The Death of the American Dream


Shortly before Trump was elected to office, conservative historian Niall Ferguson gave a talk for Google Zeitgeist.

His disdain for Trump was obvious, putting him firmly in the camp of Burkean Conservative, but what he succinctly highlighted, through his exploration of the history of populism in America, was that each of the four times that populism became active in the American polis, the conditions required were both that the rate of foreign-born citizens exceeded 14% of the population and an economic downturn increased fears of economic scarcity. Let me parse that differently- populism has only historically been on the ascendant when blue collar fears of economic displacement and wage dilution become activated.

By contrast, Australia managed to achieve a rate of foreign-born citizens at 30% with their Populate or Perish policy, but populism really was banished to the sidelines for the longest time. The reasons for this were simple. First, Australia has always insisted that people who migrate to their shores become Australians first, with their cultural heritage a secondary consideration. Second, and far more importantly, for a long period of Australia's immigration history, labour interests were protected- simply put, blue collar jobs were enshrined in Priority Migration Skilled Occupation List, to the extent that regardless of the wage pressures employers felt, those seeking full-time blue collar jobs weren't allowed into Australia. Put simply, it is possible for a country to run high levels of immigration without populism becoming prevalent, provided that said migration doesn't hurt blue collar interests.

Since the 2000s, this policy has changed, with the stranglehold which labour once held over barring blue collar occupations from inward migration, being relaxed. Predictably, as blue collar interests have increasingly been trampled upon, we have began to see the first stirrings of populism in Australia- proof positive of the fact that if you want to protect your country from the far right and the politics of racial division, then the only feasible way of doing so is to protect blue collar interests from the destructive force of the unlimited labour supply neoliberalism so desperately needs to turn the blue collar class into powerless serfs, with no negotiating power.

These may seem like strong words, but it's worth noting that of all the demographic recently surveyed by Pew about immigration, African Americans were the most laudable- they were both the most likely to want government to step-in to help migrants in need, and the most likely to fear that their economic interests will be damaged by labour competition from migrants. They are only partially correct on the second point, because the evidence shows that although their economic interests will be significantly damaged, those who suffer most from further migration are the recently arrived.

The best data on The Labour market effects of immigration comes from the UK and the Migration Observatory at Oxford University. It's a somewhat honest appraisal which shows that higher income workers benefit the most and the lowest paid are the most adversely effected, with at least some negative effects on labour participation rates for the native-born population. But contained within this overview needs to be couched the understanding that whilst some lower to medium income workers benefit somewhat from migration, others find their interests harmed drastically.

Simply put, if you fall into the category of having done well at school, and especially if you have attended university, then immigration has been an economic good for you. Not only will you have benefitted through cheaper goods and services produced domestically, especially in areas like restaurant bills and takeaway food, but if you happen to be a valuable employee, whose skills are in demand, then the cheaper wages of lower skilled support staff like cleaners, and even the halved wages of the construction workers who laid the foundations of the offices you work in, will mean that your employer has greater latitude to reward you.

Even if you are a high school leaver with no higher education and a woman, it is somewhat likely that you will have either experienced a small gain, or are treading water. An employment agency servicing industry with a contract worker database of 200 to 500 blue collar, mostly male, blue collar workers, will need admins to man the phones and do the paperwork, as well as recruitment consultants in sales roles to work with professional managers in their customer base. Both types of roles are likely to be predominantly female, and this is only the tip of the iceberg. The blue collar version of the gig economy is big business, it supports roles in Real Estate, for leasing agents, machinery sales, work for lawyers, accountants, stationary suppliers, IT workers and numerous others. But again, opportunities for some come at the expense of the repeated decimation of blue collar interests.

Central to the divided worldview between the Cosmopolitan Educated Class and Blue Collar Interests is the liberal fallacy that anyone can be educated to do anything, given enough time and resources. It's simply not true, even if for some it feels true for some, given the ease with which they've breezed through life. Once a liberal studies the problem they will propose solutions, none of which work. Let's raise the minimum wage, which ignores the fact that the natural labour rates of most of the blue collar work that is being displaced or wage diluted is mostly well above proposed minimum wage hikes. Let's try economic transfers, otherwise known as redistribution. Again, by the time redistribution has been arranged and targeted towards lower income families, the $10 a week is hardly compensation for the $200 a week lost by a line operator, construction worker or driver.

The simple fact is that if you didn't do well at school, and you don't have the polish and appearance to work service or retail, there is only a limited pool of work within the economy which you can do. To be fair, there are other factors, both offshoring and automation have had incredibly harmful effects on blue collar class interests. But any attempt to shift the blame from immigration to these factors, conveniently ignores the fact that whilst automation and offshoring might have been the things which eliminated the *preferred source* of employment, it's highly likely that its the unlimited supply of blue collar labour from inward migration is the factor which wiped out choices number two, three, four and five- particularly given that 50% of all new economic opportunities in America has been confined to 20 or so major American cities where migrant blue collar labour is both abundant and cheap.

What should concern the educated millennial directly, is that migrant labour is the primary reason why they can't buy a home at a price to which their budget can stretch. It's worst in the UK, where an annual undersupply in the building of replacement housing stock dates back to 1992. Here it's by no means uncommon for local councils in major metropolitan centres like London, to find migrant workers living in sheds with space heaters, or 30 migrant workers living in a three bedroom semi-detached house.

It's not the only problem. The New Frontier of Private Equity is Pricing according to [McKinsey](, for which the translation is higher rents and more expensive housing. And for those neoliberals who would argue that Private Equity helps pension and insurance investment, it's worth noting that the biggest inward investment in Private Equity in the West increasingly comes from Sovereign Wealth Funds, particularly from the Middle East. But however much those on the Left might decry the aggressive movements of the likes of Blackrock into the housing sector, we need to acknowledge that they are only taking advantage of the existing market forces that our governments and our politics have unleashed on an unsuspecting West.

Most politicians seem to think that economics forces operate like the consumer economics they know so well- prefaced on the notion that demand creates supply. In areas like housing this simply isn't the case, given that the scarcity cost increases which come from increased demand tend to be higher than the increases in house prices. Put another way, increased demand in housing squeezes the profit margins on housing even tighter, whilst the only true profit to be rendered comes from land asset speculation, which is hardly speculative at all, given that the local central planners grip on new building land means that building land costs rise ever upwards in a boon for financiers chasing mortgage debt as an asset class, and carpet baggers intent upon inflating prices at the expense of ordinary aspiring home owners.

It's the New Gilded Age with the desperation of economic migrants seeking a better life serving as grist for the mill in an inhumane economic system, not only deflating blue collar wages to the point of economic serfdom, but also increasing housing costs to the point that they eat up a larger and larger share of income. And it's process which cosmopolitans are largely blind to because although they are intimately familiar with some of the effects of this process- lower net incomes relative to their parents and grandparents, and higher housing and rent costs, they lack the economic understanding and discipline to investigate the root causes.

Besides, nobody really wants to believe that the inward influx of blue collar labour is the primary driver of growing economic inequality, and that tighter labour markets could be transformative in resurrecting the American Dream. For a start it would put the lie to the notion that higher income workers are worse off than their parents, in any area other than housing opportunities, when one understands that most of the relative income losses by generation have accrued further down the socio-economic ladder. It would also entail admitting that many wasted money spending it on higher education, because a huge portion of real value creation in the economy occurs through the labours of the blue collar class, whilst many of the jobs which occupy the educated middle classes are largely superfluous and of no real value.

But above all, it would dispel the notion that there is a way out of this emerging dystopia through conventional politics. Yes, there are significant things which might help- a more libertarian approach to zoning and planning laws would be a huge boon for house building, blue collar labour and value creation, but it is unlikely to happen because of entrenched interests. Capital loves the huge returns which can be made by artificial scarcity in building land, and finance loves the greatly inflated mortgages which an undersupply of housing creates. Above all, neoliberalism craves cheap blue collar labour more than anything else.

My dad was a ship's captain in the oil business. He always used to say that if anybody could do his job better than him, they were welcome to it. He did, however, take exception to people willing to the work for considerably less money than him. This used to be a part of the blue collar ethos which everyone understood. Now, this perfectly rational position is routinely mischaracterised as racial animus or xenophobia. Race and politics obscures this simple truth. The problem is only exacerbated by the fact that most proud blue collar men are unlikely to admit even to themselves that they feel threatened when younger foreign men are willing to work for less money than them, with ugly hostility often masking the very real reasons why they feel under threat- because of the ever present fear of being thrown on the scrapheap before their time.

This doesn't mean that immigration should stop. Far from it, most American support legal immigration and Australia proves that a migration system can be designed in such a way that aspiring migrants from around the world get the chance to participate in a vibrant, thriving society. But central to any sane immigration system should be the imperative to protect blue collar male employment. To guard it fiercely as the exclusive domain of native-born kids who don't do well as school. Apart from anything else these precious jobs are in decline as automation continues to eat away at previous blue collar staples of employment. Otherwise we are setting our less fortunate teenage boys on the path towards self-destruction, regardless of whether they happen to be African American, White or Latino.

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