The Dark Side of the Weak Galt Hypothesis

One of the facts that I like to surprise people with is that in many East Asian countries, there are no such things as ghettos. Oh, there are certainly poor areas of town, places with worse infrastructure and peeling paint, but these are not associated with muggings and homicides. As someone who grew up in America, the notion that poverty and crime go together is so obvious as to not even rise to conscious awareness. But what cities like Taipei and Singapore demonstrate is that it’s really not a universal law.

But at the same time, it’s a sobering fact that these countries, while they’re doing well, are not obviously taking over the world. Having a functional lower-class does by your great deal of quality of life. It opens up huge tracts of the city which in the US would be no go zones after dark. Rents are therefore slightly more affordable (although as world-class cities they’re still not exactly cheap) and the availability of low skilled but reliable workers means you can have things like convenience stores in every corner and restaurants that are cheaper than cooking at home. But it doesn’t give the kind of boost to the economy that you’d naïvely expect. Your companies don’t become world-beaters, your GDP doesn’t grow by leaps and bounds. Getting a proper handle on crime is still worth doing, of course, but it doesn’t seem to be the kind of thing that would take our civilization into a golden age.

There has recently been a great deal of news about riots in Baltimore, with frightening footage and some striking photos of an Orioles game played before an empty stadium. And this, of course, only means that the dysfunction is a little more organized and concentrated than usual; all the statistics and testimony from my friends from there has been to the effect that The Wire is essentially a documentary. But it’s a striking fact that despite all this, Baltimore still has tall buildings. It still has corporate offices providing well-paying jobs. Several of my friends go to graduate and medical schools in Baltimore. Despite deep, deep dysfunction verging on farce, the city still stands, and this is a mystery that needs explaining.

In an earlier post I touched on what I call the Weak Galt Hypothesis to explain why adding women to the workforce didn’t double GDP.  The hypothesis is that only a relatively small proportion of the population is actually causally responsible for economic growth. Unlike the original John Galt, I don’t think these people are so few in number they could hide a tiny village in Colorado. In fact I’m probably a little less extreme than Michael Vassar, who claims that about 1% of the population could run the entire economy. But it certainly seems that income inequality understates how much people vary in the ability to create value.   Conservatively, one might estimate that a third of the population is necessary to run the economy.

Now, on one hand, the Weak Galt Hypothesis favors a sort of throne and altar conservatism. It reinforces the notion of a natural aristocracy, throws some weight behind the Great Man theory of history, and is joyously anti-democratic as it lauds the virtues of the productive classes. But there’s a dark side to this hypothesis too. The very fact that not all working age people contribute to the economy also means that there is much less pressure to make sure that that bottom two thirds remains productive and civilized.

If the world were still in agricultural economy, then a state that lost control of its peasants as badly as Baltimore has would be an economic basket case. This level of persistent disorder, unemployment rates, and criminality can only be compared to catastrophes like the Thirty Years’ War or the Black Plague. The news would be showing not a sold out Orioles game, but footage of a Canadian invasion fleet landing.

But in fact, it seems that having a functional city is pretty much optional if you just want a first world economy. Small private police forces are good enough to give colleges like Johns Hopkins a veneer of normalcy. Office workers will tolerate living in the city, despite all the inconveniences, if it continues to be a Schelling point and the best place for their careers. Critical infrastructure and manufacturing hubs are mostly outside the cities anyway, and can be protected by private security for a reasonable cost. Civilization can interpret the city as damage and routes around it with barely a hiccup. A few beacons of civilization are enough to sustain a nation.

The increase in crime in the latter half of the 20th century didn’t happen without cause, it happened because of a set of beliefs that happened to become fashionable – beliefs like leaning hard towards the rights of the accused, having greater sympathy for groups that can claim to be victimized minorities, and distrust of authority. If we were in an agricultural civilization, this could only go so far before the economic strain became intolerable, and policy shifted back to a stable equilibrium. But in a Weak Galt world, the feedback is much weaker. Crime in Baltimore imposes a huge cost, not least on poor black Baltimore residents themselves, but it’s not the kind of catastrophic cost that would force our leaders to reconsider their cherished values. The kind of slow burn that Baltimore is going through is considered tolerable and indeed normal.

It’s a sobering thought. The flip side of a Weak Galt economy is that things are allowed to get much, much worse without triggering much of a backlash. The trends that have helped to create such an economy in the first place – mechanization and automation chief among them – show no signs of slowing down. And so it’s entirely possible that this political dysfunction will be allowed to continue, until every city is slouching towards Baltimore.

After all, keep in mind: there are nice suburbs in Baltimore. There are white-collar professionals and fancy academic, some nice restaurants and a nice tourist district in the Inner Harbor, which is usually, though not always, riot free. An America that looks like Baltimore is not going to be unlivable. It would just be a much less pleasant place to live, particularly for those who fall out of the middle class. There are certainly some limits to how far this can go – Zimbabwe demonstrated that having white-owned farms being your only beacons of civilization is not quite enough to sustain an economy. But you will note that Brazil seems to be doing fine.

Ayn Rand’s fantasy of Galt’s Gulch imagined a small number of natural aristocrats noticing that they kept the ungrateful world alive.  Feeling their strength, they said “screw the peasants,” seceded from civilization, and the country began to collapse.  The reality of the Weak Galt Hypothesis is that the peasants say “screw the aristocrats,” secede from civilization, and the country does not collapse.  This should not comfort us.