LBJ and The Economic Reality That Had to Change Before Civil Rights Legislation Could Pass

In one of my earliest memories, I was sitting in a tree with my sister and neighbor Jeff, older kids I was apparently trying to impress. I said, “LBJ is a SOB.” I knew who LBJ was but didn’t know what SOB meant. When my mother found out she washed out my mouth with soap (for the first and only time in my life). She told me, “You don’t talk that way about a president.”

It left an impression. I’ve been fascinated with politics ever since.

American president Lyndon Baines Johnson (LBJ) averaged only 4 to 5 hours of sleep a day and worked most of the rest; his wife once said, “Lyndon acts as if there is never going to be a tomorrow.” He might sleep from about 2 am to 5 am, work until lunch, then take a nap around 2 pm, before working until the early hours of the morning. These “double days” were exhausting for everyone who worked with him but the man signed a lot of legislation.

He once called a congressman at 3 a.m. to discuss a piece of pending legislation. When Johnson asked, “Were you asleep?” the congressman responded, “No, Mr. President. I was just lying here hoping you’d call.”

One of the things he liked to do, at the start of formal meetings, is ask where the folks present had gone to university. As you may imagine in a meeting at the White House, he would hear answers like Yale, Princeton, Harvard - the usual suspects. Then he would pause and say "It looks like I'm the lone representative of Southwest Texas State Teachers College."

He was colorful. Once asked whether he might force J. Edgar Hoover out of the FBI (Hoover had abused his power more than once) LBJ quipped, “I’d rather have him in the tent pissing out than outside the tent pissing in.”

LBJ described himself as a protégé of FDR. His Great Society was a continuation of FDR’s initiatives that focused on labor – that is, on people - more than capital.

A video at the Johnson Library in Austin includes LBJ explaining a new bit of legislation that he’d signed to fund free school lunches. He recounted how as he watched the poor kids come into his classroom, unable to afford lunch – early in his career he taught in a part of Texas with a lot of poor Mexican-American kids – he vowed that if he ever had the power to change this fact of hungry kids at school he would. “Well,” he said, “I now have that power and I intend to use it.”

He also tasked Sargent Shriver – JFK’s brother-in-law – to lead the war on poverty. Shriver said that he had asked for data on who in America was poor and was shocked when he saw a pie chart: 50% of America’s poor in the mid-1960s were children. One of the programs that Shriver quickly scaled up was Head Start, funding and drafting volunteers to go into the country’s poorest neighborhoods to give these kids a head start with summer school and healthy food.

LBJ also got universal healthcare (at least for those over 65 in the form of Medicare).

His most defining legislation might have been his Civil Rights legislation that forbade discrimination in jobs and public services and then – after his overwhelming victory against Barry Goldwater in 1964 – the Voting Rights Act of 1965 that protected minority registration and voting, ending a century of denying Blacks access to the ballot. The courage of Martin Luther King, John Lewis and others had helped to shift American opinion; after peaceful protests in Birmingham, Alabama were made violent by local authorities, LBJ accelerated his agenda for Civil Rights. When he signed the Voting Rights Act Bill, he reportedly said, “We have lost the south for a generation.” As it turns out, the south that once reliably voted against the Republican Party that freed the slaves still reliably votes Republican two generations later. And counting. It is now the Republican base.

One of the rarely reported on reasons that presidents in the 1900s fought for and gave so many rights to women and minorities? If the US only invested in white, non-Hispanic males – only allowed these men to realize their potential and have full access to the institutions that are key to success - it would only let 30% of its adults realize their potential. Again, if a society is caught up in win-lose thinking and thinks that one person’s prosperity comes at the expense of another (a mostly accurate description of reality in an economy based on land), this matter of only 30% of adults being able to realize their potential is not a big deal. In fact, even 30% might be too many to compete with for scarce resources.

But once the limit to economic progress shifted to labor, progress became dependent on having more people solving more problems and creating more new possibilities. The economy grew as the portion of people fully engaged in it grew.

Only 30% of adults are white males. Add in all the minority men and we’re now engaging 49% of adults. Add in all the women and we’re now engaging 100%. The community that engaged and gave opportunity to 100% of its adults is obviously going to do better than a community that only engages 30%.

Slavery had always been bad morality; after the automation of manual work brought on by the industrial revolution and its machinery, slavery became bad economics. It was then that policy made slavery illegal.

Discrimination against women and minorities had always been bad morality; after labor – and particularly knowledge work – became the limit to progress, discrimination became bad economics. It was then that policy made discrimination illegal. It was then that men like FDR and LBJ could win by overwhelming margins and sign legislation that changed reality for millions.

And lest you think that discrimination doesn’t make a difference, it is worth pointing out that the Deep South that voted for segregationists into the 1960s still lags the nation in income. Average income in those states is 20% lower than the national average. There is a penalty for failing to invest in and include as many people in your community as you can.

The great thing about labor as the limit to progress is that a community intent on realizing its potential is going to be intent on investing in as many of its members as it can – regardless of their accents, eyelids, pigment, hair, genitalia or with whom they use it. By our standards, LBJ was racist, sexist and homophobic. He was – as a four-year-old in a tree once pointed out - an SOB. And yet he lived at a point in history in which progress meant investing in everyone because with labor as the limit, a community could not afford to exclude anyone and he was smart enough to know this and champion the policies that changed it.

We’re bigger for LBJ’s policies. “We” literally encompasses all of us now instead of just a portion of us. And we’re better for it.

What a Growth in Free Time Could Mean for Entrepreneurial Opportunities for Structuring Consciousness

Between 1900 and 2000, life expectancy rose from 49 to 77 and the average workweek dropped from 53 to 37 hours.

If retirement remained constant at age 65, the additional life expectancy gave a person 12 new years of free time - years that never had to be - never got to be - filled before. The shorter workweek gave a person in 2000 an additional 16 hours a week.

We rightfully get kids thinking about what they are going to do for work from an early age. It's a big decision and should be given a lot of consideration.

I wonder, though, if we don't do enough to get kids thinking about who they want to be in their free time. It's a nontrivial question and could do as much to define you and your quality of life as your work.

Csikszentmihalyi notes that in studies of free time most people lapse into things like watching TV. It's easy to do but people generally report feeling less than engaged or happy doing it. The problem is, activities like tea parties, building cars, and group hikes that are more engaging are also more work; it takes a lot to set up the activities that create flow. Setting people up for more flow-inducing activity may become one of the big growth industries as growing affluence means that more people will be retiring before 65, adding even more free time to lives.

The good news is that we have more hours and years of free time than ever before; even better news for aspiring entrepreneurs is that this suggests more demand for someone to structure the activities that structure our consciousness. Retirement planning will become much bigger than cash flow management.

How the Success of the University of California System Has Created a Crazy Obstacle to Higher Education in California

These poor kids trying to get into UCs. It's not enough that the average GPAs for the kids they admit are over 4.0. The success of these campuses as a hub for activity, research, new businesses, and - of course - education has made them some of the most expensive areas to live in California.

The median home price in California is $635,000. Home prices in some UC neighborhoods are about 2 to 3X that.

Median home prices are

$1,850,000 around UC Berkeley

$1,500,000 around UC Los Angeles

$1,875,000 around UC San Diego

$1,050,000 around UC Irvine

$1,300,000 around UC Santa Barbara

$1,100,000 around UC Santa Cruz

My mother moved from Montana to Berkeley in the 1950s. She told me about one guy she'd met who had inherited money, tried work but found that boring, so he'd just been going to UC Berkeley for years and years. They don't let you do that now but what a lifestyle. And what an income you'd need to do that even if they did let you.

In 1968, the UCs first began charging tuition ("to keep out the riff raff") of $300 a year. Back then median home prices in Berkeley were $23,000.

Last year at UC Berkeley, tuition, health insurance, and room and board was $35,000. That's if you could get a place on campus.

The Counterintuitive Approach to Raising Average Wages

A minimum wage is necessary but it won’t do much for raising average wages. If you want to raise wages, shift from policies focused on labor to policies focused on entrepreneurship. It may sound counterintuitive but there is precedent.

By Lincoln’s presidency, America’s conquest of land was largely done. Lincoln and the New Republicans shifted the focus from acquiring new land to creating new capital. As a result, the value of land rose. Dramatically.

When Lincoln took office, New York City still had farmland and single-story housing. In 1910, the average price per square foot for an apartment was $8. It is now $1,300. That is even more dramatic than it sounds. If your average building is 2 stories high, $8 per square foot works out to about $700,000 per acre. If your average building is 10 stories high (and more than 7,000 buildings in New York are at least this high), $1,300 works out to over $500 million per acre.

Capital made land more valuable. Steel and elevators made it possible to build skyscrapers. Trains and cars made it possible to draw workers from a wider circle. All of these require capital and as cities created more capital, the value of land rose.

From the start of Lincoln’s presidency in 1861 to the end of Herbert Hoover’s presidency in 1933, Republicans focused on creating capital. After that, policies shifted to the problem of keeping labor fully employed and making labor more valuable. The result for capital was very similar to what happened to land after 1860.

The Federal Reserve has a simple charter: keep unemployment and inflation low. There is nothing there about ensuring that capital gets a high return. Financial markets are no longer subordinate to capital; they are subordinated to labor.

So, what happened to capital after the Fed found tools to better fulfill its charter? In 1945, household net worth in the US was $11.5 trillion. (Adjusted for inflation.) At the end of 2020, household net worth had reached $130 trillion, 11X more.

When the limit shifted from capital to labor, capital did fine. At the risk of hyperbole, you might even say it has done spectacularly. One of many reasons is that a growing number of employees are also capitalists: through pension funds, 401(k) accounts, and home ownership most workers also have a stake in the country’s assets.

Want to increase the value of land? Create more capital.

Want to increase wealth? Develop labor.

Want to raise wages? Make more people more entrepreneurial.

What evidence do we have of this? Well, for now it is anecdotal but the wages in Silicon Valley and Seattle are absurdly high by national – much less global – standards.

Do we need minimum wage laws? I think so.

Are minimum wage laws a good way to raise wages for folks outside the bottom 20%? Probably not.

The way to drive up average wages is to create so much demand for labor through startups that the limit to the number of startups has far less to do with capital than labor. And if that is the case – the priority by which startups get funded is determined by which key people they can get and not which investors they can find (and spoiler alert – that is already happening in places like Seattle and Silicon Valley) – it will drive up wages. Silicon Valley is not just the region with the highest wages in the country; it is the region where wages are growing the fastest. Based on weekly wages in the third quarter of 2020, the average wage in the US is $61,000, up 7.4% in the last year. In San Mateo, San Francisco, and Santa Clara, California, average wages are $148,000 – up more than 20% in the last year. Silicon Valley not only gets more venture capital funding than any other region in the US but more than any other country in the world. One of the many ways that Silicon Valley leads is that it is a place where a relative abundance of entrepreneurship is driving the demand for knowledge workers and raising wages to record levels. In King County, Washington, home to Amazon and Microsoft, the average wage for information workers in the third quarter of 2020 was $327,000. That’s five times the national average for all workers, which means that these workers are making each day what the average American worker makes in a week.

You may be inclined to dismiss these high wages as something reserved for only knowledge workers, arguing that these wage premiums only go to college graduates. It actually raises wages more broadly. Enrico Moretti, in his The New Geography of Jobs, writes, “Compare San Jose, number five from the top [by the measure of percent of workforce with BA or more], with Merced, at the very bottom. Both cities are in California, less than 100 miles apart, but their labor markets belong to two different universes. San Jose, in the heart of Silicon Valley, has more than four times the number of college graduates per capita as Merced and salaries that are 40 percent higher for college graduates and a whopping 130 percent higher for workers with a high school diploma.”

A barber cutting hair for folks making $30,000 a year will make less than a barber cutting the hair of folks making $300,000.

Wages in a region go up with levels of entrepreneurship. We raised the price of land with more capital. We will raise wages by making more people more entrepreneurial which will create more demand for labor in the same way that New York's financial markets, subways and skyscrapers created more demand for land.

British and French Alternatives to Jefferson's Pursuit of Happiness

Thomas Jefferson insisted that the phrase "the pursuit of happiness" be kept in the Declaration of Independence.

"The Declaration of the Rights of Man of August 1789 was largely the work of Lafayette, Mirabeau and Jean Joseph Mounier, 'but it derived philosophically from the American Bill of Rights." (While he had been in Paris, Jefferson was constantly consulted in secrecy by Lafayette: the 'pursuit of happiness' became in Lafayette's French, la rescherche du bienentre.)"

[from Peter Watson's Ideas]

John Locke - the British Enlightenment philosopher wrote that natural rights included "life, liberty and property." Jefferson revised that to "life, liberty and the pursuit of happiness." Lafayette - the French aristocrat who fought with Washington to help the Americans win their independence before returning to France to spark revolution there - turned Locke's property and Jefferson's pursuit of happiness into "the search for well-being."

Curious how the code that defines one's social norms can lead to such different outcomes.

The British got an empire that spanned the globe - an abundance of property.

The Americans got sitcoms and standup comedy.

The French got existentialism.

Incubators Will Become to Corporations in the 21st Century What R&D Labs Became to Corporations in the 20th Century

In the decades after World War I ended in 1918, more than 500 American companies established Research & Development Labs. R&D was too important to a company's future to be left to chance or outside startups. Now, a century later, companies regularly update old products and release new ones. The iPhone just gets new model numbers in the same way that the French used to get a new King Louis - a succession of iPhones, the 3, 4, 6 ... 12 ... released at a more rapid rate than the King Louis but named no more creatively. But I digress.

 By far the most famous to emerge from that era was Bell Labs, from which sprung touch tone dial, the transistor, communication satellites and information theory.

In 2017, Walmart founded Store No8 - an incubator tasked with starting new businesses that will define the future of retail. 

Walmart has topped the Fortune 500 8 years in a row, generating $4 trillion in cumulative revenue in that time. Other companies pay attention to what they do.

My own prediction is that a growing portion of the Fortune 500 will follow this example: business incubators will become to the mid-2000s what R&D labs were to the mid-1900s.
Innovation - creating new products - that so defined 20th century businesses as prelude to entrepreneurship - creating new businesses - will increasingly drive and define 21st century corporations.

My intro to the new book: New Politics for the Next Economy

Patterns let you predict. The sun will come up tomorrow at 6:18. This spring it will get warmer. Because the drummer is predictably playing 4/4 time, the guitarist has a platform upon which he can build a solo. Your toddler eventually becomes a teenager and who you have to – get to – be as a parent changes as they do.

I’m writing this in 2021. Early this year a mob stormed the Capitol to overthrow democracy. Thoughtful people were rightfully outraged but this is part of a pattern of change, a pattern of progress. The US has gone through three earlier transformations that were wrenching, violent and frightening affairs. Out of each one came something better. Optimist that I am, I think that this current transformation will never get as violent or tumultuous as those past transitions and out of this will come something great.

I’m predicting this based on a pattern I see in history. Once I point this out to you, a few things will happen. One, you’ll see even more than I do. That is, given what you know and have experienced, you will be able to see things that I’ve missed. Two, you’ll have a big picture for making sense of these events that take years and decades to play out but are reported on daily. Three, you’ll have a better sense of what you can do. It gives you an option to become a participant and not just a spectator in helping to create what is next.

***

So, what is the pattern?

A political party champions a set of economic policies that drives progress. Until it doesn’t. And then a new political party comes along to repeat that pattern with a new set of policies.

NEW POLITICS -> HELPS TO CREATE A NEW ECONOMY -> THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT -> THE LIMIT TO PROGRESS SHIFTS

NEW POLITICS -> HELPS TO CREATE A NEW ECONOMY -> THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT -> THE LIMIT TO PROGRESS SHIFTS

NEW POLITICS -> HELPS TO CREATE A NEW ECONOMY -> THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT -> THE LIMIT TO PROGRESS SHIFTS

That’s it. This pattern that has played out three times is about to begin again. The limit to progress has already shifted.

The first time this pattern played out in the US was in our founding. It’s hard to think of a politics more dramatically new than the world’s first modern democracy.

FIRST
NEW POLITICS: American Democracy, particularly Thomas Jefferson’s Democratic Republicans (eventually just called Democratic) Party’s policies

HELPS TO CREATE A NEW ECONOMY: An Agricultural Economy dependent on land

THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT: The limit of this first economy was land and Democrats were focused on getting more of it. They did it by purchase (Jefferson’s Louisiana Purchase from Napoleon), war (most notably the Mexican War that greatly expanded the US) and some combination of genocide, war and simply pushing the first tribes and nations into marginal regions of the continent. By 1860, the US was roughly its current size. (Save for Alaska.) Land was no longer the limit.

THE LIMIT TO PROGRESS SHIFTS: If you’re on a farm in Iowa or Minnesota in 1860, the value of your crop would be less likely to go up with more acreage than it would with a tractor to work your acreage or a train to take your crop to market. You already have more land than you can work on your own. What adds value are tools that help you to work more land and tools that give you access to markets, letting you sell your crops or livestock to towns and cities where people would pay good money. That is, the limit to progress has shifted from land to capital.

SECOND
NEW POLITICS: Lincoln’s Republican Party

HELPS TO CREATE A NEW ECONOMY: An Industrial Economy dependent on capital

THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT: The limit of this second economy was capital and Republicans were focused on creating more of it. They did it by creating a national currency that made it easier to buy and sell. They did it at the state level by creating a new kind of corporation that made it easier for investors to provide corporations with capital. They did it with the most ambitious infrastructure project – a massive investment in the midst of the huge expense of the Civil War – in the young nation’s history, the transcontinental railroad. They did it by unleashing a flurry of inventions and investments that led to a proliferation of new products like tractors, radios, lightbulbs, cars, and telephones – each transforming reality and the imaginations of the next generation of inventors.

THE LIMIT TO PROGRESS SHIFTS: These capital markets were incredibly volatile. Between 1900 and 1933, the American economy was in recession 48% of the time. Each recession plunged workers into unemployment and ruined families. Labor was at the mercy of capital and no one quite seemed to understand the volatility of capital markets, how they would soar and crash, creating and destroying wealth and jobs. Eventually, communities made louder demands for protections for labor than they did for more capital. 10-year-old children working 12-hour days in factories. Families making just enough each month to buy groceries and pay rent suddenly facing layoffs. The next generation of politicians to win elections would offer policies that made life better for labor.

THIRD
NEW POLITICS: FDR’s Democratic Party

HELPS TO CREATE A NEW ECONOMY: An Information Economy dependent on labor

THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT: The limit to the third economy was labor and progressives first focused on the rights of workers to form unions and strike for higher wages. Curiously, getting children out of factories led to a new kind of labor: the knowledge worker. Instead of going into factories, children went to school and that investment in minds combined with continued investment in machinery meant that labor was less about applying our brawn to tasks (it was increasingly nonsensical for labor to compete with machines when it came to tasks that required strength) than it was about applying our brains to tasks. Also, by the second half of the twentieth century, the magic of machinery was being applied to processing information. From this combination of education and evolving machinery came the knowledge worker who manipulated the symbols of things rather than actual things, working at a computer rather than factory line.

THE LIMIT TO PROGRES SHIFTS: By the early 2000s, there were various signs that we had overcome the limit of labor. As more young adults invested in college, student debt went up. This was partly a failure of governments that shifted an increasing portion of the investment in education onto teenagers. It was also partly a signal that the marginal returns to this investment in labor was dropping. A growing percentage of college graduates were working jobs little different than what they could have worked with only a high school education; those low wages coupled with student debt payment meant that college education was worsening, not improving, their economic prospects. Returns on information technology, too, were reaching their limit. By 2020, households were consuming 344 gigabytes of information per month, 38X more than they had been in 2010. The trickle of information that was so small and vital when the telegraph first emerged had become a flood that did less to inform us than distract us. In 2020, studies suggest that attention spans are about 8 seconds long, the time it takes before we distract ourselves with the next text or swipe of the internet’s infinite scroll. Additional education and information promise far less in increased prosperity than it did in 1933.

FOURTH
NEW POLITICS: In 2021, the divide in American politics is between Trump’s Republican Party still promising to bring back the industrial economy and the Democratic Party still promising to protect and invest in the labor, investing in the R&D and education that has helped to create the information economy. A choice between an industrial economy reliant on fossil fuels or an information economy reliant on knowledge workers is easy to make but it is the wrong choice. The question about what sort of economy we need to create should start with the issue of what now limits our economic progress. No party has yet defined themselves in this way but the transition would be much easier for Democrats than Republicans. It’s also conceivable that this new limit creates a new party.

HELPS TO CREATE A NEW ECONOMY: An entrepreneurial economy dependent on the popularization of entrepreneurship

THESE POLICIES EVENTUALLY OVERCOME THE OLD LIMIT: And here the pattern could end. If we successfully address the limit of entrepreneurship, we will be at the end of communities defined by market economies. Or more to the point, economics will no longer be our limit. There are only four factors of production in economics: land, capital, labor, and entrepreneurship. If we successfully overcome the limit of entrepreneurship, we will have successfully overcome the last limit of economics.

In the West, we shifted from traditional to market economy around 1300. That sounds like an arbitrary date but one of the reasons to choose that is that before 1300, organized trips east from Europe were literally religious crusades into the Holy Land that ended in 1291. The purpose was partially political, partly economic but mostly religious. Marco Polo traveled from Venice along the Silk Road to Cathay – now China – and the accounts of his adventures were captured in a book that was released after he was released from prison in 1299. Columbus had a copy of The Travels of Marco Polo when he sailed across the Atlantic. Marco Polo and 1300 mark a shift from organized expeditions for religious reasons to organized expeditions for business reasons. That is, the shift from communities organized by religious forces to communities organized by market forces.

Even though markets have done so much to define humanity in the 7 centuries since, there is no reason to believe that they will always be what defines us. Overcoming the limit of entrepreneurship suggests it won’t be economic limits but instead economic abundance that defines our policies, options, and lives. That changes everything. Even more dramatically than the first three economies have.

The Mona Lisa's Eyes, Trump's Lies and the Nazi's Worldview Warfare

Just look at her face. Mona Lisa - painted about 500 years ago - looks so contemporary, like any other face you might see on social media.

We now look at the world with the same eyes but very different worldviews.

As Lisa sat for this portrait, Europeans were just beginning to realize that they’d discovered new continents. The people in the Americas were people with very different worldviews that nonetheless included kings, priests, calendars, and economies.

During Mona Lisa’s life, the view of the world changed more dramatically than it ever had before. The very notion that we lived on a globe was new. Martin Luther was a member of the first generation of Europeans to grow up aware of the Americas. It is easy to imagine that living through such a radical shift in worldview gave him the courage to lead a revolt against the Catholic Church that had a monopoly on the authorized worldview of his childhood. View of the world .... worldview … it all collapsed into one during Mona Lisa’s lifetime.

The Nazis realized the power of offering new myths in a world where the old world of aristocracy and church had proven obsolete and the new world of technology and markets had failed so spectacularly with a world war and Great Depression. What others called propaganda the Nazis called Weltanschaunungkrieg, or worldview warfare. They knew that the first battle they had to win was in German minds, a battle of worldviews.

The economists might have it wrong. They attribute political unrest to economic stagnation, to median wage growth not keeping pace with the accumulation of wealth by the new generation of entrepreneurs. Perhaps instead it is the fact of economic progress that has created so much stress and discontent, has created demand for worldviews that aren’t upended by continual change.

Trump's continual lies dismayed so many of us. The volume of blatant lies seems to so clearly disqualify him for leadership. How can any group that denies reality survive, one can’t help but wonder. But maybe that misses a larger point.

As reality changes it forces continual updating to our worldviews. And of course, this is never a clean process. Updating worldviews creates new divisions, a continual competition between new versions. The Europeans who discovered a world of Mayan gods didn’t become Mayan but the reaction to this was one cause of the fragmentation in Christendom. When worldviews update, wars break out, national borders shift, families split and accepted philosophies revered in one generation aren’t even considered in the next. Facts force constant updating of our worldviews which can lead to the anomie (or loss of norms) that Durkheim claimed in about 1900 was a cause for suicides. Social progress that destroys worldviews can feel like anything but progress to people who feel their sense of self bound up in it.

In the wake of World War One, Yeats wrote, 

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

A world of rapid change drives demand for a worldview that doesn’t. Change, that is. If it takes lies to protect it from constant change and updates, that is a small price to pay.

And in this we may have one of our more frightening conflicts, the conflict between our psychological need for stability and the imperative of progress that demands constant change. "The centre cannot hold." There is no easy resolution to this conflict. Our eyes, unchanged for generations, close at the thought of yet another change to our worldview, another change too much to bear. Lies are a price we are willing to pay to keep the old worldview.

The Price of Attention as We Reach the End of the Information Economy

Among the many signs that the information economy is reaching its limit? The price we pay to those able to focus in the midst of its distractions.

A couple of years ago I was talking to the principal of a school in King County, where Microsoft and Amazon are headquartered. I asked her, “What is it about that area that in the decades around 2000 it would produce two men who are the world’s wealthiest?”

She ended up telling me about how much trouble they have with children with some variant of autism spectrum disorder (ASD). So many of the programmers who are so productive come to Seattle to work, meet each other and marry. Their kids are sometimes even deeper into the issues brought on by ASD. Given how differently they process information and notice signals around them, some will experience a distressing social life.

I’m a big fan of flow, the psychology of engagement. When you are in flow, you are absorbed by a task and not only are you at your most productive and creative but are happy.

One of the big obstacles to creating flow is the steady flow of information, of distractions. Information consumption in households in 2020 was 38X higher than it was in 2010 - the average monthly consumption hitting 344 gigabytes per month by 2020. Some of this is because we’re consuming videos that push so much more data into our homes than text ever does. Some of this, though, gets to an odd truth: we have multiple tabs opened to multiple things. Now someone watches a video while texting with a couple of friends and playing an online game. To consume this much information, we multitask.

  

Attention spans have shortened to allow us to consume all these various sources of information. The new, online human brain has an attention span about the same as a goldfish. Seriously. Measured by how long we stay focused on one thing, our attention spans have dropped to 8 seconds. 8. With so much information streaming in, we cannot afford to stay focused for long on any one thing. To get lost in any one thing is to miss out on all the other things.

They call it an information age for good reason. We live in a sea of information.

So, what does this have to do with the folks Amazon and Microsoft are hiring to create the software that drives work and commerce? As it turns out, some forms of ASD – being on the spectrum – are a gift in a world flooded with distractions. Some folks with ASD are capable of becoming hyper-focused. One way that is described is as if one were in flow – but for hours. All other priorities and distractions dissolve. To be this focused with the tools of the information age makes one incredibly productive.

How productive?

This week, the Bureau of Labor Statistics (BLS) released one of their regular reports on income. They track weekly wages but of course simply multiplying that number by 52 suggests a good approximation of what Americans earn annually. In the third quarter of 2020, the average pay for American workers was about $61,000. In Silicon Valley, New York, and King County average pay was about double that. But BLS breaks down the sectors. In King County, information workers’ average pay was $327,000. Average. This for a group of 130,000 people. $327,000 is great salary for anyone; it’s kind of a stunning to think of a group this large averaging that much.

How much does it pay to be able to focus in the midst of an information economy seemingly doing its best to distract us? Pretty good money, as it turns out. And think about this. Gates and Bezos can pay wages this high and still accumulate hundreds of billions in wealth. You could argue that even at a third of a million a year in salary, these information workers are not paid enough.

Markets reward what is scarce. What is scarce in this information economy pumping 344 gigabytes a month into our homes? Attention.

Pay attention? It turns out that we pay a lot for it.

How the Pandemic Drove a Huge Gain in Average Wages and the Extraordinary Wages for Knowledge Workers in Seattle

New data at BLS on wages for 3Q of 2020.

Average weekly wages in the US were up 7.4% from 3Q 2019. That's a big raise.

Two reasons.
The good: areas with information workers saw demand rise for their services as the whole world went online.
The bad: lower paid workers tend to be in service jobs that were lost in the pandemic, thus dropping out of the calculation of average wages.

Silicon Valley and King County - home to Microsoft and Amazon - saw big gains.

California's Bay Area had six counties in the top ten by percentage increase, four in the top ten by average wage. San Mateo (the heart of Silicon Valley) has the highest average wage of any county in the US ($152k a year) AND had the highest wage increase in the last year (23.2%). Highest wages and highest percentage increase. It's a crazy combination.

California had 9 counties among the top 25 counties with the fastest growing wages; on average, those counties' COVID mortality rates were half the national average.

Average weekly wages in King County, Washington are fifth highest in the nation. Everyone knows that King County residents Bill Gates and Jeff Bezos have - between them - spent decades as the world's richest man. Fewer people are aware of how many folks they've made wealthy and what kind of wages they pay.

Calculated annual wage for information workers in 3Q 2020 in:
US: $133,796
King County: $327,236

https://www.bls.gov/news.release/cewqtr.nr0.htm

Hitler, FDR, Keynes and The Shift in the Limit to Progress from Capital to Labor

The new Republican Party created a new national currency and national banking system. Before they took power, thousands of banknotes circulated around the country – each discounted a little differently based on the risks to that particular bank. It wasn’t possible to verify each one and counterfeiting abounded. Imagine what an obstacle that would be to simple transactions. With 90% of the country in farming though – as it was in 1800 – money wasn’t a big part of too many folks’ lives. As specialization and the early move into automation lowered that percentage of self-sufficient farmers, though, more people needed money even for something as simple as buying groceries. Money became more important and having a stable, government-backed currency made it easier to buy, sell and invest. What would have been nice in 1800 - a national currency - had become vital by 1861.

But there was something the world didn’t quite understand about money and financial markets: capital markets could reach equilibrium before labor markets did.

In 1922, Russia became the Soviet Union and Mussolini took power in Italy. Communists and fascists had seized power. These new ideologies that were easy to dismiss in the roaring 20s became a threat in the early 1930s when the global economy collapsed. Communists and fascists began proliferating in the US in the 1930s.

When Hitler and FDR took office in March of 1933, capitalism was in crisis. More specifically, labor was in crisis. In the US, unemployment was about 25%. In Germany it was 30%.

The full name of the Nazi Party was National Socialists German Workers’ Party. There had always been a tension between the interests of labor and capital. The Great Depression seemed to prove that capitalism had failed labor.

It had, but not in a way that communists or fascists could address. For that we needed Keynes.

John Maynard Keynes’s General Theory of Employment, Interest and Money created macroeconomics. One way to think about his theory is simply this: capital markets could be at equilibrium before you got to full employment. When you talk about market equilibrium, you have to be more specific. As it turns out, labor and capital markets don’t necessarily hit equilibrium at the same time. The industrial economy that Republicans had helped to create was wonderful in so many ways but it had made labor dependent on capital. Even farmers had tractors. The economy was built atop a layer of financial and industrial capital and if that collapsed, the floor for labor dropped. The labor markets could not treat capital markets as a sideshow; it was the foundation.

What did Keynes suggest? Simply put, anything you could to get people back to work. Fiscal policy like spending and tax cuts. Monetary policy like lowering interest rates so that businesses would be more likely to borrow to hire and expand and households would be more likely to borrow to buy. Move the levers in the capital market to bring the labor market back to full employment. Get aggregate demand up and get people back in jobs. Don’t assume that capital markets will automatically move to fully employ labor.

As it turns out, FDR’s imagination was not wild enough to imagine just how much government spending it would take to again reach full employment. Weirdly, it took a massive war with the fascists to fully employ people. The battle of ideologies turned out to be a literal war. Weirdly, the massive spending needed to defeat Hitler and Mussolini brought the economy to full employment.

One other odd thing. Conceptually, everyone knew that things like GDP or GNP and unemployment mattered. There was no systematic way to measure those things, though. The unemployment numbers we use to track jobs created and unemployment rate? They only go back to 1939. We didn’t invent the measures until after we had the theory. And those measures have become essential to modern policy.

Not only have Keynes’ ideas made ours a less turbulent economy. From 1900 to 1933, the economy was in recession 48% of the time; since 1933, it has been in recession less than 14% of the time. Keynes’ ideas have been good for capital as well. In 1945, the wealth of households and nonprofits was $800 billion; last year it hit $124 trillion. When capital markets were subordinated to labor – the limit of the information economy – even capitalists prospered. People in communities that treat the limit as a limit always do, even if it takes global depressions and world wars to signal the shift in the limit. We can only hope that we make this next shift more smoothly, with less pain, unemployment and carnage.

Humor, Railroads and the Internet Have Changed Who "We" Are (or what technology has to do with nationalism and globalism)

Technology – from humor to railroads to the internet - changes our definition of “us.”

Germany became a nation-state in 1871, the same year as Italy and only one year after the United States.

In 1865, the American Civil War ended. By 1870, three constitutional amendments would change the United States from a collection of states into a nation-state, literally changing the label we gave to the United States from plural to singular. Before Lincoln, people said, “The United States are” in references to the many states. After Lincoln people said, “The United State is,” in reference to the one nation. The historian Eric Foner calls these three amendments that ended slavery, defined American citizenship and protected the right of citizens to vote “the second founding,” because they so changed our notion of who we were.

Among other things, these amendments gave congress the right to enforce them. These rights gave the national government power to protect citizens from states, making individual rights more important than state law. The nation became more important than the state.

So, is it just a coincidence that Italy was consolidated from a collection of kingdoms and Germany a collection of states at the same time as the United States? I don’t think so. I blame the railroad and telegraph.

Between 1840 and 1860, the miles of railways in the US grew from 3,000 to 30,000. This web of interconnections changed who we were. New factories sold goods across states lines. Goods, contracts, communication and corporations spilled across state borders as easily as clouds. Laws and governance that did not travel with this exchange of goods and ideas were increasingly ineffective. The Republicans who led this second founding were capitalists who needed national governance to properly manage the scope of their new, industrial economy.

Which brings us to this 21st century.

The war from 1860 to 1865 was between folks who wanted their world to remain a collection of states to those who wanted the world to merge into nations. The war today is between nationalists and globalists.

Once again, a confluence of technologies has made us bigger. The world wide web sort of gives itself away in its name. It has become a hotbed for nationalists all across the world but they are reliant on the very technology that undermines their nationalism. The notion of nationalists – BREXIT folks in the UK, Le Pen’s National Front (now National Rally) folks in France and Trumpbros in the US, among others – connecting around the globe to fight globalism tells you a great deal about how futile is their battle. Everything is global now. Why? In no small part because of the technology. A container ship has dropped the cost of transporting a can of beer or soda across an ocean to one cent. When transportation and communication costs near zero, national borders become less meaningful.


Robin Dunbar has studied the groups we feel part of. Other primates spend hours grooming one another to sustain the bonds that make them feel like an “us” who cooperate and interact to create a community of chimps, bonobos or gorillas. Grooming releases the endorphins that connect them. One of Dunbar’s theories is that as the number of humans in a group expanded to 150, grooming was no longer sustainable. It simply took too long to do this with 149 other humans. So, humor emerged as a way to do the same thing. Grooming gave way to comedy. And to this day memes are a big part of the online communication within groups.

Technological innovations change our community and our notion of self has to keep up. Whether it is humor, railroads or the internet, as our world is made bigger so must our sense of us. Benedict Anderson called a nation “an imagined political community.” In some sense, so is a family, a tribe, nation, or even a world. But the technology we have changes our ability to make real what we can imagine.