Over production of NPC elite

From The Fragmenting of the New Class Elites, or, Downward Mobility by Kenneth Anderson.  This is from October 31, 2011, around peak Occupy Wall Street.  

In social theory, OWS is best understood not as a populist movement against the bankers, but instead as the breakdown of the New Class into its two increasingly disconnected parts.  The upper tier, the bankers-government bankers-super credentialed elites.  But also the lower tier, those who saw themselves entitled to a white collar job in the Virtue Industries of government and non-profits – the helping professions, the culture industry, the virtueocracies, the industries of therapeutic social control, as Christopher Lasch pointed out in his final book, The Revolt of the Elites.

The two tiers of the New Class have always had different sources of rents, however.  For the upper tier, since 1990, it has come through its ability to take the benefits of generations of US social investment in education and sell that expertise across global markets – leveraging expertise and access to capital and technological markets in the 1990s to places in Asia and the former communist world in desperate need of it.  As Lasch said, the revolt and flight of the elites, to marketize themselves globally as free agents – to take the social capital derived over many generations by American society, and to go live in the jet stream and extract returns on a global scale for that expertise.  But that expertise is now largely commodified – to paraphrase David Swenson on financial engineering, that kind of universal expertise is commodified, cheaply available, and no longer commands much premium.  As those returns have come under pressure, the Global New Class has come home, looking to command premiums through privileged access to the public-private divide – access most visible at the moment as virtuous new technology projects that turn out to be mere crony capitalism.

The lower tier is in a different situation and always has been.  It is characterized by status-income disequilibrium, to borrow from David Brooks; it cultivates the sensibilities of the upper tier New Class, but does not have the ability to globalize its rent extraction.  The helping professions, the professions of therapeutic authoritarianism (the social workers as well as the public safety workers), the virtuecrats, the regulatory class, etc., have a problem – they mostly service and manage individuals, the client-consumers of the welfare state.  Their rents are not leveraged very much, certainly not globally, and are limited to what amounts to an hourly wage.  The method of ramping up wages, however, is through public employee unions and their own special ability to access the public-private divide.   But, as everyone understands, that model no longer works, because it has overreached and overleveraged, to the point that even the system’s most sympathetic politicians understand that it cannot pay up.

The upper tier is still doing pretty well.  But the lower tier of the New Class – the machine by which universities trained young people to become minor regulators and then delivered them into white collar positions on the basis of credentials in history, political science, literature, ethnic and women’s studies – with or without the benefit of law school – has broken down.  The supply is uninterrupted, but the demand has dried up.  The agony of the students getting dumped at the far end of the supply chain is in large part the OWS.  As Above the Law points out, here is “John,” who got out of undergrad, spent a year unemployed and living at home, and is now apparently at University of Vermont law school, with its top ranked environmental law program – John wants to work at a “nonprofit.”

Even more frightening is the young woman who graduated from UC Berkeley, wanting to work in “sustainable conservation.”  She is now raising chickens at home, dying wool and knitting knick-knacks to sell at craft fairs.  Her husband has been studying criminal justice and EMT – i.e., preparing to work for government in some of California’s hitherto most lucrative positions – but as those work possibilities have dried up, he is hedging with a (sensible) apprenticeship as an electrician.  These young people are looking at serious downward mobility, in income as well as status.  The prospects of the lower tier New Class semi-professionals are dissolving at an alarming rate.  Student loan debt is a large part of its problems, but that’s essentially a cost question accompanying a loss of demand for these professionals’ services.

The OWS protestors are a revolt – a shrill, cri-de-coeur wail at the betrayal of class solidarity – of the lower tier New Class against the upper tier New Class.  It was, after all, the upper tier New Class, the private-public finance consortium, that created the student loan business and inflated the bubble in which these lower tier would-be professionals borrowed the money.  It’s a securitization machine, not so very different from the subprime mortgage machine.  The asset bubble pops, but the upper tier New Class, having insulated itself and, as with subprime, having taken its cut upfront and passed the risk along, is still doing pretty well.  It’s not populism versus the bankers so much as internecine warfare between two tiers of elites.

The downward mobility is real, however, in both income and status.  The Cal graduate started out wanting to do “sustainable conservation.”  She is now engaged in something closer to subsistence farming.

You see it in the plethora of NGOs with highly credentialed but low accomplishment lower tier New Class.  You see it in the explosion of administrative staff in academia - credentialed but negative value adding.  You see it in government with demands for higher income with attainment of masters degrees in non-value adding fields such as education, sociology, communication, studies, etc.  

The lower tier New Class are the challenge.  Their expectations are far higher than their actual capabilities.  They want to be rewarded based on their expectations rather than on their performance.  

This relates to Rob Hendersons Luxury Beliefs.  You could say that those Luxury Beliefs are the fighting line where the lower tier New Class are struggling to get into the upper tier New Class.

This also ties in with Gregory Clark's research which has suggested that overproduction of those in the upper echelons of society pushed people with the human capital of the upper class (beliefs, goals, values, behaviors) down the social pyramid.  It has been posited that those values became more prevalent in lower classes owing to elite overproduction and that social capital in the middle and lower ranks of society might explain why the industrial revolution took off earliest in Britain.

I wonder though, if we could hope for such a beneficial outcome.  It seems that the lower tier New Class are reasonably bereft of the human capital (values, behaviors, goals, and beliefs) which would allow them to be successful in a different way.