In Thomas Piketty’s ground-breaking 2014 economics blockbuster Capital in the 21st Century, the economist carefully documents the increasing wealth disparity around the globe, a phenomenon that has animated the Arab Spring, the Occupy movement, Pope Francis, and political activists around the world. Some of Piketty’s critics have tried to call his math into question, but on this front Piketty seems most sound. The data-set he worked from represents an astonishing work of scholarship, and the raw numbers are online for anyone to download, along with copious notes about the assumptions Piketty made in normalizing disparate data-sources in order to form a coherent narrative. Piketty is a quant’s quant, a man with a lot of extremely defensible numbers.
Then there’s the other criticism of Piketty: ‘‘So what?’’ So what if rich people are getting richer and poor people are getting poorer? As Boris Johnson, the Eton-educated mayor of London, quipped: ‘‘The harder you shake the pack, the easier it will be for some cornflakes to get to the top.’’ In other words, if capitalism is making the rich richer, it’s because they deserve it, a fact that can be demonstrated by how rich they are. If you’re a crumb at the bottom of the box, you must be a crumby sort of person.
Piketty addresses this criticism less explicitly, by oblique references to ‘‘social instability.’’ He frequently compares contemporary wealth disparity to that of the eve of World War I (cast as a kind of turf-war among the super-rich about who would pocket the ongoing wealth from the colonies, now that there were no more new territories to conquer) and to the time just before the French Revolution, a comparison that presumably sends shivers up the backs of his fellow French citizens, but probably seems a bit abstract to the book’s English-language audience.
Here’s what he’s saying, when you read between the lines: when the gap between the rich and the poor gets too big, the poor start building guillotines. It’s probably cheaper to redistribute some of your wealth, deserved or not, than to pay for all the guards you’ll need to keep your head affixed to your body.
In other words, a big gap between the rich and the poor destabilizes societies, and it’s hard to be really rich in a society that’s in chaos. Unless the people around you buy into the legitimacy of the system that made you rich, they will not be bothered by the spectacle of you having all your stuff taken away, and they may even help do it.
Historically, there have been two kinds of very stable societies: highly redistributive ones, like the Scandinavian countries (in which the gap between the rich and the poor is closed through taxation, laws that favor employees and tenants, and extensive social programs), and totalitarian ones, like Saddam Hussein’s Iraq or Muammar Gaddafi’s Libya, where, instead of redistributing a lot of money from the ruling elite to the rest of the people, the ruling elites spend somewhat less money on a huge coercive apparatus made up of soldiers, spies, police officers, snitches, propaganda, and surveillance, using all this to identify agitators fomenting political change, then neutralizing them through imprisonment, smear campaigns, exclusion from employment, exile, blackmail, torture, and murder.
Samuel Bowles, an economist at the Santa Fe Institute, uses the term ‘‘guard labor’’ to describe all the activities used to coerce social stability out of people who question a society’s legitimacy. In the absence of an ethical framework that says poverty and its associated suffering is wrong, a rational ruling elite should pursue a policy of using a combination of redistribution and guard labor to attain social stability. If a tiny minority of society are rich enough, and everyone else is poor enough, it will cost the rich minority more to hire guards to keep the starving masses out of their palaces than it would to feed and educate some of those people, creating a middle class, some social mobility, and the sense that the rich are rich because they’ve earned their station, and if you buy into the system, you might join them.
There are lots of examples of this, but my favorite is the tunnels that Joseph Williamson paid to have dug under Liverpool after the Napoleonic War. Williamson was a local tycoon who understood that the return of armed shell-shocked infantrymen from the battlefields of Europe into a city where no work awaited them was probably going to be bad news for that city’s stability. So Williamson hived off a sizable fraction of his enormous fortune and paid veterans to honeycomb the ground under Liverpool with miles and miles of tunnels from nowhere to nowhere. Williamson reasoned – probably correctly – that it was cheaper to give these veterans a wage and the dignity of work than it would be to hire enough security to defend himself from a demobilized army who felt that the nation had turned its back on them.
Not all guard labor is overtly coercive. Some of it is persuasive. The post-Reagan boom in wealth disparity also coincided with massive media deregulation, both in terms of consolidation of ownership and in the extent and nature of public service programming obligations that came along with a broadcast license. The result was a huge economic and technological revolution in media, ending in the creation of the five vast media empires that own virtually all the music, movies, news broadcasting, print journalism, publishing, and cable/satellites in the world, and in many cases these companies also own the pipes – the telephone and cable wires.
This has made the conveyance of socially stabilizing messages more tractable than ever. Study after study has found the press to be sympathetic with the narrative of the deserving rich, equating taxation with theft, and hostile to labor and regulation. The rise of Fox News and its global counterpart, Sky News, as well as the collapse of the newspaper industry into the hands of a few companies that are largely owned by hedge funds and billionaires, means that messages questioning the legitimacy of great fortunes are thin on the ground.
The telecoms and media revolution of the late 20th century made guard labor cheaper, changing the balance between spending on redistribution and force to attain social stability. When guarding your fortune is cheaper, you can afford to piss off more people by getting richer instead of sharing with them.
The 21st century has been very kind to guard labor. In addition to great leaps and bounds in making military tools available to local police departments, the 21st century has seen the rise of the Internet, and, thanks to loose regulation over telecoms and consolidation, the rise of a tiny number of Internet giants who are privy to every single action and transaction of practically everyone on Earth, all seven billion of us.
The massive Internet surveillance revealed by the whistleblower Edward Snowden showed that governments – and the rich people who dominate policy circles in direct proportion with how much of the national wealth they command – have figured out that all they need to do to put the whole planet under surveillance is to subvert those Internet giants, either overtly (as when the spy agency GCHQ pays BT handsomely for letting it wiretap the fiber trunks that land on British shores) or covertly (as when the NSA secretly tapped the fiber links between the data centers used by companies like Google, Yahoo, and Facebook).
It’s hard to overstate just how efficient surveillance has become in the 21st century. Critics of mass Internet surveillance like to compare the NSA and its allied spy services to the Stasi, the secret police of the former East Germany, who were notorious for the pervasive and suffocating blanket of surveillance with which they smothered the country. But the Stasi were engaged in pre-Internet surveillance, and they were very expensive guard labor by modern standards.
In 1989, the last year of the Stasi’s operation, there were 16,111,000 people in East Germany, and 264,096 operatives of one kind or another in the pay of the Stasi, including 173,081 ‘‘unofficial informants’’ (snitches). That’s a ratio of one spy to every 60 people.
It’s hard to know exactly how many people work for the NSA – so much of its budget is black, and so many of its operations are carried out by its private enterprise partners, like Booz Allen, Edward Snowden’s former employer. But we do know how many Americans have security clearance (4.9 million), and how many of them have Top Secret clearance (1.4 million), and so we can be pretty sure that it’s less than 1.4 million people (because the people with Top Secret clearance also need to be apportioned to the CIA, FBI, DOD, etc.). In addition, NSA surveillance is assisted by foreign spies, especially those in the other ‘‘five eyes’’ countries (Canada, the UK, Australia, and New Zealand), but all of those spies will be a drop in the bucket compared to the US surveillance apparatus – the US alone accounts for a third of the world’s total military spending, and only two of the remaining five eyes countries (the UK and Australia) even appear on the top-fifteen list of military spenders.
Being generous, though, let’s say there’s 1.4 million NSA spies and associated staff, including in the five eyes – 1.4 million people to surveil seven billion humans, give or take a couple.
That’s a spy:subject ratio of 1:5000 – two orders of magnitude greater than the Stasi. The Stasi used an army to surveil a nation; the NSA uses a battalion to surveil a planet. Compared to the NSA, the Stasi were artisanal craftsmen.
And while it’s true that the US surveillance apparatus has grown mightily since the Reagan era – some agencies have had their budgets increased fourfold since the Berlin Wall fell – it certainly hasn’t grown a hundredfold. Even with the budgets obscured and shrouded in deception, it’s clear that the geometric rise in spying volume was accompanied by a merely linear increase in spying resource expenditure.
In other words, the cost of one of the crucial pieces of guard labor is in free-fall, and has been since the Internet started to take off.
Here’s where we get back to Piketty and social stability. Rich people need stability, at least enough to keep banks and commerce humming.
Wealth gaps destabilize society, and restabilizing society is a choice between the cost of lifting people out of poverty, or making sure you can head them off before they bust out the guillotines (or knock down the Berlin Wall).
When guard labor gets cheaper, the sustainable gap between the rich and the poor gets wider. A two order of magnitude drop in the price of separating the wolves from the sheep amongst the have-nots is a powerful argument against providing social programs, or labor laws, or tenants’ rights – sure, deprivation makes the population restless, but we can pinpoint whom to arrest, or discredit, or blackmail, or render, with incredible reliability for pennies. Let ’em eat social media.
This is bad news, because huge wealth disparity doesn’t just destabilize society due to poverty – it also destabilizes through corruption. In a society where lawmakers must raise tens of millions to take and hold office, the influence of the wealthy grows. This is pretty clear in autocratic regimes – you can go to jail in Thailand for criticizing the royals; exposing slave labor conditions in Qatar is likewise an offense.
But it’s also true in the USA. In April 2014, academics from Princeton and Northwestern published ‘‘Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens’’, in the journal Perspectives and Politics. It was a massive study of 20 years’ worth of policy battles in the US Congress and Administrative Branch, and it concluded that these policy outcomes favored the richest 10 percent of Americans nearly all of the time – policy outcomes that favored middle earners were so rare that they didn’t even register above the level of statistical noise.
In a society of extreme wealth gaps, the only policies that flourish have to have a business-model. They have to make someone outside of Congress or Parliament rich, so that a person can spend some of the money she’s taking home on influencing politicians to maintain and expand the policy.
There are probably some things that states do that can produce surplus capital for a few people and still do good, but there are other areas where this is certainly untrue. Education, for example – you can certainly run a school like a business, using ‘‘accountability’’ as your main metric, with standardized tests and attendance scores instead of the judgment of educators, or scholarly evidence about real learning.
Using this methodology, you can produce handsome profits for companies that figure out how to improve standardized test scores and reduce absenteeism (for example, by cramming students for tests instead of giving them arts and physical education instruction, and by kicking out students who have problems with this regime, or whose personal problems make them frequently absent from school). This will make your quarterly reports rise and rise in a way that will warm the heart of any Wall Street analyst, but good luck finding someone with any pedagogical credibility who will say that the kids are doing anything like ‘‘learning.’’
I’ll level with you: this freaks me out. The expansion of surveillance means that the natural checks and balances on inequality, already insufficient, have been shuffled around to favor true oligarchy. It’s yet another reason to get your friends using cryptographic tools, especially those that run on free and open source software. As I write this in January 2015, Obama, the New York Attorney General, and the head of the FBI have all called for bans on the civilian use of crypto, as has the UK Prime Minister David Cameron. Banning crypto is an ambitious project that’s unlikely to succeed – it combines all the dumbest aspects of the War on Some Drugs with the War on File Sharing – but that doesn’t mean that the move to make us all vulnerable to surveillance won’t do real damage.
Time is running out. It’s five minutes to midnight. Have you encrypted your hard drive yet?