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Saturday, June 25, 2016
Why Garbagemen Should Earn More Than Bankers
Thick fog envelops City Hall Park at daybreak on February 2, 1968. Seven thousand New York City sanitation workers stand crowded together, their mood rebellious. Union spokesman John DeLury addresses the multitude from the roof of a truck. When he announces that the mayor has refused further concessions, the crowd’s anger threatens to boil over. As the first rotten eggs sail overhead, DeLury realizes the time for compromise is over. It’s time to take the illegal route, the path prohibited to sanitation workers for the simple reason that the job they do is too important.
It’s time to strike.
The next day, trash goes uncollected throughout the Big Apple. Nearly all the city’s garbage crews have stayed home. “We’ve never had prestige, and it never bothered me before,” one garbageman is quoted in a local newspaper. “But it does now. People treat us like dirt.”
When the mayor goes out to survey the situation two days later, the city is already knee-deep in refuse, with another 10,000 tons added every day. A rank stench begins to percolate through the city’s streets, and rats have been sighted in even the swankiest parts of town. In the space of just a few days, one of the world’s most iconic cities has started to look like a slum. And for the first time since the polio epidemic of 1931, city authorities declare a state of emergency.
Still the mayor refuses to budge. He has the local press on his side, which portrays the strikers as greedy narcissists. It takes a week before the realization begins to kick in: The garbagemen are actually going to win. “New York is helpless before them,” the editors of The New York Times despair. “This greatest of cities must surrender or see itself sink in filth.” Nine days into the strike, when the trash has piled up to 100,000 tons, the sanitation workers get their way. “The moral of the story,” Time Magazine later reported, “is that it pays to strike.”
Rich without Lifting a Finger
Perhaps, but not in every profession.
Imagine, for instance, that all of Washington’s 100,000 lobbyists were to go on strike tomorrow. Or that every tax accountant in Manhattan decided to stay home. It seems unlikely the mayor would announce a state of emergency. In fact, it’s unlikely that either of these scenarios would do much damage. A strike by, say, social media consultants, telemarketers, or high-frequency traders might never even make the news at all.
When it comes to garbage collectors, though, it’s different. Any way you look at it, they do a job we can’t do without. And the harsh truth is that an increasing number of people do jobs that we can do just fine without. Were they to suddenly stop working the world wouldn’t get any poorer, uglier, or in any way worse. Take the slick Wall Street traders who line their pockets at the expense of another retirement fund. Take the shrewd lawyers who can draw a corporate lawsuit out until the end of days. Or take the brilliant ad writer who pens the slogan of the year and puts the competition right out of business.
Instead of creating wealth, these jobs mostly just shiftit around.
Of course, there’s no clear line between who creates wealth and who shifts it. Lots of jobs do both. There’s no denying that the financial sector can contribute to our wealth and grease the wheels of other sectors in the process. Banks can help to spread risks and back people with bright ideas. And yet, these days, banks have become so big that much of what they do is merely shuffle wealth around, or even destroy it. Instead of growing the pie, the explosive expansion of the banking sector has increased the share it serves itself.
Or take the legal profession. It goes without saying that the rule of law is necessary for a country to prosper. But now that the U.S. has 17 times the number of lawyers per capita as Japan, does that make American rule of law 17 times as effective? Or Americans 17 times as protected? Far from it. Some law firms even make a practice of buying up patents for products they have no intention of producing, purely to enable them to sue people for copyright infringement.
Bizarrely, it’s precisely the jobs that shift money around – creating next to nothing of tangible value – that net the best salaries. It’s a fascinating, paradoxical state of affairs. How is it possible that all those agents of prosperity – the teachers, the police officers, the nurses – are paid so poorly, while the unimportant, superfluous, and even destructive shifters do so well?
When Idleness was Still a Birthright
Maybe history can shed some light on this conundrum.
Up until a few centuries ago, almost everybody worked in agriculture. That left an affluent upper class free to loaf around, live off their private assets, and wage war – all hobbies that don’t create wealth but at best shift it about, or at worst destroy it. Any blue-blooded noble was proud of this lifestyle, which gave the happy few the hereditary right to line their pockets at the expense of others. Work? That was for peasants.
In those days, before the Industrial Revolution, a farmers’ strike would have paralyzed the entire economy. These days, all the graphs, diagrams, and pie charts suggest that everything has changed. As a portion of the economy, agriculture seems marginal. Indeed, the U.S. financial sector is seven times as large as its agricultural sector.
So, does this mean that if farmers were to stage a strike, it would put us in less of a bind than a boycott by bankers? (No, quite the reverse.) And, besides, hasn’t agricultural production actually soared in recent decades? (Certainly.) Well then, aren’t farmers earning more than ever? (Sadly, no.)
You see, in a market economy, things work precisely the other way around. The larger the supply, the lower the price. And there’s the rub. Over the last few decades, the supply of food has skyrocketed. In 2010, American cows produced twice as much milk as they did in 1970. Over that same period, the productivity of wheat has also doubled, and that of tomatoes has tripled. The better agriculture has become, the less we’re willing to pay for it. These days, the food on our plates has become dirt cheap.
This is what economic progress is all about. As our farms and factories grew more efficient, they accounted for a shrinking share of our economy. And the more productive agriculture and manufacturing became, the fewer people they employed. At the same time, this shift generated more work in the service sector. Yet before we could get ourselves a job in this new world of consultants, chefs, accountants, programmers, advisors, brokers, doctors, and lawyers, we first had to earn the proper credentials.
This development has generated immense wealth.
Ironically, however, it has also created a system in which an increasing number of people can earn money without contributing anything of tangible value to society. Call it the paradox of progress: Here in the Land of Plenty, the richer and the smarter we get, the more expendable we become.
When Bankers Struck
“CLOSURE OF BANKS.”
On May 4, 1970, this notice ran in the Irish Independent. After lengthy but fruitless negotiations over wages that had failed to keep pace with inflation, Ireland’s bank employees decided to go on strike.
Overnight, 85% of the country’s reserves were locked down. With all indications suggesting that the strike could last a while, businesses across Ireland began to hoard cash. Two weeks into the strike, The Irish Timesreported that half of the country’s 7,000 bankers had already booked flights to London in search of other work.
At the outset, pundits predicted that life in Ireland would come to a standstill. First, cash supplies would dry up, then trade would stagnate, and finally unemployment would explode. “Imagine all the veins in your body suddenly shrinking and collapsing,” one economist described the prevailing fear, “and you might begin to see how economists conceive of banking shutdowns.” Heading into the summer of 1970, Ireland braced itself for the worst.
And then something odd happened. Or more accurately, nothing much happened at all.
In July, the The Times of England reported that the “figures and trends which are available indicate that the dispute has not had an adverse effect on the economy so far.” A few months later, the Central Bank of Ireland drew up the final balance. “The Irish economy continued to function for a reasonably long period of time with its main clearing banks closed for business,” it concluded. Not only that, the economy had continued to grow.
In the end, the strike would last a whole six months – 20 times as long as the New York City sanitation workers’ strike. But whereas across the pond a state of emergency had been declared after just six days, Ireland was still going strong after six months without bankers. “The main reason I cannot recollect much about the bank strike,” an Irish journalist reflected in 2013, “was because it did not have a debilitating impact on daily life.”
But without bankers, what did they do for money?
Something quite simple: The Irish started issuing their own cash. After the bank closures, they continued writing checks to one another as usual, the only difference being that they could no longer be cashed at the bank. Instead, that other dealer in liquid assets – the Irish pub – stepped in to fill the void. At a time when the Irish still stopped for a pint at their local pub at least three times a week, everyone – and especially the bartender – had a pretty good idea who could be trusted. “The managers of these retail outlets and public houses had a high degree of information about their customers,” explains the economist Antoin Murphy. “One does not after all serve drink to someone for years without discovering something of his liquid resources.”
In no time, people forged a radically decentralized monetary system with the country’s 11,000 pubs as its key nodes and basic trust as its underlying mechanism. By the time the banks finally reopened in November, the Irish had printed an incredible £5 billion in homemade currency. Some checks had been issued by companies, others were scribbled on the backs of cigar boxes, or even on toilet paper. According to historians, the reason the Irish were able to manage so well without banks was all down to social cohesion.
So were there no problems at all?
No, of course there were problems. Take the guy who bought a racehorse on credit and then paid the debt with money he won when his horse came in first – basically, gambling with another person’s cash. It sounds an awful lot like what banks do now, but then on a smaller scale. And, during the strike, Irish companies had a harder time acquiring capital for big investments. Indeed, the very fact that people began do-it-yourself banking makes it patently clear that they couldn’t do without some kind of financial sector.
But what they could do perfectly well without was all the smoke and mirrors, all the risky speculation, the glittering skyscrapers, and the towering bonuses paid out of taxpayers’ pockets. “Maybe, just maybe,” the author and economist Umair Haque conjectures, “banks need people a lot more than people need banks.”
Another Form of Taxation
What a contrast with that other strike two years earlier and 3,000 miles away. Where New Yorkers had looked on in desperation as their city deteriorated into a garbage dump, the Irish became their own bankers. Where New York was staring into the abyss after just six days, in Ireland things were still going swimmingly even after six months.
Let’s get one thing straight, however. Making money without creating anything of value is anything but easy. It takes talent, ambition, and brains. And the banking world is brimming with clever minds. “The genius of the great speculative investors is to see what others do not, or to see it earlier,” explains the economist Roger Bootle. “This is a skill. But so is the ability to stand on tiptoe, balancing on one leg, while holding a pot of tea above your head, without spillage.”
In other words, the fact that something is difficult does not automatically make it valuable.
In recent decades those clever minds have concocted all manner of complex financial products that don’t create wealth, but destroy it. These products are, essentially, like a tax on the rest of the population. Who do you think is paying for all those custom-tailored suits, mansions, and luxury yachts? If bankers aren’t generating the underlying value themselves, then it has to come from somewhere – or someone – else. The government isn’t the only one redistributing wealth. The financial sector does it, too, but without a democratic mandate.
The bottom line is that wealth can be concentratedsomewhere, but that doesn’t also mean that’s where it’s being created. This is just as true for your former feudal landowner as it is for the current CEO of Goldman Sachs. The only difference is that bankers sometimes have a momentary lapse and imagine themselves the great creators of all this wealth. The lord who was proud to live off his peasants’ labor suffered no such delusions.
And to think that things could have been so different.
Nearly a century ago, economist John Maynard Keynes famously predicted that we would work fifteen-hour weeks by the year 2030. He thought that our wealth and prosperity would increase dramatically and that we would convert much of that wealth into leisure. Keynes was certainly not the only one to believe that it was just a matter of time before we solved the “economic problem.” Well into the 1970s, economists and sociologists forecasted that “the End of Work” was near.
In reality, that’s not at all what has happened. We’re plenty more prosperous, but we’re not exactly swimming in a sea of free time. Quite the reverse. We’re all working harder than ever. Many people explain these circumstances by assuming we use money we don’t have to buy stuff we don’t need to impress people we don’t like. In other words: we sacrificed our free time on the altar of consumerism.
But there’s one puzzle piece that doesn’t fit. Most people play no part in the production of iPhone cases in their panoply of colors, exotic shampoos containing botanical extracts, or Mocha Cookie Crumble Frappuccinos. Our addiction to consumption is enabled mostly by robots and Third World wage slaves. And although agricultural and manufacturing production capacity have grown exponentially over the past decades, employment in these industries has dropped. So is it really true that our overworked lifestyle all comes down to out-of-control consumerism?
David Graeber, an anthropologist at the London School of Economics, believes there’s something else going on. A few years ago he wrote a fascinating piecethat pinned the blame not on the stuff we buy but on the work we do. It is titled, aptly, “On the Phenomenon of Bullshit Jobs.”
In Graeber’s analysis, innumerable people spend their entire working lives doing jobs they consider to be pointless, jobs like telemarketer, HR manager, social media strategist, PR advisor, and a whole host of administrative positions at hospitals, universities, and government offices. “Bullshit jobs,” Graeber calls them. They’re the jobs that even the people doing them admit are, in essence, superfluous.
When I first wrote an article about this phenomenon, it unleashed a small flood of confessions. “Personally, I’d prefer to do something that’s genuinely useful,” responded one stockbroker, “but I couldn’t handle the pay cut.” He also described his “amazingly talented former classmate with a Ph.D. in physics” who develops cancer detection technologies, and “earns so much less than me it’s depressing.” But of course, that your work happens to serve a weighty public interest and requires lots of talent, intelligence, and perseverance doesn’t automatically mean you’re raking in the cash.
Or vice versa. Is it any coincidence that the proliferation of well-paid bullshit jobs has coincided with a huge boom in higher education and an economy that revolves around knowledge? Remember, making money without creating anything of value isn’t easy. For starters, you have to memorize some very important-sounding but meaningless jargon. (Crucial when attending strategic trans-sector peer-to-peer meetings to brainstorm the value add-on co-creation in the network society.) Almost anybody can collect trash, but a career in banking is reserved for a select few.
In a world that’s getting ever richer, where cows produce more milk and robots produce more stuff, there’s more room for friends, family, community service, science, art, sports, and all the other things that make life worthwhile. But there’s also more room for bullshit. As long as we continue to be obsessed with work, work, and more work (even as useful activities are further automated or outsourced), the number of superfluous jobs will only continue to grow. Much like the number of managers in the developed world, which has grown over the last 30 years without making us a dime richer. On the contrary, studiesshow that countries with more managers are actuallyless productive and innovative. In a survey of 12,000 professionals by the Harvard Business Review, half said they felt their job had no “meaning and significance,” and an equal number were unable to relate to their company’s mission. Another recent pollrevealed that as many as 37% of British workers think they have a bullshit job.
By no means are all these new service sector jobs pointless – far from it. Look at healthcare, education, fire services, and the police and you’ll find lots of people who go home every day knowing, despite their modest paychecks, they’ve made the world a better place. “It’s as if they are being told,” Graeber writes, “You get to have real jobs! And on top of that you have the nerve to also expect middle-class pensions and health care?”
There is Another Way
What makes all this especially shocking is that it’s happening in a capitalist system, a system founded on capitalist values like efficiency and productivity. While politicians endlessly stress the need to downsize government, they remain largely silent as the number of bullshit jobs goes right on growing. This results in scenarios where, on the one hand, governments cut back on useful jobs in sectors like healthcare, education, and infrastructure – resulting in unemployment – while on the other investing millions in the unemployment industry of training and surveillance whose effectiveness has long been disproven.
The modern marketplace is equally uninterested in usefulness, quality, and innovation. All that really matters is profit. Sometimes that leads to marvelous contributions, sometimes not. From telemarketers to tax consultants, there’s a rock-solid rationale for creating one bullshit job after another: You can net a fortune without ever producing a thing.
In this situation, inequality only exacerbates the problem. The more wealth is concentrated at the top, the greater the demand for corporate attorneys, lobbyists, and high-frequency traders. Demand doesn’t exist in a vacuum, after all; it’s the product of a constant negotiation, determined by a country’s laws and institutions, and, of course, by the people who control the purse strings.
Maybe this is also a clue as to why the innovations of the past 30 years – a time of spiraling inequality – haven’t quite lived up to our expectations. “We wanted flying cars, instead we got 140 characters,” mocks Peter Thiel, Silicon Valley’s resident intellectual. If the postwar era gave us fabulous inventions like the washing machine, the refrigerator, the space shuttle, and the pill, lately it’s been slightly improved iterations of the same phone we bought a couple years ago.
In fact, it has become increasingly profitable not to innovate. Imagine just how much progress we’ve missed out on because thousands of bright minds have frittered away their time dreaming up hypercomplex financial products that are ultimately only destructive. Or spent the best years of their lives duplicating existing pharmaceuticals in a way that’s infinitesimally different enough to warrant a new patent application by a brainy lawyer so a brilliant PR department can launch a brand-new marketing campaign for the not-so-brand-new drug.
Imagine that all this talent were to be invested not inshifting wealth around, but in creating it. Who knows, we might already have had jetpacks, built submarine cities, or cured cancer.
Friedrich Engels, a close friend of Karl Marx, described the “false consciousness” to which the working classes of his day – the “proletariat” – had fallen victim. According to Engels, the 19th-century factory worker didn’t rise up against the landed elite because his worldview was clouded by religion and nationalism. Maybe society is stuck in a comparable rut today, except this time at the very top of the pyramid. Maybe some of those people have had their vision clouded by all the zeros on their paychecks, the hefty bonuses, and the cushy retirement plans. Maybe a fat billfold triggers a similar false consciousness: the conviction that you’re producing something of great value because you earn so much.
Whatever the case, the way things are is not the way they have to be. Our economy, our taxes, and our universities can all be reinvented to make real innovation and creativity pay off. “We do not have to wait patiently for slow cultural change,” the maverick economist William Baumol challenged more than 20 years ago. We don’t have to wait until gambling with other people’s money is no longer profitable; until sanitation workers, police agents, and nurses earn a decent wage; and until math whizzes once again start dreaming of building colonies on Mars instead of starting their own hedge funds.
In the end, it’s not the market or technology that decides what has real value, but society. If we want this century to be one in which all of us get richer, then we’ll need to free ourselves of the dogma that all work is meaningful. And, while we’re at it, let’s also get rid of the fallacy that a higher salary is automatically a reflection of societal value.
Then we might realize that in terms of value creation, it just doesn’t pay to be a banker.
New York City, 50 Years Later
Half a century after the strike, the Big Apple seems to have learned its lesson. “Everyone in NYC wants to be garbage collector,” read a recent newspaper headline. These days, the people who pick up after the megacity earn an enviable salary. After five years on the payroll, they can take home as much as $70,000 plus overtime and perks. “They keep the city running,” a Sanitation Department spokesperson explained in the article. “If they were to stop working, however briefly, all of New York City would come to a standstill.”
The paper also interviewed a city sanitation worker. In 2006, Joseph Lerman, then 20, got a call from the city informing him he could report for duty as a collector. “I felt like I’d won the jackpot,” he recounts. Nowadays, Lerman gets up at 4 a.m. every morning to haul garbage bags for shifts of up to 12 hours. To his fellow New Yorkers, it’s only logical that he is well paid for his labors. “Honest,” the city spokesperson smiles, “these men and women aren’t known as the heroes of New York City for nothing.”