Downward Mobility & Life On The Margins

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by Tyler Durden
Sunday, Oct 15, 2023 - 09:30 PM

Authored by Charles Hugh Smith via OfTwoMinds blog,

We can anticipate a sharp reduction in conventional financial security in the next decade as the waste is growth / Landfill Economy runs out of cheap materials to throw away.

There are many pathways to life on the margins of the economy and society. Let's consider three:

1. Our character and upbringing leave us unable to fill the work slots valued by employers. Constitutionally incapable of fitting into the conventional slots, we find our way to (or end up in) the margins. (I raise my hand here.)

2. Opportunities to lock in the security of steady work that can support a family are scarce in one's locale, class, caste, etc. Most people are thus relegated to life on the margins.

3. Circumstances change, and the foundations of our security melt into air. The conventional socio-economic slots that provide security become scarce and we slip-slide from predictable security to the insecurity of the margins. This is downward mobility, a slide accelerated by high-cost lifestyles that require reliably high incomes.

Those who find themselves incapable of fitting into the conventional slots still have to support themselves (unless they chose their parents wisely and are trust-funders living off family wealth). Despite their unconventionality, the unconventional still dream of conventional success (recognition, admiration, earning lots of money, etc.) arising from their creative endeavors.

A relative handful of creators manage to mint millions, as many sectors of conventional economy need "something new" to sell to meet the ceaseless demand for novelty to separate the avant garde and the wealthy from the merely aspirational bourgeois. (The acquisition of status is a struggle through shifting sands that is highly profitable to those selling the latest must-have signifier.)

Creative success follows a brutal power-law long tail distribution. The few at the top reap the vast majority of the royalties, recognition, etc., a small percentage earn a conventional middle-class income and the vast majority earn too little to support themselves.

To sustain their creative endeavors, they must find some other source of income, preferably part-time (so they have time to create) and doing work that doesn't demand adherence to (what seem like nonsensical) standards. These more informal sources of paid work include much of the restaurant-food-service industry, light construction, non-profit organizations in the arts and social services, delivery and other 1099 gigs, etc.

These more fluid sectors offer more opportunities to take control of one's work and life even as they offer minimal security and pay. There are always tradeoffs, and taking control of one's work and life is never free.

The money is rarely enough to live large, and so the creatives live on the margins in seedy housing, scrounging cheap food, riding a bicycle or scooter when weather allows, etc.

A few manage to acquire a specialized skill that enables them to earn a good living working part-time. These tend to be professional or trade skills that command high hourly wages.

Others endure work they loathe until it breaks them. After they burn out and accept they're not cut out for the conventional slots, they drift to the margins. The security offered by conventional slots came at too high a price.

Those in the second category--the economy has too few opportunities for conventional security and status--must scrape by on the margins, or they must move to a place with more opportunities. This is rarely easy, and despite their best efforts, they may end up on the margins in the new locale.

But life on the margins can be much better in places with more nooks and crannies in the economy and more affordable shelter and services--more niche enterprises, quirky corners, etc., better public transport that offers affordable mobility, and a wider diversity of like-minded people to connect with. Networks in the margins offer the same advantages of networks in the conventional economy: more connections means more opportunities to find work and collaborate, share one's creative endeavors, etc.

We can anticipate a sharp reduction in conventional financial security in the next decade as the waste is growth / Landfill Economy runs out of cheap materials to throw away and the credit needed to buy replacements for what broke/became obsolete and was tossed out. Financialization and globalization have both hit intrinsic barriers to further expansion and so they're stagnating and reversing.

Global asset bubbles inflated by financialization and globalization are bursting and cannot be reinflated a fourth time.

How many jobs can actually be replaced by commoditized (i.e. nearly free) AI is unknown, but even if it's only 10% of the number projected by AI boosters, it may contribute to a systemic decline in the white-collar slots that were considered "safe and secure."

When credit-fueled expansion reverses and asset bubble burst, this will trigger the breakdown of all the systems that only function if there is an endless expansion of credit, consumption and asset valuations. This includes many if not most systems considered integral to the status quo foundations of conventional security.

As a result, a great many people will experience downward mobility as the foundations of their financial security evaporate or crumble. Those who need less and control more of their life (the essence of self-reliance) will manage life on the margins much better than those who need high incomes to survive and who control very little of their lives.

Those with robust personal networks, few wants/needs and a wide spectrum of skills will find the margins are sufficient, or they may even thrive in the less structured churn of life on the margins.

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