Kotkin book review for FT

In: Daniel In The News

22 Sep 2014

This is the text of my book review from last Friday’s Financial Times.

Any serious attempt to understand the US’s current impasse by moving outside the conventional framework should be welcome. The stale pairings of liberal and conservative, right and left, no longer cut it.

Joel Kotkin, an American academic and author, has come up with the unlikely proposal of understanding the country’s predicament in terms of class conflict. But his conception is a world away from the old socialist notion of a combative proletariat battling against an intransigent ruling class. Instead, his is an innovative attempt to rethink the main contours of US society.

For a start, he sees the American elite as split between two mutually antagonistic oligarchies. On one side is a new elite based largely on information technology, although with substantial support from Wall Street. On the other is the old plutocracy centred on sectors such as agribusiness, construction, energy and manufacturing.

The new oligarchy differs from the old in important ways. Its technology wing is concentrated in and around San Francisco, with a secondary cluster in Seattle, and it employs far fewer people than traditional industries. Kotkin estimates that in 2013 the leading social media companies together directly employed fewer than 60,000 people in the US. By contrast, GM employed 200,000, Ford 164,000 and Exxon more than 100,000. The different nature of technology firms, with far less dependence on cheap energy, helps explain why they are predisposed to green thinking. They also tend to be both geographically and emotionally distant from middle America.

Meanwhile, the financial sector, which has traditionally favoured the Republicans, has benefited from enormous government largesse. This includes federal bailouts, cheap money and low interest rates. As a result, it has become more amenable to the progressive causes usually associated with the Democrats.

These new oligarchs are in alliance with what Kotkin calls the clerisy. This is the burgeoning class of technical specialists ensconced in government, law firms, the media and foundations. The technical class has swollen in line with the increased role of the state. Almost instinctively, the clerisy advocates increased regulation as the solution to any problem it encounters.

Together, the tech oligarchs and the clerisy tend to favour what Kotkin calls gentry liberalism. This outlook has an almost aristocratic disdain for the mass prosperity that long characterised the US. It typically favours sustainability over economic growth. It dismisses the suburbs in which most Americans choose to live as ugly “sprawl”.

The yeomanry – the class of small business owners – is the big loser in this new arrangement. Not only are its members being squeezed by offshoring, globalisation and technology, but excessive government regulations are undermining their livelihoods. The restrictions so beloved by the clerisy are breaking the traditional backbone of US prosperity.

Kotkin believes the new oligarchy and the clerisy together provide Barack Obama’s support base. Although the president often rails against excessive inequality, he has widespread backing from the ultra-wealthy of Silicon Valley and Wall Street. His predilection for government regulation also sits well with the interests and outlook of the clerisy.

Kotkin does not advocate supporting the Republicans as an alternative. Their ties to the old plutocracy are transparent. Meanwhile, self-proclaimed progressives rail against the excesses of the “1 per cent” while disenfranchising the middle and working class from popular prosperity.

His solution is for a renewed emphasis on broad-based economic growth. This means shifting government priorities away from lavish pensions and benefits towards investment in physical infrastructure. It involves greater emphasis on education and training, with particular attention to adult learning. Kotkin also advocates a resurgence of blue collar industry and the creation of new homes and businesses on the periphery of metropolitan regions.

Although his framework is superior to the platitudes of liberals versus conservatives, it has weaknesses. It does not sufficiently explain why an elitist technocratic outlook has such a grip on American life. The ever-increasing role of government is only part of the story. Nor does he acknowledge how many leaders in traditional industries, not just the tech oligarchs, have embraced notions such as sustainability.

But in having the courage to junk the old nostrums, he has taken an important step forward. The challenge is for others to go even further.

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