Opting out

Henry Fudge’s essay Degeneracy Is A Symptom is bleak and clarifying.

Consider what it means to be a young adult in a developed economy, and consider it across the same three stages.

In the hedge stage of being alive (call it 1955 to roughly 1975 in the Anglosphere), a median wage covers the median life. You leave school, you get a job, you find a partner, you buy a house at three or four times your annual income, you have children, you save into a pension that your employer co-funds, and at the end you retire on something approaching your final salary. Cash flows cover principal. The future is, in the literal financial sense, affordable. The system is hedge-financed at the household level.

In the speculative stage (call it 1980 to roughly 2008), wages cover the running costs of a life but not the accumulation of the assets a life requires. You can pay your rent but you cannot accumulate a deposit at the rate house prices are rising. You can service your student loans but you cannot retire them. You take on more debt to bridge the gap. You roll your overdraft. You buy your house with a 95% mortgage at six times income because there is no other way to buy it. The system is functional so long as credit remains available and asset prices keep rising. You are speculatively financed. You are, in Minsky’s terms, depending on the music continuing.

In the Ponzi stage (call it now), wages do not cover even the running costs of the life that previous generations defined as normal. The deposit is unreachable; the family is unaffordable; the retirement is fictional; the career path that was supposed to deliver these things has been replaced by a sequence of contracts. The only way to access the reference standard of living is to acquire assets that rise faster than wages, which means either inheriting them, marrying them, or speculating into them. Productive labour, in the Ponzi stage, is a losing strategy by construction. You cannot save your way to the life your parents had, because the life your parents had is now priced in a currency (asset wealth) that wages do not convert into.

What does a rational agent do in the Ponzi stage?

She does not work harder at the losing strategy. That would be irrational. She pivots to strategies with the property that their upside actually reaches the reference threshold, even if their expected value is poor. She buys lottery tickets, metaphorical and literal. She speculates on crypto. She gambles on football. She starts an OnlyFans. She day-trades. She marries for money. She sells her eggs. She joins a multi-level marketing scheme. She bets her redundancy on a single hand at the roulette wheel of life because the steady strategy has a known terminal value below the threshold she needs to clear.

Found by way of Silverman On Security, who says:

This is a great analysis of an interesting article. What goes unsaid, and I expect it is only because Paul doesn’t work in the discipline, is that what is being described has been known as Differential Social Organization, which is the beginnings of Social Learning Theory.

It grew out of the response of Sutherland, the father of modern criminology, to his colleagues at Chicago doing the neighborhood studies for the Cook County Courts. Those studies were an attempt to apply sociology & demography to questions of juvenile delinquency and other criminal activity.

As the lore goes, when Sutherland looked at his colleagues’ results he told them what they were really looking at was not normatively versus deviantly organized communities in different neighborhoods & areas (zones) of the city.

Rather, the neighborhoods & areas with the highest levels of delinquency, deviancy, and crime weren’t maladapted, they were differentially socially organized.

What he meant was that in order to be able to survive, function, and live under the socio-economic & socio-political conditions those Chicagoans were living in, it made perfect sense for men, teens, and boys to engage in criminal activity as there were few decent paying jobs. Since their was almost no reward to engaging in the licit economy, the risks of engaging in the illicit one were lower because it was pretty much that or nothing. Similar for women who chose to engage in sex work.

When I read the excerpts that Paul include, clicked through to the piece he’s responding to, and then his take on it my impression was this is a description of Differential Social Organization with two other, and related to each other, empirical sociological / criminological explanations.

Institutional Anomie, which is the macro- to meso-level modern variant of Weber’s classic anomie theory and General Strain Theory, which is the more micro- to meso- version of Weber’s classic. Specifically the alienation from each of the societies socio-economic, socio-political, and social realities.

Differential Social Organization is very apt and useful to look at what happens to states & societies and the groups & people within them under different socio-political, socio-economic, socio-religious, and societal conditions. I’ve used it in my work on Iraq & Afghanistan for the Army.