Last week, Elon Musk’s SpaceX successfully launched their new Falcon Heavy, a more powerful rocket than anything flown since the Apollo era Saturn V. Media has been abuzz with excitement at the renewal of our spacefaring ambitions. But rather than the typical scientific experiments and satellites aiming to further our understanding of the world, SpaceX hauled up a car from their sister company Tesla and memetic references to popular sci-fi. Is there a place for science in the new private vision of space?
The pricing mechanism inherent in markets allows each consumer’s choices to influence the success of a product or company. Conservatives and liberals both assert that product boycotts and consumer activism are effective ways to have our voices heard. Liberals boycott companies associated with Trump’s business empire, while conservatives employ the same tactics in support of their own aims. Nobel prize winning economist Milton Friedman asserts that markets, unlike political channels, permit wide diversity through a system of proportional representation – “each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit.”
But just how democratic are markets?
As an example of a democratic system we can consider the Dutch House of Representatives, which has 150 members chosen through proportional representation. Each citizen is eligible to vote and each gets only one vote. Every citizen’s vote has the same value. After the votes are tallied, the seats are allocated to parties in proportion to the number of votes they received using a quota method. This gives a diverse representation of people’s views, from the People’s Party for Freedom and Democracy, supported by 21.3% of people in 2017 for 33 seats (or 22% of the total) right down to the Forum for Democracy, with 1.8% of the vote and 2 seats. The way in which each vote is counted varies between systems (for instance in Australia, where our votes go towards the winner of each geographical seat), but the central principle remains. We are all equal. We all get just one vote, regardless of status.
In the analogy of markets to democracies, each dollar is a vote. A consumer boycott campaign reduces a company’s profits in proportion to the number of dollars which aren’t spent. The simple number of people boycotting the company makes no difference. A support campaign acts similarly, increasing the company’s profits only in proportion to the additional dollar spend of the supporters. We can only continuously spend the money we earn, so both our ability to reward and punish companies in the market is tied directly to our income. A person’s disposable income determine’s the value of their vote and thus their voting power within the market.
In a perfectly equal society then, markets would then be democratic with each consumer having equal voting power. Unfortunately, our society doesn’t come close to this ideal. As a simple example, women in Australia earn 87% of what men do. So when voting in the market, on average a woman’s vote is worth only 0.87 male votes, as they have proportionally less dollars to spend. Consider a company which might take a sexist stance in their advertising. They could gain 1000 male customers and lose 1100 female customers, yet the market vote would deliver them more profits through the higher average incomes of men, even though more people disagree with the stance than support it.
The gender pay gap, though real, is small compared with the discrepancies which exist across other strata of society. Consider the income distribution in the USA: The top 10% of people have 47% of the income, while the bottom 50% of people have only 13%. This means that the average person in the top 10% has 18x the market voting power of their counterpart in the bottom 50%. A boycott by half the population could be cancelled out by the top 10% each increasing their spend by just under a third. Markets don’t care who the dollars come from, just that they keep flowing in. To correct Mr Friedman’s analogy, each man can indeed vote for the colour of tie he wants, but only the wealthy man gets it; the poor man with little market power can only hope that some rich men share his views.
Investments provide an even starker image, as a consumer’s voting power there is determined not by their income but by their wealth. The wealth distribution everywhere is more unequal than income, and again the US data is illustrative. The top 1% have 39% of the wealth, the next 9% (from 90-99% in the distribution) have 34%, while the bottom 50% of people have a combined net worth of zero. So the direction of investment is almost entirely determined by the top 10%, with the poorest 50% able to provide no input whatsoever. Is it any wonder that venture capital continues to demonstrate itself entirely out of touch with real people? Why tech entrepreneurs continue to ignore women, people of colour and the poor? In a society built around markets, those with no money have no say.
We do have a word for this kind of system, where a small elite has all the power. But that word isn’t democracy. It is an oligarchy.
The prospect of gambling brings to mind the glittering lights of Las Vegas, but its real home is a dingy RSL club in Western Sydney. Here, countless desperate folks see their only chance at escape within the tawdry reels of what is euphemistically called ‘gaming’. These dens of inequity ensnare the poor, the uneducated and pensioners with little to live for but the promise of riches through feedback specifically designed to trick players into taking just one more spin. Loyalty programs turn saps into VIPs and give them a free spin every visit to re-engage those gambling faculties and maintain the addiction cycle. Australia leads the world in gambling spend per person, thanks to these obiquitous poker machines. We spend $1,273 per adult each year on gambling in this country. More than half of this expenditure is taken up by the particularly loathsome category of poker machines.
Australia has the second highest number of poker machines in the world, 195,631 at last count which places us second only to the USA (but with a much higher number per capita). This makes one poker machine for every 95 adults. Of those machines, nearly half are in New South Wales, which records an abominable machine per 65 people. Consequently, the average New South Welsh adult loses $1,580 per year gambling(roughly 2/3 of that on the pokies), or about $30 every week. We lose $23.7B each year on a turnover of $204B to the gambling industry. To put these numbers in perspective, the agriculture industry earned profits before tax, depreciation, etc of $21.1B last year, while the construction industry earned $43.2B.
What these statistics conceal however is that not all of us gamble. The HILDA survey found that 8.1% of Australians play poker machines once or more a month. So neglecting the (likely only small) losses of irregular players, each poker machine player loses $8,023 a year on the pokies alone. Eight thousand bucks per person per year, so more than the average household spends on electricity, gas, clothing, footwear and telecommunications combined! Losses per player are likely higher within NSW alone, but HILDA doesn’t break down participation to state levels. Even worse, the HILDA survey asked gamblers how much they thought they spent on a monthly basis. Pokie players underreported their losses by a factor of six compared with the industry data, demonstrating how the tricks of the machines cause addicts to lose track of their spending.
HILDA does break down demographics, so we can see who these players are. Poker machine gamblers are disproportionately poorer, less educated, more likely to be indigenous, of lower socio-economic status, older and more likely to be on government assistance than the general population. So those who are compelled to throw their money away are also those who can least afford it. Pokies steal from the poor addicts and give to the rich owners of these suburban casinos, who are commonly professional sporting teams. This isn’t just a moral issue, but also one of social justice.
How have we got to the point where pokie addicts each sacrifice eight thousand dollars every year to these one armed bandits? Governments are well aware of the clear and present harm which they are doing to the community, with multiple studies undertaken and maverick NXT leader Nick Xenophon starting his career as a ‘No Pokies Independent‘. One major problem is that state governments have themselves become addicted to the taxes pokies bring in. Government revenue from gambling comes to $6B across the country, making up around 8% of taxation taken in by the governments of New South Wales, Victoria, Queensland, South Australia and Tasmania and 12% in the NT. Both major parties have also been given hefty donations from hotels and clubs, with $6.6M donated to Labor and $4.4M to the Liberal and National parties since 1998. This includes $3M just from Clubs NSW (split $1.2M to Labor and $1.8M to the LNP), the statewide representative group for the clubs which hold most of these machines. So there is quite an incentive to maintain the status quo.
Is it any wonder that the government’s committment to problem gamblers focuses entirely on overseas online sports betting, which accounts for only a small sliver of the gambling pie? Or that the most recent Productivity Commission report into gambling found that “people’s willingness to pay for gambling over alternative products reveals their underlying preferences” rather than addiction and so “gambling provides significant enjoyment for many Australians”, in a classic case of the economist’s ignorance of reality? Both governments and the parties who run them have been entirely captured by this callous industry which sells an illusion of glamour coating an exploitative core.
I seek to read and learn widely, building an understanding across a wide range of areas in order to understand the world I live in. If you’re willing to trawl the internet widely enough to find this blog, then that probably applies to you as well. But what good does all this knowledge do us? Does understanding the dynamics of society improve our lives if we lack the power to change them? Is the ignorant worker-drone who spends his leisure time with mindless entertainment more at peace and happier than one who understands his problems yet cannot solve them?
We are all free to choose our own purpose, our own values and to make our lives our own projects. In a world without godly codes, everything is permitted and it is up to us both as individuals and as members of the greater mankind to decide what is good and just. Our own choices and actions demonstrate what we see as good, and our society’s conception of ‘good’ is the sum of our individual choices. So far, so Jean-Paul Sartre. But most of the folks who make up our society don’t ever actually consider their values or examine their lives the way a bourgeois philosopher might. How many amongst us have ever really considered the meaning of their lives beyond simple surface level goals?
For most of us, our values aren’t defined by a heady contemplation of ethics – we muddle along and try to make the best of the limited information which is readily available. At best, our ethics are informed by looking at parents and role models, at worst by simple osmosis from the society in which we are immersed and only in the case of rare individuals through active contemplation. So if, as Sartre asserts, “everything happens to every man as if the entire human race was staring at him and measuring itself by what he does”, what happens when the bulk of people are not actively choosing, but merely being swept along in their unexamined lives?
The ABS released the results of Australia’s survey into the legalisation of gay marriage today. The headline result was a win for the ‘Yes’ vote, with 61.6% of the vote which should translate into legislation in the near future. Thanks to the release of data per electorate, we can also use this to take a look at what sorts of communities were more supportive of the change. As a pure issue of social liberalism versus conservatism, this gives us the opportunity to consider positions of groups of people solely on an axis of social issues, rather than conflating them with economic issues as is the case in general elections. As the data is only detailed down to a per electorate basis however, we do need to consider that across an electrorate there may be substantial variation as well as a cacophony of variables acting in multiple ways, so these are certainly guides rather than anything genuinely scientific.
The self-help book is ubiquitous, filling the shelves of bookstores and offering to solve the problems of your life. From happiness to loneliness to overeating, everything can be solved with a ten step plan. In the digital age, a cottage industry of self-help websites have sprung up, with similar promises and even less scientific backing. Self-help books are the world’s best selling genre. They demonstrate both our dissatisfaction with our lives and the all pervasive nature of the ideology which underpins them.
To further my earlier post on STEM oversupply, I took a look at historical graduate numbers and job openings (on a three year rolling average to smooth out fluctuations), using data from the ABS and the Department of Education & Training, accounting for not just retirement but also deaths and migration (though occupation data on skilled migrants isn’t available). In short – even under the old restricted entry system, graduates often outpaced opportunities but the combination of economic slowdown and increased access to education after the GFC has led to this gap widening to its present unsustainable level.
Deregulation of university places by the Gillard government has left a legacy of massive graduate oversupply. The chart above makes for stark reading, with many more graduates than jobs available for them in every field except IT, much like the situation in the US. The much vaunted STEM field, which Australia’s Chief Scientist declared should be “at the core of almost every agenda” is revealed to be a hollow wasteland, with 18 graduates for every job in the maths and sciences. The supposedly “always in demand” engineering sector provides a similar employment proposition to the much derided creative arts stream. Without jobs in their area of study, graduates in SEM will be forced outside it in order to find work, if indeed they can find skilled work at all given the depths of the oversupply. So how did we get here, and why is STEM still lionised as a cure-all to employability?
What do you do?
To this common icebreaker, one is expected to respond with their job title. But I write, I think, I analyse, I research, I design, I create, I photograph and I develop, there is much more to my abilities than just ‘Mechanical Services Engineer’ or ‘Software Developer’. The intellectual poverty of late stage Taylorism has driven us into tiny little silos with exceedingly specific skills, debasing our general abilites and as a result we are losing the ability to consider things holistically or systemically.