This tweet first reads as snarky, then insightful, but give it a few seconds and you’ll realize it’s pointing out a real problem.

The reason people were surprised the left did so poorly in the mayor primary is half of journalists under 40 in America live within these boundaries. https://t.co/rUy8qSxMDW

— Josh Barro (@jbarro) February 6, 2022

There are many reasons why an industry can become concentrated within a narrow geographic region. Externally generated increasing returns to scale i.e. a firm becomes more productive simply by being near other firms producing the same thing, is an observation that goes all the way back to Alfred Marshall. That’s the story of Hollywood and Silicon Valley, not to mention a million other micro-industries. The story of journalism, however, is different, because it is not the capital or labor market opportunities, but specifically the labor itself that is concentrated in a narrow location. The “Writer living in Brooklyn” Twitter/LinkedIn/Muckrack bio is a cliche at this point for a reason. But why are they all in Brooklyn? And why do I get the sense that I can summarize at least half of them as White children of the upper-middle class who paid full-freight for an English-adjacent degree from an expensive liberal arts college?

Wages in journalism have gone to hell while, at the same time, there has emerged an extreme upper tail whose public standing achieved escape velocity, allowing them to go independent via Substack and earn vastly higher incomes. These diverging trends have their origin in the same phenomenon: the skyrocketing potential of any one journalist to reach the masses. The power law scale of social networks means every article, post, or tweet has a chance of going viral, and with it the chance to reach tens of millions of eyeballs. Put another way, its gotten easier to reach people, but harder to get paid to reach people.

There is a status that comes with strangers knowing who you are, what you wrote, what your core ideas are. It is also a status that disproportionately recognizes itself. When prominent writers hang out with each other, recognizing the ideas that each carries and communicates to large numbers of people, they reinforce the status that comes with that reach. I’m getting out over my psychological skis a bit here, but I’m willing to wager it feels good, in a way not dissimilar to my research being recognized by my academic peers. With less risk to going beyond my own expertise, I’m willing to argue that the reach, imprint, pageviews, and followers; the eyeballs that your work generates, is the prinicipal source of status within the modern journalist community.

The problem isn’t that writing generates status, but rather that this status is grossly out of proportion to the wages they are earning in the market. Amongst other problems, this selects for people who value status over wages (often because they are independently financially secure). In this light it’s not surprising the community has become so geographically concentrated – there are enormous rewards to living with the people that most recognize and grant this status. This is not unto itself a problem until that concentration is part of greater demand for what is already some of the most expensive real estate in the world. I’d wager there are more than a few writers with non-trivial followings out there whose Brooklyn lifestyle is a net monetary loss every month. Thats bad, but honestly I think its even worse than it sounds.

1. Status skews even less equally than income

I’m tempted to say that status is a zero-sum game, but that’s not really true. A field or industry can grow in status as a whole, making all its members better off. The distribution of status, however, will tend to be even more skewed than the famously unequal distribution of income, an attribute likely to be all the more acutely observed in a field where attention begets attention – see Exhibit A, the power law distribution of retweets. If you think wage inequality puts people in a frothy rage of perceived unfairness, wait until a group of Brooklynites three drinks deep find out the friend they always hated got retweeted by Drake.

2. Status can’t pay the rent

Unlike wages, status is extremely difficult to directly exchange for goods and services. You need an intermediary, such as a person desperate to market their latest brand of protein powder or neo-fascist authoritarianism, who will pay you for access to your status.

3. Twenty-two year-olds will often accept status in lieu of wages

Makowsky’s law of career planning: never bet your entire future on doing something other people will happily do for free. If you’re curious why unionization has taken the journalism world by storm the last few years, you don’t have to look to politics or in-group signaling for an explanation, basic economics will get you all the way there. If you have an industry where amateurs can provide you the inputs you need at 60% of the quality level as professionals, but for 10% of the costs, the incumbent professionals in your labor force are going to have it rough. If those incumbents can close the shop via unionization and raise the mininmum wages within the profession, the balance will tip back to skilled professionals. You reduce quantity of labor supplied and end up with higher equilibrium wages for those who manage to get their foot in the door. Of course, this will only heighten the favoring of those who can get their foot in the $3200/mo Brooklyn rent door while dressing fashionably and using “semiotics” correctly in a sentence, but that’s neither here nor there.

4. Status rewards lead to homogeneity

Status rewards incentivize geographic concentration, which will in turn intensify herding behavior. If the bulk of your compensation is in-group status, you’re going to want to spend as much time with that group as possible. Your social life will become more important than ever. That also means, however, that anything that might risk disdain or ostracism within the group is to be avoided whenever possible. Opinions, particularly on subjects that don’t directly impact your life, will tend to become more and more homogeneous over time. It also means hypotheses born of motivated reasoning i.e. the next mayor will be super progressive or want to “defund the police” can acquire a life of their own and quickly evolve from idea spoken aloud in a Brooklyn cocktail bar to universally accepted truth within an insular community. This classic herding phenomenon is relevant to the broader world because this particular community spends its working hours delivering the news to us.

5. Homogeneity creates rewards to heresy

Even if you can survive off status and a monthly check from your parents at twenty-two, the same can rarely be said at forty-two. The mortgage needs to be paid, the kid needs braces, and you need to start putting away some money every month so you can die somewhere warm. The only thing you know how to do at a professional level is write, but you can’t find a way to get people to pay you well for what you’ve been writing.

Solution: write something that people will pay you for.

You need to find something that is undersupplied relative to demand. The answer lies in the very same homogeneity being created in your old neighborhood. You want to get paid: move to cheap suburb of a medium sized city and start writing heresy, the more inflammatory the better. Accusations of politicians and celebrities. Cheap pablum for frothing basement trolls and listicles of reasons never to let your kids leave the house. Election conspiracy theories and a new expose on why red wine and chocolate will cure Covid. Corporate public relations expressing the deepest committment of the NFL to protect everyone and only good from here on out. Anything that someone is willing to pay you to write because nobody else will write it for free.

So yeah, a bunch of writers live in Brooklyn and they are currently a hilariously homogeneous monolith of progressive cosplay, often producing little in the way of insight or information, surviving emotionally off the status returns of living in a bubble of mutual-affirmation and shared anxiety. It’d all be pretty innocuous if I didn’t worry that today’s progressive writer’s commune is also a breeding ground for tomorrows purveyors of reactionary fearmongering and misinformation.

I was listening to an episode of Planet Money and, as one does, thought of a completely brand new and in no way derivative idea that would make many billions of dollars for myself and my future investors. It was a very exciting drive home. Of course, the prospects and originality of idea did not survive first contact with Google.

The episode in question, “Of Boxes and Boats” was characteristically delightful and informative. TL;DR: the supply chain is a disaster, ports are backed up, and the US is experiencing an especially acute shortage of warehouse space. A moment that especially caught my attention was warehouse manager expressing that there was, in fact, empty space in his warehouse, but that the firm currently leasing that space wasn’t using it, and the warehouse had no means of offering that space to another client.

That’s interesting. That’s a resource that, in the moment, is suboptimally allocated, even if only for the hour, day, or week. That’s an arbitrage opportunity. In fact, this is exactly what AirBnB did: found real estate that was more valuable to potential short-term renters than current lease holders that could be temporarily exchanged between parties, and as a facilitator for that exchange AirBnB could take a cut. Someone needs to make Warehouse AirBnB! I’m a genius.

No, I’m not.

Meet “The Airbnb of Warehouse Space”

Sigh. I wasn’t even first to the incredibly obvious one-line sales pitch. But my fanciful dreams of buying an English (or at least Belgian) soccer team asside, I honestly can’t decide if I should feel better or worse knowing this idea is already out there. On the one hand, it’s good to be reminded how dynamic and responsive entrpreneurs are in identifying problems and offering solutions.

On the other hand, the supply chain is still very much a mess, warehouses are still out of useable space, and I see no evidence that there is in fact a rich secondary market in warehouse space allocations. Clearly something is getting in the way of the market responding. Is the market over-regulated? The Department of Homeland Security apparently makes entry into the shipping and warehouse business pretty costly. Maybe it’s under-regulated? Perhaps firms are squatting on warehouse space rather than sell it to potential long-term competitors. Maybe the intermediaries, real and hypothesized, are so inefficient that their additional costs as a middlemen are prohibitive. Maybe it’s <Insert Politician You Don’t Like Here>‘s fault. That idiot screwed up everything they touched.

The fact remains though that the idea itself was not the limiting factor, and I suspect it rarely is. I thought of it in ten seconds after listening to a podcast. For the people working in such a field, they probably come up with similar ideas daily. No, the limiting factor isn’t inspiration, or likely even perspiration. It’s being able to identify a path from idea to execution. A path that includes sufficient time, energy, capital, and personnel to make it happen. It’s about resources and risk. All of which is obvious. I’m pretty sure the “It’s About Resources and Risk” banner and bunting gets used more than “Happy Birthday” at your modal MBA program.

But it’s good to be reminded of the obvious every now and then. There are great ideas everywhere. When we’re thinking about any prospective policy regarding an issue we care about, it never hurts to think about whether it will be an aid or hindrance to others when they’re trying to solve the problems upstream and downstream from yours. Sometimes the best idea is to just stay out of the way.

I’ve long been a lurker on r/kitchenconfidential. I did a few brief tours in the service industry when I was younger and my partner used to manage a successful upscale restaurant. If you’ve spent anytime in a restaurant after closing in the last ten years, then you probably aren’t surprised by the continuing labor shortage in the service industry. Things have been bad for a while, with a pervasive sense that the industry was dependent on employees with weak outside options (i.e. a criminal record) or high exit costs (i.e. can’t afford to be on entry-level wages in a new career track). As I’ve written before, we’ve been eating on borrowed time: the pandemic game shifted the calculus for a lot of marginal employees who have left the service industry and likely aren’t coming back. The service industry is important, but not such that a great reorganization is likely to have catastrophic short term consequences for broader society.

Which bring us to nursing.

Nurses are burned out.

If the daily threads at on r/nursing subreddit are even mildly representative, the status quo in nursing is unsustainable. It’s not just that the job has become more dangerous, more tiring, and less rewarding. Tough jobs exist all over the place, with employees taking them on in return for higher wages than they might otherwise enjoy. No, the bigger problem in nursing is that it is not what these people signed up for. It has become dangerous and unrelentingly exhausting. It requires increasingly greater education and training that is highly specialized, with little in the way of outside options likely to reward that education and training. Can you think of a job with equivalent background requirements, that places the same physical demands on you, and forces you to interact at a personal level in the general population? I can’t, and if you did, I can almost guarantee that the pay is considerably higher.

The broad shortage of nurses in the US has gotten a fair amount of attention. That article points to a lot of causes, most entirely valid (the idea that travel nurses are a cause, rather than symptom, of the nursing shortage is silly, but we’ll let that slide- the broader point stands), but this is one of those cases where it seems to me the diagnosis is best kept simple: nursing has become a worse a job, in part because of the pandemic, and that has tipped the cost benefit analysis towards labor exiting.

While cooks and nurses decided that the pandemic was a good time to get out, let’s not make the mistake of ignoring one of the most martyred vocations in the US.

Teaching sucks, and this time they mean it.

You could go to r/teachers and read the resignation posts, but there isn’t a lot of new information to be gleaned. Everyone knows teachers are undervalued and underpaid. I was a public school teacher for two years, and I endured lots of third drink questions of “Why?” to go along with daily complaints about pay and “continuing education” requirementss with my colleagues. The rate of exit, was pretty predictable. More than half of teachers left the profession in their first 5 years, the rest stayed for life.

I’ll wait for the data to come out before I make broad pronouncements, but this wave of resignations could be different. If we lose a generation of teachers (>80% of those in their first 5 years), there really will be a massive shortage down the road. The pandemic is interesting because it’s taught us two things:

1. Online teaching is inferior
2. The value of schooling as “mass daycare” is hard to overstate

If we step into massive teaching shortage five years down the road, there’s not going to be a “scale education online” solution. The only solution will be to raise compensation for teachers and bring labor into the industry and, well, the failure to raise teaching salaries is maybe the single greatest of example of the divergence between what people publicly support and what they actually vote for. A mass teacher shortage would certainly given teachers unions across the country the opportunity to negotiate better pay scales, but I’m cynical enough to expect they will find a way to waste it on even more job security for their worst members while ensuring that the best teachers still never see a dime in extra compensation. But hey, prove me wrong, yeah know?

What do Cooks, Nurses, and Teachers have in common?

I can’t help but see what these three vocations have in common in the US labor market – a frequent sense of being trapped. Sure, working grill for $15/hour might not sound like something you couldn’t bring yourself to leave, but if you’re 34 with a high school diploma, a felony drug arrest, and a mortgage to pay, the intermediate stage between the status quo and something better might not seem so great. No, you did not enjoy being threatened by a patient who backed you into a corner and told you he “knows what you are trying to inject in him”, but you have a masters degree in nursing, which makes the pay gap between nursing and not nursing a miserable prospect, especially if you’re going to pay off the student loans that got you the job that makes you miserable. You know you essentially can’t be fired, but you’ve also seen the pay scale by seniority, and the prospect of teaching 5th grade for 25 more years fills you with a dark melancholy you did’t know possible. But your degree is in teaching, which essentially means you’d have to find a way to start from scratch at twenty-six. Or thirty-three. Or forty-one.

But then the pandemic happened and everything you already hated got even worse. So you did it. You quit.

But how many of you quit? How many of you are laying out your exit strategy? What will these industries look like in 2 years? We won’t know for a while, but I do think we’re going to learn which industries have been dependent on squeezing every ounce of juice out of trapped labor pools (with what you might call actual monopsony power), versus those industries where the standard “work sucks” complaints simply get more attention for whatever reason.

Personally, I’m betting on two out of the three, but I’m not telling you which two. Working in two of these industries is going to look very different in the wake of the pandemic, both in terms of labor characteristics and compensation. And one will just return to the previous normal, like it never happened.

It’s a debt we will never be able to pay back, but that doesn’t mean we shouldn’t keep trying.

This caught my eye.

Puzzle: the Large Hadron Collider cost $279 million per mile to build. It has 10,000 superconducting magnets, 96 tons of liquid helium for cooling, and is all custom made.

New York City's subway costs between $1.5 to $3.5 *billion* per new mile to build 🤯

5-13x more expensive pic.twitter.com/YGgS5K0ugJ

— Marcelo P. Lima (@MarceloPLima) January 8, 2022

This isn’t just expensive or inefficient. This is obstructive at a level only just short of an executive veto. Regardless of what sits at the top of your dream infrastructure list, this is the problem you have to solve first. Doesn’t matter if it’s high speed rail, the hyperloop, or offshore windfarms. Heck, maybe your big policy dream is universal healthcare or public education. If governments can’t build anything short of a 10X markup, then every large scale government provided solution has no value besides giving us something to argue over.

If I might put my even-more-cynical-than-usual hat on for a moment, the fact that this isn’t a top line item in every policy discussion is politically telling. This is relevant to the policy ambitions for everyone to the left of the politest anarchist you know. However, the urgency and relevance should increase exponentially as we move leftward across our political spectrum since those are the people most excited about the government actually building things. With a handful of exceptions, that’s just not what I am seeing, quite the contrary even.

Maybe it’s union indolence, conservative obstructionism, or just the quiet manifestation of all the reasons that public choice theory is actually more relevant as a left-wing school of thought than a conservative one. The fact remains that the incentives within modern politics and governance has brought us here, to a place where people want the same thing they always have: everything. And they’re willing to pay exactly as much as they always have: nothing. The difference is that our institutions used to give people incentive to bargain within the political marketplace and hammer out a deal where prices, both in dollars and political support, led to an an actual outcome where everyone ended up better off. Maybe it wasn’t as efficient as the private marketplace, but that’s almost besides the point. Sometimes the most important thing isn’t maximizing efficiency, but just managing to build the public good at all.

Instead, we seemed to have arrived at an equilibrium with enough legacy rent-seekers that the system is choking on them, with no one willing to flinch unless they continue to enjoy the previously established flow of benefits. We can try to blame this on conservative obstruction, but the fact remains that there just isn’t that much work for them to do. It’s a lot easier to tell voters they shouldn’t have to pay taxes when those taxes are disappearing into the suppurating maw of insatiable contractors, unfunded pension obligations, unplacatable union reps, and a menagerie of regulations that accomplish nothing but make a advocate 2 years removed from an overpriced BA in communications feel good about levying just one more papercut on a bloated corpse.

I have no idea if “supply-side” progressivism will gain anymore purchase than any of the other ad hoc attempts to coin a school of thought or political identity. But the idea stands, and I think it’s unescapable: if we want the government to be able to build stuff while leaving the 13th Amendment intact, they’re going to have to be able to pay market prices, and market wages, for it. Not much more, not much less.

Omicron is highly contagious, but has far lower rates of associated hospitalization and death. By one estimate it is essentially 3 times deadlier than the standard flu, which is bad, but modest compared to previous variants of Covid-19. The vaccines, especially the mRNA vaccines, appear to help a lot towards further mitigating the cost of infection. That all said, there’s no reason to yet be confident it precludes one from “long Covid” symptoms, many of which are moderately terrifying to a relatively healthy person such as myself.

But, after being vaccinated and begging everyone in your life to get vaccinated, is there anything else we can do at this point? There is a cost-benefit analysis happening in all of our heads now, and many of us who were stridently in the “isolate at home and wait until the vaccine miracle arrives” camp got our miracle, only to find out other people were…less enthusiastic. Then Omicron showed up and it started to feel like the only options are to either return to home isolation (perhaps even more strictly than before) or just accept that you’re going to get it.

I don’t know the answer to this question, but as I sit here, wondering if any body ache or cough is the beginning of “my turn” with Covid, there isn’t the fear or rage I would have previously expected. Just a quiet resignation, a hope that my to-do-list doesn’t grow to unmanageable proportions while I am down, and a gratitude that my entire family (in the broadest possible definition) is vaccinated and boosted.

The road here has been long and dumb, but it also might be near the end. Not because we won, but because we’ve arrived at a point where more people will survive their bad decision-making while imposing a far smaller cost on the rest of us than before. Which is fine, I guess.

But is it? Or have we just let the experience of the last two years beat down our expectations to the point where we’ll willing to accept an endemic version of mild Covid and move on with our lives? You’d think the main take away would be that mankind has arrived at a point where we can make a bespoke vaccine in 18 months (it probably should be), but in all honesty I find our incredible innovation less shocking than how easily grotesque anti-science fictions have become not just limits on public health, but bonafide popular campaign strategies, rigid spines capable of supporting functioning political coalitions. Angry, dangerous people have found each other, found community, and many very ambitious people have figured out how to speak directly to them. I don’t see any way that isn’t a problem going forward.

I remain more optimistic than pessimistic with regards to our global future, but I can’t shake the feeling that this particular denouement to the pandemic should be viewed cautiously in how it portends for the near future.

What does effective political advocacy look like? There is an entire school of thought dedicated to effective altruism. Givewell.org exists solely to evaluate and promote efficient, high-impact charities to help donors maximize the value their donations create. But what about political advocacy? It doesn’t fall neatly within the realm of altruism or charity – there is certainly nothing wrong with advocacy on behalf of yourself or a group you count yourself among, but it’s not altruistic in the classic sense. It also doesn’t conform to the neater forms of dollar efficiency or target outcome analysis that a charity might be evaluated along. Political outcomes don’t always lend themselves to intuitive metrics, or even agreement over whether an outcome should be counted a good or bad thing. There’s nothing especially convenient about political advocacy as a tool for welfare maximization, but that doesn’t free us from its necessity. Abandoning politics for it’s frequent ugliness concedes the power of of governance to the ugliest among us.

Political advocacy requires, nearly by definition, to interface with government institutions. In the case of a democracy, this means working within the limits and incentive structures of politics, and all of the complexity that entails. Leaving behind the relatively straightforward prices and incentives of the marketplace, as well as the fungibility of direct charitable donations, politics demands coping with indirect routes to measurable outcomes and, most importantly, the inevitable arrival of oppositional forces. It doesn’t take long in any meaningful advocacy engagement before the arrival of people and resources working explicitly, if not directly, counter to your efforts. This is not something you have to deal with in most charitable endeavors – efforts to shutdown city food banks and block textbooks from reaching African schoolchildren are thankfully rare.

So, again, what might an effective advocacy practice look like? I imagine it would bare scarce resemblance to your modal election campaign, where the emphasis is on manufacturing turnout in a zero-sum competition with your opponent. I also doubt it would look like most lobbying efforts, where the dollars at work represent the selection-effects of classic collective action problems. Rather than the efficient welfare maximization that a hypothetical EffectiveAdvocacy.org would aspire to, the lion share of lobbying simply represents the interests of firms and groups who have identified a bundle of policies whose benefits are sufficiently concentrated within them that it is worth organizing, while at the same time the broader social costs are sufficiently spread out that an opposing forces cannot similarly get over the organizational hump (Yes, I know this is a restatement of the standard Olsonian collective action model of lobbying. Bear with me.)

Effective advocacy would demand working with not just the limited resources of a group without a built-in constituency of concentrated benefits, but also a focused strategy of identifying welfare-maximizing policies unlikely to generate organizable opposition. That’s a tall order. I mean, if you’re going to convince me such a thing is feasible, an example would go a long way. Can you name one?

I’m glad I asked.

The good people at Marginal Revolution posting a link to a paper about the de facto banning of HIV home tests that has been in effect at the FDA for almost 40 years. Suffice it to say, the banning of home tests for a deadly communicable disease is a horrifying policy, one that has without question killed people by the thousands at best and the millions at worst. I imagine the origin story of this regulatory horror is not dissimilar from the opposition to the HPV vaccine – a macabre desire to raise the costs of an undesired behavior. Homosexuality was viewed by many in the not distant past as a choice, HIV/AIDS was killing homosexuals, and a home test would feasibly lower the risk to gay men, so advocates successfully blocked the development of tests. Why did opposition to HPV vaccines find less success? Because HPV is connected to cervical cancer in everyone, and being pro-cancer in the 2010’s enjoyed less popular support than being anti-gay in the 1980s.

This story is a tragic history, but it also represents an opportunity for effective advocacy. The policy, born of homophobia, would never enjoy such popular support today. It survives almost exclusively of regulatory inertia today. A minimum of lobbying resources could feasibly end the policy in large part because it’s originating constituency is diminished and would be unlikely to successfully organize.

This, in a nutshell, is the opportunity for effective advocacy – the strategic search for welfare-harming policies whose originating constituencies have shrunken or disappeared. It’s not particularly exciting, the notion of combing through policies on the books, agency by agency, looking for harmful policies with little to no continuing political support, but it is in that lack of excitement within which the opportunity lies. Reform of headline- and chryon-inducing policies have built in opposition. Any political or politics-adjacent effort that garners significant media attention always promises similar attention for opposing forces. It is within the boring stuff, the bureaucratic protocols and categorical bans produced at the margins of historical political battles, where advocacy, particularly crowd-sourced efforts, motivated by the same sentiments behind effective altruism and efficient charity might make contributions to our government institutions in the best way possible: by making changes that nobody can get attention from opposing.

That’s just one opportunity for effective altruism: inattention. There are no doubt more, but I suspect many will share at least a sliver of unsexy monotony. A better world through boredom.

Organized shoplifting mobs! Retailers claiming increases in shoplifting! Journalists claiming its an overstated numbers grift! Other journalists saying we should ignore shoplifting because corporate theft! The conversation about shoplifting is often hysterical and occasionally stupid, but that doesn’t mean something isn’t actually happening. Some of the facts seem clear, others murkier, and the underlying causes, like everything during this pandemic, are no doubt complex and uncertain. Let’s see if we can organize our thoughts a bit.

What we know

Shoplifting has been on the rise across the United States, with increasing theft of both staples for survival and the goods most easily resold on the black market. More specifically, and perhaps even more certainly, a still wealthy San Francisco, where one would expect retailers to desperately want a presence, can only seem to watch as its retailers flee. CVS is out. Walgreens is out. One Target it out (but not the biggest one). And the reason they claim is not commercial real estate overhead costs or declining customer bases, but an overwhelming increase in shoplifting (or what the retail industry used to call “inventory shrink”). While obviously not the whole story, the effective decriminalization of theft under $950 in San Francisco seems a key component. It doesn’t take any clever or subtle theorizing to expect that if the cost of theft under a certain threshold is radically lowered, then all you have to do is disaggregate your theft events across time and people to yield a sufficiently lucrative use of time (especially for those who are struggling or already carry the far weightier burden of a felony record). You can’t lower the opportunity cost of labor (less jail time) in a field of endeavor (boosting consumer goods) and pretend to be shocked when supply increases (more theft).

What we think

I am sure there is no shortage of “greedy corporations are abandoning American cities” and other malice-based theories, but those aren’t particularly useful theories. Retailers want customers and cities have a lot lot of them. So the first possibility is that they are simply telling us, and their shareholders, the truth– theft has reduced the profitability of stores such that the optimal decision is to close the doors. It would be a pretty shocking development to look back one day and realize that shoplifting was what closed the book on brick and mortar retail. Not Amazon or delivery drones, but the favored hobby of bored delinquents and subsidy of struggling families.

To those ends, though, a meteoric rise in shoplifting nonetheless feels, if not convenient, then incomplete as an explanation. CVS isn’t just closing in San Francisco, it’s closing 900 stores and moving to a new “store format”. Perhaps the better way of framing these closures isn’t a “crime wave of shoplifting” but rather more evidence that the brick and mortar retail industry is incredibly fragile, where any unforeseen increase in costs immediately threatens profitability. In a composite of shoplifting, online competition, the unabated growth of Costco and other wholesale clubs, and the rise in reservation wages of labor all across the country, which story would you want to emphasize to your shareholders as you close shops in urban centers? That you can’t compete? That you can’t afford labor? Or that you are being forced out by the crumbling of civilization into Mad Max dens of wayward lawlessness? At least the last one holds out hope that your business model isn’t wholly obsolete.

Still, people definitely seem to be stealing a lot of stuff, and that just creates one more cost advantage for online competitors and venues that require membership for admission. Things are changing, perhaps at an accelerated rate thanks to the pandemic and it’s accompanying bundle of policy responses. When considering fundamental change, observation of chaos rarely offers evidence to the contrary.

What can or should we do?

There are lots of things we should decriminalize. Lots. But I am extremely confident that theft is not one of them. The consequences are obvious, and in the short run will be felt almost exclusively by the poorest, who depend on local retailers, particularly those on the public transportation routes they take to work. Further, this is a problem that can metastasize as people don’t just supplement their incomes with theft, but specialize in it. It will hollow out the largest retailers and the smallest bodegas. It will change the the entire structure of physical marketplaces. It will change how people interact with core components of our welfare system. It will poison another relationship, this time between seller and customer, where people are increasingly viewed as a threat.

So what should we do? Desperate people stealing rice and other staples is one more argument for an unconditional universal basic income. People opting for black market income is one more argument for wage subsidies to increase relative attractiveness of wages in the legal market. And people stealing because the price of getting caught approaches zero? That’s an argument for raising the price of theft. Not to new and cruel heights, but to the levels they were at before i.e. high enough that theft is nothing but a last resort. A very last one.

In our eternal quest to never let go of any effective rhetorical device that can double as a headline, the last 12-18 months have been dubbed The Great Resignation. Within voluntary job separations, a sizable chunk of which appear to be early retirements, many are young people transitioning from low-paying jobs to those that have seen fit to adapt to the labor shortage faster, offering some combination of higher wages, better benefits, or a higher quality of life, often through the channel of relaxed educational or experience prerequisites.

The Great Resignation isn’t really about what most ppl call "quitting." And not really about burnout, like the media says.

It's a free agency period for low-wage workers switching jobs for money, plus a moderate surge of early retirements in a pandemic.https://t.co/NijfeXcFTQ

— Derek Thompson (@DKThomp) December 8, 2021

Some, generally from the political left, are framing this as a shift in power from management to labor, particularly for those who hope this can be the moment that pushes unionization back to the forefront. Others, mostly from the political right, are framing this as a catastrophic undercutting of the incentive to work induced by the expanded welfare state. I tend to see these positions as frantic over-optimism or pessimism from those desperate for a sexy political narrative to sell.

I think the closer parallel, in terms of mechanism (not scale), isn’t the Great Depression or the New Deal era that followed, but rather the World War II draft-accelerated entry of women into the workforce. I think what we’re seeing is a massive reorganization of the US labor market. If this half-baked generalization were true, what would it look like?

1. Education, Training, and Experience reconsidered

My guess is that managers in a range of fields have long had a itch in the back of their minds that they weren’t always hiring the right people. Specifically, they were eliminating large swaths of applicants from the pool of consideration because they lacked the minimum formal education or years of narrowly defined experience. A lot of these requirements, I suspect, existed not as tried and true markers of the subset of optimal candidates, but because they could be routinized through online job applications and human resources triage, largely in an effort to conserve on managerial and administrative time. Combined CYA incentives and other sources of herding behavior both within and across firms (i.e. no one gets fired for only hiring college graduates), these are exactly that kind of sub-optimal practices that can widely embed themselves when an economy is growing, but the labor market is relatively loose, so any suboptimality is lost in the wash.

A negative labor shock, be it a military draft or global pandemic, is exactly the kind of thing that rewards firms that begin hiring from whole strata of previously unconsidered job candidates. Not for nothing, that’s how you end learning all kinds of new things: the relative value of various degrees and training, the cross-applicability of job experience previously treated as irrelevant to an open position, and the marginal products of a firms employment portfolio.

2. Compensation bundles rebalanced

There’s plenty of fuss (rightly so) over the shift towards working from home. Yes, it saves on fixed costs, particularly in cities with sky-high commercial real estate costs, but I suspect the greater impact in the long run will be on the composition of wages+benefits+flexibility in employee compensation bundles, where flexibility is largely a catch-all for the quality of life component associated with any job. Maybe we already knew that health insurance and paid leave were valuable, but I think a lot of employees have discovered they were previously undervaluing the costs of commuting, schedule uncertainty, and existing “on call” for co-workers and superiors. Whether its working from home or as an independent contractor, many people are discovering that recapturing 10 hours a week of the rest of your life is worth a lot more than the wages being foregone. We already know that women are the future, but we also know that women value flexibility in work schedules more than men. A shift towards quality of life in compensation bundles was likely already in the cards, the pandemic just accelerated it.

For firms that have spent the last 20 years burning out the handful of key employees, rewarding their exceptional productivity by turning them into productivity bottlenecks, they are either going to have to find a way to spread the work thinner or recapture those key employees by finding other means of maintaining the quality of their employee lives.

3. The service industry is dead. Long live the service industry?

We’ve been eating on borrowed time. Through the combination of over-priced and over-valued higher education, a gratuitous over-stigmatization of non-violent criminal records, and the employment trap of limited human capital building, but lots of cash in hand, the service industry has been feeding us all on the cheap for a very long time now.

Turns out, though, that the relative frugality of diners has squeezed margins in restaurants razor thin, and has largely come at the expense of servers and kitchen staff. Came at the expense, I should say. I think we’re all going to have find a new normal where outsourcing meal preparation is, at the margin, slightly less of a staple and slightly more of a luxury. I still see Help Needed signs in lots of restaurants, and owners complaining in news stories that “No one wants to work“, but I’m also seeing new employees bring home higher salaries at McDonald’s after 90 days than fine dining cooks in their 3rd year working sauté. Eventually the new equilibrium will be reached, and I predict it’s going to involve higher salaries and better benefits for line cooks, but it’s also going to mean customers are going to have to get over there perceived $28 ceiling on entrees. Also, don’t expect your favorite restaurants to be open on Monday’s and Tuesdays, because it turns out everyone wants to have weekend.

4. The same, but different
What will the labor market look like in 5 years? Forecasting is a fool’s errand, but I never promised anyone I wasn’t a fool. Here’s my best guess:

I don’t expect a revival of unionization, but I do expect that employment will start taking on a lot of the attributes that pro-union people are currently agitating for. There will be more people with 3 and 4-day work weeks, though I suspect those people will be working 10 and 12 hour shifts. I think there will be a lot of flexible office-home work schedules, where firms coordinate their employees around days when everyone is in the office, the rest floating between the office and home as the work dictates. I expect there will be more independent contractors, but unlike previously self-employed people who bounced from contract to contract, they will instead be people who balance a portfolio of employment, with what amounts a small number of long term contracts. Rather than work for one person at a time 40 hours a week, they’ll work for 2 or 3, 8-10 hours each, building up enough firm-specific capital that contracts will last years, even decades, at a time.

I expect kitchens will remain hot, crowded, and loud. I expect chef’s will remain angry and owner’s tight-fisted with every penny. I expect that servers will still finish every shift with sore feet and stories of annoying customers. Maybe even more annoying than before, because those customer’s will be paying 15% more than the prices they already manage to complain about. But it’ll be okay, because everyone in that restaurant is going to be earning a much better living. They’ll have to, because otherwise they’re not coming back.

These two tweets came through my feed today through secondhand channels

Merry Christmas! 🎄
ps. Santa, please bring ammo. 🎁 pic.twitter.com/NVawULhCNr

— Thomas Massie (@RepThomasMassie) December 4, 2021

People really underestimate how dystopian the United States is

— Kate Aronoff (@KateAronoff) December 4, 2021

I am not suggesting that these two tweets are equivalent. The first is grotesque cosplay, the second a bit of hyperbole (possibly inspired by the first). Rather, I think they are both part of the same democratic mechanism – the belief that there are more votes to be gained from incentivizing turnout of the base rather than persuading those at the margin. The voters in your base have already decided you and your party are a better option than the rival option, so the only obstacle between you and their vote is the opportunity cost of their time relative to their chances of being decisive in the next election. None of this is new – this uncanny astuteness is how 24 of the last 3 failures of the Median Voter Theorem were predicted. If you want the base to show up, you don’t need to persuade them – you need to scare them.

You need people to vote, so you give them big stakes. Of course, mathematically no stakes short of global extinction are big enough to warrant voting in a national election. The thing about stakes, though, is that even short of extinction-level threats, they still increase the value of a vote that absolves your guilt if the other side wins. You can move on with your life because at least you tried.

When you’re trying to bring out the base, stakes are everything. Problem is, people start to catch on when every election somehow manages to be the most important one ever. You need to recruit someone to convince your base that this election is the most important one ever. Someone credible. And that’s what politicians and activists have figured out. The most credible source for the potential terror that only our candidate can hold at bay is the opposition. Not their candidates or campaigns, mind you. Their base.

The most credible way to increase the stakes for your base is the rile up the rage and vitriol of the the opposition’s. If you want to truly convince your voters that the stakes are high, all you have to do is chum the water and let the craziest avatars of your political opposition do the work for you. They’ll wave their guns, call each other “comrade”, insult their religious faith, call them stupid, make veiled threats, make unveiled threats, all of which will make perfectly clear that if we don’t win this next election, these people will win. They will win and have power. They must be stopped.

This is the principal reason there has been such a meteoric rise of professional trolls and hyperbolic “reply-guys”. The trolls, your Tucker Carlson’s and Chapo Trap Houses chum the waters, and then an entire ecosystem of reply-guys respond, quote tweet, and record 30 second CNN/Fox News video commentaries. Politicians have discovered that truly horrific people, and the shrieking dystopia fetishists that swarm them, are amazing at bringing out political support, not through persuasion or direct signaling of group identity, but through the specter of the lunacy of the opposition, and the subtle implication that if you don’t signal your affinity for our group, you are by implication associated with the toxicity of our opposition.

Which is why when these sort of messages show up on social media or television sound bites, you can quickly see that they aren’t propaganda or even fan service. They’re bait.

And just so you don’t get the wrong impression, I fall for this too. I try not to, but these people are professionals for a reason.

I try to ignore these silly bits of political cosplay, but this one really did its job. I'm hard-pressed to imagine something more perfectly designed as both crowd-pleasing petty fun and brazen cruelty. The glib hypocrisy of a Christmas tree surrounded by $15k of murder tools… https://t.co/8i8Vfq2kbs

— Mike Makowsky is here to violently equivocate (@mikemakowsky) December 5, 2021

Just because I’m an economist, and one who studies political economy at that, that doesn’t mean I not still a sucker.