America’s creeping Serrata

[obgyn65]

A very interesting article in today's NYT which I enjoyed reading. Happy to share it with everyone here, hoping others will find it interesting also.
http://www.nytimes.com/2012/10/14/op...R_AP_LO_MST_FB

"IN the early 14th century, Venice was one of the richest cities in Europe. At the heart of its economy was the colleganza, a basic form of joint-stock company created to finance a single trade expedition. The brilliance of the colleganza was that it opened the economy to new entrants, allowing risk-taking entrepreneurs to share in the financial upside with the established businessmen who financed their merchant voyages.
Venice’s elites were the chief beneficiaries. Like all open economies, theirs was turbulent. Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition. In 1315, when the Venetian city-state was at the height of its economic powers, the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.
The political shift, which had begun nearly two decades earlier, was so striking a change that the Venetians gave it a name: La Serrata, or the closure. It wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity more generally. By 1500, Venice’s population was smaller than it had been in 1330. In the 17th and 18th centuries, as the rest of Europe grew, the city continued to shrink... "

[haha]

So what opportunities are closed to talented Americans today? Ivy League Universities and Stanford and a few others scour the country, looking for students to give full scholarships, especially if those students can be ticked off on a minority checklist.

America spends more money on primary and secondary education than any other country. As much of it in awful neighborhoods as in good. Whose fault is it that the teachers unions gradually see to it that the only thing a teacher won't be able to do is teach?

America is broken, but it is not the serrata.

Ha

[ERD50]

Quote:

Originally Posted by haha America is broken, but it is not the serrata. Ha

Yes, if we are so 'closed', why do so many people come here for the opportunities?

I'm guessing the average lower-class US citizen today has a lot more opportunities to increase his status than the lower class of 14th century Venice. But I'm a poor history student, so I'm open to contrary views, but wasn't that the age of the 'indentured servant', etc.

-ERD50

[audreyh1]

Venice's decline was probably mainly due to the closing off of the Middle East to Europe after 1450 (collapse of the Byzantine Empire 1453) which was their main trading partner. Somehow I think this had more to do with it. Cities in the western Mediterranean - in Spain & Portugal - found new routes to the Indies, and Venice was no longer the middle man.

[yakers]

Quote:

Originally Posted by ERD50 Yes, if we are so 'closed', why do so many people come here for the opportunities? I'm guessing the average lower-class US citizen today has a lot more opportunities to increase his status than the lower class of 14th century Venice. But I'm a poor history student, so I'm open to contrary views, but wasn't that the age of the 'indentured servant', etc. -ERD50

Well, probably more than 14th century Venice but maybe not as well as 'the competition': Social Immobility: Climbing The Economic Ladder Is Harder In The U.S. Than In Most European Countries

[meierlde]

Quote:

Originally Posted by audreyh1 Venice's decline was probably mainly due to the closing off of the Middle East to Europe after 1450 (collapse of the Byzantine Empire 1453) which was their main trading partner. Somehow I think this had more to do with it. Cities in the western Mediterranean - in Spain & Portugal - found new routes to the Indies, and Venice was no longer the middle man.

Actually the last part of the comment is the point, Portugal provided new competition (and then the Dutch a bit later) to the Italian/Islamic axis of trade in goods from the east (which is how Venice made its money for example on pepper). If you read a splendid exchange the Portuguese played an extreme version of hardball on the established trade routes, and were able to undercut them. (Essentially Venice/Genoa etc. bought in Egypt, from Islamic traders who sailed the Indian ocean). The route around Africa disrupted that trade.

[ERD50]

Quote:

Originally Posted by yakers Well, probably more than 14th century Venice but maybe not as well as 'the competition': Social Immobility: Climbing The Economic Ladder Is Harder In The U.S. Than In Most European Countries

Even if the methodology is good (which I question), it doesn't get into the reason why. Are the lower classes really being 'shut out'? Or maybe what qualifies as 'poor' these days is good enough that some don't feel as motivated to work their way up? After all, 'poor' people qualify for better phones and better plans than what I buy for myself. 99 weeks unemployment insurance? Who want to hire someone who couldn't find a job for 99 weeks? And so on. Schools provide breakfast and lunch, which might be a good thing, but it also takes one more responsibility away from the parent - one less reason to work harder and earn more.

No, I don't want to trade places, but I think these subsidies could be a factor in not motivating people to lift themselves up.

-ERD50

[ERD50]

Quote:

Originally Posted by obgyn65 .... Venice gradually cut off commercial opportunities for new entrants. ..."

The more I think about this, I just don't get the connection. Seems 180 backwards to me.

Today, the 'little guy' has more opportunities to get involved in commercial opportunities than ever before. The requirements to open a brokerage account are low. Trade for $5 or $10? Low cost index mutual funds are available, and it is all extremely transparent.

Compare that to the 1920's - you sent your trade to the floor and who knew if you were being screwed over or not. There was no transparency. Some 'good old boys' making your deals.

I know a young man, from an immigrant family, he got his Eng degree and got a job. He's putting 10% into his 401K in a target retirement fund. He's not the '1%' and he's well on his way to being financially successful.

I'm tired of these 'pity parties'. You want a future? Go and make it happen. Is it easier if your family was well-to-do? Sure, but that doesn't prevent someone from doing it. Too many exceptions.

-ERD50

[yakers]

Quote:

Originally Posted by ERD50 The more I think about this, I just don't get the connection. Seems 180 backwards to me. Today, the 'little guy' has more opportunities to get involved in commercial opportunities than ever before....... -ERD50

Plenty of opportunities, just seems interesting that the opportunities for an ambitious person are equal or better or worse (depending which other country) in these countries with extensive social programs. Not the way we like to see ourselves.These places that some decry we are headed towards can work as well as ours. It may be that social cohesion is as important as free markets.

[ERD50]

Quote:

Originally Posted by yakers Plenty of opportunities, just seems interesting that the opportunities for an ambitious person are equal or better or worse (depending which other country) in these countries with extensive social programs. Not the way we like to see ourselves.These places that some decry we are headed towards can work as well as ours. It may be that social cohesion is as important as free markets.

OK, but I contend that:

1) It's a tough thing to measure - lot's of variables, I think much of it is subjective.

2) There could be so many factors, I don't know that we can pin a delta on any one thing. For example, does the US have more immigration that takes low-end jobs, maybe making it harder to get a start for low-income groups? I don't know, just one variable among many to consider.

All I'm saying is, could it be that providing so many things for low-income people creates a dis-incentive among some of them to put in the effort to rise up? Logically, it would seem so.

I'm not being judgmental, maybe we should be providing these things(*), maybe more. I'm just trying to state it factually, that it could be a source of limiting upward mobility.


(*) I'll make an exception for that free cell-phone plan. Sure, provide a phone for people who are active job seekers, provide a 'switchboard' service, so only job-seekers can be called or call you. You should also have to provide proof that you don't already own a phone plan with plenty of minutes. If you have a cheapo plan like me, maybe throw them a $10 card for minutes for that month.


-ERD50

[youbet]

Quote:

Originally Posted by ERD50 All I'm saying is, could it be that providing so many things for low-income people creates a dis-incentive among some of them to put in the effort to rise up?

I too believe we create dis-incentives with some of our taxpayer supported programs including unemployment insurance, the tax code, subsidies, charity-like giveaways, etc. But at the same time I believe that it's difficult to accurately identify which programs are acting only as safety nets of last resort for the indigent vs. programs which reduce motivation for lower middle class folks to go the extra step to get ahead as an unintended consequence.

The better we can identify which of our well intentioned actions keep the indigent from suffering (kids going to bed hungry, etc.) and which discourage the able but unwilling from aggressively seizing opportunities (generous and lengthly unemployment insurance programs), the better off we'll be as a country. And the better our upward mobility statistics will look.

But, saying it again, I recognize that accurately identifying safety nets vs feather beds isn't as easy as it seems at first glance. And I would have no interest in kids going to bed hungry in order to keep some able but unwilling worker from gaming the system.......

[marko]

Quote:

Originally Posted by yakers Well, probably more than 14th century Venice but maybe not as well as 'the competition': Social Immobility: Climbing The Economic Ladder Is Harder In The U.S. Than In Most European Countries

I'm not buying it. The article above mentions Spain as one of the places better for upward mobility than the US. SPAIN?? You mean the Spain with 25%+ unemployment? Or is there another Spain I'm not aware of?

I generally have to read the HuffPost with a grain of salt.

Agree with the posters that opportunities in the US are what you make of them. Whiners need not apply.

As ERD50 mentions, a lot of the barriers in the US that existed 50 years ago are gone. Remember when the banks closed at 3PM? They didn't want the unwashed working class traipsing through their lobbies.

Meanwhile, lots of middlemen have been eliminated making growth and the ability to earn/create easier.

Easy? No. Hard work? Yup! Easier to do than when Dad was a kid? I honestly think so, but you gotta put down the game controls/Facebook/Tweets and go DO something.

Ok, now this is the cue for someone to start crying about people who can't find work, are disabled, orphaned, yada yada...not what I'm talking about.

[FUEGO]

Quote:

Originally Posted by marko I'm not buying it. The article above mentions Spain as one of the places better for upward mobility than the US. SPAIN?? You mean the Spain with 25%+ unemployment? Or is there another Spain I'm not aware of? I generally have to read the HuffPost with a grain of salt.

It isn't just Huffpost. I just read the same assertion - social mobility is greater in Europe than it is in the US - in The Economist. Not exactly a liberal rag (unless you mean liberal in the economic sense).

That assertion shouldn't be too surprising, since if you have a more redistributive economic system like many countries in Europe, you would expect the lower classes to receive a disproportionate share of government largesse, and the upper classes to pay more into the system to support the largesse.

[marko]

Quote:

Originally Posted by FUEGO It isn't just Huffpost. I just read the same assertion - social mobility is greater in Europe than it is in the US - in The Economist. Not exactly a liberal rag (unless you mean liberal in the economic sense). That assertion shouldn't be too surprising, since if you have a more redistributive economic system like many countries in Europe, you would expect the lower classes to receive a disproportionate share of government largesse, and the upper classes to pay more into the system to support the largesse.

Ok, I can agree to the logic, but is (how is) a greater "share of government largesse" considered 'upward mobility' "? Handouts aren't my idea of being upwardly mobile.

[eridanus]

Quote:

Originally Posted by haha So what opportunities are closed to talented Americans today? Ivy League Universities and Stanford and a few others scour the country, looking for students to give full scholarships, especially if those students can be ticked off on a minority checklist.

A few thousand need based scholarships at a few top American universities hardly closes the wealth gap.

We can whine about the causes -- teacher's unions, lazy welfare recipients, corporate power -- but it is happening. The relevant question is whether we believe that it's a problem.

"That conclusion is by no means settled, and this article will lay out the best arguments of both sides – some of those arguments voiced by ordinary Americans. But what now seems established is that income disparity has risen in recent years within the United States, as well as within other economically advanced nations."

America's big wealth gap: Is it good, bad, or irrelevant? - CSMonitor.com

[marko]

Quote:

Originally Posted by eridanus The relevant question is whether we believe that it's a problem.

At the same time, IIRC there was an article about the younger generation rejecting the trappings of 'upward mobility' (big house, new car, big job) in an effort to find a greater balance in life (more free time, friendships).

If so, is the question moot? Are we asking the right question?

If younger folks aren't aspiring to be 'at least as successful as their parents'...heck, they don't even WANT that...they want something entirely different, what is the relevant question?

[eridanus]

Quote:

If younger folks aren't aspiring to be 'at least as successful as their parents'...heck, they don't even WANT that...they want something entirely different, what is the relevant question?

Good question. If it's actually a true, lasting, movement, it would cause dramatic changes in the American way-of-life.

[haha]

We should probably ask what we mean by upward mobility. If we mean take people who would be criminals or welfare recipients, and get them jobs that they will go to, and prefer to welfare and crime, government jobs are really the only possibility. But the more government jobs we have, the weaker our country becomes economically. Odd that so many fondly look toward Europe, when Europe is bankrupt and not about to get any less bankrupt.

Factory employment was the engine toward middle class life for for non worldbeater types, but it is gone. We could get better economic growth in this country by reforming immigration to being completely skills based and doing away with family unification. But that would not put the underclass to work, or people who can't or won't understand math or the need to get up every day and go to work. Our prisons are one of the main things that lessen unemployment. Both the detainees, and the very well paid unskilled workforce.

My feeling is that we are screwed. Nothing that we will do politically can help, and much of it will harm. All posturing, and a complete failure to understand or to admit what has really happened.

OTOH, if we mean taking people who are talented and willing to work and getting them opportunities, it isn't bad now, but could get much better with a thoroughgoing reform of education k thru college or trade schools. Another thing that will happen slowly if at all.

Ha

[haha]

Quote:

Originally Posted by eridanus A few thousand need based scholarships at a few top American universities hardly closes the wealth gap.

First of all, is is not a few thousand. If they find someone who they think can get through the course and graduate, and s/he has some nice adjunct characteristics, s/he is in. Your kid may be left out, but hey, that's a price we have to pay, right? Nothing wrong with CCNY, or not at least in the bad old days.

Ha

[Alan]

Quote:

Originally Posted by haha My feeling is that we are screwed. Nothing that we will do politically can help, and much of it will harm. All posturing, and a complete failure to understand or to admit what has really happened.

You can be a real ray of sunshine at times .

I was listening to a re-run of the first ever BBC personal finance radio program, Moneybox, in 1977 this last week and it reminded me of the state of the UK when DW and I were working our way through college, '73 - '77.

In the winter of 73-74 we had wide spread strikes by power workers, railroads and coal miners forcing industry into a 3-day work week because of power cuts, and the the collapse of the current government. By '75 the economy had collapsed and the UK needed a bailout from the IMF, plus there was inflation of 25%/year.

Not only did we survive but we prospered personally and as a country.

Those college years were fantastic despite the financial crisis, and "floods of immigrants from the sub-content taking all the jobs from the natives".

I believe the USA is as resilient as any country in the world, and will not just survive, but will prosper.

PS
I don't have loads of data points, just a boatload of optimism.