The Two Economies
Leveraged Stress
One Nation, Two Labor Markets
Working Class Versus Service Class
The Mushrooms!
Houston, Lugano, and Hong Kong

When you write about economics, you learn very quickly that the economy doesn’t care what you say about it. The forces that drive it are beyond any one person’s comprehension, much less control.

But at the same time, the economy doesn’t work like a law of nature. Unlike gravity, for instance, the economy responds to human choices and preferences. We influence it, even if we don’t understand exactly how.

In last week’s “Fragmentation of Society” letter, I wrote about the coming technological changes that will replace many human jobs and disrupt society. Some of the disruption will be good and necessary. Much of it will be painful, too, and the pain won’t be evenly distributed.

That is a problem whether you personally feel any pain or not. People don’t like pain and will change their behavior to avoid or relieve it. Like the drowning who desperately seek something to hold onto, they will vote for politicians who say they can relieve that pain, regardless of whether they actually can. And if those who suffer see that you don’t share their pain, they will wonder why not and seek to gain whatever advantage you possess. And then it gets ugly.

That’s not a moral statement but simply a fact-based observation of human nature. Whether we like the facts doesn’t really matter: We have to face them. Presently we are not handling them very well.

We have engineered society so that we at the upper end of the financial spectrum have little interaction with or knowledge of the people who feel the most pain. I wrote about this chasm between classes last year (see “Life on the Edge”) as the US elections made the split in our nation harder to ignore.

Peggy Noonan talks about the “Protected” class that makes public policy and the “Unprotected” who must live with those policies. The gulf between those classes continues to widen. The changes I wrote about last week will probably make it worse over the next 10–15 years.

Today I want to delve a little deeper into this widening split and consider where it may take us. As you’ll see, the possibilities range from “not so bad” to “very, very bad.”