Thursday, May 10, 2012

Downshifting: Some Predictions

One of the mechanisms that characterize a society with a free-market
economy is the irregular advance of prosperity through that society via
upshifting. This is a simple concept: At time T0, persons of great means
can afford the high-quality version of item X; persons in the "middle
class" must be satisfied with a middle grade of X; and persons at or
near the subsistence level must content themselves with low-grade X or
do without it. By a later time T1, increases in the efficiency of
production, compelled by competition of several sorts, cause effective
reductions in the prices of those grades, such that persons at or near
the subsistence level can now afford the middle grade of X, while
persons in the "middle class" upshift to the high-quality version of X,
and persons of wealth have moved to an ultra-high-quality version of X,
or to some completely different product.

Housing is a particularly clear case of this. No one can have failed to
notice that the quality of new-built homes has risen sharply in recent
years. The families buying those homes are no better off, relative to
the population generally, than they were thirty years ago, yet they're
able to afford houses considerably roomier, better built, and more
various in their features than families of their economic standing could
afford a generation ago. The houses those families are selling are being
purchased by families less well off -- families that probably wouldn't
have been able to afford to buy houses a generation ago.

Upshifting also applies to the job market. Progress in the available
tools and technologies, though they do require learning and adaptation
to exploit them, gives rise to more remunerative occupations, into which
those who have the smarts and the desire will upshift. The slots they
leave will be filled by persons who were previously on lower rungs of
the ladder. (Interestingly, the tragic deterioration of the
government-run schools appears not to have affected this form of
upshifting; the learning required to make the transition seldom requires
a stint in a classroom.)

However, just now, the prolonged weakness of the economy -- and don't
kid yourself, left-liberal friends, this is entirely the consequence of
the policies **you** favor -- has brought about a reversal of the
upshifting dynamic. We are currently in a period of downshifting, most
noticeably in the jobs market.

The contraction of many industries that provided large numbers of
middle-class jobs has forced those who've been let go from those jobs to
lower their sights. Those released workers have resorted to taking jobs
they once would have spurned as beneath their skills. In the process,
they're reducing the number of openings suitable for the sort of workers
who would once have filled those slots, forcing them into piecework, odd
jobs, and the "underground economy."

When governments strangle production and trade,
When governments mulct us for every dollar they can,
When we allow the vain and arrogant to dictate to the rest of us,
Downshifting happens.
And it's happening now.

(A tangent: The debate over the value of education, particularly college
education, is sharpened and intensified by downshifting. A college
degree is not particularly useful to a retail clerk. A high school
diploma is largely irrelevant to a delivery-truck driver. A certificate
for having completed grammar school matters little to someone who mops
floors for his daily bread. Note that the actual educational value
conferred by our schools, whatever it might be, becomes ever less
relevant as downshifting intensifies.)

This process may have a while to run; accelerating taxation, ObamaCare,
and the explosion of business-hostile regulation have frightened
employers into immobility, a condition unlikely to be relieved in the
near term. It's exceedingly unlikely that the November elections will
reduce the Democrats' Senatorial caucus to 40 seats or fewer; therefore,
they will retain the ability to block, not only new legislation, but the
repeal of ObamaCare and the reduction of the regulatory authority of the
alphabet agencies. If I'm correct in this, there's more downshifting to
come, with a concomitant reduction in tax revenues, enlargement of the
"underground economy," and increase in the general resentment of
government at all levels.

One aspect of downshifting that makes prediction possible is the
occupation, by adult breadwinners, of jobs that teenagers would
otherwise fill. That includes temporary seasonal jobs. Expect to see
more teens than usual "loose on the streets" this coming summer; there
won't be nearly as many unoccupied slots for them as in previous years.
A large number of teens wandering about, with nothing wholesome to
occupy them, is rarely a harbinger of good times to come.

Perhaps it's time I got to work on that crush-proof mailbox.

1 comment:

Weetabix said...

(Interestingly, the tragic deterioration of the government-run schools appears not to have affected this form of upshifting; the learning required to make the transition seldom requires a stint in a classroom.)

I suspect that the magnitude of the technological upshifting factor is larger than the reciprocal of the school deterioration factor, so the total job market upshift factor is still larger than 1.0.

Just look at the soda-filling carousel at the McDonald's drive through.