The death of the corporate job.
Trump fires labor stats head after shaky jobs report.
two things stand out when I look at this chart. First is how evident the 2008 Great Recession, the pandemic drop, and the post-pandemic recovery are in the data. And, given what we know about how this data is collected, that actually makes sense; BLS surveys about 631,000 worksites for their employment data as of the 12th of the month, then revises the monthly numbers as more data comes out. The corrections to the jobs reports in 2008 were likely caused by numbers that continued to decrease throughout consecutive months, while reports late in 2021 showed an economy actively adding jobs as it rebounded from the pandemic. In short: A growing job market has positive revisions, a shrinking job market has negative revisions.
National Review’s Dominic Pino wrote a thorough breakdown of the complex work that goes into producing these reports, noting how variables like seasonal employment patterns, self-employment, and new and shuttered businesses make creating an accurate snapshot of the economy on the first try very difficult. Furthermore, the response rate to BLS surveys has dipped since the pandemic. Ironically, Secretary of Commerce Howard Lutnick fired the team of people who help us know how many people are getting fired, making it even more difficult to get accurate initial estimates.
employment in industries that Trump is trying to boost with tariffs have hit a wall: Since May, manufacturing, wholesale trade, and retail trade — three sectors most sensitive to tariff policies — have lost jobs. Meanwhile, both the rates of nonfarm hiring and workers quitting their jobs are steadily decreasing, showing a labor market that’s getting tighter and tighter.
Instead, this firing looks like a case of Trump injecting us-versus-them politics into another arena that could really benefit from reasonable discussion. Whoever takes the role next will still be attempting a difficult task with dwindling resources, but with the addition of a white-hot spotlight of the political culture war beating down on them.
American Disruption
manufacturing in Asia is fundamentally different than the manufacturing we remember in the United States decades ago: instead of firms with product-specific factories, China has flexible factories that accommodate all kinds of orders, delivering on that vector of speed, convenience, and customization that Christensen talked about.
Every decrease in node size comes at increasingly astronomical costs; the best way to afford those costs is to have one entity making chips for everyone, and that has turned out to be TSMC. Indeed, one way to understand Intel’s struggles is that it was actually one of the last massive integrated manufacturers: Intel made chips almost entirely for itself. However, once the company missed mobile, it had no choice but to switch to a foundry model; the company is trying now, but really should have started fifteen years ago. Now the company is stuck, and I think they will need government help.
companies that go up-market find it impossible to go back down, and I think this too applies to countries. Start with the theory: Christensen had a chapter in The Innovator’s Dilemma entitled “What Goes Up, Can’t Go Down”:
Three factors — the promise of upmarket margins, the simultaneous upmarket movement of many of a company’s customers, and the difficulty of cutting costs to move downmarket profitably — together create powerful barriers to downward mobility. In the internal debates about resource allocation for new product development, therefore, proposals to pursue disruptive technologies generally lose out to proposals to move upmarket. In fact, cultivating a systematic approach to weeding out new product development initiatives that would likely lower profits is one of the most important achievements of any well-managed company.
So could Apple pay more to get U.S. workers? I suppose — leaving aside the questions of skills and whatnot — but there is also the question of desirability; the iPhone assembly work that is not automated is highly drudgerous, sitting in a factory for hours a day delicately assembling the same components over and over again. It’s a good job if the alternative is working in the fields or in a much more dangerous and uncomfortable factory, but it’s much worse than basically any sort of job that is available in the U.S. market.
First, blanket tariffs are a mistake. I understand the motivation: a big reason why Chinese imports to the U.S. have actually shrunk over the last few years is because a lot of final assembly moved to countries like Vietnam, Thailand, Mexico, etc. Blanket tariffs stop this from happening, at least in theory.
The problem, however, is that those final assembly jobs are the least desirable jobs in the value chain, at least for the American worker; assuming the Trump administration doesn’t want to import millions of workers — that seems rather counter to the foundation of his candidacy! — the United States needs to find alternative trustworthy countries for final assembly. This can be accomplished through selective tariffs (which is exactly what happened in the first Trump administration).
Secondly, using trade flows to measure the health of the economic relationship with these countries — any country, really, but particularly final assembly countries — is legitimately stupid. Go back to the iPhone: the value-add of final assembly is in the single digit dollar range; the value-add of Apple’s software, marketing, distribution, etc. is in the hundreds of dollars. Simply looking at trade flows — where an imported iPhone is calculated as a trade deficit of several hundred dollars — completely obscures this reality. Moreover, the criteria for a final assembly country is that they have low wages, which by definition can’t pay for an equivalent amount of U.S. goods to said iPhone.
At the same time, the overall value of final assembly does exceed its economic value, for the reasons noted above: final assembly is gravity for higher value components, and it’s those components that are the biggest national security problem. This is where component tariffs might be a useful tool: the U.S. could use a scalpel instead of a sledgehammer to incentivize buying components from trusted allies, or from the U.S. itself, or to build new capacity in trusted locations. This does, admittedly, start to sound a lot like central planning, but that is why the gravity argument is an important one: simply moving final assembly somewhere other than China is a win — but not if there are blanket tariffs, at which point you might as well leave the supply chain where it is.
You can certainly make the case that things like castings and other machine components are of sufficient importance to the U.S. that they ought to be manufactured here, but you have to ramp up to that. What is much more problematic is that raw materials and components are now much cheaper for Haas’ foreign competitors; even if those competitors face tariffs in the United States, their cost of goods sold will be meaningfully lower than Haas, completely defeating the goal of encouraging the purchase of U.S. machine tools.
Fourth, there remains the problem of chips. Trump just declared economic war on China, which definitionally increases the possibility of kinetic war. A kinetic war, however, will mean the destruction of TSMC, leaving the U.S. bereft of chips at the very moment that A.I. is poised to create tremendous opportunities for growth and automation. And, even if A.I. didn’t exist, it’s enough to note that modern life would grind to a halt without chips. That’s why this is the area that most needs direct intervention from the federal government, particularly in terms of incentivizing demand for both leading and trailing edge U.S. chips.
my prevailing emotion over the past week — one I didn’t fully come to grips with until interrogating why Monday’s Article failed to live up to my standards — is sadness over the end of an era in technology, and frustration-bordering-on-disillusionment over the demise of what I thought was a uniquely American spirit.
Internet 1.0 was about technology. This was the early web, when technology was made for technology’s sake. This was when we got standards like TCP/IP, DNS, HTTP, etc. This was obviously the best era, but one that was impossible to maintain once there was big money to be made on the Internet.
Internet 2.0 was about economics. This was the era of Aggregators — the era of Stratechery, in other words — when the Internet developed, for better or worse, in ways that made maximum economic sense. This was a massive boon for the U.S., which sits astride the world of technology; unfortunately none of the value that comes from that position is counted in the trade statistics, so the administration doesn’t seem to care.
Internet 3.0 is about politics. This is the era when countries make economically sub-optimal choices for reasons that can’t be measured in dollars and cents. In that Article I thought that Big Tech exercising its power against the President might be a spur for other countries to seek to wean themselves away from American companies; instead it is the U.S. that may be leaving other countries little choice but to retaliate against U.S. tech.
There is, admittedly, a hint of that old school American can-do attitude embedded in these tariffs: the Trump administration seems to believe the U.S. can overcome all of the naysayers and skeptics through sheer force of will. That force of will, however, would be much better spent pursuing a vision of a new world order in 2050, not trying to return to 1950. That is possible to do, by the way, but only if you accept 1950’s living standards, which weren’t nearly as attractive as nostalgia-colored glasses paint them, and if we’re not careful, 1950’s technology as well. I think we can do better that that; I know we can do better than this.
Trump brags that billionaire pals made a killing after he pulled the plug on tariffs
The One Word that Explains Globalization's Failure, and Trump's Response
The proper objective for a nation, as Adam Smith put it, is to arrange things so we get as large a volume of imports as possible for as small a volume of exports as possible.”
By this logic, anything that slows the flow of imports, or raises their cost, would indeed be a self-inflicted wound. If the Chinese Communist Party wants to block the sale of U.S. electric vehicles in China, let it. We should still want as many cheap Chinese EVs as possible flooding into our market.
Even Friedman’s claim that “the proper objective for a nation, as Adam Smith put it, is to arrange things so we get as large a volume of imports as possible for as small a volume of exports as possible,” runs directly counter to what Smith actually wrote, which was: “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry.”
With some part of the produce of our own country. A vital assumption of the classical model was that trade would be balanced—something made here for something made there
How the 2025 US Financial Crisis is Different than 2008
Whatever tools may be at the disposal of the Federal Reserve and the US federal government will not be able to undo the damage to reputation and relationships upon which so much commerce bases its functions on day-to-day. As much as humans fancy themselves civilized and sophisticated, as a whole, societies still have serious trust issues internally and therefore externally. That’s why the concept of “credit” exists worldwide for the most part and is a component of trade, of alliances, and of good will.
By first taking a chainsaw to the global relationships of a worldview nature — most easily seen in the conflict of the Russian invasion of Ukraine and the rightful concern expressed by Western interests…credit has been damaged. By next taking a chainsaw to the global trade relationships which have functioned for decades and, while problematic, have enabled commerce to proceed at a reasonable level…credit has been damaged. By exploiting internal divisiveness of the political spectrum and the wealth inequality where the investor class seemingly has unchecked rule over hundreds of millions of disenfranchised people in the United States…the nation can no longer trust itself.
There is no utopia waiting on the other side of Trump's economy
Putting the Reconciliation Resolution in Context-2025-03-11
“For context, a $2.8 trillion reconciliation bill – with nearly all the borrowing between 2026 and 2034 – would:
- Equal more than all spending programs except for the Social Security retirement program, Medicare, Medicaid, net interest, veterans’ and defense spending.
- Equal two times as much as Medicare Part D, almost three times as much as the Child Tax Credit and Earned Income Tax Credit, and five times as much as foreign aid from USAID and the State Department.
- Add more to the deficit than any legislation enacted in the past decade, including 50 percent more than the American Rescue Plan Act, twice as much as the original Tax Cuts and Jobs Act, and seven times as much as the bipartisan infrastructure law”
Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost?
DeepSeek FAQ
future competition may be more about cost structure than model capabilities
Trump’s new economic war
Saudi Arabia and other producers must cut oil prices, global central banks “immediately” needed to slash interest rates, and foreign companies must ramp up investments in US factories or face tariffs. The EU — which came in for particular opprobrium — must stop hitting big American technology companies with competition fines.
Trump’s demands came amid a frenetic first week in office in which the president launched a blitzkrieg of executive orders and announcements intended not just to reshape the state but also assert America’s economic and commercial supremacy. Tariffs of up to 25 per cent could be slapped on Canada and Mexico as early as February 1, riding roughshod over the trade deal Trump himself negotiated in his first term.
China could face levies of up to 100 per cent if Beijing failed to agree on a deal to sell at least 50 per cent of the TikTok app to a US company, while the EU was told to purchase more American oil if it wanted to avoid tariffs. Underscoring the new American unilateralism, Trump pulled the US out of the World Health Organization, as well as exiting the Paris climate accord for a second time.
This proposal throws a “hand grenade” at international tax policymaking, says Niels Johannesen, director of the Oxford university Centre for Business Taxation at Saïd Business School. The move suggests a determination to “shape other countries’ tax policy through coercion rather than through co-operation”, he adds.
“Those around Trump have had time to build up a systematic, methodological approach for protectionist trade policy and it shows,” says former UK trade department official Allie Renison, now at consultancy SEC Newgate. The approach will be to build up a case file of “evidence” against countries, she says, and then use it to extract concessions in areas of both economic and foreign policy.
The question remains how far Trump is willing to go. The danger of trampling on the rules-based order, says Jeromin Zettelmeyer, head of the Bruegel think-tank, is a complete breakdown in the diplomatic and legal channels for settling international disputes.
If Trump were to pull out of a wider range of international frameworks, such as the WTO or the IMF, he warns, then the arrangements that help govern the global economy could get “substantively destroyed”.
Some caution against being awestruck by Trump’s threats or his espousal of capitalism without limits, because his agenda was so incoherent.
“What we are seeing is huge doses of American hubris,” says Arancha González, dean of the Paris School of International Affairs at Sciences Po. “We are blinded by the intensity of all the issues put on the table and by Trump’s conviction. But we are not looking at the contradictions. It’s like we are all on an orange drug
MANAGING FINANCIAL INSTABILITY IN 2025
Managing Financial Instability Risks in 2025
Summary
- The analysis positions itself as a warning about economic warfare, not financial advice
Key threats identified:
- Alleged Russian influence over key US political figures including Trump and Musk
- Strategic goal to dismantle US through internal turmoil and financial destabilization
- Bitcoin characterized as an economic weapon in a zero-sum game
- Christian Nationalist alignment with plans to destroy dollar/Fed system
Immediate financial risks for 2025:
- Potential government shutdown due to no budget passage
- Proposed $2 trillion budget cuts by Musk
- US debt default risk as leverage for cuts
- Strategic Bitcoin Reserve proposal threatening dollar stability
Critical timeline identified:
- January 2 2025: Government runs out of money
- January 3: New Congress installation
- January 20: Treasury transition period
- May 2025: Potential default date ("X-Date")
Recommended defensive measures:
- Diversify holdings across bonds, real estate, gold/silver ETFs
- Avoid Bitcoin/crypto investments
- Contact representatives to oppose extreme measures
Additional considerations:
- Moving to another country unlikely to help financially
- Social Security potentially at risk
- Banking system likely to hold but spreading funds recommended
- Resolution depends on mainstream Republicans recognizing and countering these threats
Document context:
- Living document subject to updates
- Written by Dave Troy, presented as analysis of warfare operations
- Includes extensive bibliography and related articles
- Last updated November 16, 2024
The Cost-of-Living Crisis Explains Everything
headline economic figures have become less and less of a useful guide to how actual families are doing—something repeatedly noted by Democrats during the Obama recovery and the Trump years. Inequality may be declining, but it still skews GDP and income figures, with most gains going to the few, not the many. The obscene cost of health care saps family incomes and government coffers without making anyone feel healthier or wealthier.
To be clear, the headline economic numbers are strong. The gains are real. The reduction in inequality is tremendous, the pickup in wage growth astonishing, particularly if you anchor your expectations to the Barack Obama years, as many Biden staffers do.
During the Biden-Harris years, more granular data pointed to considerable strain. Real median household income fell relative to its pre-COVID peak. The poverty rate ticked up, as did the jobless rate. The number of Americans spending more than 30 percent of their income on rent climbed. The delinquency rate on credit cards surged, as did the share of families struggling to afford enough nutritious food, as did the rate of homelessness.
the White House never passed the permanent care-economy measures it had considered.
the biggest problem, one that voters talked about at any given opportunity, was the unaffordability of American life. The giant run-up in inflation during the Biden administration made everything feel expensive, and the sudden jump in the cost of small-ticket, common purchases (such as fast food and groceries) highlighted how bad the country’s long-standing large-ticket, sticky costs (health care, child care, and housing) had gotten. The cost-of-living crisis became the defining issue of the campaign, and one where the incumbent Democrats’ messaging felt false and weak.
Rather than acknowledging the pain and the trade-offs and the complexity—and rather than running a candidate who could have criticized Biden’s economic plans—Democrats dissembled. They noted that inflation was a global phenomenon, as if that mattered to moms in Ohio and machinists in the Central Valley. They pushed the headline numbers. They insisted that working-class voters were better off, and ran on the threat Trump posed to democracy and rights. But were working-class voters really better off? Why wasn’t anyone listening when they said they weren’t?
Voters do seem to be less likely to vote in their economic self-interest these days, and more likely to vote for a culturally compelling candidate. As my colleague Rogé Karma notes, lower-income white voters are flipping from the Democratic Party to the Republican Party on the basis of identitarian issues. The sharp movement of union voters to Trump seems to confirm the trend. At the same time, high-income voters are becoming bluer in order to vote their cosmopolitan values.
The Biden-Harris administration did make a difference in concrete, specific ways: It failed to address the cost-of-living catastrophe and had little to show for its infrastructure laws, even if it found a lot to talk about. And it dismissed voters who said they hated the pain they felt every time they had to open their wallet.
Donald Trump’s Victory and the Politics of Inflation
I readily agreed that positive news about jobs, G.D.P., and Biden’s efforts to stimulate manufacturing investment—of which there was plenty—wasn’t receiving as much attention as it deserved, particularly compared with the voluminous coverage of inflation. But I also pointed to governments from across the political spectrum in other countries, such as Britain, Germany, and France, that had experienced big rises in consumer prices. Inflation, it seemed, was poison for all incumbents, regardless of their location or political affiliation.
According to the network exit poll, conducted by Edison Research, seventy-five per cent of the voters in last week’s election said that inflation had caused them moderate or severe hardship during the past year, and of this group about two-thirds voted for Donald Trump.
According to the Financial Times, “Every governing party facing election in a developed country this year lost vote share, the first time this has ever happened in almost 120 years.”
Immigration, the culture war, Trump’s reprobate appeal, and other factors all fed into the mix. But anger at high prices clearly played an important role, which raises the question of what, if anything, the Biden Administration could have done to counteract the global anti-incumbency wave. This is a complex issue that can’t be fully addressed in a single column. But one place to start is at the White House itself, where staffers at the Council of Economic Advisers (C.E.A.) and the National Economic Council spent a lot of time analyzing the inflation spike and examining options to deal with it.
Why, despite falling inflation, was public sentiment about the economy and the President still so sour? “We quickly realized that wasn’t just about the inflation rate,” Ernie Tedeschi, a former chief economist at the C.E.A. who left the Administration earlier this year, told me. “People were still going to the store and seeing high egg prices and high milk prices.” Even when an inflationary period peters out, prices don’t magically return to where they were before it began.
Most U.S. economists, including those associated with the Biden White House, remain skeptical about the efficacy of price controls, which they believe can lead to serious distortions and shortages. “I try to be humble, but I don’t know how they would have helped,” Tedeschi said. “People complained about inflation. If we had done price controls, they would have complained about shortages. It would still have been pinned on the President.”
Even if there was no simple policy fix for the political problems facing the Biden Administration, could it have done a better job of addressing voters’ concerns rhetorically? William Galston, a fellow at the Brookings Institution who worked in the Clinton Administration, said last week that Biden should have pivoted much earlier from emphasizing job creation to focussing on the cost of living. “He was trapped in a very traditional ‘jobs, jobs, jobs’ mind-set,” Galston said. “It was a fundamental mistake.”
Though Biden’s record on G.D.P. growth and employment creation is genuinely praiseworthy—since January, 2021, the economy has added sixteen million jobs—there is perhaps something in this criticism. For a time, it did seem that the White House wasn’t sufficiently acknowledging the frustration and anger that the inflation spike had generated. Still, beginning last year, Biden spoke out a lot more about high prices, and he sought to place some of the responsibility on corporate graft. He announced measures to crack down on “junk fees,” and criticized “shrinkflation” and “price gouging”—getting very little credit for it in the media or anywhere else. The Administration also tried to advertise the pathbreaking steps it had taken, through the Inflation Reduction Act of 2022, to lower health-care costs: capping the price of insulin for retirees, empowering Medicare to negotiate the prices it pays for some drugs, and introducing limits on out-of-pocket costs.
After Harris replaced Biden at the top of the Democratic ticket, she vowed that reducing the cost of living would be her first priority. She also outlined a number of proposals designed to help low- and middle-income families, which included expanded child tax credits, a new subsidy for first-time home buyers, and allowing Medicare to help cover the cost of home care.
Ultimately, however, none of these things dislodged the public perception that over-all prices were still too high and that Biden and Harris, if not entirely responsible, were convenient vehicles for voters to take out their frustration on.
David Shreve: The irony of American political economics
Summary: Shreve analyzes the paradox between economic performance under Democratic versus Republican administrations and public perception of economic competence. He presents substantial statistical evidence showing Democratic administrations consistently outperforming Republican ones across multiple economic metrics, while explaining how Republicans have successfully maintained a reputation for superior economic stewardship through specific messaging strategies and tax policies.
Since 1949, job growth under Democratic presidencies has been more than twice as large as that during Republican administrations (2.47% to 1.07%). Excluding public sector jobs, the advantage is even greater (2.55% to 0.97%). Other key averages reveal a similar distinction during this period: Real business investment growth advanced 6.58% under Democratic presidents and 2.98% under their Republican counterparts; real personal income — excluding government transfers — increased 2.66% and real economic growth per capita (net domestic product) advanced 2.6% under Democratic chief executives, but only by 1.41% and 1.28%, respectively, under Republican leaders. Inflation has also been much more modest under Democratic presidents (2.91% compared to 3.28% under their Republican counterparts), with an even more decided advantage when volatile energy and food markets are excluded (2.87% compared to 3.59%).
Of the 11 U.S. recessions we’ve endured over the past 75 years, 10 began in Republican presidential administrations; only Jimmy Carter — embracing Republican-style fiscal, monetary and regulatory policy much more completely than any other recent Democratic president — presided over a “Democratic” recession. The two “double-dip” recessions of 1980 and 1981-82, straddling the late Carter and early Reagan administrations, are almost indistinguishable in their policy origins.
We are reminded consistently by pundits, journalists and scholars that tax cuts represent what may be our most readily available and useful tool for economic stimulus. Flat, or flatter, taxes, we are told, are the only means to the achievement of tax simplicity and tax compliance.
Even on the question of who tends to favor lower or higher taxes, it is easy to be deceived. When income taxes are reduced (at the federal and state level) and the entire tax code is rendered less progressive as a result, two things happen almost automatically: other much more regressive taxes rise to fill the vacuum created by universally demanded (if not readily acknowledged) public services and consumer demand falters as higher taxes begin to fall on those compelled to spend all that they earn. Overall economic activity and prospective revenue growth, in turn, begin to stagnate, triggering a vicious cycle of tax rate increases (among the untouched regressive tax vehicles), just to maintain public services and economic activity.
Republican politicians have stumbled upon a remarkably effective political strategy: preach tax cuts as the be-all and end-all of successful economic policy; ignore the ways in which federal income tax cuts often lead to increased tolls, fees and property, sales, and excise tax increases; relinquish all but rhetorical opposition to the federal deficits created by federal tax cuts; and cap it off by hinting repeatedly that more could be done — allegedly to great effect — by reducing government spending directed at “undeserving” and “unambitious” poor people of color.
Republican political leaders have their cake and eat it too, riding a diffuse anti-tax sentiment to political victory. Actual results in this game don’t often matter, at least as long as their Democratic opponents succeed in staving off the most precipitous decline with safety nets and the preservation of some progressive fiscal policy elements.
Begun quietly with what Republican activist and Wall Street Journal editor Jude Wanniski called the “Two Santa Claus Theory” — under which Republicans could counter the Democratic social spending Santa Claus with their own tax-cutting Kris Kringle — this approach promised political “success” even amid policy failure, for opponents could be pinned with the deficits and damage it produced.
Exploiting normal psychological tendencies to imagine that “more money in my pocket” and “less money in theirs” simply must be good policy, the widespread ignorance of actual public spending and significant intergovernmental fiscal policies (where federal change forces state and local change, or vice versa), and the compelling notion that personal economic opportunity or success must be derived from personal talent and initiative (rather than significant public policy reform), the “Two Santa Claus” strategy has buoyed a Republican Party that has consistently delivered sub-par results.
Inside the Collapse of Venture for America
In the beginning, VFA was an institution beloved by many of its fellows. “It was a wonderful way to leave college and enter the real world because you’re surrounded by a community and there’s support from the organization,” says Jamie Norwood, co-founder of feminine hygiene brand Winx Health. Norwood and her co-founder, Cynthia Plotch, are a VFA success story. They met as fellows in 2015 and VFA eventually helped them launch their company with a grant and advisement. “We always say, Winx Health would not be here without VFA,” Norwood says.
Norwood and Plotch went through the standard VFA admissions protocol, which was rigorous. It required two written applications, a video interview, and in-person interviews at an event called “Selection Day,” many of which were held in New York City and Detroit over the years. By the end of each university term in May, accepted fellows would get access to Connect, VFA’s job portal, and have until November to land a job. For each fellow hired in a full-time job, VFA received a $5,000 placement fee, paid by partner companies. This fee became a crucial revenue stream for the organization—effectively wedding the professional success of its fellows to its bottom line.
Selection Day interviews were conducted by judges who often pitted interviewees against each other. Candidates were told to organize themselves in order of least to most likely to be successful, or according to whose answers had the most value per word. The format felt ruthless. “People cried” during the interview process, Plotch remembers.
The problems with the business bled into the fellows’ experience in 2023 and 2024, leaving them disenchanted, financially struggling, or expelled en masse from the program for reasons they believe were beyond their control. Despite a multitude of financial red flags, VFA leadership still insisted on recruiting for the 2024 class. “The talent team was traveling nonstop, using prepaid Visa cards since the corporate cards didn’t work,” explains a former director who worked closely with fellows.
Onboarding fresh recruits became increasingly crucial if VFA was going to survive. The organization asked companies for placement fees upfront in 2023, according to internal VFA documents and conversations with former employees. The policy change gave companies pause. Fewer companies signed up as partners, meaning fellows weren’t getting jobs and VFA was losing money.
In the spring of 2023, “there were 15 jobs on opening day,” for a class that eventually grew to over 100 fellows, the former director explains. Gabriella Rudnik, a 2023 fellow, estimates that when training camp began in July 2023, less than half of her peers had jobs, “whereas in previous years it would be closer to like 80 percent.”
Fellows were made to pay the price for the shortage of companies partnering with VFA in 2023. “We weren’t getting more jobs on Connect, and that’s what led to so many fellows being off-boarded,” explains a former director who worked closely with fellows.
Traditionally, VFA gave fellows a deadline of November of their class year to find a job, which typically meant a few stragglers were given extra help to find a position if they were late. In those rare cases during earlier years, fellows were offboarded by the organization, a former director says.
In previous years, expulsion was a much more serious and infrequent occurrence. “Removal from the fellowship was not something done lightly. During my tenure, we instituted an internal investigation process, similar to an HR investigation,” says the former executive who worked at VFA from 2017-20.
In total, at least 40 fellows from the 2023 class were expelled for failing to get jobs that weren’t available, according to research by former VFA fellows who tracked the number of fellows purged from a Slack channel. Records of their participation were removed from the VFA website, the fellows say.
Many fellows had made sacrifices to be part of the highly selective and prestigious VFA, which cited acceptance rates of around 10 percent of applicants. “There were fellows who turned down six-figure jobs to be a part of this program, and were told that the program that Andrew Yang started would live up to its reputation,” says Paul Ford, a 2024 fellow.
Though internal documents show that VFA was slowly imploding for months, in all external communications with fellows, the nonprofit still maintained that 2024 training camp would take place in Detroit.
“From an ethical perspective, it does reek of being problematic,” says Thad Calabrese, a professor of nonprofit management at New York University. “You entered into an arrangement with people who don’t have a lot of money, who believed that you were going to make them whole. Then you’re going to turn around and not make them whole.”
Why millions voted for both Trump and progressive policies
Bidenomics Is Starting to Transform America. Why Has No One Noticed?
Biden is the first President in decades to treat government as the designer and ongoing referee of markets, rather than as the corrector of markets’ dislocations and excesses after the fact. He doesn’t speak of free trade and globalization as economic ideals. His approach to combatting climate change involves no carbon taxes or credits—another major departure, not just from his predecessors but also from the policies of many other countries. His Administration has been far more aggressive than previous ones in taking antitrust actions against big companies.
Another way of thinking about Biden’s approach is through terminology devised by the political scientist Jacob Hacker: it rejects redistribution as a guiding liberal principle, in favor of “predistribution,” an effort to transform the economy in a way that makes redistribution less necessary.
Democrats pass something called “The Inflation Reduction Act.” (Without a single Republican vote). And it literally reduced inflation.
How Are You Auramaxxing?
While readings like those that might come from an aura photographer had previously been done by assigning meanings to specific colors, a point system has emerged from teenagers on TikTok, where real-life interactions are gamified into gaining or losing “aura points.” There are celebrity compilations of “the worst aura moments of all time” and people posting concerns about losing aura because their boyfriend wants space. Taking care of your skin and taping your mouth while you sleep will gain you aura points. Same goes for developing an aesthetic, sitting in nature, making eye contact with women, using wired headphones, doing pull-ups, not speaking, and finding other friends with aura. While the aura math online is inconsistent and subjective (people usually debate the points in the comments), the general rule is you gain hundreds or thousands of points by doing something impressive, intriguing, charismatic, or authentic.
While learning how to auramaxx by preparing for conversations as an introvert and eating breakfast and working out in the morning may help some young men navigate life, and the mostly amusing aura point system may seem harmless, Derek Beres, author and co-host of Conspirituality, a podcast dismantling New Age cults, wellness grifters, and conspiracy-mad yogis, points out that auramaxxing content online is rife with misogyny. This comes as little surprise seeing as, according to Beres, wellness content online often has right-wing overlap, and looksmaxxing has roots within incel message boards. Aside from the obvious potential for harm toward women, Beres says that the pursuit of auramaxxing can also inevitably lead to guilt and shame for young men.
AI Integration and Modularization
Summary: The question of integration versus modularization in the context of AI, drawing on the work of economists Ronald Coase and Clayton Christensen. Google is pursuing a fully integrated approach similar to Apple, while AWS is betting on modularization, and Microsoft and Meta are somewhere in between. Integration may provide an advantage in the consumer market and for achieving AGI, but that for enterprise AI, a more modular approach leveraging data gravity and treating models as commodities may prevail. Ultimately, the biggest beneficiary of this dynamic could be Nvidia.
The left side of figure 5-1 indicates that when there is a performance gap — when product functionality and reliability are not yet good enough to address the needs of customers in a given tier of the market — companies must compete by making the best possible products. In the race to do this, firms that build their products around proprietary, interdependent architectures enjoy an important competitive advantage against competitors whose product architectures are modular, because the standardization inherent in modularity takes too many degrees of design freedom away from engineers, and they cannot not optimize performance.
The issue I have with this analysis of vertical integration — and this is exactly what I was taught at business school — is that the only considered costs are financial. But there are other, more difficult to quantify costs. Modularization incurs costs in the design and experience of using products that cannot be overcome, yet cannot be measured. Business buyers — and the analysts who study them — simply ignore them, but consumers don’t. Some consumers inherently know and value quality, look-and-feel, and attention to detail, and are willing to pay a premium that far exceeds the financial costs of being vertically integrated.
Google trains and runs its Gemini family of models on its own TPU processors, which are only available on Google’s cloud infrastructure. Developers can access Gemini through Vertex AI, Google’s fully-managed AI development platform; and, to the extent Vertex AI is similar to Google’s internal development environment, that is the platform on which Google is building its own consumer-facing AI apps. It’s all Google, from top-to-bottom, and there is evidence that this integration is paying off: Gemini 1.5’s industry leading 2 million token context window almost certainly required joint innovation between Google’s infrastructure team and its model-building team.
In AI, Google is pursuing an integrated strategy, building everything from chips to models to applications, similar to Apple's approach in smartphones.
On the other extreme is AWS, which doesn’t have any of its own models; instead its focus has been on its Bedrock managed development platform, which lets you use any model. Amazon’s other focus has been on developing its own chips, although the vast majority of its AI business runs on Nvidia GPUs.
Microsoft is in the middle, thanks to its close ties to OpenAI and its models. The company added Azure Models-as-a-Service last year, but its primary focus for both external customers and its own internal apps has been building on top of OpenAI’s GPT family of models; Microsoft has also launched its own chip for inference, but the vast majority of its workloads run on Nvidia.
Google is certainly building products for the consumer market, but those products are not devices; they are Internet services. And, as you might have noticed, the historical discussion didn’t really mention the Internet. Both Google and Meta, the two biggest winners of the Internet epoch, built their services on commodity hardware. Granted, those services scaled thanks to the deep infrastructure work undertaken by both companies, but even there Google’s more customized approach has been at least rivaled by Meta’s more open approach. What is notable is that both companies are integrating their models and their apps, as is OpenAI with ChatGPT.
Google's integrated AI strategy is unique but may not provide a sustainable advantage for Internet services in the way Apple's integration does for devices
It may be the case that selling hardware, which has to be perfect every year to justify a significant outlay of money by consumers, provides a much better incentive structure for maintaining excellence and execution than does being an Aggregator that users access for free.
Google’s collection of moonshots — from Waymo to Google Fiber to Nest to Project Wing to Verily to Project Loon (and the list goes on) — have mostly been science projects that have, for the most part, served to divert profits from Google Search away from shareholders. Waymo is probably the most interesting, but even if it succeeds, it is ultimately a car service rather far afield from Google’s mission statement “to organize the world’s information and make it universally accessible and useful.”
The only thing that drives meaningful shifts in platform marketshare are paradigm shifts, and while I doubt the v1 version of Pixie [Google’s rumored Pixel-only AI assistant] would be good enough to drive switching from iPhone users, there is at least a path to where it does exactly that.
the fact that Google is being mocked mercilessly for messed-up AI answers gets at why consumer-facing AI may be disruptive for the company: the reason why incumbents find it hard to respond to disruptive technologies is because they are, at least at the beginning, not good enough for the incumbent’s core offering. Time will tell if this gives more fuel to a shift in smartphone strategies, or makes the company more reticent.
while I was very impressed with Google’s enterprise pitch, which benefits from its integration with Google’s infrastructure without all of the overhead of potentially disrupting the company’s existing products, it’s going to be a heavy lift to overcome data gravity, i.e. the fact that many enterprise customers will simply find it easier to use AI services on the same clouds where they already store their data (Google does, of course, also support non-Gemini models and Nvidia GPUs for enterprise customers). To the extent Google wins in enterprise it may be by capturing the next generation of startups that are AI first and, by definition, data light; a new company has the freedom to base its decision on infrastructure and integration.
Amazon is certainly hoping that argument is correct: the company is operating as if everything in the AI value chain is modular and ultimately a commodity, which insinuates that it believes that data gravity will matter most. What is difficult to separate is to what extent this is the correct interpretation of the strategic landscape versus a convenient interpretation of the facts that happens to perfectly align with Amazon’s strengths and weaknesses, including infrastructure that is heavily optimized for commodity workloads.
Unclear if Amazon's strategy is based on true insight or motivated reasoning based on their existing strengths
Meta’s open source approach to Llama: the company is focused on products, which do benefit from integration, but there are also benefits that come from widespread usage, particularly in terms of optimization and complementary software. Open source accrues those benefits without imposing any incentives that detract from Meta’s product efforts (and don’t forget that Meta is receiving some portion of revenue from hyperscalers serving Llama models).
The iPhone maker, like Amazon, appears to be betting that AI will be a feature or an app; like Amazon, it’s not clear to what extent this is strategic foresight versus motivated reasoning.
achieving something approaching AGI, whatever that means, will require maximizing every efficiency and optimization, which rewards the integrated approach.
the most value will be derived from building platforms that treat models like processors, delivering performance improvements to developers who never need to know what is going on under the hood.
Shop Class as Soulcraft
Summary: Skilled manual labor entails a systematic encounter with the material world that can enrich one's intellectual and spiritual life. The degradation of work in both blue-collar and white-collar professions is driven not just by technological progress, but by the separation of thinking from doing according to the dictates of capital. To realize the full potential of human flourishing, we must reckon with the appeal of skilled manual work and question the assumptions that shape our educational priorities and notions of a good life.
an engineering culture has developed in recent years in which the object is to “hide the works,” rendering the artifacts we use unintelligible to direct inspection. Lift the hood on some cars now (especially German ones), and the engine appears a bit like the shimmering, featureless obelisk that so enthralled the cavemen in the opening scene of the movie 2001: A Space Odyssey. Essentially, there is another hood under the hood.
What ordinary people once made, they buy; and what they once fixed for themselves, they replace entirely or hire an expert to repair, whose expert fix often involves installing a pre-made replacement part.
So perhaps the time is ripe for reconsideration of an ideal that has fallen out of favor: manual competence, and the stance it entails toward the built, material world. Neither as workers nor as consumers are we much called upon to exercise such competence, most of us anyway, and merely to recommend its cultivation is to risk the scorn of those who take themselves to be the most hard-headed: the hard-headed economist will point out the opportunity costs of making what can be bought, and the hard-headed educator will say that it is irresponsible to educate the young for the trades, which are somehow identified as the jobs of the past.
It was an experience of agency and competence. The effects of my work were visible for all to see, so my competence was real for others as well; it had a social currency. The well-founded pride of the tradesman is far from the gratuitous “self-esteem” that educators would impart to students, as though by magic.
Skilled manual labor entails a systematic encounter with the material world, precisely the kind of encounter that gives rise to natural science. From its earliest practice, craft knowledge has entailed knowledge of the “ways” of one’s materials — that is, knowledge of their nature, acquired through disciplined perception and a systematic approach to problems.
Because craftsmanship refers to objective standards that do not issue from the self and its desires, it poses a challenge to the ethic of consumerism, as the sociologist Richard Sennett has recently argued. The craftsman is proud of what he has made, and cherishes it, while the consumer discards things that are perfectly serviceable in his restless pursuit of the new.
The central culprit in Braverman’s account is “scientific management,” which “enters the workplace not as the representative of science, but as the representative of management masquerading in the trappings of science.” The tenets of scientific management were given their first and frankest articulation by Frederick Winslow Taylor
Scattered craft knowledge is concentrated in the hands of the employer, then doled out again to workers in the form of minute instructions needed to perform some part of what is now a work process. This process replaces what was previously an integral activity, rooted in craft tradition and experience, animated by the worker’s own mental image of, and intention toward, the finished product. Thus, according to Taylor, “All possible brain work should be removed from the shop and centered in the planning or lay-out department.” It is a mistake to suppose that the primary purpose of this partition is to render the work process more efficient. It may or may not result in extracting more value from a given unit of labor time. The concern is rather with labor cost. Once the cognitive aspects of the job are located in a separate management class, or better yet in a process that, once designed, requires no ongoing judgment or deliberation, skilled workers can be replaced with unskilled workers at a lower rate of pay.
the “jobs of the future” rhetoric surrounding the eagerness to end shop class and get every warm body into college, thence into a cubicle, implicitly assumes that we are heading to a “post-industrial” economy in which everyone will deal only in abstractions. Yet trafficking in abstractions is not the same as thinking. White collar professions, too, are subject to routinization and degradation, proceeding by the same process as befell manual fabrication a hundred years ago: the cognitive elements of the job are appropriated from professionals, instantiated in a system or process, and then handed back to a new class of workers — clerks — who replace the professionals. If genuine knowledge work is not growing but actually shrinking, because it is coming to be concentrated in an ever-smaller elite, this has implications for the vocational advice that students ought to receive.
The trades are then a natural home for anyone who would live by his own powers, free not only of deadening abstraction, but also of the insidious hopes and rising insecurities that seem to be endemic in our current economic life. This is the stoic ideal.
My Last Five Years of Work
Copywriting, tax preparation, customer service, and many other tasks are or will soon be heavily automated. I can see the beginnings in areas like software development and contract law. Generally, tasks that involve reading, analyzing, and synthesizing information, and then generating content based on it, seem ripe for replacement by language models.
Anyone who makes a living through delicate and varied movements guided by situation specific know-how can expect to work for much longer than five more years. Thus, electricians, gardeners, plumbers, jewelry makers, hair stylists, as well as those who repair ironwork or make stained glass might find their handiwork contributing to our society for many more years to come
Finally, I expect there to be jobs where humans are preferred to AIs even if the AIs can do the job equally well, or perhaps even if they can do it better. This will apply to jobs where something is gained from the very fact that a human is doing it—likely because it involves the consumer feeling like they have a relationship with the human worker as a human. Jobs that might fall into this category include counselors, doulas, caretakers for the elderly, babysitters, preschool teachers, priests and religious leaders, even sex workers—much has been made of AI girlfriends, but I still expect that a large percentage of buyers of in-person sexual services will have a strong preference for humans. Some have called these jobs “nostalgic jobs.”
It does seem that, overall, unemployment makes people sadder, sicker, and more anxious. But it isn’t clear if this is an inherent fact of unemployment, or a contingent one. It is difficult to isolate the pure psychological effects of being unemployed, because at present these are confounded with the financial effects—if you lose your job, you have less money—which produce stress that would not exist in the context of, say, universal basic income. It is also confounded with the “shame” aspect of being fired or laid off—of not working when you really feel you should be working—as opposed to the context where essentially all workers have been displaced.
One study that gets around the “shame” confounder of unemployment is “A Forced Vacation? The Stress of Being Temporarily Laid Off During a Pandemic” by Scott Schieman, Quan Mai, and Ryu Won Kang. This study looked at Canadian workers who were temporarily laid off several months into the COVID-19 pandemic. They first assumed that such a disruption would increase psychological distress, but instead found that the self-reported wellbeing was more in line with the “forced vacation hypothesis,” suggesting that temporarily laid-off workers might initially experience lower distress due to the unique circumstances of the pandemic.
By May 2020, the distress gap observed in April had vanished, indicating that being temporarily laid off was not associated with higher distress during these months. The interviews revealed that many workers viewed being left without work as a “forced vacation,” appreciating the break from work-related stress and valuing the time for self-care and family. The widespread nature of layoffs normalized the experience, reducing personal blame and fostering a sense of shared experience. Financial strain was mitigated by government support, personal savings, and reduced spending, which buffered against potential distress.
The study suggests that the context and available support systems can significantly alter the psychological outcomes of unemployment—which seems promising for AGI-induced unemployment.
From the studies on plant closures and pandemic layoffs, it seems that shame plays a role in making people unhappy after unemployment, which implies that they might be happier in full automation-induced unemployment, since it would be near-universal and not signify any personal failing.
A final piece that reveals a societal-psychological aspect to how much work is deemed necessary is that the amount has changed over time! The number of hours that people have worked has declined over the past 150 years. Work hours tend to decline as a country gets richer. It seems odd to assume that the current accepted amount of work of roughly 40 hours a week is the optimal amount. The 8-hour work day, weekends, time off—hard-fought and won by the labor movement!—seem to have been triumphs for human health and well-being. Why should we assume that stopping here is right? Why should we assume that less work was better in the past, but less work now would be worse?
Removing the shame that accompanies unemployment by removing the sense that one ought to be working seems one way to make people happier during unemployment. Another is what they do with their free time. Regardless of how one enters unemployment, one still confronts empty and often unstructured time.
One paper, titled “Having Too Little or Too Much Time Is Linked to Lower Subjective Well-Being” by Marissa A. Sharif, Cassie Mogilner, and Hal E. Hershfield tried to explore whether it was possible to have “too much” leisure time.
The paper concluded that it is possible to have too little discretionary time, but also possible to have too much, and that moderate amounts of discretionary time seemed best for subjective well-being. More time could be better, or at least not meaningfully worse, provided it was spent on “social” or “productive” leisure activities. This suggests that how people fare psychologically with their post-AGI unemployment will depend heavily on how they use their time, not how much of it there is
Automation-induced unemployment could feel like retiring depending on how total it is. If essentially no one is working, and no one feels like they should be working, it might be more akin to retirement, in that it would lack the shameful element of feeling set apart from one’s peers.
Women provide another view on whether formal work is good for happiness. Women are, for the most part, relatively recent entrants to the formal labor market. In the U.S., 18% of women were in the formal labor force in 1890. In 2016, 57% were. Has labor force participation made them happier? By some accounts: no. A paper that looked at subjective well-being for U.S. women from the General Social Survey between the 1970s and 2000s—a time when labor force participation was climbing—found both relative and absolute declines in female happiness.
I think women’s work and AI is a relatively optimistic story. Women have been able to automate unpleasant tasks via technological advances, while the more meaningful aspects of their work seem less likely to be automated away.
When not participating in the formal labor market, women overwhelmingly fill their time with childcare and housework. The time needed to do housework has declined over time due to tools like washing machines, dryers, and dishwashers. These tools might serve as early analogous examples of the future effects of AI: reducing unwanted and burdensome work to free up time for other tasks deemed more necessary or enjoyable.
it seems less likely that AIs will so thoroughly automate childcare and child-rearing because this “work” is so much more about the relationship between the parties involved. Like therapy, childcare and teaching seems likely to be one of the forms of work where a preference for a human worker will persist the longest.
In the early modern era, landed gentry and similar were essentially unemployed. Perhaps they did some minor administration of their tenants, some dabbled in politics or were dragged into military projects, but compared to most formal workers they seem to have worked relatively few hours. They filled the remainder of their time with intricate social rituals like balls and parties, hobbies like hunting, studying literature, and philosophy, producing and consuming art, writing letters, and spending time with friends and family. We don’t have much real well-being survey data from this group, but, hedonically, they seem to have been fine. Perhaps they suffered from some ennui, but if we were informed that the great mass of humanity was going to enter their position, I don’t think people would be particularly worried.
I sometimes wonder if there is some implicit classism in people’s worries about unemployment: the rich will know how to use their time well, but the poor will need to be kept busy.
Although a trained therapist might be able to counsel my friends or family through their troubles better, I still do it, because there is value in me being the one to do so. We can think of this as the relational reason for doing something others can do better. I write because sometimes I enjoy it, and sometimes I think it betters me. I know others do so better, but I don’t care—at least not all the time. The reasons for this are part hedonic and part virtue or morality.
A renowned AI researcher once told me that he is practicing for post-AGI by taking up activities that he is not particularly good at: jiu-jitsu, surfing, and so on, and savoring the doing even without excellence. This is how we can prepare for our future where we will have to do things from joy rather than need, where we will no longer be the best at them, but will still have to choose how to fill our days.
Smart and Illicit - Who becomes an Entrepreneur and do they earn more?
How McKinsey Destroyed the Middle Class - The Atlantic
The rise of management consulting firms like McKinsey played a pivotal role in disempowering the American middle class by promoting corporate restructuring that concentrated power and wealth in the hands of elite managers while stripping middle managers and workers of their decision-making roles, job security, and opportunities for career advancement.
Key topics:
- Management consulting's role in reshaping corporate America
- The decline of the middle class and the rise of corporate elitism
- McKinsey's influence on corporate restructuring and inequality
- The shift from lifetime employment to precarious jobs
- The erosion of corporate social responsibility
- The role of management consulting in perpetuating economic inequality
what consequences has the rise of management consulting had for the organization of American business and the lives of American workers?
The answers to these questions put management consultants at the epicenter of economic inequality and the destruction of the American middle class.
Managers do not produce goods or deliver services. Instead, they plan what goods and services a company will provide, and they coordinate the production workers who make the output. Because complex goods and services require much planning and coordination, management (even though it is only indirectly productive) adds a great deal of value. And managers as a class capture much of this value as pay. This makes the question of who gets to be a manager extremely consequential.
In the middle of the last century, management saturated American corporations. Every worker, from the CEO down to production personnel, served partly as a manager, participating in planning and coordination along an unbroken continuum in which each job closely resembled its nearest neighbor.
Even production workers became, on account of lifetime employment and workplace training, functionally the lowest-level managers. They were charged with planning and coordinating the development of their own skills to serve the long-run interests of their employers.
At McDonald’s, Ed Rensi worked his way up from flipping burgers in the 1960s to become CEO. More broadly, a 1952 report by Fortune magazine found that two-thirds of senior executives had more than 20 years’ service at their current companies.
Top executives enjoyed commensurately less control and captured lower incomes. This democratic approach to management compressed the distribution of income and status. In fact, a mid-century study of General Motors published in the Harvard Business Review—completed, in a portent of what was to come, by McKinsey’s Arch Patton—found that from 1939 to 1950, hourly workers’ wages rose roughly three times faster than elite executives’ pay. The management function’s wide diffusion throughout the workforce substantially built the mid-century middle class.
The earliest consultants were engineers who advised factory owners on measuring and improving efficiency at the complex factories required for industrial production. The then-leading firm, Booz Allen, did not achieve annual revenues of $2 million until after the Second World War. McKinsey, which didn’t hire its first Harvard M.B.A. until 1953, retained a diffident and traditional ethos
A new ideal of shareholder primacy, powerfully championed by Milton Friedman in a 1970 New York Times Magazine article entitled “The Social Responsibility of Business is to Increase its Profits,” gave the newly ambitious management consultants a guiding purpose. According to this ideal, in language eventually adopted by the Business Roundtable, “the paramount duty of management and of boards of directors is to the corporation’s stockholders.” During the 1970s, and accelerating into the ’80s and ’90s, the upgraded management consultants pursued this duty by expressly and relentlessly taking aim at the middle managers who had dominated mid-century firms, and whose wages weighed down the bottom line.
Management consultants thus implemented and rationalized a transformation in the American corporation. Companies that had long affirmed express “no layoff” policies now took aim at what the corporate raider Carl Icahn, writing in the The New York Times in the late 1980s, called “corporate bureaucracies” run by “incompetent” and “inbred” middle managers. They downsized in response not to particular business problems but rather to a new managerial ethos and methods; they downsized when profitable as well as when struggling, and during booms as well as busts.
Downsizing was indeed wrenching. When IBM abandoned lifetime employment in the 1990s, local officials asked gun-shop owners around its headquarters to close their stores while employees absorbed the shock.
In some cases, downsized employees have been hired back as subcontractors, with no long-term claim on the companies and no role in running them. When IBM laid off masses of workers in the 1990s, for example, it hired back one in five as consultants. Other corporations were built from scratch on a subcontracting model. The clothing brand United Colors of Benetton has only 1,500 employees but uses 25,000 workers through subcontractors.
Shift from lifetime employment to reliance on outsourced labor; decline in unions
The shift from permanent to precarious jobs continues apace. Buttigieg’s work at McKinsey included an engagement for Blue Cross Blue Shield of Michigan, during a period when it considered cutting up to 1,000 jobs (or 10 percent of its workforce). And the gig economy is just a high-tech generalization of the sub-contractor model. Uber is a more extreme Benetton; it deprives drivers of any role in planning and coordination, and it has literally no corporate hierarchy through which drivers can rise up to join management.
In effect, management consulting is a tool that allows corporations to replace lifetime employees with short-term, part-time, and even subcontracted workers, hired under ever more tightly controlled arrangements, who sell particular skills and even specified outputs, and who manage nothing at all.
the managerial control stripped from middle managers and production workers has been concentrated in a narrow cadre of executives who monopolize planning and coordination. Mid-century, democratic management empowered ordinary workers and disempowered elite executives, so that a bad CEO could do little to harm a company and a good one little to help it.
Whereas at mid-century a typical large-company CEO made 20 times a production worker’s income, today’s CEOs make nearly 300 times as much. In a recent year, the five highest-paid employees of the S&P 1500 (7,500 elite executives overall), obtained income equal to about 10 percent of the total profits of the entire S&P 1500.
as Kiechel put it dryly, “we are not all in this together; some pigs are smarter than other pigs and deserve more money.” Consultants seek, in this way, to legitimate both the job cuts and the explosion of elite pay. Properly understood, the corporate reorganizations were, then, not merely technocratic but ideological.
corporate reorganizations have deprived companies of an internal supply of managerial workers. When restructurings eradicated workplace training and purged the middle rungs of the corporate ladder, they also forced companies to look beyond their walls for managerial talent—to elite colleges, business schools, and (of course) to management-consulting firms. That is to say: The administrative techniques that management consultants invented created a huge demand for precisely the services that the consultants supply.
Consulting, like law school, is an all-purpose status giver—“low in risk and high in reward,” according to the Harvard Crimson. McKinsey also hopes that its meritocratic excellence will legitimate its activities in the eyes of the broader world. Management consulting, Kiechel observed, acquired its power and authority not from “silver-haired industry experience but rather from the brilliance of its ideas and the obvious candlepower of the people explaining them, even if those people were twenty-eight years old.”
A deeper objection to Buttigieg’s association with McKinsey concerns not whom the firm represents but the central role the consulting revolution has played in fueling the enormous economic inequalities that now threaten to turn the United States into a caste society.
Meritocrats like Buttigieg changed not just corporate strategies but also corporate values.
GM may aspire to build good cars; IBM, to make typewriters, computers, and other business machines; and AT&T, to improve communications. Executives who rose up through these companies, on the mid-century model, were embedded in their firms and embraced these values, so that they might even have come to view profits as a salutary side effect of running their businesses well.
When management consulting untethered executives from particular industries or firms and tied them instead to management in general, it also led them to embrace the one thing common to all corporations: making money for shareholders. Executives raised on the new, untethered model of management aim exclusively and directly at profit: their education, their career arc, and their professional role conspire to isolate them from other workers and train them single-mindedly on the bottom line.
American democracy, the left believes, cannot be rejuvenated by persuading elites to deploy their excessive power somehow more benevolently. Instead, it requires breaking the stranglehold that elites have on our economics and politics, and reempowering everyone else.
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Monopoly by the Numbers — Open Markets Institute
Antitrust laws have not been effectively enforced or applied to specific market realities.
A generation ago, small, independent operations defined the entire industry. Today, the businesses of beef, pork, and poultry slaughter are all dominated by four giants at the national level. But that greatly understates the problem, as in many regions, a single corporation holds a complete monopoly. Two firms, Dean Foods and the Dairy Farmers of America control as much as 80-90 percent of the milk supply chain in some states and wield substantial influence across the entire industry. As our Food & Power website details, the story is much the same in food-processing, egg production, grain production, and produce farming.
Monopolists have captured control over many lines of manufacturing as well. Corning, an American glass manufacturer, sells 60 percent of all the glass used in LCD screens, and Owens Illinois holds a near monopoly over market for glass bottles in the US. Rexam, a British company, holds a dominant position over the international supply of bottle caps and pharmaceutical bottles.
Hospital corporations across America have also been buying up physician practices in recent years. Hospital ownership of physician practices more than doubled between 2004 and 2011, from 24 to 49 percent. In drug stores, meanwhile, the pending takeover of Rite Aid by Walgreen’s would reduce the market to two giants, along with CVS.
Pharmaceutical companies have been merging at a record pace in recent years, and drug makers often use their concentrated market power to raise the prices of generic drugs, such as Digoxin, Daraprim, Naloxone, and standard vaccines.
Whirlpool’s takeover of Maytag in 2006 gave it control of 50 to 80 percent of U.S. sales of washing machines, dryers, and dishwashers and a very strong position in refrigerators. Maytag also controls the Jenn-Air, Amana, Magic Chef, Admiral, and KitchenAid brands and holds a dominant position over supply of Sears Kenmore products.
The FTC successfully blocked a proposed merger of Staples and Office Depot, but the market is still highly concentrated after Office Depot’s 2013 acquisition of Office Max. Collectively, the two firms control 69 percent of the entire office supplies market.
China’s vitamin cartel controls 100 percent of the market for U.S. Vitamin C, which is also known as ascorbic acid and which is used in almost all preserved foods.