Andrew Leigh

ME VERSUS WE: 'THE UPSWING'

The Monthly, November 2020

On a summer’s day in San Francisco, a university student waited to cross a zebra crossing. Some cars obeyed the law and stopped. Others whizzed through the intersection. A second student observed the cars and recorded their status, grading them on a five-point scale from beaten-up hatchbacks to luxury sedans. Afterwards, researchers tabulated the data. Among the most modest cars, all stopped at the crossing. Of the most expensive, almost half ignored the pedestrian and drove straight through.

Pan across to Australia in early 2020, as the federal government was devising its economic response to the coronavirus pandemic. While other countries had offered wage subsidies, the Coalition was initially reluctant. Then business leaders began turning up the pressure. In one telephone call, retail billionaire Solomon Lew reportedly cried as he spoke to Treasurer Josh Frydenberg, urging him to provide wage subsidies to affected firms. At the end of March, a package was announced.

Because Solomon Lew had to shut many of his stores, his company – which owns Dotti, Just Jeans and Portmans, among others – experienced a drop in revenue, and qualified for around $45 million in JobKeeper payments. But it wasn’t long before the firm’s fortunes turned around, helped by strong online sales. At the end of September, Lew’s company announced that its profits had matched those in previous year, and paid shareholders a $57 million dividend. As the largest shareholder, Lew himself received more than $20 million. A policy designed to support workers ended up benefiting an Australian billionaire. And it wasn’t an isolated example. Other firms used JobKeeper to prop up profits, and even paid executive bonuses after receiving the taxpayer-funded assistance.

In their 2020 book The Upswing: How America Came Together a Century Ago and How We Can Do It Again, Robert D. Putnam and Shaylyn Romney Garrett argue that there has been a substantial shift in how the most successful see their role in society. Corporate titans, they say, “live by an ideology of individualism that barely masks selfishness and an air of superiority”. As a result, “redistributive programs are often criticized as wasteful and an irresponsible use of resources. But lavish displays of luxury, flamboyant parties, global travel, and opulent mansions are the social currency of the elite.”

The Upswing is both a social and an economic critique. In his 2000 book, Bowling Alone: The Collapse and Revival of American Community, Putnam documented the breakdown of social capital. In the 21st century, this trend has only worsened. Since the 1960s, the membership of organisations such as scouts, guides, Rotary and Lions has declined. Americans used to attend an average of one club meeting a month. Now it’s just four meetings a year. Church attendance has fallen. Union membership is down. Most Americans used to believe that “people can be trusted”. Today, that is a minority view. The share of Americans who give money to charity has steadily declined over the past half century.

Politics, too, has become more sharply divided. In both houses of the United States Congress there used to be significant crossover, with the voting records of the most conservative Democrats placing them to the right of the most progressive Republicans. Now, the parties are clearly distinct, and pure party line votes are common. The same polarisation of attitudes can be seen among the public. In the era of Eisenhower and Kennedy, knowing whether someone voted Democrat or Republican didn’t tell you much about whether they approved of the president. In the era of Obama and Trump, if you want to know what someone thinks of the White House incumbent, all you need to know is how they voted.

The partisan chasm affects relationships, too. Americans are increasingly likely to marry across racial and religious lines, but decreasingly likely to marry across party lines. Two out of five Americans say that they would be troubled by their son or daughter marrying someone from the other party. Political comity has gone the way of social solidarity.

Following the bestselling success of Bowling Alone, Putnam turned his attention to economic inequality. In his 2015 book, Our Kids: The American Dream in Crisis, he told the story of rising inequity through the lens of his boyhood town: Port Clinton, Ohio. In the 1950s, inequality was low and opportunity was high. Virtually everyone in Putnam’s classroom, regardless of background, “lived with two parents, in homes their parents owned, and in neighborhoods where everyone knew everyone else’s first name”. The economic gap and social distance between classmates was small, and half the children of high-school dropouts went on to university. Today, the town is a place of harsh class divisions, where “wealthy kids park BMW convertibles in the high school lot next to decrepit junkers that homeless classmates drive away each night to live in”. Upward educational and economic mobility has ground to a halt. The families of Port Clinton no longer think of all of the young people in the town as “our kids”.

On virtually every metric, the income gap in America has turned into a yawning chasm. In 1965, it took 21 years for the typical worker to earn what a chief executive took home in a single year. Today, it would take 320 years to earn as much as the boss’s annual pay packet. The richest 400 people in America now have more wealth than the bottom 150 million. In 2019, the typical male full-time worker earned US$57,456. After inflation, that’s $236 less than the typical American male full-timer earned in 1973.

As the gaps between the rungs of the ladder have widened, it has become harder for children to climb from rags to riches. Harvard economist Raj Chetty and his team find that Americans born in the 1940s had a 90 per cent chance of earning more than their parents. Now it’s just 50 per cent. One manifestation of this are the “deaths of despair”, with US life expectancy falling for three years in a row: 2015, 2016 and 2017. Diminished lifespans are as strange as it would be to suddenly discover a generation growing up shorter than their parents. Outside famine and war, it’s virtually unprecedented to see life expectancy going backwards.

Now in The Upswing, Putnam and Garrett bring together four major trends: economic equality, political comity, social cohesion and cultural altruism. Each of these trends, they contend, has traced out a hump-shaped pattern: rising from the 1890s to the 1960s, then declining. What is remarkable is the consistency of the patterns. As Putnam and Garrett sum things up, the first half of the 20th century saw the US shift from an individualistic society of “me” to a collective society of “we”. Since the 1960s, America has moved back to a society of “me”.

So what? you might be asking. The fact that the US has become more unequal, civically disengaged and politically polarised is not in itself surprising. What is more interesting, however, is that these metrics were all trending in a positive direction from the “gilded age” of the late 1800s until The Beatles age of the 1960s. Then, with the precision of a flying acrobatic team executing a sharp turn, each of the metrics suddenly reversed. The Upswing is a book filled with lots of graphs, and many of them are inverted U-shapes, peaking a decade or two after the end of World War Two.

A fascinating aspect of the book is the authors’ conclusion that the “me–we–me” pattern also extends to language. Since 2004, Google has been scanning tens of millions of books, and using optical character recognition to identify the billions of words inside. Scholars can search a database to find how frequently phrases are used in books published in a particular year. For example, mentions of the word “nationalise” peaked in books published in the 1940s, while mentions of the word “privatise” peaked in the 1990s.

The Google books data make it possible to measure the frequency with which American books used the word “we” compared with the word “I”. Putnam and Garrett report that, from 1900 to 1965, “I” became relatively less frequent. From 1965 onwards, the trend reversed, and “in a paroxysm of selfcenteredness” the frequency of the word “I” in American books doubled. A similar pattern can be seen for words such as “agreement”, “compromise” and “unity”, which peaked in the 1950s or 1960s, before declining in the eras of self-help books and selfies. The same is also true of “conformity”, “responsibility” and “rights” – words that denote the duty that people owe to others.

Other sources confirm the change in cultural norms. In 1950, just 12 per cent of American high-schoolers agreed with the statement “I am a very important person”. By 1990, that number had risen to 80 per cent. Even baby names have a story to tell. Analysing the degree of similarity across the names given to babies born every year, Putnam and Garrett show that similarity in names given to newborns rose – you guessed it – until the 1950s. In that era, many children received a common name, such as John, David, Susan or Mary. But in the decades since, parents have become increasingly likely to choose quirky or less traditional names for their children. Some go further, expressing their individuality by giving their baby a name that might well be one of a kind. One study of Californian birth certificates found that the share of children given a unique name more than doubled from 1961 to 2000, including children named Uneek, Uneque, and Uneqqee.

Putnam and Garrett are not nostalgic about the 1950s. They acknowledge that laws of that time allowed firms to refuse service to African Americans, criminalised homosexuality and permitted companies to fire married women. Since that era, Putnam and Garrett note, infant mortality has fallen, homes have become larger and cars have become affordable to most people. More young people finish high school and university. The postwar decades might have been more collegial, but few today would permanently trade places with our grandparents. The past might be fun to visit, but it’s unlikely we’d want to live there. The question, they argue, “is not whether we can or should turn back the tide of history, but whether we can resurrect the earlier communitarian virtues in a way that does not reverse the progress we’ve made in terms of individual liberties”.

What can The Upswing teach us about Australia? In economic terms, the trend in inequality follows a similar pattern. Analysing tax records since the early 1900s, economist Tony Atkinson and I found that Australia became steadily more equal until the late 1970s, and then much more unequal. Australia does not have America’s extremes of rich and poor, but there is still a significant gap between battlers and billionaires. Moreover, economic growth has slowed in the past decade, as productivity has wound down. Far from inequality being the price of growth, Australia seems to be getting the worst of both worlds: less equality and less innovation. Home ownership is at its lowest level in six decades, the incarceration rate is more than twice as high as in the 1980s, and household debt has skyrocketed.

Civic community, too, has taken a battering. In Reconnected: A Community Builder’s Handbook, Nick Terrell and I show that the typical Australian has half as many close friends now as a generation ago. When Neighbours hit Australian screens in 1985, the viewing public knew twice as many of their real neighbours as we do today. Church attendance has dropped by two thirds since the 1950s. Union membership has fallen by two thirds since the 1980s.

Participation in most of the hitherto popular sports is declining, including golf (down 48 per cent), netball (41 per cent) and Aussie Rules (27 per cent). Young Australians are increasingly trading squash and tennis for smartphones and tablets. One study tested how far Grade 6 students could jump from a standing start and found that primary schoolers of the 1980s could jump an average of 147 centimetres, while those of the 2010s could jump just 130 centimetres. The researchers titled their report “The Great Leap Backward”.

The decline in civic life has severe consequences. From 2010 to 2019, the share of adults who served as volunteer firefighters fell by almost one fifth. This translated into a deficit of 14,000 volunteers. When last summer’s horrific bushfires hit, volunteer fire brigades found themselves overstretched and under-resourced. In Indigenous communities, social capital is also declining, with fewer Aboriginal and Torres Strait Islander people reporting involvement in cultural activities.

Rising inequality and disconnection doesn’t have a single cause, and there’s no single solution to rebuilding a “we” society. Part of the answer is in education, where the decline in literacy and numeracy has left young people underprepared to play a productive role in an increasingly technological economy. On international maths tests, Australian students’ test scores are comparable to those of Portugal, a nation that is considerably poorer. As well as doing a better job of attracting and retaining great teachers, we should think about how teachers are allocated across schools. At present, Australian schools that serve advantaged students have teachers who are more experienced, better qualified and less likely to be absent than teachers in schools serving disadvantaged students. This is hardly a recipe for building opportunity.

On the community front, Terrell and I identify hundreds of inspiring community leaders, whose organisations are finding fresh ways to connect communities. In South Australia, Puddle Jumpers provides camps and get-togethers for vulnerable children, and has built its base by asking existing volunteers to bring along a friend, perhaps someone who might themselves be feeling a little lonely. In Brisbane, Welcoming Sport connects new migrants to local sporting clubs, helping out with uniforms and registration costs where these might otherwise be a barrier to participation. In New South Wales, the NRMA’s Drive Time program recruits volunteers to help provide driver education to those who couldn’t otherwise afford it. In honour of Willie Sutton, who reportedly said that he robbed banks “because that’s where the money is”, Terrell and I argue that these social purpose organisations are fulfilling ‘Sutton’s Law of Social Capital’ – building community where the need is greatest.

Building connections is about allowing differences to flourish. In Reconnected, we discuss the work of Intrepid Landcare, a network that engages young people on environmental restoration programs but also encourages local groups to forge a distinct identity, and to build a “tribe” of environmental activists. In the workplace, the Young Workers Centre provides support to young people on issues of harassment, wage theft and discrimination. Its campaigns aren’t just about getting members a fair deal, they’re also seeking to forge stronger community cohesion.

The philosophy of “we” – spanning both economic justice and social connection – is a reminder that Australia was built on teams, not individuals. When a rich guy in San Francisco doesn’t stop for a pedestrian crossing, he’s endangering a life. When firms use emergency support from taxpayers to pad their profits, they’re endangering public support for capitalism. Connections matter. Without a sense of solidarity, it’s hard to see how Australia will emerge from our current economic malaise.

Reconnecting isn’t just a matter of fairness, it’s also the best path to prosperity. Trust is good for business. Grassroots engagement is vital for politics. Having more friends makes for a better life. Volunteering, joining and donating make for a healthier and happier society.

As the saying goes, history doesn’t repeat itself, but it often rhymes. The first two-thirds of the 20th century saw remarkable changes in American life, as the nation became more socially cohesive, politically cooperative and economically equal. A culture of solidarity emerged, with shared responsibility accompanying shared prosperity. Narrow self-interest waned, and community networks grew stronger. Through two world wars and the Depression, the United States experienced an upswing that left the nation more egalitarian, altruistic and communitarian. Can America – and Australia – do it again?

Andrew Leigh is a former economics professor and a member of the Australian parliament. His books include Reconnected (with Nick Terrell), Randomistas, The Luck of Politics, and Battlers and Billionaires.

ENDS

Authorised by Paul Erickson, ALP, Canberra.