From healthy youth to senescent decay: a list of examples and thoughts

Image result for everything old is new again

An incomplete series of thoughts beginning with a couple of paragraphs suggesting something with grander aspirations – which of course may be realised some day – but not in this blog post. Still I’m heading overseas now, and I’m not sure how the aspirations can be realised, so it’s a good time to pull the plug, sit on the plane and play “The bomb in the baby carriage” (something I always do) as the monster takes to the sky. These are the days of miracle and wonder.

I

Alexis de Tocqueville sought a mentor in political economy and sent a copy of the first volume of his Democracy in America to British political economist Nassau William Senior. Admiring the work, Senior nevertheless cavilled at Tocqueville’s suggestion that America was more egalitarian than England where, in law and in social experience “the welfare of the poor has often been sacrificed to that of the rich, and the rights of the greater number to the privileges of the few”. Senior argued that workers were better paid in England than elsewhere to which Tocqueville responded:

it seems to me that you give to the expression the good [le bien] of the poor a restricted meaning that I did not give to it: you translate it by the word wealth, which applies in particular to riches. I had wished to speak, myself, of all the things that can concur in the well-being of life: consideration, political rights, ease of obtaining justice, pleasures of the mind, and a thousand other things that contribute indirectly to happiness. I believe, until I have proof to the contrary, that in England the rich have little by little drawn to themselves all the advantages that the state of society furnishes to men.

In many ways Tocqueville’s comments anatomise some of the key benefits of America being a relatively young country. So long as social institutions were functioning tolerably – as they were in the US and Australia – things went along pretty swimmingly. Some of the most important are just the microeconomics of being a young country where the plenitude of resources leads to seemingly limitless expansion with labour scarcity underpinning a relatively egalitarian economy which itself underpins an egalitarian culture. Self-help author Mark Manson explains some of the microeconomics of being a young country in this fine bit of DIY economics.

Thomas Piketty has given us much food for thought on the way in which he argues the future will play out as our economy ages as income inequality works its way into even deeper levels of wealth inequality returning us to an age in which power returns to the rentier. For a country with our egalitarian traditions, we seem to have optimised at least two of our major institutions to smooth the path to Piketty’s dystopian vision. While our tax and social welfare system is one of the most redistributive in the world, our wealth management and education systems lead the world in their inequity. Thus our superannuation system contains around two trillion dollars of Australian wealth subject to (mostly) flat and very low taxation. And in schools, Australia is preeminent in moving quite rapidly towards greater educational inequity with good educations increasingly depending on the wisdom with which students choose parents who are willing and able to send them to private schools.

But Tocqueville was also talking about all those other ‘non-economic’ aspects of life that seemed to work out so much better in a young country.

II

Mancur Olson proposed the idea of ‘institutional sclerosis’ explained by Wikipedia thus:

The accumulation of vested interests and rent-seekers ultimately slows the ability of a government to reform, adapt, and secure perfectly competitive markets thanks to a related phenomenon studied by Olson: the collective action problem. This sclerosis saps an economy’s dynamism and lowers growth rates. In liberal democracies with young institutions, by contrast, competition remains perfect and natural economic dynamism and creative destruction ensue, generating high growth.

But there are other kinds of decay associated with age.  Where incentives are not perfectly aligned with the best possible outcome (which is to say if there are market failures – even quite small ones) competition may amplify them – often subtly, insidiously and profoundly – over the passage of a fair amount of time.

As we evolved on the African Savannah our bodies gave us lots of feedback about what, when and how much to eat and drink. Healthy food tasted good and unhealthy food – like long dead meat – disgusted us. But as we learned to isolate and refine the substances that pleased us, those same tastes began to betray us. It turned out that the relentless optimisation around giving us what we want – salt, fat, sugar – is literally poisoning us.

I think something similar is happening much more widely within our culture. As fast food is to ordinary food, so porn is to sexuality, memes are to culture and to our capacity to concentrate, linkbait is to our curiosity, modern auto-tuned formulaic pop is to popular music of a few generations back. Professional sport is also often optimised to the point where it loses interest.

Another area in which this has happened to disastrous effect is in democracy. It seems to me that electoral democracy perpetrated as it must be through the linkbaited terrain of mainstream and social media is in dire straights and I think there is much to be gained by trying to disrupt this state of affairs. My preference is for deliberative democracy. But many disruptions could help precisely because, in disrupting business as usual, they reset institutions.

An example was the Accord established by the Hawke/Keating Government in 1983 which lasted as a powerful force in policy making for the best part of a decade.

As I argued a while back comparing Hawke’s and Howard’s approach to governing, the Accord’s disruption of Parliamentary business-as-usual enabled the newly formed social partners to be at their best – to behave in the spirit of the enterprise they were engaged in. (I suspect most members of parliament would like to engage in the spirit of democratic deliberation, but they can’t because, over a long period of time, the game has been optimised by the players and it turns out the incentives to do so are trumped by other imperatives. As I argued:

Critics could say – did say – that Hawke’s corporatism was undemocratic; that the right venue for such deal making was not behind closed doors, but within Parliament under public scrutiny.

[However] at a time when the executive so dominates Parliament, when political debate is so rarely permitted to rise above the relentless infotainment values of the media, one can argue that Hawke’s centrist corporatism enriched our deliberative democracy. Although invitations to the table were at the grace and favour of the government, the conversation once there was a genuine search for solutions, something that has become increasingly rare within the stage-managed public theatre of Parliament and party political combat. And once established within the Accord framework, politically difficult policy objectives like wage restraint were then sold to constituencies by the Accord partners.

But the Accord was better when it was young. As I commented in the piece just quoted:

as its period in power lengthened, the bureaucracy’s proximity to senior politicians ensured that its influence grew at the cost of others. … But it’s in the nature of such agencies to promote strong orthodoxies which can blindside them and those they advise. By the end of the ALPs reign, economic reform had become formulaic and it had become all too easy for the defenders of the formula to mistake those arguing for new developments of those policies as their opponents.

III

Finally, to illustrate this idea of making things new again (at a bit of a stretch – I warned you at the head of this post), I give you this story of two people connecting.

Would that it were a sign for renewal in the year ahead.

This entry was posted in Cultural Critique, Economics and public policy, Innovation. Bookmark the permalink.

18 Responses to From healthy youth to senescent decay: a list of examples and thoughts

  1. I am and will always be Not Trampis says:

    A typical thoughtful piece Nick.
    Enjoyable to read and to get the grey matter going.

    Change is always needed. The major question will always be what sort of change. The other problem is some people get wary of change hence Brexit, Trump and Hanson.

  2. paul walter says:

    I’m quite astonished that I’ve turned up here while feeling sorry for myself as a man in his sixties coming to terms with changes that though slightly unwelcome must be accomm0dated as part of an inexorable process.

    The consolation seems to be a developing appreciation of how I got here, a sort of debriefing.

    The examples for processes that shaped me are often visible in the adventures of younger people. You watch them making obvious mistakes trying to get through a sort of maze and these examples show you how much more your own life has been processive than you ever imagine when you arrived in the last rain cloud, many decades ago, imagining you would succeed where the older buffers had failed.

    A teacher got me to read “Siddhartha” by Herman Hesse when I was young and only now do I find a yield for his commendation.

    Re the topic, this time I am in step with the previous poster and become deeply pessimistic.

    I hope the young have some sort of adjustment mechanism, but it all looks bad to me, deeply on the skids, with what happened in the US the crowning culmination in a century of depressing mishaps and errors from the global public and oligarchy, although it is probable that the real problem is, just, that no adult is in charge or has been for quite some time.

  3. Matt Cowgill says:

    Hi Nick,

    Interesting piece.

    I have to quibble with your assertion that “our tax and social welfare system is one of the most redistributive in the world”.

    Our tax and welfare system is one of the most progressive in the world, in the sense that a relatively large proportion of taxes are paid by high-income people and a very large proportion of transfer payments are received by low-income people.

    But a very progressive system isn’t necessarily a very redistributive one, at least as I understand the terms. Redistribution is a function of the degree of progressivity and the level of taxes and transfers, both of which are relatively low in Australia.

    We can measure the extent of redistribution by comparing the Gini coefficient of (equivalised, household) income before taxes and transfers to the post-tax, post-transfer Gini. The difference between these is a measure of the extent of redistribution. In Australia, the post-tax, post-transfer Gini is 0.337, which is 0.146 points lower than the pre-tax, pre-transfer Gini. This is in the lower third of OECD countries. A number of European countries have a difference of 0.2 or more between their Ginis measured before and after taxes and transfers.

  4. Nicholas Gruen says:

    Thanks for the clarification Matt and apologies for the delay in getting back to you,

    I should have said ‘progressive’ according to the terms you’ve referenced. I guess I had in mind our system as being relatively highly redistributive per dollar – I think we can both agree on that.

  5. derrida derider says:

    Yep, Matt’s right. We do more redistribution per dollar raised, but raise fewer dollars.

    “as its period in power lengthened, the bureaucracy’s proximity to senior politicians ensured that its influence grew at the cost of others. … But it’s in the nature of such agencies to promote strong orthodoxies which can blindside them and those they advise.”

    Why, its almost as though institutions even as they triumph slowly develop within themselves contradictions that lead to inability to respond to change, and that these in turn lead to their quite sudden and unexpected destruction and the subsequent creation of new institutions. And that this is how history progresses.

    Now where have I heard that before …

  6. derrida derider says:

    PS: I forgot to add “nice post Nicholas” – it’s a good read and food for thought.

  7. paul walter says:

    I think I am re reading this in the light of the Centrelink antic.

    I’m probably wrong I thinking it evil, but if I were right, would it be pointing to a bottle neck for egalitarianism as the money that lubricates egalitarianism is drained off shore and into the accounts of the local kleptocracy.

    I think Oz has been reasonably egalitarian over my life time, within its own modest ambit. but the Centrelink algorithm seems to smack of a Reichstag fire frame up or blood libel against welfare recipients where the driving factor is irrational fear and prejudice incubating a lie, rather than a response to any actual misbehaviour.

    in the past, errors were eventually owned up to when rationality was the criterion, but with the violent Centrelink clawback, the error if anything is emphasised through the refusal of the false algorithms removal, as a means to convince not just welfare recipients but the wider public, of a new state of powerless that one would find in an authoritarian state.

    It has become the means by which asylum seeker/aboriginal intervention style government becomes universalised, eg proto rule by fiat on bias and subjectivity, directly contrary to rationality and an urge to cooperate, build and share civilisation, something now to be preyed off develops irrational pathologies and goals expressing a deranged mentality or senescence…very reactionary postmodernist, right the way back to the first half of the 20th century.

    Hobsbawm described it well with his comments from his intro to Age of Anxiety concerning historical and cultural amnesia. What we see now is the inevitable result as such a process hypothesised by that historian.

  8. Nicholas Gruen says:

    This is another example of something with a wonderful youth declining into an ugly senescence.

    • paul walter says:

      Measured, reasoned commentary. The future of mankind looks rosy, if we take it as the exemplar (crawls off to bed, buries head under pillow).

  9. Ravi Smith says:

    Nick,
    I have always thought that Tocqueville observations were much more relevant to New England than the US as a whole. Labour scarcity can lead to extreme inequality as well, by making coercion cost-effective. Thus, England was less egalitarian than New England but much more so than the South. Even post-Civil War, coercion based on slavery was mostly replaced by coercion based on asymmetric information (KKK, SovCom).

    Australia’s equality has a large basis in cultural and institutional factors. The tall poppy syndrome keeps Australia’s bureaucracy well-run on anything that is easily measurable (since bad performers will be outed by internal competitors). I wonder if the rise in Australian inequality is related to the increasing importance of things where quality measurement is more difficult (education and finance). Australia’s high quality health system would be a strong counterpoint though.

    • John Walker says:

      Ravi
      ” increasing importance of things where quality management is more difficult ” think you are correct.

      • conrad says:

        I doubt that’s true of the high school system — the quality of the system at least in terms of school performance is more or less the same level of difficulty to measure as it always was — in fact, if anything, probably easier for parents to evaluate given the wider distribution of data. There is also more data available to the government (and it’s easier to process).

        I imagine the increasing inequality in the school system is for many reasons, some of which include (a) the job market changing so further education is thought to be more important; (b) parents having less children so they can actually afford to send their kids to private schools; (c) parents being older and thus more able to pay for it; (d) older parents worrying more about their children’s future; (e) people having access to more money due to low interest rates to pay for it; (f) increasing ethnic diversity but higher house prices leading to relatively rich people living in school zones they don’t want to send their children to; and (g) people believing in increased sensationalism towards poor public school standards (despite no real evidence of it).

        I can probably think of many more, but it’s clearly a multi-factorial issue.

        • Ravi says:

          Conrad,
          You bring up many good points. Our ability to measure the quality of education has always been relatively low. If education has become more important, then our willingness to spend money on it may have grown faster than our quality monitoring, increasing opportunities for rent-seeking. All your points are valid reasons for an increase in inequality of education received though.

    • Nicholas Gruen says:

      Yes Tocqueville was tired and fagged out by the time he got to the South, had planned to spend more time there but was called back. Other than his instinctive hostility to slavery, he’s much less good on the South than the North and the little that was developing of the Mid West down the Mississippi.

      • Ravi says:

        Nick,
        That makes sense. Despite the shortness of his trip, I can’t think of a better social scientist or observer of American society.

  10. Nicholas Gruen says:

    Turns out Don’s already posted on redistributive systems here.

    Page 16 of this report (pdf) has an excellent graph showing Gini coefficients of pretty much all countries before and after tax and transfers.

  11. Nicholas Gruen says:

    Note to self in the event of my developing this piece. This piece wrote about McDonaldsisation and the irrationality of rationality. (Which reminds me that Hegel said something similar as did folklore. To much wit outwits itself or ‘too clever by half’.

Leave a Reply

Your email address will not be published. Required fields are marked *

Notify me of followup comments via e-mail. You can also subscribe without commenting.