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Ruchir Sharma The writer is chair of Rockefeller International. His latest book is 'What Went Wrong With Capitalism'
As the US goes to the polls, its economy looks unusually strong. Averaging nearly 3 per cent growth for nine straight quarters, the country is attracting heavy flows of foreign money, which have helped push its share of the global stock market index well above 60 per cent, a record high. Yet voters remain pessimistic about their economic and financial prospects.
Why? US growth is a mirage for most Americans, driven by rising wealth and discretionary spending among the richest consumers, and distorted by growing profits for the biggest corporations. Times look good but this growth is lopsided, brittle and heavily dependent on spending and borrowing by the government, which is typically the lender of last resort.
Although the world marvels at "unsinkable" US consumers, a growing number are priced out of homes and falling behind on credit-card debt. The bottom 40 per cent by income now account for 20 per cent of all spending while the richest 20 per cent account for 40 per cent. That is the widest gap on record and it is likely to widen further, says Oxford Economics, a consultancy. Most Americans now spend so much on essentials such as food that they have little left for extras like travel or eating out.
Discretionary spending is becoming a luxury for the wealthy, and so is optimism. Confidence collapsed during the pandemic and has since recovered much more strongly for the richest third of consumers than for the middle or bottom thirds. The impact of rising wealth on spending is also concentrated among rich consumers, who own most of the assets. This decade, booming financial markets added $51tn to US wealth and while millennials did especially well, virtually all their gains went to rich millennials. To a widening wealth gap between the young and old, add this new source of division and anger within the younger generation.
Increasingly, America is a gilded economy, with a shiny but thin veneer. In the corporate sphere, the 10 largest companies account for 36 per cent of stock market cap — a peak since the data began in 1980. The most valuable US stock trades for 750 times more than any stock in the bottom quartile — up from just 200 times 10 years ago, and the widest gap since the early 1930s.
As the big grow bigger, anxiety haunts the rest. The share of small businesses expressing uncertainty about the economy and their own future is unusually high, and their confidence is at lows rarely seen outside recessions.
Most analysts see dominant tech companies as a plus for the US economy, driving growth, justifying sky-high stock prices and drawing in a torrent of money. In the 2010s, foreigners invested about $30bn a year in US stocks, but that is set to hit $350bn this year.
Normally, though, booms are financed by rising debt in the private sector. The government ramps up its borrowing only later, to help dampen the shock after the boom goes bust. This time, government leads the way; the deficit has more than doubled over the past decade to top 6 per cent of GDP and is on track to expand further in coming years. Public debt is exploding, up $17tn in the last decade, matching in 10 years the increase in the previous 240 years — almost back to US independence.
By accounting definition, the government deficit is the mirror image of private savings, which include corporate profits. Historically, US corporate profits have risen with the deficit, a link established as early as 1908 in the "Kalecki-Levy equation". It has held ever since, powerfully so of late, with rising deficits turbocharging the surge in corporate profits.
Democrats and Republicans don't agree on much but are united in indifference to the deficit, which is expected to increase significantly regardless of who wins Tuesday's election. With so much money pouring in, why not keep borrowing?
Following the end of the zero-interest rate regime two years ago, the "bond vigilantes" woke from a long slumber and began punishing nations for fiscal profligacy, starting with frontier markets such as Sri Lanka and Ghana, shifting to emerging markets like Brazil and Turkey and most recently to developed markets, first the UK and now France. Thanks to heavy demand for the world's preferred currency, the US seems less vulnerable, but no country in history has been immune forever.
With deficits on the rise, artificially inflating America's growth, there are already signs that these forces are pushing up interest rates. Empires have often failed when they could no longer cover their own debts, and the way the US is headed, its next president may learn this lesson the hard way.
....Bullshit Jobs: A Theory, first published in 2018. A "bullshit job," according to Graeber, is a job where even the person doing it secretly believes the job shouldn't exist. But part of their condition of employment is to pretend it's not as pointless as they know it to be.
Bullshit jobbers, he writes, can include "box tickers," "flunkies," "goons," and "taskmasters" (more on them later). Such roles are prevalent in areas such as finance, admin, law, marketing, and human resources. The book has been translated into many languages, and while it has been criticized for some rather broad generalizations, he clearly struck a chord.
In the 1930s, economist John Maynard Keynes suggested we were fast approaching a time when our new "labor-saving technology" meant we'd have to confront the issue of "technological unemployment." Due to the prodigious gains in productivity, wrote Keynes, we'd soon be working half as much—or less. By the postwar period, this had become a widely held belief.
Keynes, writes Graeber, was right. But rather than embrace more leisure time for workers, our response was "to make up a raft of new jobs," resulting in large swaths "of people, in Europe and North America in particular," spending "their entire working lives performing tasks they secretly believe[d]" did not really need to be performed.
The "proliferation" of these "bullshit jobs," Graeber suggests, is a significant part of the reason we don't have a 20- or even 15-hour work week....."
"By increasing economic inequality and insecurity, conservative economic policies have exacerbated social tensions. As a consequence, an ever-increasing fraction of the nation's productive potential must be devoted simply to keeping the have-nots at bay.
Similarly, on the international scene, hawkish foreign and military policies aimed at reasserting U.S. global power have a comparably high price tag: A mounting fraction of the labor force is not producing goods for consumption or for investment but is either producing military goods or working for the Pentagon....."
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This study examines the association between precarious employment and stress among U.S. working-aged individuals using data from waves 4 (2008-2009) and 5 (2016-2018) of the National Longitudinal Study of Adolescent to Adult Health. Precarious employment (PES) was measured based on factors like low wages, work hours, job instability, and lack of benefits. Higher PES was associated with increased perceived stress and higher levels of C-reactive protein, a biological stress marker. The results suggest that precarious employment, a psychosocial stressor, may contribute to poor mental and physical health. The researchers recommend policies like improved job stability, better wages, and healthcare benefits to mitigate these effects and reduce health disparities.
The deployment of AI in the workplace has shined a light on long-standing problems: The deployment of AI-powered technologies in the workplace has been associated with an array of worker experiences and outcomes that warrant concern, including discrimination, unsafe working conditions, loss of privacy, and seemingly arbitrary disciplinary action or discharge, among others.
But these outcomes are not inherent to the use of AI. Employers' use of other technologies and even garden-variety management practices have perpetuated these outcomes for decades. The use of AI has shined a light on the challenges workers with little bargaining power and insufficient on-the-job protections face in our labor market.
Broader solutions are needed to improve worker outcomes in the era of AI: Policymakers should address the negative outcomes experienced by workers today, but they also should look beyond how the use of specific AI systems may degrade job quality and look deeper to the underlying conditions that enable employers to use AI in this manner: the imbalance of power between businesses and their workers.
Workers should have greater protections and a voice in workplace policies: Decades of weakened bargaining power and heavy reliance on employers for life necessities, such as healthcare and retirement, has made it exceedingly difficult for most workers to bargain over how AI technologies are being used in the workplace—let alone opt out of the use of AI-powered management and surveillance at work or walk away from unlawful or poor working conditions.
The objective of worker-centered AI policy: Increase the ability of workers to meaningfully engage their employers in how AI technologies are deployed in the workplace.
To achieve this straightforward objective, policymakers will need to address long-standing imbalances in the labor market; reduce AI-specific barriers to worker voice while banning the most egregious uses of AI; and support workers' ability to find better jobs.
The Big Shift From Salaries to Bonus-Based Pay, Fuhrmans, WSJ 9/24
More Americans are in jobs where a chunk of their pay isn't guaranteed.
In incentive pay programs, base salaries are often fleshed out with monthly or quarterly bonuses conditional on hitting certain targets. Twenty-eight percent of more than 300 companies surveyed said they were building incentive pay into new roles, according to a 2024 survey by revenue-management consulting firm Alexander Group.
The practice has long been common for salespeople and top brass. Yet apart from the yearly raise—and for some, an annual bonus—the vast majority of the workforce makes the same amount every payday.
Now, more companies are trying to get the most out of rising payroll costs by making a part of workers' pay contingent on completing prescribed goals.
Employers say the new way to pay professionals from accountants and human-resource managers to marketing assistants can fuel greater productivity. Plenty of overachievers say they are relishing the often-rich upside potential. Yet some workers say they are making less than they bargained for.
"There's absolutely risk, but in my experience there's been more reward," says Hannah Brown, 32, a chief of staff at business-software company WalkMe.....
Jobs close to the sales process, such as marketing and after-sales support, are the most likely to be swept up into pay-for-performance plans. But some firms, such as WalkMe, are using short-term bonuses to shape pay for everyone from accountants to human-resources managers.....
