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Saturday, April 13, 2024
CEOWORLD magazine - Latest - CEO Advisory - End Times. How to Win Back the American Dream, Or else

CEO Advisory

End Times. How to Win Back the American Dream, Or else

American Dream

If you haven’t been keeping up on the day-to-day developments in 2024, this year may be one to remember.  America is facing an historic point of inflection. Social media is tipping the balance in favor of the many voices collectively at odds with the status quo. There’s no one group. They hail from all walks. They are the American workforce. Remember them?

Call it A.I., call it a post-covid back-to-office worker recall, call it cost-savings, call it “the year of efficiency,” call it a response to a murky 2024 economic outlook, there’s no over-looking the headlines:

Massive worker layoffs from dozens of companies are sending seismic shockwaves across the entire American labor landscape, especially well-educated workers, where confidence is low.

It’s not like they can’t find work, they can if they lower their expectations, especially college grads who struggle to land a job that pays the bills and their student loans. It’s more about not loving the job you have and not trusting your employers to have your best interests in the plan.

Did you know that the number of unhappy dissatisfied Americans according to a 2023 Gallop survey is near a record high?  

A whopping 80% of Americans are “dissatisfied” with the way things are going in the US right now. Add to this growing voice of malcontents a cocpahopny of other dismal headlines and the message is front page bold font; It’s not working!

Meanwhile social media is busy reminding us every day of exactly what’s wrong. The increasing homeless rate in America is off the charts, home ownership is a distant dream for young people, everything costs more, food, rent, gas, utilities, car payments, insurance, and interest rates at benchmark highs. Consumers now carry more than $1 Trillion in credit card debt, a new all-time record.

According to Reality Check: The Paycheck-To-Paycheck Report, 50% of consumers live paycheck to paycheck, and 70% of consumers have less than $15,000 in savings, many have less than $1,000. Moreover, our national debt is now 120% of our GDP, our cities are falling apart, and we’re more divided politically and financially en mass from one another than ever before it seems.

Heard any of this rant before? 

Enter social scientist historian and author Peter Turchin who begged the question; Does history rhyme or repeat itself?

In his most recent book, End Times: Elites, Counter-Elites, and the Path of Political Disintegration (2023), Turchin, professor of social dynamics at the University of Connecticut analyzes the causes and consequences of social and political instability in the United States and other countries over the arc of time. He argues that the main drivers of this instability are the “elite overproduction” aka too many college grads, the marginalization of worker wages and consequential accumulation of profits by the rich at the expense of the working class.

Citing historical patterns whereby societal “elites” so engorge themselves with riches and social power they cause the societies they control to revolt, and tear the house down. Over and over whenever, wherever elite factions form the outcome for the “common man” is the same, gloomy.

And yet, while the symptoms of mass discontent and societal distress are everywhere lately, the “elites” don’t seem to mind it much.

So, who are these elites? Am I an elite? Are you?

It may surprise you but the elites are not all the latte-sipping, BMW-driving, monied rich people clogging the drive-thru. Elites are select members of society that control the 4 key pillars of power: military, economic, political and ideological.

Elites control and/or influence each of these pillars to protect, concentrate and funnel the flow of profits and power to themselves, Turchin outlines. And more starkly, they will do whatever it takes to keep it that way, resulting in clashes between themselves and with the rest of us.

Whether you agree or not Turchin puts up a good fight. His tracking data includes 300 historic case studies fed through a scientific model looking for patterns, which is exactly what machine learning does to help predict things. In this case the prediction is not good. It appears that like the boom and bust of the business cycle, human societies have them as well.

Unfortunately, Turchin concludes America and much of the world population is stressed out, and signs are evident he notes that many societies are approaching another end time in their current social cycle and looking for dramatic change.

So, are we headed for imminent collapse? American big cities could be, homeless in Modesto, CA now live in caves! News video you have to see to believe.

But if you’re a born skeptic, Turchin lays it out for you:

“When a state, such as the United States, has stagnating or declining real wages, a growing gap between rich and poor, overproduction of young graduates with advanced degrees, declining public trust, and exploding public debt, these seemingly disparate social indicators are actually indicators of looming political instability.”

Ok. So why should we care?

  • The American Revolution (1776)
  • The French Revolution (1789)
  • The American Civil War (1861)
  • The Russian Revolution (1917)
  • The Chinese Revolution (1949)
  • The Iranian Revolution (1979)

Get the idea? And what’s more, each of these major disruptions had a “trigger” event. Which is how most uprisings start.

You’ll remember:

  • The Boston Tea Party (1773)
  • The Storming of the Bastille (1789)
  • The Bombardment of Fort Sumter (1861)
  • The Easter Monday Rising (1916)
  • The Fall of the Berlin Wall (1989)

Each event had a common thread. Unhappy disaffected marginalized groups, mostly middle and lower working-class earners and families who felt then as they do now reason to join and embrace the contemporary cries of the unheard “common man.”

Combined with other disaffected groups they together form a united front dead set on tossing out the old bastards and ushering in anything new, as long as it’s different.

Unfortunately, change for the better rooted and stemmed from a raw emotionally-driven compulsively kinetic force for change doesn’t always end well either. Caveat emptor as was the case in Nazi Germany, Soviet Russia and a host of other communist and fascist-run countries last century.

Still here we are again, walking along a well punctuated historic precipice in the dark and asking; How close to the edge are we, anybody know?

Well let me tell you, Turchin warns, we are once more in a “pre-revolutionary stage” in America he says.

“When the equilibrium between ruling elites and the majority tips too far in favor of elites, political instability is all but inevitable. As income inequality surges and prosperity flows disproportionately into the hands of the elites, the common people suffer, and society-wide efforts to become an elite grow ever more frenzied.”

Frenzied? You mean despite all the seemingly good “macro” economic news such as historically low unemployment, millions of open jobs and record-high stock market levels, there’s still something under the bed?

Current macro measures don’t tell the whole story, they tend to mask and distract from it. I love it when my IRA goes up, and isn’t that the whole point?

Since 1950 the S&P 500 stock index grew from 17 points to more than 5,000 in the 73 years since, that’s a cool 29,000% rise, and a pathway to wealth, if you owned stocks.

Meanwhile America’s birthrate is half what it was in 1950, and the wealth divide is a disturbing gulf-so wide that by any measuring tool you can’t see the other side. And it’s not going unnoticed. Younger workers are asking; what’s in it for me? Who am I in this profit-driven machine? Why am I doing this?

And elites should take note. Facebook, Instagram and TikTok are each brimming with video testimonials of laid-off workers and disaffected often homeless American citizens who cannot make ends meet in our current economic system. And they are garnering millions of “likes and views.”

So, what do we say to them? Work harder?

In 2023 the top 10% of Americans owned 66% of all household assets. By contrast, the lowest 50% of Americans owned just 2.6% of total assets. Yikes! I hope nobody reads that. Which means most of us work just to live day to day, have little savings and own next to nothing. And regardless of the why, to these Americans it altogether sounds a lot more like living under the hand-outs of an elite Oligarchy than a free market Democracy.

But don’t such things in America always ‘regress to the mean’ as they say, come back down from the frenzied froth and fix themselves over time?

No. Because as the wealth gap grows wider and elites continue to restrict who can enter the golden realm, social media readily feeds the frenzied up-and-coming worker bee a cold dish of the American Dream. Call them what you may, but unless things change Turchin argues we’re doomed to repeat history.

Meanwhile, given the course of western capitalism up to now a massive reset may be unstoppable. All we need to repeat history the data reveals is a “trigger event.”

A trigger event is any act that so outrages the masses they riot and protest, aka revolution, which is exactly what you never want to see. But it happens, again and again.

Like the Farmer rebellion happening now in Europe blocking streets with hundreds of tractors and farm equipment there to protest higher input costs, new Green Deal carbon taxes, and cheaper food import prices, all conspiring to drive them out of business they say. Regardless of who’s at fault, they blame their government, and their anger is real.

Back home we face several of our own trigger events. Would any of these surprise you?

  • A precipitous decline of big city law and order causes riots?
  • A massive un-timely layoff cohort that results in violent protests?
  • A nationwide backlash against immigrants resulting in military closure of the southern border?
  • A divisive and contested national election outcome redux?

And let’s not forget the newest, biggest bad Daddy of the them all – Artificial Intelligence.

Maybe artificial Intelligence is the final straw that breaks the camel’s back. [read my article A.I.- It’s Altogether Insane]. There are frightening developments.

Just this past week another devastating blow to the minions. Have you seen OpenAI’s new Sora text-to-video diffusion model? Sora can replicate realistic movie-quality videos of any imagination from a single line of descriptive text prompt in minutes. It’s a stunning new capability. Especially for the 1000s of digital artists, graphic designers, game designers, animators, photographers, editors and ad agency production crews who all find themselves staring at Sora’s videos eyes-wide, jaws-dropped and newly unemployed.

If AI technology does increase productivity as promised and eliminates swaths of human labor cognitive skillsets and talent as expected, a collective mass of millions of unemployed and under-skilled workers could be on the streets, very angry, and very determined to get back at the system that let them down.

According to Turchin’s recent article “When A.I. Comes for the Elites” he discusses how the A.I. revolution will affect the social power dynamics and the stability of societies. He argues that A.I. will create new challenges and opportunities for both the elites and the counter-elites, and that we need to develop a new social contract that can accommodate the changes brought on by A.I.

So, I got to thinking. A new social contract? Is it possible? 

What if maybe… ahead of a radical profound violent trigger event to force profound changes, ‘We the people’ do hereby request business, government, educators and all Americans to come together to outline, plan and implement a rebalancing approach to capitalism that can encourage profits, but without the abrupt workforce-obliterating downsides of our free market system? Something better, and something big.

1933 FDR did something big. He introduced the ‘New Deal’ to America, a line from an election speech to the “forgotten man.” It wasn’t just one deal; it was a series of programs designed foremost to help the whopping 25% of unemployed citizens eat and find work during the Great Depression.

As it turned out despite the substantial tax increases, over the decade the New Deal did help America recover from the Depression. Without it the US economy may have collapsed, plunging our country into utter chaos and anarchy at the very threshold of World War II.

Instead, the New Deal in America was likely the single most important social reform at the right time and place to shape our great country and the future of all civilization.

The New Deal had a significant impact on the role of a federal government in American society, as it expanded its unprecedented authority and responsibility in regulating the economy by providing social welfare safety nets and promoting infrastructure development (aka: jobs).

And, let’s not forget the New Deal created four super key programs that America still relies on today:

  • Social Security
  • The national minimum wage
  • The SEC
  • The FDIC

They’re not perfect, but they were revolutionary at the time for us. Today they exist as cornerstones under our Constitution armed to protect citizens from the crippling side effects of unbridled capitalism. Which may be what we need to right the ship.

Despite the cynical distrust of big US government programs then and now, like it or not the New Deal did prove the US government could create, regulate, borrow, invest and spend on national interests including programs that got the unemployed compensated and eventually back to work, and not toward a revolution.

So. Why not another New Deal? 

With a committed and focused team in Washington, We the People, can embark on the same ambitious plan and vision FDR had 90 years ago, and do it without another Revolution or a Depression.

Critics cry foul. They say any massive social reform like a New Deal would put America on a slippery slope to EU-style Socialism, right?

No. But a New Deal would require us to effectively dismantle decades of elite influences and power controls in place now. Which goes beyond government accountability alone. Because it’s not the 1930s.

This time it’s corporate America’s turn to step up and get on board.

American corporations and all employers including federal, state and local governments have become the mother’s milk of American civilian life. They are our de facto caretakers of the American working class. They control wages, healthcare, the environment, and the growth, prosperity or decline of many U.S. cities. The history of American companies moving our manufacturing base offshore chasing profits under the mantle of globalization 30 years ago is still a pile of rubble in many parts of our country. But times change, and so do people!

Turchin proposes the ultimate pipedream, some possible solutions to rebalance and restore our economic and social fabric. The outline of a New Deal, with not the intention to restrict profits per se, but rather how they are distributed. What do you think – can we:

  • Reduce the inequality gap by implementing progressive taxation and eliminating corporate loopholes
  • Increase social spending and promote more economic democracy
  • Reform the political system by limiting the influence of money and special interests
  • Increase representation and participation of the people in politics, not the money
  • Foster a common national identity, teach students the importance of being American
  • Require corporations to ramp up E.S.G., such as paying fair wages and taxes, investing in human capital re-training and innovation, supporting social and environmental causes, and becoming certified Benefit Corporations
  • Create new public assets by establishing sovereign wealth funds, digital dividends, or UBI: universal basic income, such that the benefits of economic growth and technological innovation can be more widely shared with all citizens

Sounds like a radical social rethink to me. And maybe it’s time. Do we have a choice? 

Unfortunately, neither Congress nor the corner office is ready to embrace such sweeping reforms. Remember these are the elites. Their collective understanding of the issues must work to preserve the status quo, the pillars of power, and will likely listen more to industry lobbyists in the short term than risk their elite status by supporting radical longer term social fixes.

That’s why it’s always been up to the People to make changes happen. If it gets to the breaking point, we may need a radical painful capital re-alignment New Deal approach.

But in the meanwhile, I believe that with the concentrated efforts of business, government and schools we can “mind the gap” we can sell the American people on a New Deal framework just not all at once, but in bigger baby steps. It may not be too late. Americans are always hopeful given a fair chance to succeed.

We can do this by slowing the pace of dissatisfaction at the water cooler, getting ahead of employee malcontents and listening to their expectations for careers and life as one interconnected thing.

Let’s hire human capital consultants to redesign work flows. Let’s re-create jobs that have meaning, purpose, representation and longevity again.

Wharton professor Adam Grant who studies human capital development found that “employees who know how their work has a meaningful, positive impact on others are not just happier than those who don’t; they are vastly more productive.”

Because it’s not just a job anymore. In America, work is how we perceive ourselves, showcase our self-esteem and progress in life and culture. Something worth preserving. And in this way with new leaders on board we can divert and cool the blame-seeking destructive forces from embracing history as a guide for wholesale revolutionary change.

And if A.I. is the next existential threat looking to become the next revolutionary trigger event, let’s get ahead of it, cut it off at the pass, regulate it, and not let it run away with good jobs willy nilly like Globalization did in the 1990s.

If we want to survive as a free democracy, a Constitutional Republic that re-empowers the People we need to pay attention to the warning signs Turchin and others lay out for us. We need to take back control of our happiness, the American Dream and the definition of work.

We can start by un-electing our Washington elites who won’t listen to the voice for change this election season. We can reign in corporate conglomerate power and influence at the center of unaccountable labor displacements (layoffs). And we can force our educators and corporations to retrain our workforce to use AI as the helpful tool it was designed to be, not the job killer.

We must do this, now!

Because, if we don’t, it’s not the bright future for work or happiness or the American Dream we see coming in 2024, but rather the bleak beginning of America’s End Times.


Written by Rick Andrade.

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CEOWORLD magazine - Latest - CEO Advisory - End Times. How to Win Back the American Dream, Or else
Rick Andrade
Rick Andrade is an investment banker at Janas Associates in Pasadena, CA, where he helps CEOs and business owners buy, sell, and finance middle-market companies.

Rick earned his BA and MBA from UCLA, along with his Series 7, 63, & 79 FINRA securities licenses. He is also a CA Real Estate Broker, a volunteer SBA/SCORE instructor, and blogs at RickAndrade.com on issues important to business owners. Please note this article is for informational purposes only and should not be considered in any way an offer to buy or sell a security. Securities are offered through JCC Capital Markets LLC, Member FINRA/SIPC.

Rick Andrade is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn.