From American Affairs Journal:
America’s emergence in the eighteenth and nineteenth centuries represented a dramatic break from the past. The United States came on the scene with only vestiges of the old European feudal order—mostly in the plantation economy of the Deep South. There was no hereditary nobility, no national church, and, thanks to George Washington’s modesty, no royal authority. At least among whites, there was also far less poverty in America, compared to Europe’s intense, intractable, multigenerational poverty. In contrast, as Jefferson noted in 1814, America had fewer “paupers,” and the bulk of the population was “fed abundantly, clothed above mere decency, to labor moderately and raise their families.”
Yet in recent decades this country, along with many other liberal democracies, has begun to show signs of growing feudalization. This trend has been most pronounced in the economy, where income growth has skewed dramatically towards the ultrarich, creating a ruling financial and now tech oligarchy. This is a global phenomenon: starting in the 1970s, upward mobility for middle and working classes across all advanced economies began to stall, while the prospects for the upper classes rose dramatically.
The fading prospects for the new generation are all too obvious. Once upon a time, when the boomers entered adulthood, they entered an ascendant middle class. According to a recent study by the St. Louis Fed, their successors, the millennials, are in danger of becoming a “lost generation” in terms of wealth accumulation.
This generational shift will shape our future economic, political, and social order. About 90 percent of those born in 1940 grew up to experience higher incomes than their parents, according to researchers at the Equality of Opportunity Project. This proportion was only 50 percent among those born in the 1980s, and the chances of middle-class earners moving up to the top rungs of the earnings ladder has declined by approximately 20 percent since the early 1980s. Corporate CEOs used to boast of starting out in the mailroom. There will not be many of those stories in the future.
The Return to Oligarchy
In feudal society, power was exercised primarily by two classes—what the French referred to as the First Estate, the clergy, and the Second Estate, comprised of the warrior-aristocratic elite. Everyone else, even successful merchants, resided in the Third Estate, and most were peasants living at subsistence levels. This was a society, noted historian Pierre Riché, composed of “those who prayed, those who fought, and those who labored.”1
Contemporary society may have little place for orthodox religion, and our military, however impressive, hardly constitutes an effective ruling class. But we are beginning to see the elevation of two very powerful classes—one dominant economically, the other culturally. Meanwhile, the power of today’s Third Estate inexorably weakens.
The ultrarich represent an emergent global aristocracy—or rather, a new oligarchy. Fewer than one hundred billionaires now own as much as 50 percent of the world’s assets—the same amount that around four hundred billionaires owned a little more than five years ago. In the United States, the richest four hundred U.S. citizens now have more wealth than 185 million of their fellow Americans combined. The shift has been dramatic: the top 1 percent in America captured just 4.9 percent of total U.S. income growth from 1945 to 1973, but in the following two decades the country’s richest classes gobbled up the majority of U.S. income growth.
Patterns of property ownership reflect the very same trends that anchored both the medieval aristocratic and ecclesiastical classes. The proportion of land owned by the nation’s hundred largest private landowners grew by nearly 50 percent between 2007 and 2017. In 2007, according to the Land Report, this group owned a combined twenty-seven million acres of land, equivalent to the area of Maine and New Hampshire combined. A decade later, the hundred largest landowners had holdings of over forty million acres. Their holdings are now larger than the entirety of New England. Even in much of the vast American West, where much of the land remains in public hands, billionaires have created expansive estates that many fear will make the rest of the local population land-poor.
In the past, the oligarchy tended to be associated with either Wall Street or industrial corporate executives. But today the predominant and most influential group consists of those atop a handful of mega-technology firms. Six firms—Amazon, Apple, Facebook, Google, Microsoft, and Netflix—have achieved a combined net worth equal to one-quarter of the nasdaq, more than the next 282 firms combined and equal to the GDP of France. Seven of the world’s ten most valuable companies come from this sector. Tech giants have produced eight of the twenty wealthiest people on the planet. Among the nation’s billionaires, all those under forty live in the state of California, with twelve in San Francisco alone. In 2017, the tech industry produced eleven new billionaires, mostly in California. Only China, home to nine of the world’s top twenty tech firms, presents any kind of challenge to their domination.
Initially many Americans, even on the left, saw the rise of the tech oligarchy as both transformative and positive. Observing the rise of the technology industry, the futurist Alvin Toffler prophesied “the dawn of a new civilization,”2 with vast opportunities for societal and human growth. But today we confront a reality more reminiscent of the feudal past—with ever greater concentrations of wealth, along with less social mobility and material progress.
Rather than Toffler’s tech paradise, we increasingly confront what the Japanese futurist Taichi Sakaiya, writing three decades ago, saw as the dawn of “a high-tech middle ages.”3 Rather than epitomizing American ingenuity and competition, the tech oligarchy increasingly resembles the feudal lords of the Middle Ages. With the alacrity of the barbarian warriors who took control of territory after the fall of the Roman Empire, they have seized the strategic digital territory, and they ruthlessly defend their stake.
Such concentrations of wealth naturally seek to concentrate power. In the Middle Ages, this involved the control of land and the instruments of violence. In our time, the ascendant tech oligarchy has exploited the “natural monopolies” of web-based business. Their “super-platforms” depress competition, squeeze suppliers, and reduce opportunities for potential rivals, much as the monopolists of the late nineteenth century did. Firms like Google, Facebook, and Microsoft control 80 to 90 percent of their key markets and have served to further widen class divides not only in the United States but around the world.
Once exemplars of entrepreneurial risk-taking, today’s tech elites are now entrenched monopolists. Increasingly, these firms reflect the worst of American capitalism—squashing competitors, using indentured servants from abroad for upwards of 40 percent of their Silicon Valley workforce, fixing wages, and avoiding taxes—while creating ever more social anomie and alienation.
The tech oligarchs are forging a post-democratic future, where opportunity is restricted only to themselves and their chosen few. As technology investor Peter Thiel has suggested, democracy—based on the fundamental principles of individual responsibility and agency—does not fit comfortably with a technocratic mindset that believes superior software can address and modulate every problem.
This emerging world is far removed from the democratic capitalism that dominated the era after World War II. Rather than encouraging and accommodating families, today’s oligarchs promote a largely childless college campus environment, where they even pay female workers to freeze their eggs. Traditionally companies liked employees with families. Not so much in the brave new tech world, which demands long hours and little time off for such things as raising children.
As for the rest of the population, the prospects are even bleaker. In the tech hub of San Francisco, the middle-class family is almost extinct. The city has lost thirty-one thousand home-owning families over the past decade. It leads the state in economic inequality. The evidence of massive inequality, pervasive homelessness, and social dysfunction fills the streets.
Silicon Valley, located in the suburbs south of the city, has also become profoundly less egalitarian. It is increasingly divided between an entrenched ultra-wealthy class and a dependent poor class, working largely in the service industries. By 2015, some seventy-six thousand millionaires and billionaires called Santa Clara and San Mateo counties home, while many in the area struggle to feed their families and pay their bills each month. Nearly 30 percent of Silicon Valley’s residents rely on public or private assistance........MUCH MORE
