Ortega y Gasset and You Tube

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An acquaintance of mine, a very bright historian, just gave a TED Talk.

 

I think his conclusion sheds some light on the discussion between George N. Romney and Bill Kamps in the What Changed Us article.

 

Professor Vlahos concludes that elites (which he defines more broadly than "the One Percent") are acting to their own advantage, as elites have done in other times moving towards the point when things fell apart (for example, at the end of Classical times in 6th through the 8th Centuries or after the Black Death in the 14th Century or after the World Wars in the 20th Century). 

 

He further thinks that over what could be a long period of time our current elites have set the stage, by monopolizing resources, for a catastrophic event (perhaps climate change) to change how the cards are dealt.

 

Professor Vlahos came to that conclusion while teaching graduate courses on how global systems subside.  He states that he initially focused on climate change, but came to see such events (like the, probably climate related,  Plague of Justinian in the 6th Century) as being a trigger for a course of events that were already in trail.

 

There have been thinkers who have considered these matters before.

 

In 1930, the Spanish philosopher, José Ortega y Gasset, published a book called The Revolt of the Masses,  which dealt with the "mass-ification" of society, which included "señorito satisfecho" ("Little Mr. Satisfied" or the bureaucrat). 

 

In 1995, the late historian, Christopher Lasch, wrote a book called The Revolt of the Elites, which presciently predicted the perception on the part of many Americans that elites were "'dangerously isolated' from the rest of the country" mind set and lacked a sense of "noblesse oblige." 

 

I am vastly less qualified than the people I have cited, but let me offer my own opinion.

 

The world of "mass man" that Ortega y Gasset wrote about began to collapse during the 1970s with "Stagflation."

 

 Productivity in the developed world, certainly in the Anglosphere, was  no longer able to support the social bargain of a welfare state and almost full employment.  There were too many legal and regulatory barriers to the needed levels of productivity.

 

The former elites, like business-statesman Reg Jones of GE, began to cede their positions to scrappy up-starts like Jack Welsh.  (However, that  succession was engineered by Reg Jones himself, which caused management gaon Peter Drucker to name Jones as the greatest CEO he had ever worked with.)  That period also included the early rise of brilliant entrepreneurial leaders, like  Steve Jobs and Bill Gates.

 

Arguably, the thinkers who most obviously perceived these trends at the time they were occurring were Alvin and Heidi Toffler in their 1980 book, The Third Wave.   This accurately forecast a de-"massified," post-Westphalian Nation State world, driven by talent.

 

During this period, the entire economy began to be predicated on talent, as only the arts and sports had been before.

 

Steve Jobs was not as important a technologist as Edison, but he had an insight about the interplay of technology and aesthetics that profoundly impacted how technological products were developed and marketed.   Where Edison had relied on leveraging effort, "Genius is 1% inspiration and 99% perspiration" (with acres of scientists and engineers in Menlo Park laboriously providing the "perspiration" by trying to get things to work until they did, a concrete example of the Ortega hypothosis), Jobs leveraged 'A Players" to create new approaches, a practical application of the cult of talent.  It was the kind of approach that brought new life to telecomm (dominated by entities like ITT and the Bell System) and computers (dominated by IBM's main frames) that were then-perceived as fairly mature industries, along with de-regulation. 

 

Not all new approaches worked.  Michael Milken's attempt to use High Yield (or "Junk Bonds") to create a new class of owner managers, disciplined by debt-service, was conspicuously unsuccessful.  (However it led people like Mitt Romney to perfect East Coast M&A, where if the turnaround failed, you could still profit by selling off the PP&E.)

 

As with the end of the Roman Empire, this change occurred because a group of elites saw no value to them in the current dispensation.  Odoacer was, for example, a Roman Officer and a vassal of the Emperor Julius Nepos and he ruled with the concurrence of the Roman Senate and among his advisers was the father of Boethius.  This has been a common theme in times of change.  Lord Keynes, one of the fathers of the post-World War system, was by any sense an elite. 

 

The stage was set for this change in the 1970s by two factors: 1) the establishment of the Collage Board in 1946, providing an empirical basis for the meritocracy; and 2) the writings of Ayn Rand in the 1940s and 1950s, which popularized the idea of free-market capitalism as the best system for best utilizing the talents of that meritocracy.  Steve Jobs, despite his Buddhist principals and general liberalism, was strongly influenced by Rand's romantic world view of visionaries creating technology as a form of art, if not her particular philosophy. 

 

If   Lasch and the Toefflers are right about the decline of the nation-state, then what result for less talented individuals like myself who are, by definition, more tied the nation-state?

 

Well the historical precedents are fairly dire.  In late Roman times, the urban poor, fleeing chaos in the cities and the end to the "Bread and Circuses" system, found themselves legally bound to the soil.

 

But . . . .

 

If de-massification has damaged the lot of the less talented, it also provides opportunity.  If government and employers are exiting the provision of health benefits, for example, then groups of individuals can join together to do this, as Sara Horowtz has been trying to do with The Freelancers' Union

 

If a Federal system of social welfare is unacceptable due to its high costs and mediocre results, then state-charitable systems of social welfare (as in Utah), that are far cheaper and more effective may become the new model.

 

In short, while the shift to an individualistic world, predicated on talent may disproportionally hurt the less talented, it may also offer them an opportunity to discover their talents.             

Comments

George N Romey Added Mar 31, 2017 - 4:01pm
Well John I tend to doubt talent is rising to the top when we are moving towards a second gilded age.  Success becomes dependent upon birth right.  The poor remain poor no matter how talented. 
 
Most of history has been comprised of a small ruling elite, maybe a very small center or what we call the Middle Class, and hordes of poor people.  Look at much of South America.  The US is returning to a traditional means in which society is organized.
 
In the US, we had a sold middle class in the 1910-1925 period and from 1945 to about the turn of the century albeit the decline started somewhere in the late 1970s, very slowly at the start.  Can the US save the Middle Class and what would be done to do so? 
 
My thought is only after the US goes through a 1930s style or worse Depression.  Given the strain on our healthcare system and the rise again in debt levels among Americans, the overheated and way overvalued stock market a crash is coming.  In the previous decade the crash was put off by a couple of years and if there hadn't been people running around with tales of doom on CNBC it could have gone on longer.  This time around, again who really knows?  Will the Shorts again play a major role?
 
 
 
 
John Minehan Added Mar 31, 2017 - 4:24pm
George, As always you raise some excellent points.
 
Nassim Nicholas Taleb is very suspicious of what he calls the "Intellectual Yet Idiot" or "IYI."  He is suspicious of people who are only "credentialed" instead of being people who create results (such as Traders, his professional background).
 
However, most people who are in the financial business are NOT there because they know someone or have familial connections.  They are there because they have the intellectual prowess to get into elite schools and excel there AND then succeeded at the highest of high pressure businesses, where  vast amounts of money rest on their decisions made in a short amount of time on incomplete information.
 
The key point is not that the 2008 Crisis occurred, but that the talented capitalized on it.
 
The world since the 1970s is one with fewer guarantees and more down side . . . but also vastly more up side for the talented.
 
The rest of us are disadvantaged in such a world . . . but we are vastly more disadvantaged f we do not embrace it.  
 
 
George N Romey Added Mar 31, 2017 - 4:35pm
John I've done a lot of research on the so called traders.  Prior to the 1980s and 1990s most traders were high school grads or at best had a degree from a state university or college.  Firms tended to be ethnic oriented and jobs were often secured by knowing someone.  Bosses looked for guys (because it was and remains exclusively male) that had smarts, balls, and bravado.  Above all one had to be honest, fess up when a trade went bad.  Most firms were Irish, Jewish or Italian.  Blacks were not accepted anywhere.
 
As the firms began to go public in the 1980s and 1990s the companies began to instead recruit from Ivy League schools. These young people were led to believe they were "special."  They were recruited and paid big bonuses and salaries from the start.  Previously a ruffian from Long Island had to prove his worth in the pits.  When I lived in NYC I knew many of an older man that started on the Street that way.  They were not snowflakes in any sense of the word, they liked kicking ass.
 
Since this new breed had little life experience and was immediately vested with millions to trade they naturally made huge mistakes in the long run.  However, in the short run the profits were awesome and the bosses not being to turn down the money just simply ignored what they knew would be the inviable.  Read about Merrill Lynch former CEO Stan O'Neil or Dick Fuld at Lehman and you will see this is how it all played out.
Michael B. Added Mar 31, 2017 - 11:50pm
John M., as usual, you've delivered a very thought-provoking article. From my perspective, the world is setting the stage for a massive bloodletting, which it apparently needs from time to time.
John Minehan Added Apr 1, 2017 - 8:43am
"Prior to the 1980s and 1990s most traders were high school grads or at best had a degree from a state university or college.  Firms tended to be ethnic oriented and jobs were often secured by knowing someone."
 
That is still true of some firms.  An example, that is familiar from the films Boiler Room and   The Wolf of Wall Street, was Stratton Oakmont.
 
But now, traders are either: 1) people who have really proven themselves at firms at lower tiers (Taleb's "Fat Tony"); 2) people with excellent academic records at outstanding schools; or 3) "quants," who started out being people with degrees in science, mathematics and engineering but are now people with those kinds of degrees from elite schools.   
John Minehan Added Apr 1, 2017 - 8:50am
"Since this new breed had little life experience and was immediately vested with millions to trade they naturally made huge mistakes in the long run."
 
But where this became a systemic crisis was the fact that boards of financial institutions did not see the problems with the instruments they were using to capitalize their financial institutions, the same problem that arose with High Yield/"Junk" Bonds in the late 1990s.
 
Compounding the problem was the fact that Federal Law did not require these instruments to have a prospectus, as stock offerings are required to have.  Thus lots and lots of brilliant young lawyers were not pouring over written descriptions of what these instruments were supposed to do, who might have noticed there was no way to value the instrument if the valuation algorithm was proven not to hold.    
John Minehan Added Apr 1, 2017 - 8:57am
"From my perspective, the world is setting the stage for a massive bloodletting, which it apparently needs from time to time."
 
Maybe the rise of a meritocratic, non-national elite will prevent future wars, at least among nations that share this demographic trend.  (The GWOT being an exception because AQ and IS are outside this system).
 
In The Grand Illusion (1937), the French and German aristocrats have more in common than either has with their own countrymen, but each acts out of patriotism, in defiance of common "class" interest. 
 
However, today's meritocracy are by nature non-nationalistic.  I think that reduces the chances for wars within societies that embrace the new dispensation.   
Stephen Hunter Added Apr 1, 2017 - 9:12am
Great article John, very insightful. The great thing about viewing history is that we can watch changes happen over time, and i like the way you ended your analysis on a positive note.
John Minehan Added Apr 1, 2017 - 9:23am
The other great thing about history is that it gives you some ideas about what you might do next.
Stephen Hunter Added Apr 1, 2017 - 10:49am
Or savvy entrepreneurs an idea on where to focus their energy and creativity. People like Elon Musk, who is now the 80th richest person on the planet. The recent launch and landing of a booster rocket is MAJOR. So many others areas he is in like the Tesla car, Solar energy and innovations in battery storage, the list goes on. 
John Minehan Added Apr 1, 2017 - 11:04am
Brilliant guy, not everything will work out, but likely something will. 
George N Romey Added Apr 1, 2017 - 11:19am
People like Musk talk about going to Mars when the US can't even upgrade its 1960s airport and airways system.  We should be focusing on at least a 2017 infrastructure.  Go to Asia and see what the airports are like and no there is no waiting 3 hours for your flight to take off because of a little bit of rain.
John Minehan Added Apr 1, 2017 - 11:27am
That is an interesting problem.  Is it because the US had the first system of air ports and the system has just failed to keep up?
George N Romey Added Apr 1, 2017 - 11:56am
John like a lot of things that started first with the US so did jet travel and the building or expansion of airports.  That was mostly in the 60s and 70s.  Of course since then air travel has significantly increased.  The last new airport opened was Denver in the mid 1980s.  The FAA has tried to install Next Gen designed to ease air congestion now for years and is no closer than ten years ago.  The US has built very few mass transit systems since the 1960s and when they do its a real joke.   The LA subway system that took decades and billions to build but goes nowhere. NYC which took years to build the East Side line that runs only a real short distance. The Amtrak Northeast corridor line which is still running on 1970 technology and infrastructure.
 
Meanwhile Europe and Asia have bullet trains that run 250 mph.  Yet we have elites taking about going to the moon. It shows number one just how out of touch they are and number two that they lack any common sense.
John Minehan Added Apr 1, 2017 - 12:59pm
I wonder what effect environmental regulations have had on this?
 
Also, Stewart Air Field, formerly a local and ANG air field was expanded into a major airport for the NYC MSA starting around the turn of this century.
 
Possibly, it has become to hard to patch the old quilt.
John Minehan Added Apr 1, 2017 - 1:00pm
Also and this . . . .
George N Romey Added Apr 1, 2017 - 1:03pm
Its money, with $20 trillion in debt and trillions spent overseas we do not have a "pot to piss in."
George N Romey Added Apr 1, 2017 - 1:07pm
John during the first WW and second WW yes the rich went to war.  Bush Sr. as well as JFK served in combat. Notice son W did not (found a way out of the draft). Even by WW2 the dynamics were changing.  RR was the first kind of celebrity draft dodger (he "entertained" the troops and was a PR person for the armed services).
John Minehan Added Apr 1, 2017 - 1:31pm
Actually, Reagan was an odd duck.  He had joined the California National Guard in the 1930s and was commissioned in the Cavalry (not Armor, like with Horses).
 
When WWII came he volunteered for active duty . . . and had no useful skills and severe astigmatism (not a guy you want as an FO unless he can read the map, really, really well).
 
As a result he wound up being the S-1 (Adjutant/Personnel Officer) for an Army Air Forces unit making training and propaganda films.
 
His major career achievement was signing air gunnery instructor/doctrine writer/publicist MAJ Clark Gable's discharge. 
Dino Manalis Added Apr 1, 2017 - 7:23pm
Things are falling apart, because we lack order and stability in the world, as well as a lack of pro-growth policies to stimulate the private sector to spend; invest; hire; and broaden the tax base.
John Minehan Added Apr 1, 2017 - 7:36pm
There is a LOT of room for "regulatory right-sizing."  
John Minehan Added Apr 2, 2017 - 7:40am
An alternative view . . ..
George N Romey Added Apr 2, 2017 - 9:43am
John I believe that article has hit the nail on the head.  It has been misallocation of resources to benefit a very few and done by bureaucrats clueless about the real economy.
John Minehan Added Apr 2, 2017 - 10:14am
On the other hand, the ultimate point of Michael Lewis's The Big Short may be that anything that allows ordinary, untalented people to make six figure salaries (as the Sub-prime Mortgage Industry did at its height) should be shorted and is ripe for disruption. 
George N Romey Added Apr 2, 2017 - 12:18pm
John there is more scum than cream in society.  When the scum gets a chance at success you can bet it will be exploited.  Guess what the fastest growing industry is-payday lenders.  Proving my point that when the scum of the Earth get their chance they take it.
Bill Caciene Added Apr 3, 2017 - 9:57am
So it’s your belief that the 1% only act in their own self-interest and the other 99% all unite and act in the interest of everyone else?  Spare me, we all act in our own self-interest.  The only difference between the 1% and the 99% is that the 1% are far more successful at it.  More importantly, we shouldn’t ridicule success by negatively labeling them as “elites.”  Those in society that have climbed to the top of whatever field they are in should be respected.  
John Minehan Added Apr 3, 2017 - 10:56am
For a slightly different take.
 
Everyone acts in their own interest.  Some times those interests overlap, which drives; markets; the civil society/"social sector"(Drucker's term); and governments. 
 
Less able people, I am one of them, need to learn to rely on themselves and other people with common interests working in concert, rather than legacy governments. 
 
How can you ridicule people by calling them "elites?"
George N Romey Added Apr 3, 2017 - 11:15am
I've lived among the elites in Manhattan.  So let me give you a glimpse of their lives.  They were born into money.  Given the best schools, a cool rod to tool around in, summers in Europe, winters in Vail.  When they graduated Mommy and Daddy picked out their fashionable New York condo, furnished it and paid for it. 
 
They were either set up in a very nice job or given the funds to do "their own thing."  Usually something like their own fashion line.  Now to be fair many of them busted their ass and were successful.  Of course there was money for a maid service, a car service (no schlepping on the E train back to Chelsea at night), a valet, a personal trainer, a personal food service, and quite nice vacations. Tends to take the edge off the 12 hour days.
 
So this idea that the elites starting off sweeping floors or the mail room and worked their way up is urban legend. 
John Minehan Added Apr 3, 2017 - 12:06pm
Many start out modestly, Steve Jobs certainly did. 
 
Elon Musk, Mike Milken and Bill Gates came from comfortable, upper middle class backgrounds (Musk's father was an engineer, Gates father the senior partner in a regional law firm, Milken came from a more middle class background.) 
 
Taleb is critical of the SAT-based meritocracy, but it is the first reasoning (as opposed to memorization) based meritocracy.  
George N Romey Added Apr 3, 2017 - 12:12pm
John Gate's father was fairly wealthy, certain a top 5%.  Musk depending upon his father's specific job might have also been born into the top 5%.  The dynamics of being able to go from middle class to rich via what was a healthy social mobility is quickly changing as we enter another gilded age.
John Minehan Added Apr 3, 2017 - 1:11pm
This may be of interest . . . .
George N Romey Added Apr 3, 2017 - 1:23pm
John good article.  I am for guaranteed employment.  When the private sector can't provide jobs there is still plenty to be done.  Included in that could be retraining if that is beneficial. 
 
The lack of a job or at least a job that allows for living is far more than income.  It takes away dignity, purpose of living and steers people towards unproductive vises.  Right now we have an opiate and suicide epidemic among middle aged men.  However, more recent research shows more ex white collar and a growing number of women.  People that have worked all their life, did all the right things just to be thrown to the wolves.  Wouldn't common sense thing say to utilize their skills for the greater good.  This could be done in a for profit partnership.  How about a partnership that would provide a seasoned officer to small companies a few hours a week making it affordable and giving that fledging enterprise the chance to succeed.  The older professional in turn would serve a number of companies getting in a full time work week.
 
When the old answers don't solve the new problems clearly its time to think differently.  Our system was that when someone became unemployed through no fault of their own we gave them a modest stipend to tied them over until they became re-employed.  But the kind of jobs they left are becoming rarer.
John Minehan Added Apr 3, 2017 - 1:38pm
I think what you propose probably needs to be done by groups of people working together in the social sector, rather than through government.
 
What the larger economy is going through is similar to what Hollywood went through between about 1950 to 1965, as we transition from a model of employment by large companies to being employed on projects.
 
I think a big part of this is to reinvent the union, to let groups of people leverage their market power to get better deals on health care, pension fund administration and professional and vocational training.  (Possibly, the web lets people do that on their own, but group discounts and agency are helpful things.)   
George N Romey Added Apr 3, 2017 - 1:55pm
Yes work unions in all types of employment could work assuming workers would still have stable employment even if the source shifts from time to time.  Technology would make this much easier.  Someone is on a six month assignment, like an actor shooting a movie for six months and it winds down the union prepared to find another venue.  Again, new problems require no answers.
Bill Caciene Added Apr 4, 2017 - 10:58am
John
Based on your response, I believe we’re agreeing on the invisible hand theory which essentially means that in a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.  This means from the 1% to the other 99%, we are all doing something for the benefit of society at large.  Do you now retract your nasty comments about the 1%?
John Minehan Added Apr 4, 2017 - 11:27am
I'm not sure I made any.
 
I think we by and large have created a meritocracy, in large measure by the Establishment of the College Board in 1946, creating reasoning, as opposed to memorization,  based standardized tests.
 
There are some reasonable critiques of this, notably Taleb's, who thinks things like the SAT, MCAT, GMAT, etc., don't measure 2d Order Reasoning.
 
To say that elites (and like Prof. Vlahos, I think that goes beyond the "1%") act in their own interests is obvious, everyone (to a greater or lesser degree) acts in their own interest. 
 
There is probably something to Lasch's opinion that modern elites have less of a sense of "noblesse oblige" than prior elites.  However,  this comes from two sources: Randian ethics and the fact that, unlike prior elites, a talent-based elite got where they got by proven merit and not birth or connections.  
John Minehan Added Apr 4, 2017 - 11:50am
This is also interesting, look at the comments in addition to the article.  John Robb is an interesting thinker.
Richard Plank Added Apr 4, 2017 - 3:36pm
Oh were to start so many opportunities too little space.
1.  It is possible to view the world in terms of altruism versus self  interest and has been done more times to count.  It is but one way.  My take is that all of us are a mix; none of us are pure, and it is situational.  John notes that in this next to last post.  
2.  John you note we have created a meritocracy.  Well  history has shown that has happened before too many times to count.  And it is always imperfect just as this one is.
3.  The major flaw is most thinking about a lot of what is said is the assumption that things are  independent.  Mostly they are interdependent and we place things in little boxes and forget that is not how it works and wonder why we are wrong so often.  Our current President got to where he is partially on his ability, at least in some things, and in luck, his contacts, and his birthright.  Had he been born a poor black kid he might not have made it, but then again it might be possible he would, I would argue the possibility is lower.  I can honestly say I got to where I am with a lot of help and so did all of you.  And if you can really get a handle on all this complexity you are a lot better than I am; just grasping it all is difficult much less predicting it.  
4 Recognize that everything has variance and we can't measure anything very accurately  and that especially means perceptions.  
5.  My prediction of the future is extinction and since I am not religious it won't be a rapture.  Instead we will grow ourselves to the point of no return and eventually the human race will be a history with no one to read it, at least of our species.  What might happen in alternative universes if they exist I don't care to guess at.
George N Romey Added Apr 4, 2017 - 5:31pm
My feeling is round up all the corporate, financial, political and military elites.  Take them out to the Florida Everglades and leave them to be alligator and snake meat.  
John Minehan Added Apr 4, 2017 - 7:23pm
Extinction is actually fairly hard, as Dr. Vlahos points out.  In contrast, penury and misery are ubiquitous.
 
"Our current President got to where he is partially on his ability, at least in some things, and in luck, his contacts, and his birthright.  Had he been born a poor black kid he might not have made it, but then again it might be possible he would, I would argue the possibility is lower."
 
But if he had been, would he have been the same man?  That goes to your idea of "Interdependent."  However, at least some of who Trump is can be seen as coming from his background and it tends to lead to a certain mindset and certain predictable results. 
 
Put another way conspiracies are usually delusions, memes and group-think are not.
 
The downside of a meritocracy is that it tends to be educated in the same way and it have a common approach to things.  On the other hand, this meritocracy is unique in being selected on ability to reason, rather than mastery of memorized knowledge, as with mandarins in the Confucian system.  (Although, as Taleb states, SATs/GMAT, etc. do not capture 2d Order Reasoning, it does at least capture 1st Order Reasoning and selects the students who are able to see that is the answer they are being asked for, those who understand context.) 
 
 
 
 
 
 
Ari Silverstein Added Apr 5, 2017 - 4:24pm
“Productivity in the developed world, certainly in the Anglosphere, was  no longer able to support the social bargain of a welfare state and almost full employment.”
 
That doesn’t make logical sense.  If we are at or near full-employment, there is a much smaller demand on our welfare apparatus.   They don’t both go up at the same time.
John Minehan Added Apr 6, 2017 - 8:15am
Thismay be of interest . . . .
John Minehan Added Apr 6, 2017 - 8:23am
"If we are at or near full-employment, there is a much smaller demand on our welfare apparatus."
 
That depends on how you define "welfare."  People, now and even then, could be working full time and still qualify, for example, for Medicaid.  You could be "near full-employment" and still be paying out a lot (or at least more than you might want to) in unemployment.
 
Particularly, you could be paying a lot more out on Medicare than the government could afford based on reimbursement to providers based on their "Unusual, Customary and Reasonable" ("UCR") Rates. This lead, in 1982,  to a change to reimbursement to a system based on Diagnosis Related Groups" ("DRGs") and the Medicare Fee Schedule for various Catchment Areas.
John Minehan Added Apr 23, 2017 - 8:39am
Interesting . . . but how do you claim the system is oppressive, if it is almost always right?