What Happens When the Competent Opt Out?

By this terminal stage, the competent have been driven out, quit or burned out.

What happens with the competent retire, burn out or opt out? It's a question few bother to ask because the base assumption is that there is an essentially limitless pool of competent people who can be tapped or trained to replace those who retire, burn out or opt out, i.e. quit in favor of a lifestyle that doesn't require much in the way of income or stress.

These assumptions are no longer valid. A great many essential services that are tightly bound to other essential services are cracking as the competent decide (or realize) they're done with the rat-race.

The drivers of the Competent Opting Out are obvious yet difficult to quantify. Those retiring, burning out and opting out will deny they're leaving for these reasons because it's not politic to be so honest and direct. They will offer time-honored dodges such as "pursue other opportunities" or "family obligations."

1. The steady increase in workloads, paperwork, compliance and make-work (i.e. work that has nothing to do with the institution's actual purpose and mission) that lead to burnout. There is only so much we can accomplish, and if we're burdened with ever-increasing demands for paperwork, compliance, useless meetings, training sessions, etc., then we no longer have the time or energy to perform our productive work.

I wrote a short book on my experience of Burnout. I believe it is increasingly common in jobs that demand responsibility and accountability yet don't provide the tools and time to fulfill these demands. Once you've burned out, you cannot continue. That option no longer exists.

For others, the meager rewards simply aren't worth the sacrifices required. The theme song playing in the background is the Johnny Paycheck classic Take this job and shove it.

Healthcare workloads, paperwork and compliance are one example of many. Failure to complete all the make-work can have dire consequences, so it becomes necessary to do less "real work" in order to complete all the work that has little or nothing to do with actual patient care. Alternatively, the workload expands to the point that it breaks the competent and they leave.

2. Loss of autonomy, control, belonging, rewards, accomplishment and fairness. Professor Christina Malasch pioneered research on the causes of burnout, which can be summarized as any work environment that reduces autonomy, control, belonging, rewards, accomplishment and fairness. Despite a near-infinite avalanche of corporate happy-talk ("we're all family,"--oh, barf) this describes a great many work environments in the US: in a word, depersonalized. Everyone is a replaceable cog in a great impersonal machine optimized to maximize profits for shareholders.

3. The politicization of the work environment. Let's begin by distinguishing between policies enforcing equal opportunity, pay, standards and accountability, policies required to fulfill the legal promises embedded in the nation's social contract, and politicization, which demands allegiance and declarations of loyalty to political ideologies that have nothing to do with the work being done or the standards of accountability necessary to the operation of the complex institution or enterprise.

The problem with politicization is that it is 1) intrinsically inauthentic and 2) it substitutes the ideologically pure for the competent. Rigid, top-down hierarchies (including not just Communist regimes but corporations and institutions) demand expressions of fealty (the equivalent of loyalty oaths) and compliance to ideological demands (check the right boxes of party indoctrination, "self-criticism," "struggle sessions," etc.).

The correct verbiage and ideological enthusiasm become the basis of advancement rather than accountability to standards of competence. The competent are thus replaced with the politically savvy. Since competence is no longer being selected for, it's replaced by what is being selected for, political compliance.

It doesn't matter what flavor of ideological purity holds sway--conservative, progressive, communist or religious--all fatally erode competence by selecting for ideological compliance. Everyone knows the enthusiasm is inauthentic and only for show, but artifice and inauthenticity are perfectly adequate for the politicization taskmasters.

4. The competent must cover for the incompetent. As the competent tire of the artifice and make-work and quit, the remaining competent must work harder to keep everything glued together. Their commitment to high standards and accountability are their undoing, as the slack-masters and incompetent either don't care ("I'm just here to qualify for my pension") or they've mastered the processes of masking their incompetence, often by blaming the competent or the innocent for their own failings.

This additional workload crushes the remaining competent who then burn out and quit, go on disability or opt out, changing their lifestyle to get by on far less income, work, responsibility and far less exposure to the toxic work environments created by depersonalization, politicization and the elevation of the incompetent.

5. As the competent leadership leaves, the incompetent takes the reins, blind to their own incompetence. It all looked so easy when the competent were at the helm, but reality is a cruel taskmaster, and all the excuses that worked as an underling wear thin once the incompetent are in leadership roles.

By this terminal stage, the competent have been driven out, quit or burned out. There's only slack-masters and incompetent left, and the toxic work environment has been institutionalized, so no competent individual will even bother applying, much less take a job doomed to burnout and failure.

This is why systems are breaking down before our eyes and why the breakdowns will spread with alarming rapidity due the tightly bound structure of complex systems.




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A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
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A Nation of Junkies: The Empty Future of a Stimulus-Speculation Economy

Now that the US economy is totally dependent on trillions of dollars in stimulus and speculative gains reaped from the stimulus, there is no Real Economy left to pick up the pieces when the credit-stimulus-speculation bubbles all pop.

When economists speak of organic growth, they're referring to growth that arises naturally from the expansion of population, advances in productivity gained from better training and wise investments and the fruits of innovation.

Organic growth doesn't need constant stimulus, nor is it dependent on speculation. It doesn't need to be juiced by central banks and government to function. In an economy that isn't dependent on stimulus, the role of central banks is limited to being the lender of last resort in periodic financial crises, and government's role is to serve the common good by funding what fosters the common good but isn't profitable enough for private companies to pursue, for example, rural electrification and critical infrastructure.

Compare this Real Economy with the Artificial Economy we now have that is completely dependent on central bank and government stimulus and rampant speculation. If either the stimulus or speculation disappeared, the economy would collapse. Without constantly increasing monetary and fiscal stimulus, the asset bubbles inflated by stimulus would collapse.

Every decision in this stimulus-speculation-dependent economy is keyed off of Federal Reserve stimulus or federal spending guarantees. Consider the decision to buy or build a residence to live in or hold as an investment. This decision is now keyed to Federal Reserve manipulation--scrape away the sugar-coating and this is what it is--of mortgage rates and the market for mortgages (mortgage backed securities) and federal government backstops and guarantees.

Glance at the first chart below of the Fed's "intervention" in the mortgage market: somehow the housing / mortgage market survived without the Fed owning any mortgage backed securities prior to 2009, but now the Fed must intervene to the tune of trillions of dollars to keep the housing / mortgage market from imploding.

All this stimulus is sold as "help" but it all ends up "helping" the wealthiest few at the expense of the bottom 90%. Look at the two charts below of the percentage of wealth held by the top 1% and the percentage of wealth held by the middle class, those households between 50% and 90% in terms of household income. Every new Fed / federal stimulus pushes the wealth of the 1% higher and the wealth of the middle class lower.

To those pushing the stimulus, the soaring wealth of the top 1% is "success" because that's their circle of colleagues and pals. If we're doing great, everyone must be doing great. Such is the hubris and denial olf our financial and political leadership.

You'll notice three charts all display parabolic rises: the Fed balance sheet, federal debt and total debt. The primary form of stimulus is credit: expand the availability of credit and (until recently) make it cheaper to borrow by manipulating interest rates lower.

All this "free money" fueled a dependency on speculation for "growth," a dependency that has hollowed out the economy. As a direct result of all this stimulus / credit, corporations have bought tens of thousands of homes as rentals, inflating another housing bubble. Investors have snapped up tens of thousands of dwellings to cash in on the short-term rental (AirBnB etc.) boom, effectively distorting the long-term rental markets and pushing rents higher.

Debt and stimulus tracing parabolic ascents cannot end well. Eventually they collapse under their own weight.

Every junkie has an excuse. Every junkie proclaims I can stop any time. Now that the US economy is totally dependent on trillions of dollars in stimulus and speculative gains reaped from the stimulus, there is no Real Economy left to pick up the pieces when the credit-stimulus-speculation bubbles all pop.

And so we're treated to the infantile charades of the Federal Reserve and our elected officials, both bleating how wunnerful everything is while in private, with the mics safely muted, they're desperate to push the inevitable implosion off just a few more months. They have no alternative, and no way to return to an unmanipulated economy that isn't dependent on ever larger injections of stimulus and parabolic increases in debt.

The problem, friends, is the US economy has run out of veins for the coming injections of stimulus. The costs of dependency on artifices of stimulus and mood enhancement--everything's wunnerful!--are coming due, as they always do.

Unfortunately, there's no solution other than Cold Turkey, the collapse of all stimulus and all speculation. We're about to find out just how unpleasant Cold Turkey can be, and babbling rants of denial will only make it worse.














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A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
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Higher Unemployment Won't Stop Wages from Rising

The net result of these dynamics is official unemployment can soar but employers will still be scrambling to find qualified, willing employees.

The labor market is viewed as a sea of fluid workers. When one industry shrinks and lays off workers, it's presumed the workers will find employment in an expanding sector. So laid-off construction workers will transition to insurance sales, become waiters, go back to school to train for jobs in the healthcare sector, and so on.

It's also presumed that young workers will automatically be hired and trained in whatever sectors are expanding. The fresh clay of high school / college graduates will be molded into whatever workers employers need.

This isn't how the labor market actually works. People have constraints which limit their willingness and / or ability to transition to new kinds of work. These constraints may be physical--many are unable to do demanding physical work--intellectual--they lack the training or mindset needed for demanding knowledge-work--or emotional: high-stress jobs burn people out.

There are social, cultural and financial constraints as well. For example, young people will not take jobs in sectors they have no interest in. Trendy fields attract talent, staid fields are avoided. There may be an expectations gap between what young workers expect in pay and workload and what employers are offering.

Although few seem to have noticed, the pandemic lockdown pushed millions of people into discovering ways to survive without taking fulltime jobs. People get creative when they have to, and as a result of the lockdown, people found they could get by on much less than they once thought. People found nooks and crannies in the economy outside the conventional mainstream of full-time work in government or Corporate America. They have side hustles, work for cash, rent out rooms, live with Grandma and Grandpa (two Social Security checks, yowza), live in a rent-free micro-house and so on.

In other words, there is a vast spectrum of mismatches between what employers want and what the workforce is able to do and willing to do for the pay and work being offered. This has forced employers to loosen conventional demands--for example, offering flex-time for working parents, conceding to remote work, etc.--and offer higher pay and upsides (bonuses, stock options, etc.) to retain workers and poach experienced, willing workers from other employers.

As I noted in Here's How We'll Have Labor Shortages and High Unemployment at the Same Time (April 3, 2023), there are also demographic and generational forces in play. Retiring workers are in many cases taking irreplaceable work experience with them, and the replacement workers lack the requisite training and on-the-job problem-solving. Expectations and standards change with each generation.

As I explained in Wages Going Up for Good: Catch-Up and Blowback (May 24, 2023), wages must play catch-up after 45 years of declining purchasing power. A "living wage" in an era of relentlessly higher costs due not just to inflation but to credit-asset bubbles is much higher than it was in previous, lower-cost eras.

Many workers are still earning close to the same hourly rate I made in 1985 ($12/hour) while official inflation has tripled and the cost of housing has risen five or six-fold, along with higher education, childcare, health insurance, etc.

The net result of these dynamics is official unemployment can soar but employers will still be scrambling to find qualified, willing employees. Wages have to rise regardless of unemployment or recession, but few analysts seem to grasp the social and economic forces in play stretch back generations.




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A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
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The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

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Sorry Our Demographic Karma Ran Over Your Economic Dogma

Your bogus economic dogma of "growth via the wealth effect" created the demographic karma that will bring down the status quo.

What happens when you bleed your workforce while enriching those who already own assets with one bubble after another, all in the name of "fostering growth"? To answer this, let's modify a felicitous phrase: Sorry Our Demographic Karma Ran Over Your Economic Dogma.

The Demographic Karma is young people can no longer afford houses, healthcare or children and so the birthrate plummets and the workforce shrinks to the point that the bloated, heavily indebted status quo collapses under its own weight.

Demographic-economic chartist CH summed it up very succinctly in a recent Tweet:

@Econimica: Asset/RE bubbles (of assets primarily held by elderly/institutions) must be maintained to avoid a banking/economic crash...but the price will be the ongoing collapse of families/births...saving the present at the expense of the future (again).

This dynamic of Demographic Karma crushing Economic Dogma is global, as evidenced by this Tweet about China's demographic collapse and bubble-economy:

@fuxianyi: Chinese policymakers now face a dilemma: if the real-estate bubble does not burst, young couples will be unable to afford to raise two children. But if the bubble does burst, China's economy will slow, and a global financial crisis will erupt.

The Economic Dogma holds that inflating one speculative credit-asset bubble after another is wonderful because each bubble produces a "wealth effect" in which those who inherited assets or bought assets in the past are greatly enriched by the bubble. Feeling wealthier, they then borrow and spend more freely.

This Economic Dogma--that bubbles are excellent pathways to "growth"--is a form of "trickle down" economics in which the wealthy borrowing and spending more "trickles down" to the middle class and working class.

As the charts below show, this theory is baseless and bankrupt: the rich get richer and richer and everyone else gets poorer and poorer with each bubble. What's "growing" is wealth and income inequality as the demographic consequences of this soaring inequality collapses the social contract.

Let's go through the chart deck.

1. The US workforce is fully employed. Many expect a recession and AI will slash employment and create a pool of unemployed seeking work at low wages, but this isn't how it works. As I'll explain in a future post, the mismatches between the work employers need done and the skills and willingness of the workforce to do the work for the offered wage mean the unemployment rate can be high but workers are still scarce.

2. The expectation that US population and the workforce will ceaselessly expand is not guaranteed, especially if immigration declines. What is guaranteed is the population of retirees will continue rising.

3. Wages' share of the national income has declined for 45 years as the gains of the economy were shifted from labor to capital.

4. The top 1%'s share of wealth soars to new heights in every speculative credit-asset bubble.

5. The middle class's share of wealth plummets in every speculative credit-asset bubble and only gains ground when bubble pop. (We all know what happens when bubble pop: the Federal Reserve fraks out and creates trillions of dollars in stimulus that then flows into the pockets of the wealthy via the next bubble.)

6. Household net worth has skyrocketed far above inflation and the growth of the economy (GDP). As the charts above show, this wealth flowed disproportionately to the top 1%.

7. Thanks to the Fed's latest bubble--The Everything Bubble--housing affordability is at an all-time low. Put another way, the ratio of median income to housing prices is at an all-time high.

8. To stave off the inevitable karmic consequence of extreme wealth inequality--social disorder--the federal government has borrowed and blown tens of trillions of dollars on "fiscal stimulus" to buy the complicity of the 90% left behind.

So sorry Our Demographic Karma Ran Over Your Economic Dogma. Your bogus economic dogma of "growth via the wealth effect" created the demographic karma that will bring down the status quo.


















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Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
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Wages Going Up for Good: Catch-Up and Blowback

Blowback has its own dynamics, as we'll learn in the decade ahead.

One of the most durable expectations in the financial sphere is that inflation will drop sharply in a recession and the Federal Reserve will lower interest rates back to near-zero. There is a good reason to doubt this: rising wages. Yes, we all hear about the millions of human workers who will shortly be replaced by AI--wonderful for corporate profits!--but few pundits bother looking at long cycles in interest rates and inflation, and even fewer pay any attention to the absurdly extreme asymmetry of labor and capital.

As I've often noted here, labor's share of the economy has fallen for 45 years. Only recently did it reverse slightly. It's not yet clear if this was a brief false-breakout ot a change in trend, but there are good reasons to expect a secular, cyclical reversal that lasts years or even a decade.

In other words, a decade in which labor / wages gain at the expense of capital.

There are two basic narratives that are offered as explanations for how capital siphoned $50 trillion from labor over the last 45 years. One is that the macro-forces of globalization and financialization inherently favor capital and reduce labor's leverage as production and jobs were offshored and US workers entered a race-to-the-bottom competition with developing nations' low-cost workforces--a competition that kept US wages stagnant even as US corporate profits and financial assets soared.

The other narrative starts with the observation that the erosion of wages and the glorification of corporate power was the direct result of specific policies being adopted. The dominance of corporate interests and the stripmining of labor were anything but inevitable: it was engineered by policies that enriched the top 0.01% (the Financial Aristocracy), and the top 10% who own 90% of America's productive capital.

This wholesale transfer of wealth and income from workers to Capital was documented by a RAND Corporation report, Trends in Income From 1975 to 2018. Time magazine summarized the findings: The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90% -- And That's Made the U.S. Less Secure.

(We're told the stagnating wages of the past 45 years) were the unfortunate but necessary price of keeping American businesses competitive in an increasingly cutthroat global market. But in fact, the $50 trillion transfer of wealth the RAND report documents has occurred entirely within the American economy, not between it and its trading partners. No, this upward redistribution of income, wealth, and power wasn't inevitable; it was a political choice--a direct result of the trickle-down policies we chose to implement since 1981.

The net result of this four-decade siphoning of wealth/income from workers was documented by a Foreign Affairs article: Monopoly Versus Democracy:

Ten percent of Americans now control 97 percent of all capital income in the country. Nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans.

In other words, the bottom 90% have very little stake in the status quo: they receive essentially zero income from America's stupendous $140 trillion hoard of private wealth and have essentially zero political influence, as documented in Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.

We can see these realities in the data /charts. As the charts below (courtesy of the Federal Reserve FRED database) show, wages' share topped out in the early 1970s and trended down for 45 years. Corporate profits skyrocketed 15.7-fold since 1982 while inflation rose "only" 3-fold.

This decline in wages is mirrored by a corresponding decline in the wealth of the bottom 90%. It's not just wages that stagnated--so did the share of the nation's wealth held by the middle class / bottom 90%.

The middle class's share of private-sector wealth (total net worth) has plummeted from 37% in the early 1990s to 28%, a decline of $12 trillion compared to what would have been the case had the middle class continued to hold 37% of net worth.

$50 trillion here, $12 trillion there, pretty soon you're talking real money that's been transferred from the wage-earning peasantry to America's Financial Aristocracy.

We see this vast asymmetry in who collects the primary engine of wealth for the top few: capital gains. Those who already own most of the wealth have pocketed the stupendous gains of the past three decades. Middle class households pocket $4,000 or $5,000 in annual capital gains while those who own most of the wealth pocket on average a cool $1 million--200 times the middle class gain in unearned income.

So why will wages rise, regardless of deflation and AI? Catch-up and blowback. Even if we accept the "gee, we were helpless to stop wage stagnation" story (which is false, as detailed above), financialization and globalization are reversing and so labor can finally play catch-up to capital's asymmetric gains.

If catch-up is suppressed by corporate political power, then blowback kicks into gear. The workforce has had enough of corporate-state pillaging, and while corporations are gleefully planning the elimination of their human workforce via AI and automation, that fantasy isn't going to play out as expected, for automation has limits which I discuss in my book Will You Be Richer or Poorer?.

Nobody thinks that there could be political limits on corporate power, but precious few asymmetries that reward the few at the expense of the many last forever. Blowback has a remarkable ability to careen from nobody notices or cares to full-blown revolt in relatively short order. The greater the asymmetry, plunder and hubris of the Aristocracy, the greater the eventual swing of the pendulum to the opposite extreme. Blowback has its own dynamics, as we'll learn in the decade ahead.

Wages--and the inflation they generate--are going up for good whether anyone thinks this is possible or not. And inflation pulls interest rates higher, whether anyone thinks this is possible or not. It's not just the Federal Reserve that matters; asymmetries, exploitation and plunder matter, too.










New Podcast: Its a Waterfall - Risk, Collateral & Productivity (48 min)

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

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Read excerpts of all three chapters

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My recent books:

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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