The Turbulent Twenties

This is an excellent article that talks about the predictions from a 30 year old model used to determine a country’s vulnerability to political crisis. Based on demographics and structural inputs it predicted that the US would enter the turbulent 20’s. The model uses the historical behavior of elites and their three cardinal sins.

The three cardinal sins are:

Cardinal Sin 1

As populations grow creating surging labor supply, growth in wages and productivity are dampened. Elites seek to take a larger portion of economic gains for themselves, driving up inequality.

It’s not just population growth over the last few decades that have caused the stagnation of workers wages, but globalization.

Cardinal Sin 2

When facing greater competition for elite wealth and status, elites tighten up the path to mobility to favor themselves and their progeny.

The example the article provides is keeping places at top universities limited and raising the entry requirements and costs in ways that favor the children of those who have already succeeded. This is very evident when looking at the cost of education in the US and Professor Scott Galloway has written and talked about this extensively.

Cardinal Sin 3

Anxious to hold on to their rising fortunes, they do all they can to resist taxation of their wealth and profits, even if that means starving the government of needed revenues, leading to decaying infrastructure, declining public services and fast-rising government debts.

Since the Reagan administration the economic rules have been continuously changed to favor capital and the wealthy. America’s infrastructure is crumbling as a result. It’s very easy to see how these sins apply and how their model predicts a very turbulent decade to come.

The article is well worth the 15 minutes needed to read it.