The Great Affluence Fallacy
Yesterday I blogged about a weakness of capitalism, which (to my mind) is the idea that profit is a good measure of outcomes: the notion that if profits increase it means that, overall, things are moving in the right direction and getting better.
As I pointed out, though, the drive to increase profits incentivizes corporations to cut costs (since $1 saved in costs = $1 increase in profits). Though I didn’t mention it in that post, one common way a corporation cuts its costs is to get someone else to pay the costs of what the corporation is doing. For example, look at environmental destruction: taking care of the environment adds to costs, but if a corporation can get others—taxpayers, for example—to pay those costs, then the corporation’s profits are increased. (And thus we have Superfund toxic-waste sites.) Another example: the human and healthcare costs from smoking cigarettes. Those costs are enormous, but corporations pay little now and for years paid nothing.
Thus increasing profits for the corporations can result in harm to others: communities that lose factories, employees that lose jobs, the public that sees the environment despoiled and must pay to reclaim it, and (as in my earlier post at the link above) customers who get substandard products or services (airline cancellations being the specific example, because airline companies cut costs on their IT infrastructure).
So profit alone is much too narrow to offer good guidance, but it is the sole compass corporations now use.
David Brooks has a very interesting column in the NY Times this morning that looks at the notion that the US is following a flawed compass from a slightly different angle:
In 18th-century America, colonial society and Native American society sat side by side. The former was buddingly commercial; the latter was communal and tribal. As time went by, the settlers from Europe noticed something: No Indians were defecting to join colonial society, but many whites were defecting to live in the Native American one.
This struck them as strange. Colonial society was richer and more advanced. And yet people were voting with their feet the other way.
The colonials occasionally tried to welcome Native American children into their midst, but they couldn’t persuade them to stay. Benjamin Franklin observed the phenomenon in 1753, writing, “When an Indian child has been brought up among us, taught our language and habituated to our customs, yet if he goes to see his relations and make one Indian ramble with them, there is no persuading him ever to return.”
During the wars with the Indians, many European settlers were taken prisoner and held within Indian tribes. After a while, they had plenty of chances to escape and return, and yet they did not. In fact, when they were “rescued,” they fled and hid from their rescuers.
Sometimes the Indians tried to forcibly return the colonials in a prisoner swap, and still the colonials refused to go. In one case, the Shawanese Indians were compelled to tie up some European women in order to ship them back. After they were returned, the women escaped the colonial towns and ran back to the Indians.
Even as late as 1782, the pattern was still going strong. Hector de Crèvecoeur wrote, “Thousands of Europeans are Indians, and we have no examples of even one of those aborigines having from choice become European.”
I first read about this history several months ago in Sebastian Junger’s excellent book “Tribe.” It has haunted me since. It raises the possibility that our culture is built on some fundamental error about what makes people happy and fulfilled.
The native cultures were more communal. As Junger writes, “They would have practiced extremely close and involved child care. And they would have done almost everything in the company of others. They would have almost never been alone.”
If colonial culture was relatively atomized, imagine American culture of today. As we’ve gotten richer, we’ve used wealth to buy space: bigger homes, bigger yards, separate bedrooms, private cars, autonomous lifestyles. Each individual choice makes sense, but the overall atomizing trajectory sometimes seems to backfire. According to the World Health Organization, people in wealthy countries suffer depression by as much as eight times the rate as people in poor countries.
There might be a Great Affluence Fallacy going on — we want privacy in individual instances, but often this makes life generally worse.
Every generation faces the challenge of . . .