Megan McArdle and Arnold Kling on Psychic Inequality

by Reihan Salam

We all have our hobbyhorses, and one of mine is the central importance of “psychic income”: because psychic income is hard to measure and even harder to tax, maximizing psychic income is the great tax avoidance strategy of individuals rich in human capital. “Psychic income” can mean many things: a sense of pride in one’s work, recognition from one’s peers, the satisfaction some of us take in living differently than those for whom we have contempt, etc. There are many individuals, particularly in the advanced economies, who place heavier emphasis on psychic income than on market income. Indeed, if we embrace the Richard Robb “economics of becoming” thesis, as I do, we see that most efforts to increase market income aren’t so much about the gratification we derive from the consumption market income affords us, but rather from the often inchoate, sometimes explicit sense that market income is a crude indicator —  a yardstick — for whether we are accomplishing some other set of intangible goals, e.g., recognition, a sense of fulfilling one’s potential, etc. Narratives are at the heart of our economic lives. 

This leads me to Megan McArdle’s illuminating discussion of a classic Arnold Kling aphorism, which reads as follows:

The paradox is this. A job seeker is looking for something for a well-defined job. But the trend seems to be that if a job can be defined, it can be automated or outsourced.

The marginal product of people who need well-defined jobs is declining. The marginal product of people who can thrive in less structured environments is increasing. That was what I was trying to say in my jobs speech.

Kling’s observation reminded me of a recent conversation with a highly intelligent colleague, a center-left writer who has traditionally focused on issues relating to women’s rights, social justice, etc. She described the dilemmas and aspirations of working-class New Yorkers, and specifically those working in the public sector: their long-term trajectories rest on the assumption that pensions will be available in X years and that these pensions will be reasonably generous, which in various ways informs their perspective on national political debates. These women and men are deeply invested in their well-defined jobs, which offer clear and indeed rigidly-defined ladders for wages and benefits, authority, etc.  

McArdle offers the following lament:

Why is this troubling?  Aren’t routine jobs stifling? Soul-destroying? A tool of the oppressive overclass?

Well, that’s what we used to say when we had more than enough to go around.  The assembly-line was grinding modern man into just another machine part; the stultifying conformity of the white collar world was producing a nation of anal-retentive Casper Milquetoasts.

Then the jobs started to go away and we discovered that many people like dreary predictability–at least, compared to the real-world alternative, which is risk.  What many, maybe most, people actually want, it turns out, is the creativity and autonomy of entrepreneurship combined with the stability of a 1950s corporate drone.  This is a fantasy, of course, but given their druthers, it’s not clear that most people will pick risk over dronedom.

Unfortunately, they’re being given no choice.  Even if we stopped outsourcing, we’re not going to somehow stop automation.  One of my first jobs out of school, way back in 1994, was as a secretary.  I’d be shocked to find that any of the executives at that organization still have secretaries–maybe the executive director, but maybe not even him.  Already at the time there wasn’t really enough for me to do; my boss had a secretary because, well, people in his position did.  That’s not because the work was being outsourced to Bangalore, but because computers and the internet were eliminating much of the coolie labor that secretaries used to take care of.  And of course, the recession is accelerating the pace of change–and leaving the people who are displaced fewer options to transition.

I’ve always been a novelty-seeker who much prefers less structured to more structured, and the impression I get is that my parents are the same way. Yet my parents were forced to adapt to more structured environments for a number of reasons, economic necessity foremost among them, while those who prefer less structure now have more alternatives, and indeed might enjoy some not inconsiderable advantages. While novelty-seekers were once the bastard stepchildren of the economy, they now occupy many of the most privileged roles in it. 

In political conversation, it is a common for people to offer certain kinds of ad hominem argument, e.g., you take position X because you don’t understand or care about people Y. One familiar form of this argument is that one doesn’t care about poor people, for example, or middle-income public employees. A more effective line of attack, in my view, is that “you take laissez-faire, chaos-friendly position X because you don’t understand or care about people who need well-defined jobs,” who, incidentally, can range from successful publishing executives and magazine editors hostile to new media to far less privileged people. The cross-class divide between those comfortable with and those uncomfortable with risk and chaos is absolutely central to understanding the world we live in, and my strong impression is that the uncomfortables represent a majority of the population and perhaps even a large majority. This is why I’m resigned to the view that my preferred mix of public and private institutions, which I believe to be the best for the comfortables and uncomfortables but which will redound to the particular benefit of the comfortables, will always face an uphill climb.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.