.  This should come as no surprise; bad teeth can be more of an indicator of social position than genetic strength, but are a turn-off regardless.  Whatever we tell ourselves, we’re still human; our responses are still heavily influenced by pre-programmed, reactive thinking, as true for hiring as it is for mate-selection. 

As economic tensions and resulting stress levels increase, people naturally become more reactive and lean more heavily on response-oriented, limbic models of threat/benefit analysis.  Employers under duress will progressively fall back on what makes them comfortable, ie. that which is known or that which seems less risky (including innovative ideas), repeating the cycle.  It’s classic evolutionary drive.

In a capitalist system, then, the labour market is really governed by the rules of Dai Hin Min; the genetic, socio-economic, geographic and experiential cards you’re dealt determine whether you’re President or Asshole.  Movement in either direction is more about luck than it is about skill. 

There are plenty of folk out there who would say, there’s nothing wrong with that paradigm, though many are changing their tune.  If you can’t cut it, there’s no place for you – shape up or ship out.  Best social program is a job, etc.  Selection of the fittest exists for a reason – if you allow the unfit to succeed, you pollute the whole gene pool.  There are three major flaws in such thinking:

1.       Selection of the fittest is about beating the competition, not about improving one self.  When one’s focus is on beating the other guy, it’s not on working with them.  Collaboration is a key determinant of innovation, the biggest driver in the Knowledge Economy.

2.       The people that don’t or can’t shape up aren’t shipping out.  Instead, they’re feeding the lowest-tier of society, the ones that rely more on social assistance, health care, justice supports, etc, detracting from social cohesion when they don’t get it.

3.       Health care.  If we really embraced a selection-of-the-fittest model, health care would be gone in an instant; otherwise, we have sick parents, disabled children and mentally ill neighbours burdening the system.  Worse, people that genetics has determined aren’t supposed to reproduce get to do so any way.  Health care is essential to societal living, as its lack leads to epidemics that impact all classes equally.  The only way for a fully selectionist model to work is to break down society and remove the central coordination – kinda like what the Feds are doing now.

It’s a fact – lower-class citizens have more kids, less opportunity, less capacity to aggressively seize what opportunities do come their way.  The daily stresses that add up from this reality result in limbic-based, reactive responses rather than thoughtful planning.  This is why all the indicators of poverty ranging from hygiene to domestic abuse concerns to crime are emotional in nature.  This is the class that is swelling as hiring contracts and existing jobs are discontinued.  Where does that trend lead?  History provides us with plenty of examples.

Such is the conundrum of our times:

-          Government can’t afford to spend more; there simply is no more money

-          Those with above-comfortable wealth don’t feel motivated, or perhaps empowered, to give more back (despite the proven benefits to society and the economy from universal access to education, health care and accommodations)

-          We can’t afford to spend less, either – less jobs means less employment and less tax revenue. 

Less balance in society, which has always been facilitated by public funding for things like health care and education, means a greater class disparity and an increase in the lower-end, creating a structural, cyclical problem that, left unchecked, has historically led to revolution.

What do we do?  If you have a model that doesn’t serve the purpose for which it was designed – as people of all walks of life are saying is true of our social system – you change the model.

While leaders look at the facts and despair, that new model already exists and is beginning to gain traction.  What is required now is the courage and bold vision to embrace that model fully.

More on that later.

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