Pinched

by Don Peck

  Consequently, Lasch argued, modern elites tend to “exercise power irresponsibly, precisely because they recognize so few obligations to their predecessors or to the communities they profess to lead. Their lack of gratitude disqualifies meritocratic elites from the burden of leadership, and in any case, they are less interested in leadership than in escaping from the common lot—the very definition of meritocratic success.”

  IF YOU WANT to see the plutonomy up close, you can do worse than to spend some time in Aspen, Colorado. I traveled there in July 2010 for the Aspen Ideas Festival, a weeklong colloquy of the rich and powerful, loosely in the model of the World Economic Forum at Davos or the TED conference in Long Beach, California (anyone can buy a ticket to the Aspen festival—unlike Davos—but it will set you back about $5,000 for the week). Each year, hundreds of well-heeled people arrive in Aspen for the festival, many on their own jet (I counted forty or fifty private jets on the tarmac of the town’s airport, parked neatly in four long rows). Once there, they spend long days discussing pressing social issues, policy problems, and technological developments, and hobnobbing with the likes of Bill Gates, Alan Greenspan, Thomas Friedman, Sebastian Junger, and Kurt Russell.

  The crowd at Aspen is not a bad cross section of today’s meritocratic elite—hardworking, cosmopolitan, earnest if a little self-involved—and most of the people there seemed seriously engaged by the big global problems and potentially novel solutions being discussed. During breaks, fit men and attractive women milled about in casual, understated clothing, drinking pomegranate juice and snacking on oversized cookies or fresh fruit. A few were a touch too eager to chat about the World Cup games they had attended in South Africa the week before (in the company of Jacob Zuma, South Africa’s president), or to proffer what they’d gleaned from their most recent conversation with President Obama. A larger number used the breaks to focus on their BlackBerrys, iPhones, or iPads, transacting ad hoc business. (One fortysomething man sitting next to me at a panel discussion was, by turns, listening to the discussion, checking a feed on his iPad, and, in short bursts, working two different BlackBerrys.)

  Bill Gates was one of the featured attractions of the conference. With the recession still biting deeply in the United States, Walter Isaacson, the president of the Aspen Institute, kicked off an onstage interview with him by asking what he was optimistic about. Gates replied easily, “I’m optimistic about most things.” He went on to list some of them: global health and education were improving markedly; literacy was way up in Africa, and childhood deaths were down; technological and scientific progress were continuing worldwide. Gates didn’t mention America or its prospects; his frame of reference encompassed the whole globe. And why shouldn’t it? This expansive view of how we should think about economic and social fortune is both logically unimpeachable and morally laudable.

  It is also deeply liberating for American business elites today. In a recent essay, the journalist Chrystia Freeland recounted a conversation she’d had with the CEO of a U.S.-based investment fund, one of the world’s largest. The firm’s investment committee often discusses the likely winners and losers from continuing globalization, the CEO told her. Recently, he said, one of his colleagues had been arguing that the travails of American workers shouldn’t be a source of angst. “His point,” the CEO continued, “was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.”

  Not that long ago, the interests of American capitalists and American workers—while never the same—were in some important respects aligned. Firms were dependent on domestic labor, domestic financing, and the domestic consumer market; the strength and competitiveness of America’s economy and workforce were essential to the fortunes of large American companies—and those of their executives. What was good for General Motors was good for America, and vice versa.

  But in Aspen, one could see how much these ties have weakened—and how little the entrepreneurs and executives at the conference seemed to depend on the health of other classes of Americans. In a public interview at the conference, Michael Splinter, the founder of Applied Materials, a large, California-based supplier of chip-making equipment that has pushed heavily into green technology, and that recently decided to move its largest R&D operations to China, said, “This year, almost ninety percent of our sales will be outside the United States. The pull to be close to our customers, and most of them are in Asia, … is enormous.” At a panel discussion on the future of the middle class, Tom Wilson, the CEO of Allstate, said, “I can get [workers] anywhere in the world.… I have 1,500 people in Belfast, 1,000 people in India, people in the Philippines.” The employment difficulties of citizens with limited education “is a problem for America, but it is not necessarily a problem for American business,” Wilson said. Business “will adapt.”

  David Hale, the founder of David Hale Global Economics, a consulting firm that counsels large corporations and investment firms, celebrated that adaptation: Since the fourth quarter of 2009, he said at a panel discussion, U.S. firms had “enjoyed very large gains in productivity, very large gains in profits.… No other country in the world could do what America did to its workforce twelve and eighteen months ago. In this recession, the American economy had an output decline of 3.8 percent—we reduced private sector employment by 7.5 percent.” Because of its uniquely aggressive actions, “American business today is 10 to 15 percent more competitive than it was a year ago compared to Europe and Japan.”

  The particular sense of community at the Aspen Ideas Festival is difficult to put your finger on. Freeland has described the international conference circuit as the natural habitat of the new, global meritocratic elite—a replacement for the balls and fox-hunting parties that filled the social calendar of hereditary elites generations ago, with an updated focus on networking; continual learning; and sober discussion of the economic, political, and technological changes that might lead to business opportunity. At Aspen, while the participants were overwhelmingly American, the ambitions and affinities were global.

  And yet these sentiments of global citizenship and global ambition were matched by a near-total insularity from non-elites, and a personal detachment from the struggles of other Americans. Several people I spoke with said that from their enclaves and offices in Boulder or the Bay Area, the recession appeared mild or invisible—though of course they knew it wasn’t, really. That same sentiment could be observed in the popularity (or lack thereof) of different events at the conference: the talks on emerging technologies were generally well attended, and a panel discussion about the federal deficit and the future of taxes was standing room only; the panel on reigniting job growth, on the other hand, was less than half full when it started, though more people eventually trickled in. There was no shortage of gloomy speechifying at Aspen, but many attendees seemed to sort of float through that, intellectually aware and suitably concerned in an abstract way, yet personally untouched.

  Onstage, Bill Gates sat talking about global progress, and then, as the interview continued, about a host of other issues, from green energy to fixing U.S. schools. At this point in his career, Gates is as benign an icon of the meritocratic elite as one could imagine, the physical embodiment of the meritocracy’s promise. Whatever one may think of the latest version of Windows, he made his vast fortune by creating something that has improved the work and lives of countless people. And now, in his fifties, he is in the midst of giving most of that fortune away. The Bill & Melinda Gates Foundation was endowed with some $36 billion as of September 2010, and Gates was in the midst of a nationwide effort to convince America’s richest people to join him in a pledge to give away half their wealth within their lifetime or upon their death. (More than fifty billionaires have agreed.)

  “There’s a lot to be optimistic about if you look at it the right way,” Gates emphasized. His charitable endeavors reflect that op
timism; they’re designed around the idea that by trying new approaches to solving old problems, we can not only alleviate suffering but achieve permanent progress in areas ranging from health to education. About 84 percent of the Gates Foundation’s distributions in 2009 were international, reflecting the belief that the return on giving is generally highest outside the United States, in places where, for example, so many children are being stunted by malnutrition or killed by preventable disease. But roughly 16 percent—$489 million in total—was focused inside the United States, the lion’s share of it on fixing American schools and providing college scholarships.

  Gates talked about that issue in his interview. As to both equality of opportunity and international competitiveness, he said, nothing was more important than education: a country that doesn’t offer good educational opportunities to all its people is simply wasting much of its IQ. Maximizing national IQ was high on Gates’s list for curing what ails America; he mentioned it again when the discussion turned to immigration, calling IQ “the most important import into the United States” and noting the benefits of a larger inflow of accomplished and highly educated immigrants to the country’s tech companies. And, of course, Gates was right. Gathering up the best and brightest undoubtedly serves the national interest, and bringing more of them into closer proximity with one another is likely to speed technological progress.

  When I listen to Gates and to other meritocratic winners reflecting on good works or good policy or their legacy, I can’t help but think that Christopher Lasch was perhaps too harsh, or at least too sweeping, in his characterization of the new rich. Breaking into the elite requires neither virtue nor vile character, and the elite as a whole contains both elements in ample supply. Yet I also can’t shake the sense that, among the elites who are publicly minded at all, what many care most about, in the end, is perfecting the meritocracy—ensuring that every boy and girl has the same educational and entrepreneurial chances that they did so that the cream might always rise to the top. This is an admirable and, indeed, an essential goal. Yet it seems incomplete. It isn’t so much that today’s elites think poorly of Americans who lack the genetic endowment of IQ required to climb the modern economy’s ladder; by and large, many elites just don’t think about them much at all.

  DOWNTOWN ASPEN SITS perhaps half a mile from Aspen Meadows, the campus on which the Aspen Ideas Festival takes place. It is lovely in July; cafés and upscale shops line leafy streets and boulevards, arranged in miniature blocks that march out primly from the feet of stately green mountains. But the town has not escaped the recession. Many of Aspen’s wealthy homeowners were swindled by Bernie Madoff, and foreclosures have multiplied. The depth of distress is difficult to gauge; as a New York Times article published during my stay in Aspen noted (albeit using data that are merely suggestive), high-income Americans appear more likely than other classes to treat a home like any other investment, and simply walk away when it slips underwater.

  Whatever their depth, from these troubles one can trace quite clearly the trickle-down effect of the plutonomy, and better appreciate the livelihoods that elites’ spending sustains. COMPLETE STORE CLOSING LIQUIDATION read the large banner outside Ingrid Antoni Designs, one of several tony stores in town bearing out-of-place signs advertising store closures or deep discounts. On the other hand, business was “way up,” a cashier told me, at the Thrift Store of Aspen, a nonprofit that’s been in operation since 1947. Most of the new demand was coming from the small army of contractors and construction workers and maids and waitresses who live in the area (though rarely in Aspen itself) to serve wealthy residents and vacationers.

  I spoke with Diane Turner, an agent for the Aspen Real Estate Company, at her street-front office in town. She is a gregarious, middle-aged brunette, quick to smile. As we talked, her husband, an erstwhile builder, came in from a mountain-bike ride—“that’s what you do here when there’s no work,” he said, not altogether unhappily. Turner told me how fully “the town’s working class depends on the rich and the skiing industry,” and described how tough things had been. She showed me the front page of the Aspen Daily News, which announced a bank’s plan to foreclose on a big resort at nearby Snowmass. Turner asked me about my job and my current reporting, and I gestured vaguely toward her and said I was trying to see how the recession was affecting middle-class people around the country. “We’re working-class,” she said, interrupting me. And indeed, they are. In Aspen, you are one or the other, rich or the rest. There is nothing to bridge the gap in between.

  7

  UNDERCLASS: MEN AND FAMILY

  IN A JOBLESS AGE

  IN HIS 1996 BOOK, WHEN WORK DISAPPEARS, THE HARVARD SOCIOLOGIST William Julius Wilson connected the loss of jobs from inner cities in the 1970s to the social ills that overwhelmed many inner-city neighborhoods after that. “The consequences of high neighborhood joblessness,” he wrote, “are more devastating than those of high neighborhood poverty. A neighborhood in which people are poor but employed is different from a neighborhood in which many people are poor and jobless. Many of today’s problems in the inner-city ghetto neighborhoods—crime, family dissolution, welfare, low levels of social organization, and so on—are fundamentally a consequence of the disappearance of work.”

  In the mid-twentieth century, most urban black men were employed, many of them in manufacturing. But beginning in the 1970s, as factories moved out of the cities or closed altogether, unemployment began rising sharply. Between 1973 and 1987, the percentage of black men in their twenties working in manufacturing fell from roughly 37.5 percent to 20 percent. As inner cities shed manufacturing jobs, men who lived there, particularly those with limited education, had a hard time making the switch to service jobs. Service jobs and office work of course require different interpersonal skills and different standards of self-presentation from those that blue-collar work demands, and movement from one sector to the other can be jarring. What’s more, Wilson’s research shows, downwardly mobile black men often resented the new work they could find, and displayed less flexibility on the job than, for instance, women or first-generation immigrant workers. As a result, employers began to prefer hiring women and immigrants, and a vicious cycle of resentment, discrimination, and joblessness set in.

  The community breakdown that followed—drinking and drug sales and addiction; an accelerating decline in the prevalence of nuclear families; the sclerosis of church groups and other social institutions—has been well documented. But it is nonetheless troubling, as an outsider, to witness everyday life in a nongentrified inner-city neighborhood today. In October 2010, I visited Kensington, a large, multiethnic neighborhood in Philadelphia, where the death rate of young black men during the early aughts was comparable to that of U.S. soldiers in Iraq, and where it was plain to see how the neighborhood’s character and economy combined to stifle the life chances of its residents.

  Storefront businesses are not altogether absent from Kensington; on and around the main strip is a collection of pawnshops, takeout restaurants, strip clubs, bail-bond offices, hair salons, and furniture-rental stores. But even at noon on a Monday, some of the more obvious signs of economic activity involved streetwalking prostitutes and “corner boys” just beginning to emerge from dilapidated row houses to sell drugs.

  Many of those row houses once had screen doors and metal sashes, but metal can be sold for scrap, and the doors and sashes have mostly been taken. On one street, two women, working separately, pushed shopping carts filled with metal piping and other scavenged junk down the sidewalk. Other neighborhood women get work as babysitters or day-care providers or hairstylists; relatively few young men work regularly, at least in the formal economy. According to the sociologist Maria Kefalas, the high-school dropout rate in Kensington is above 50 percent for boys, and heavy daily absences from school are common.

  These sorts of problems are not exclusive to inner cities. In The Big Sort, Bill Bishop describes the economic decline of the Coal Belt in rural Appalachia and the
social dysfunction that followed. Although Appalachia has long been associated with poverty, in fact much of the area has made great material progress over the past fifty years. But the region’s “coal counties” suffered greatly during the 1980s and 1990s, shedding tens of thousands of mining jobs (between 1980 and 1995, coal-mining employment in West Virginia fell by more than half). In the early ’90s, unemployment topped 20 percent in parts of the region. It has since come down, partly because so many people have left the area—“rational people leave, if they can,” the president of Concord University in Athens, West Virginia, told Bishop—and partly because so many who’ve stayed behind have instead left the workforce, in many cases for a place on the disability rolls. Today, jobs remain scarce and poverty high.

  In McDowell County, West Virginia, about 6 percent of the adult population has a bachelor’s degree; 40 percent didn’t finish high school. The term shotgun wedding has sometimes been associated with Appalachia, perhaps unfairly, but whatever the circumstances, in the past people did marry. That’s less often the case today; more than one in three children in McDowell County were born out of wedlock in 2010. According to Bishop, “civic dysfunction” and political corruption are rife throughout the region.

  Abuse of drugs like OxyContin has ravaged coal country, and is especially prevalent among former miners. In 2005, FedEx stopped delivering prescription drugs to several counties in eastern Kentucky. Its trucks were being surrounded by staggering addicts eager for their delivery; drivers feared being robbed or mobbed. “Everybody here has a close personal friend or a relative who is on OxyContin,” the director of a drug-treatment clinic director in Evarts, Kentucky, a town of just 1,000 people, told Bishop. In Harlan County, one young woman talked about what it’s like to live in the area: “The quality of life is so low.… When you deal with what people have to deal with here. I don’t know how to say it.… Me and my son were on our own and everywhere I went I began to feel like a failure. I never dreamed I would turn to drugs but it seemed to be the easy way out.” She’d been selling her furniture to pay for her habit.