“With considerable sophistication and a good dose of humour, this book dissects the popular anger that has made our economics unsustainable and our politics dysfunctional. Lonergan and Blyth rightly call for a reset of our current model of capitalism. To their great credit, they also provide creative – and practical – ideas for moving forward.”
~Dani Rodrik, Harvard University
Today’s guest blog post comes to us from Agenda Publishing’s Mark Blyth–coauthor Angrynomics. In Angrynomics, Blyth and Eric Lonergan explore the rising tide of anger, sometimes righteous and useful, sometimes destructive and ill-targeted, and propose radical new solutions for an increasingly polarized and confusing world.
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Just before New York City went into lockdown in March, an online petition garnered over two hundred thousand signatures asking New York governor Andrew Cuomo to close all New York City schools because of Corona virus risks. It argued that, “with today’s technology, we will still be able to progress academically as well as keep everyone safe; our kids, our teachers, and all the administrative people in the school.” Indeed, this assumption guided what we ended up doing in New York City and elsewhere. And yet city school authorities initially resisted closure. At a time when school teachers are in open revolt in Florida over the prospect of going back to school, it is worth revisiting why New York City educators initially resisted closure.
The main reason was that New York City schools are the only place where over one hundred thousand homeless children can regularly eat and wash their clothes. The reality of the city’s public schools is far from some technological wonderland. It is a world where children who need basic laundry facilities and regular meals sit side by side with students for whom an Internet connection, attentive parents, and a stable home environment is the norm. These very different students sit within what is supposedly the same institution. Like America as a whole has increasingly become, that institution exists as different realities for different classes of people.
“All it takes is a shock like a viral pandemic to expose its fissures and fractures.”
As the ever building anger and polarization in our politics increasingly signals, such a state of affairs is inherently fragile. All it takes is a shock like a viral pandemic to expose its fissures and fractures. Coronavirus continues to expose those vulnerabilities. Despite its largely successful campaign against the first wave of COVID-19 infections, New York is in many ways a microcosm of the world we have built.
Consider that New York City is home to over $3.8 trillion in real estate wealth, that the median two-bedroom condominium in Manhattan costs $1.5 million, while the average is $2.9 million. Not only does that suggest that the vast majority of New Yorkers who do not already own a condo will never buy one, it signals a massive skew to the upside of the wealth distribution. Add to this an almost complete collapse in the provision of public housing since around 1980, and you can easily have a crisis of housing affordability amidst astonishing housing wealth. The average salary in New York City is a shade above $50,000, while the median household income in its richest borough, Manhattan, is $85,000. That gives a house-price multiple of nearly 18 to 1. Little wonder that there are homeless kids and kids with an iPhone 11 sitting side by side in classrooms across the city.
“Little wonder that there are homeless kids and kids with an iPhone 11 sitting side by side in classrooms across the city.”
Like most of America, these divides and financial strains have hit the working classes especially hard. For these people, there is no work from home via Zoom. There is no Zoom—just work. And that work has become significantly more precarious over time, even apart from Corona. Technological changes that have enabled insecure livings via platforms like Uber have reinforced legal changes that make workers into independent contractors. That means less benefits and more copays on ever-lower wages. Far from becoming the sharing economy that some hoped for, the gig economy has turned out to be the “work an extra ten hours in a side gig” economy, with consequent stresses on already stressed workers.
Younger people are doubly disadvantaged. Not only are they more exposed to the gig economy and low wages, 46 million of them have $1.6 trillion in debts on which they legally cannot default, and they have no corresponding asset to offset that debt. It’s like having a mortgage but no house, and then you are told by those that have all the houses that it’s because you buy too many avocados.
“Every time equity markets took a tumble over the past thirty years, the Fed has stepped in and cut rates or provided bailouts. COVID-19 has simply reinforced the pattern.”
The actual result is that poverty among young people in the U.S. is four times that among seniors. But politicians care only for giving seniors ever more—because they vote twice as much as cash-strapped millennials. Millennials, meanwhile, marry late, delay purchasing homes, spend too much on rent, save too little because they are paying off massive amounts of education debt, and collectively lower the future growth prospects of the country.
All of this was covered up for years by a deluge of cheap credit that had two pernicious effects. First, it gave the illusion of prosperity to millions. That illusion was shattered in 2008; the fracturing of our politics was the result. The second was a buildup in inequality that made the demand for credit to cover the basics of housing and education ever stronger. Every time equity markets took a tumble over the past thirty years, the Fed has stepped in and cut rates or provided bailouts. COVID-19 has simply reinforced the pattern. This has encouraged people with assets to refinance, buy more stocks, create more wealth, compounding over time into the inequality, especially in housing, we see today.
“The anger in we see in our politics today is a reaction to these inequalities.”
Corona is beginning to lift the veil on all this. It shows that we really are not all in this together. That those with assets are protected, and those without are not. New York City schools are a microcosm of the world we have built since the 1980s. So long as the channels of credit were flowing, we could pretend that we occupied those same spaces. But we don’t. The anger we see over the murder of George Floyd and the righteous response we see in the protests it has spawned is one more example of how we pretend to share the same citizenship when in fact we don’t.
The anger in we see in our politics today is a reaction to these inequalities. It’s the fear of being dragged down by it. The gap between being on one side of that divide or the other is now an incredibly slim divide, and that knowledge makes us angry and defensive. What Corona is doing is revealing the fragilities of our social safety net, the intertwining of social services with the education system, and the anger, uncertainty, and fear underlying the destruction of these systems.
Right now, fear of the virus is temporarily diverting the anger that is being generated into struggles over masks and the status of monuments. Once the virus dies down, that anger could turn into a tsunami.