The three pillars of society
An imbalance between three pillars is causing chaos
The article is based on the book The Third Pillar
Death rate rising
The death rate of middle-aged non-Hispanic white Americans between 1999–2013 was higher than that of other ethnic groups — Half a million more Americans in that group died than other ethnic groups.
Those with a high school degree or less mainly made up the additional deaths in the group. What happened to the once flourishing group in America? Let’s look at some development numbers in America from the late 1940s until 2005
Income growth and growing inequality
The median family income of the white working-class increased from around $20,000 to $50,000 between 1947–2005, an increase of about 150%.
But most of that rise was in 26 years between 1947 to 1973, when family income more than doubled with an annual growth rate of 2.8%. In the next 32 years, from 1973 to 2005, income increased only 23%, an annual growth rate of 0.6%.
Between 1979 and 2005, the average real hourly wage for those with a college degree rose by 22%, and those with advanced degree rose by 28%, but for those with a high school diploma, wages fell 2%, and for high school dropouts, wages decreased by a sharp 18%.
So, the income growth, stagnation or reduction depended on whether one had a college degree, an advanced degree or a high school diploma.
The late 1940s and mid-1960s growth
The American people supported the expansion of the welfare state in the 1950s as the American economy soared and the govt could afford to expend resources on roads, science, schools and whatever.
In contrast, many Americans are against Obamacare, and a part of it comes from why should whites pay for the insurance of blacks? The health act benefits a lot of black, Latinos-the minorities, and the insurance cost under the health act is borne, at least partly, by increasing tax rates which directly affects a large number of wealthy whites. The politicians know this and are exploiting the rift between the two races for their electoral advantage.
I doubt the increased taxes would have roiled the taxpayers if the economy was growing as it did in the 1940s to mid-1960s. If the pie is becoming large, people don’t mind sharing the pie with additional people, but if the pie remains the same and additional people are included to share the pie, it transforms into existing people getting a smaller share of the pie, and that will be disliked by the people.
The late 1940s to the mid-1960s, America got its first mass middle class in this era; a middle class that even factory workers could become part of since they could earn well even without having high levels of education or professional skills.
Job loss and politicians
But that’s not true today; moderately educated workers are struggling to get a decent wage or are even getting the sack. The book the third pillar states, ‘The primary source of worry seems to be that moderately educated workers are rapidly losing, or are at risk of losing, good ‘middle-class’ employment and this has grievous effects on them, their families, and the communities they live in.’
People understand that job loss is a result of automation, technological progress and global trade but what people don’t understand is that most of the job loss comes from technological progress than global trade.
But radical politicians blame immigrants and imports for job losses because that’s easy to do than go to the root of the problem. They create a common enemy in the society, a scapegoat, and promote the idea that once the common enemy is gone from their country, their country will become great again.
We have had the industrial revolution and ICT revolution, which disrupted society, but after the initial turmoil, those revolutions brought more jobs and prosperity.
The three pillars
But today, the pillars — state, market, and community — of society are in imbalance. And we need to recalibrate them to get the right balance.
Whenever we go through technological progress or are shaken by a collapsing economy, depression or recession, the balance is disturbed until society finds a new equilibrium.
In recent decades, two pillars have grown at the expense of the community, which has caused the community to languish; Today, we can solve many of the problems that we are plagued with by reviving the community.
Why does the community matter?
In ancient times, when people lived within a tribe, state, market, and community were part of the tribe. All activities, whether rearing children, exchange of goods and food or looking after the elder, happened within the tribe.
The head of the tribe made laws and enforced them on the tribal members and even led the tribal warriors to defend their land, but with time, as communities within the tribe progressed, the tribe became strong, and the market and state separated from the community.
Market and state didn’t just separate but became the dominating force; they took over the activities that once the communities did. Earlier, in frontier communities, neighbours would help deliver a baby, but now women prefer going to hospital where a specialist takes care of the pre/post-delivery process. This is understandable.
Similarly, communities would help someone rebuild their house if a fire destroyed their house. But today, the house gets fire insurance payment and hires a professional builder. And it makes sense because governments have enacted building laws that buildings must adhere to, but a formal system leads to the shrinking of space for community interaction.
Further, we know local governance, which allows the community to be part of decision-making, and policy-making can effectively and efficiently work for the betterment of the entire community. I will give examples in my next article.
And even though the formal system has replaced informal communities, communities still have a role in plugging the gaps that the formal process has.
For example, when a neighbour tutors your children in their spare time or when a community collects relief material for needy households, the community is filling the space left by the formal system.
How neighbourhood which a community makes up affect income-earning prospects?
Economists Raj Chetty and Nathaniel Hendren try to measure how growing up in a better community affects income-earning prospect of a person?
They study the income of children whose parents shifted from one neighbourhood to another when the children were young — better neighbourhood and worse neighbourhood.
The study observed that children of longtime residents, when grew up, earned one percentile higher in the national income distribution in the neighbourhood better when compared with the neighbourhood worse.
They also found that a child whose parents moved from neighbourhood worse to neighbourhood better will have an adult income, on average, 0.04 percentile points higher for every childhood year it spends in the neighbourhood Better.
Another way of looking at this will be that if a child is born in a neighbourhood better and lives there till the child is twenty, the child will have made up 80 per cent of the difference between the average incomes in the two neighbourhoods.
Communities have also been at the forefront of movements against corruption and cronyism, and these movements have kept away the state from getting into an implicit understanding with the big businesses, as the book states, “prevent the leviathan of the state from getting too comfortable with the behemoth of big business.”
A strong community is important to preserve the vibrant market democracies and is probably one of the reasons why authoritarian movements crush community consciousness and try to instil nationalist and proletarian consciousness.
Three pillars need must be in balance
Society gains the most when its three pillars are in balance. The state provides security, it always has, and the state also tries to ensure equity in economic outcomes through policies like affirmative action, housing for the less privileged etc.
The goal behind the policies is to create a level playing field so that people are equally placed to participate in the market.
The competitive market ensures that those who succeed use resources effectively and efficiently, and the successful since they are independent of the state, have some ability to stand up against arbitrary action of the state.
Active communities, which are organised politically and socially, act as a check to keep the states and markets separate. If the states and the market aren’t separate, the economy will become a crony and authoritarian one. Russia is a good example of what happens when the state and market get too comfortable with one another.
As the book states, “Too weak the markets and society become unproductive, too weak a community and society tends toward crony capitalism, too weak the state and society turn fearful and apathetic. Conversely, too much market and society become inequitable, too much community and society become static, and too much state and society become authoritarian. A balance is essential.”
In my following article, I will further expound on why communities are important to tide over the uncertainty brought upon by technology