Thursday, November 01, 2012

If Winners Take all Do Losers Lose Mostly All?

By Gary Berg-Cross

It’s a pretty widely observed that culturally America has become more of a winner take all society than it was 60 years ago. The Winner-Take-All Society, was co-authored by Robert H. Frank &  Philip Cook discussed the contemporary trend towards inequality a dozen years ago. It was named a Notable Book of the Year by The New York Times, and was included in Business Week's list of the ten best books for 1995.The summarized points are not familiar:

"small differences in performance give rise to enormous differences in reward. Long familiar in sports and entertainment, this payoff pattern has increasingly permeated law, finance, fashion, publishing, and other fields. The result: in addition to the growing gap between rich and poor, we see important professions like teaching and engineering in aching need of more talent. This relentless emphasis on coming out on top—the best-selling book, the blockbuster film, the Super Bowl winner—has molded our discourse in ways that many find deeply troubling."

Frank, among others, has written more on this as the inequality problem has grown along with shallow ideologies that glorify self interest and competition without morals. It is at least partially based on false dichotomys of meritorious winners and inept losers.  The idea is if you are not one, preferably the winner, you are the other.  As I noted in The “Binary Thinking Habit” some complex questions such as “should we cut Medicare” are forced into an either-or frame.  Are you for a balance budget or not? It’s a simple up or down question with an embedded dichotomization of positions. Such forced choice questions fill the air in political debates. They are a bit like the binary view of the world as organized into male/female, matter/spirit, reason/intuition, god/no god and winners/losers. We have a 2 party political system and it forces people into more polar positions than they might take in an open discussion. This perhaps feeds on a Manichean tendency we have to set many things up as exclusive and naturally opposed choices.  We like winners and sometimes wealth is used as a proxy concept to establish merit of a winner.

But looking at the world in terms of binary of dichotomous categories simplifies things too much and causes problems. Is a successful thief a winner?  Are his victims just losers? It’s Ok to steal victory from the jaws of defeat in sports, but apply this to other realms seems wrong. It reduces things to a way of keeping score as in sports.  But society is more than I vs. thou. There are too many bad things such as inequality that damages all of society that can follow from this type of simplification.The downsides are more than hurt feelings after your team loses a ball game.

In 2007 Robert H. Frank pointed out some of the problems of a winner/loser dichotomy in Falling Behind: How Rising Inequality Harms the Middle. In 2011 he followed up with an insightful The Darwin Economy: Liberty, Competition, and the Common Good.

As Darwin knew, when individual and group interests diverge, competition not only fails to promote the common good, it also actively undermines it.
The modern marketplace is rife with individual-versus-group conflicts like the one that spawned outsized antlers in bull elk. If you’re one of several qualified applicants seeking an investment banking job, for example, it’s in your interest to look good during your interview. But looking good is a
relative concept. If other applicants wear $600 suits, you’ll make a more favorable impression if you wear one costing $1,200.

Trading up is wasteful for the group, however, because the applicants are no more likely to get the positions if they all spend more on suits. But from each individual’s perspective, that’s no reason to regret buying the pricier suit.

What has been the consequence of winner take all ideology? Economist Paul Krugman notes that winner take all leads to "extreme concentration of income  income inequality” which in turn puts "the whole nature of our society" at risk and "is incompatible with real democracy." That a topic of interest to a democratic economy.
As J. Bradford DeLong noted in America - land of inequality it has produced people who have really lost something. The easy promise of a more leveled and middle class society has given way to real loses by the middle class. He attributes rising inequality to 4 major factors over the past 35 years and no surprise one of them is a transformation to a winner-take-all society.
  • the others are waning progressivity of our tax system,
  • decline in our willingness to invest in education and
  • economic shift to industrial sectors that subtract value)

On this winner take all idea DeLong observes:

The information revolution now allows the most-skilled and luckiest to leverage their skills and luck across immense customer bases. In earlier centuries, Charles Dickens and Enrico Caruso were superstars but not super-wealthy. Today Stephen King and Placido Domingo and Oprah Winfrey are super-wealthy indeed. We saw this a century ago whenever luck and economies of scale in production and a continent-wide market all came together: Andrew Carnegie and John D. Rockefeller became super-rich. But our Bill Gates is, and Sam Walton was, super-richer.

The trend is clear we are less a “win-win society” and more “I win and the rest of you lose” society.  Although on the political side sometimes the reality of loss is papered over in PR and obfuscation. Perhaps a topic for another time.  


Middle Class and Lions: 

1 comment:

Don Wharton said...

Far too true! I wish there were an easy way to fight back against this reality.