Or, How American Collapse is Made of a New Kind of Poverty
Consider the following statistics. The average American canít scrape together $500 for an emergency. A third of Americans canít afford food, shelter, and healthcare. Healthcare for a family now costs $28k ó about half of median income, which is $60k.
By themselves, of course, statistics say little. But together these facts speak volumes. The story they are beginning to tell is this.
America, it seems, is becoming something like the worldís first poor rich country. And that is the elephant in the room we arenít quite grasping. After all, authoritarianism and extremism donít arise in prosperous societies ó but in troubled ones, which are growing impoverished, like America is today. What do I mean by all that?
Letís begin with what I donít mean. I donít mean absolute poverty. Americans are not living on a few dollars a day, by and large, like people in, for example, Somalia or Bangladesh. Americaís median income is still that of a rich country, around $50k, depending on how itís counted. Nor do I really mean relative poverty ó people living below median income. While thatís a growing problem in America, because the middle class is imploding, that is not really the true problem these numbers hint at, either.
America appears to be pioneering a new kind of poverty altogether. One for which we do not yet have a name. It is something like living at the knifeís edge, constantly being on the brink of ruin, one small step away from catastrophe and disaster, ever at the risk of falling through the cracks. It has two components ó massive inflation for the basics of life, coupled with crushing, asymmetrical risk. Iíll come to what those mean shortly.
The average American has a relatively high income, that of a person in a nominally rich country. Only his income does not go very far. Most of it is eaten up by attempting to afford the basics of life. Weíve already seen how steep healthcare costs are. But then there is education. There is transport. There is interest and rent. There is media and communications. There is childcare and elderly care. All these things reduce the average American to constantly living right at the edge of ruin ó one paycheck away from penury, one emergency away from losing it all.
But this isnít true for Americaís peers. In Europe, Canada, and even Australia, society invests in all these things ó and the costs of basic necessities societies donít provide are regulated. For example, I pay $50 dollars for broadband and TV in London ó but $200 for the same thing in New York ó yet in London, I get vastly more and better media for my money (even including, yes, American junk like Ancient Aliens). Thatís regulation at work. And when basic goods like healthcare or elderly care or education are provided and managed at a social scale, that is when they are cheapest, and often of the best quality, too. Hence, healthcare costs far less in London, Paris, or Geneva ó and life expectancy is longer, too.
So if you are earning $50k in America, it is a very different thing than earning $50k in France, Germany, or Sweden ó in America, you must pay steeply for the basics of life, for basic necessities. Thus, incomes stretch much further in other countries, which enjoy a vastly higher quality of life, even though people there earn roughly the same amount, because they pay vastly less for basic necessities. Americans are rich, but only nominally ó their money doesnít buy nearly as much as their peers does, where it matters and counts most, for the basics of life.
What happens when societies donít understand all the above? Well, a strange thing has happened to the American economy. While itís true that things like TVs and Playstations have gotten cheaper, the costs of the basics of life have skyrocketed. All the things that really elevate peopleís quality of life ó healthcare, finance, education, transport, housing, and so on ó have come to consume such a large share of the average householdís income that they have little left to save, invest, or spend on anything else. And whatís worse, while the basics of life have seen massive inflation, wages and incomes (not to mention savings and benefits and safety nets and opportunities) for most have stagnated. The result is an economy ó and a society ó thatís collapsing.
Yet all that is the straightforward effect of giving, for example, hedge funds control over drugs, or speculators control over housing, healthcare, and education ó they will of course maximize profits, whereas investing in these things socially, or at least regulating them, minimizes real costs, and maximizes accessibility, affordability, and quality.
So the average American, who is left high and dry, must borrow, borrow, borrow, just to maintain a decent quality of life ó because handing capitalism control of the basics of life has caused massive, skyrocketing inflation in necessities, while flatlining his income. Healthcare didnít used to cost half of median income even a decade ago, after all ó but now it does. So what happens when, in a decade or two, healthcare costs all of median income? How can an economy ó let alone a society ó function that way?
Well, what happens if the average American steps over the line? Misses a mortgage payment, gets ill and is unable to pay a few bills on time, canít pay the costs of healthcare? Then they are punished severely and mercilessly. Their ďcredit ratingĒ (note how banks and hedge funds donít have them) is ruined. They can easily find themselves out on the street, without finance, without a second chance, without access to any kind of redress or support . And then they are rejected, shunned, and ostracized. They might not have an address anymore ó so who will hire them? They are no longer a part of society ó they have fallen through the cracks, and finding oneís way back is often next to impossible. Asymmetrical risk ó corporations and lobbies and banks bear no risk at all, precisely because the average American bears them all now.
So Americans arenít just absolutely or relatively poor, but poor in a new way entirely. First, the basics of life exploded in price, to the point that they are now unaffordable for many, maybe most, households. Second, Americans bear the risks of paying those unaffordable costs to an extreme degree, bearing the risks that institutions should, and so those risks are now ruinously high. A bank or hedge fund or corporation might go bankrupt, and liquidate its assets, and its owners stay rich ó but if an Americanís credit rating is ruined, loses his job, cannot pay his bills, or even if he declares bankruptcy, he falls through the cracks, hounded, embattled, institutionally black-marked. He finds himself outside society, with little way to get back in. Little wonder then that Americans work so much harder than anywhere else ó they are always one step away from losing it all, from genuine ruin, but their peers in truly rich countries arenít.
Marx probably would have called this immiseration. Neo-Marxist theorists call it precarity. And while thereís truth in both those ideas and perspectives, I think they miss three vital points.
We donít see America as a poor country, but we should begin to. Americans live fairly abysmal lives ó short, lonely, unhappy, full of work and stress and despair, compared to their peers. That is because they cannot afford better ones ó predatory capitalism coupled with total economic mismanagement of social investments has made the basics of life ruinously unaffordable. In this way, itís effectively a poor country ó yes, thereís a tiny number of ultra-rich, but they are outliers now, off the map of the normal. Because itís not just any kind of poverty, yesterdayís poverty, or even poverty as we are used to thinking about it.
America is pioneering a new kind of poverty. The kind of poverty thatís developed in America isnít just bizarre and gruesome ó itís novel and unseen. It isnít something that we understand well, economists, intellectuals, thinkers, because we have no good framework to think about it. Itís not absolute poverty like Somalia, and itís not just relative poverty, like in gilded banana republics. Itís a uniquely American creation. Itís extreme capitalism meets Social Darwinism by way of rugged self-reliance crossed with puritanical cruelty.
The kind of poverty Americaís pioneering today isnít absolute, or even relative , but something more like perfectly tuned poverty, strategic poverty, basic povertyó nominally well-off people whose money doesnít go far enough to make them actually live well, constantly living at the edge of ruin, and thus forced to choke down their bitter anger and serve the very systems which oppress and subjugate with more and more indignity and fear and servility by the year.
Americaís still an innovator today. Unfortunately, what itís innovating now is a new kind of poverty. Yet poverty is poverty. What happens in societies where poverty is growing? Authoritarianism rises, as people lose faith in democracy, which canít seem to offer them working social contracts. Authoritarian soon enough becomes fascism ó ďthis country, this land, its harvest ó it is only for the true volk!Ē, the cry goes up, when there is not enough to go around. And the rest of the dark and grim story of the fall into the abyss you should know well enough by now. It ends in words we do not say.
Still, history, laughing, has told this tale to us many times. And it is telling it to tomorrow, again, in the tale of American collapse.