Escape from the bubble
Re-engineering capitalism
I live in Chelsea, studied at the LSE and live in a bubble. This sounds like a confession from a self-help group like Alcoholics Anonymous. So it is, dear reader of Karina’s Column, for you too are most likely to be among the much-talked about 1% of the global population that owns half the world’s wealth. In fact, chances are a decent number of you are part of the 0.1% *
We socialise and work primarily amongst ourselves, while our global outlook and preoccupation with the state of the world is matched with socially liberal and economically conservative politics. A minority of you voted for Brexit, but its triumph was a surprise; a minority of you voted for Donald Trump, but his triumph was a surprise; I hope none of my French readers vote for Marine Le Pen and that she will not triumph.
Yet I am not sure after reading Edouard Louis’s The End of Eddy, an autobiographical account of unemployment, brutality and family love in Northern France. Caught in a trap of alienation and hopelessness, Le Pen’s National Front canalises that anger and frustration.
Understanding the world we live in is crucial. LSE’s motto is ‘Rerum cognoscere causas’ or ‘to Know the Causes of Things,’ without which we cannot properly deal with the consequences and come up with solutions.
Here is one of the primary causes of the current crisis. Two thirds of households in developed economies saw no increase in their real incomes between 2005 and 2014, according to a McKinsey study. Even with the return of some jobs to their developed country base, slow growth and technology-induced disruptions look set to eliminate jobs for humans faster than new ones can be created. Improved education and training, the mantra of all governments for the last decade or two, have stumbled against the obstacle of implementation. That doesn’t mean we should not forge ahead – the boost to apprenticeships in the UK being a case in point – but may be of use only at the margin.
In 2011, McDonald’s launched a high-profile initiative to hire 50,000 new workers in a single day and received over a million applications, a ratio that made landing a McJob more of a statistical long shot than getting accepted at Harvard, as cited by Martin Ford in his must-read The Rise of the Robots. These are the sort of low wage and no benefit jobs which have provided a kind of safety net of sorts for workers with a lack of skills. But San Francisco-based Momentum Machines’ first device makes gourmet burgers from scratch – how soon before the cost plummets and McDonald’s burgers are made and delivered by robots?
Meanwhile, the gig economy and zero hour contracts often represent a self-destructive capitalism that could take us all down with it. Putting to one side any moral considerations about a total lack of employer responsibility, on a purely economic level our societies only function on the back of large numbers of consumers who live with hope.
And yet, despair at the bleak present and future of work can be staved off. We are at a point in the developed world where we are getting to ‘know the causes’ past and present, and are beginning to visualise the future. Solutions like a Universal Basic Income (UBI) are being discussed. It does not really matter whether the idea of all citizens of a country receiving an unconditional amount of money allowing them to survive at a low level is viable, or not. What matters is that a re-engineering of capitalism is a constant topic of discussion. Innovative ideas are bubbling away.
Even much-maligned Etonians are working at solutions. The Hoberman Prize for Social Entrepreneurship in Technology was this year presented to three boys who developed a free app connecting employers and employees in the gig economy. Crucially, it also attempts to ensure workers’ rights are upheld.
I live in a bubble pricked by recent election results. Armed with optimism and the intellectual and financial resources of the 1% I believe we will be able rise to the challenge.
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* The Credit Suisse Research Institute defines the top 1% as having assets of over $759,900, including property and stock market investments, but excluding debt. Only those I have met personally or been introduced to are signed up to my column. However, a few people at hedge funds have signed themselves up.
