The Decadent Society

How We Became the Victims of Our Own Success

Ross Douthat

• Publisher: Avid Reader Press / Simon & Schuster
• Year: 2020
• ISBN:
  9781476785264
• Topic: Politics & International Relations
• Subtopic: American Government
• Index: Politics & International Relations

From the New York Times columnist and bestselling author of Bad Religion, a powerful portrait of how our wealthy, successful society has passed into an age of gridlock, stalemate, public failure and private despair. Today the Western world seems to be in crisis. But beneath our social media frenzy and reality television politics, the deeper reality is one of drift, repetition, and dead ends. The Decadent Society explains what happens when a rich and powerful society ceases advancing—how the combination of wealth and technological proficiency with economic stagnation, political stalemates, cultural exhaustion, and demographic decline creates a strange kind of "sustainable decadence, " a civilizational languor that could endure for longer than we think.Ranging from our grounded space shuttles to our Silicon Valley villains, from our blandly recycled film and television—a new Star Wars saga, another Star Trek series, the fifth Terminator sequel—to the escapism we're furiously chasing through drug use and virtual reality, Ross Douthat argues that many of today's discontents and derangements reflect a sense of futility and disappointment—a feeling that the future was not what was promised, that the frontiers have all been closed, and that the paths forward lead only to the grave.In this environment we fear catastrophe, but in a certain way we also pine for it—because the alternative is to accept that we are permanently decadent: aging, comfortable and stuck, cut off from the past and no longer confident in the future, spurning both memory and ambition while we wait for some saving innovation or revelations, growing old unhappily together in the glowing light of tiny screens.Correcting both optimists who insist that we're just growing richer and happier with every passing year and pessimists who expect collapse any moment, Douthat provides an enlightening diagnosis of the modern condition—how we got here, how long our age of frustration might last, and how, whether in renaissance or catastrophe, our decadence might ultimately end.

PART 1 The Four Horsemen

1 Stagnation

“Do people on your coast think all this is real?”

The tech executive sounded curious, proud, a little insecure. We were talking in the San Franciscan office of a venture capital firm, a vaulted space washed in late-afternoon Californian sun. His gesture encompassed all of Silicon Valley, the whole gilded world around the Bay, the entire Internet economy.

That was in 2015. Here are three stories from the five years since.

A young man comes to New York City. He’s a striver, a hustler, working the borderlands between entrepreneurship and con artistry, drumming up investments for his projects without being completely honest about his financial prospects. His first effort, a special credit card for affluent millennials, gets attention disproportionate to its profitability and yanks him into the celebrity economy, where he meets an ambitious rapper-businessman. Together they plan a new company: a kind of Internet brokerage where celebrities can sell their mere presence to the highest bidder. As a brand-enhancing advertisement for the company, they decide to leverage their connections to host a major music festival—an exclusive, expensive affair on a Caribbean island that will be the must-get ticket for influencers, festival obsessives, and the youthful rich.

The festival’s online rollout is a great success. There is a viral video of supermodels and Instagram celebrities frolicking on a deserted beach, a sleek website for customers and the curious, and soon people are dropping down substantial, even obscene, amounts on luxurious festival packages—the kind that promise not just backstage access but also a private cabana on the beach. In the end, about eight thousand people buy tickets, at an average cost of $2,500 to $4,000. Tens of millions of dollars, the superfluity of a rich society, yours for the right sales pitch.

But the festival as pitched does not exist. Instead, our entrepreneur’s big plans collapse one by one. The private island can’t hold the crowds. The local government doesn’t cooperate. Even after all the ticket sales, the money isn’t there and the time definitely isn’t there, and he has to keep talking new investors into bailing out the old ones and inventing new amenities to sell to ticket buyers to pay for the ones they’ve already purchased. He does have a team, exhausted and impressively driven, working around the clock to ready… something for the paying customers, but what they actually offer in the end is a sea of FEMA tents vaguely near a beach, a soundstage that doesn’t work, a catering concern that supplies slimy sandwiches, and a lot of cheap tequila. Amazingly, the people actually come—bright young things Instagraming their way to the experience of a lifetime, only to have their photo streams and video feeds become a hilarious chronicle of dashed expectations, the tent city ruined by an unexpected rainstorm, the spoiled life giving way to drunken anarchy, and the failed entrepreneur trying to keep order with a bullhorn before absconding to New York, where he finds disgrace, arrest, prison and the inevitable Netflix documentary.

That’s the story of Billy McFarland and the Fyre Festival. It’s a small-time story; the next one is bigger.

A girl grows up in Texas, she gets accepted to Stanford, she wants to be Steve Jobs. She has an idea for a revolutionary technology, one that will change an industry that hasn’t changed in years: the boring but essential world of blood testing, which is dominated by lumbering monopolies, feared and avoided by potential paying customers who don’t like having their arms stabbed by strangers, and yet intimately linked to public health—to the prevention and cure of almost every possible disease. Like Jobs building the Mac, she envisions a machine, dubbed the Edison after the paradigmatic American inventor, that will test for diseases just as well as the existing technologies despite using just a single prick of blood. And like Jobs she drops out of college to figure out how to build it.

Ten years later, she is the Internet era’s leading female billionaire, a constant magazine cover girl, with a sprawling campus and a $4 billion valuation for her company, a lucrative deal with Walgreens to use her machines in every store, and a stream of venture capital that seems unlikely to run dry. Her story is a counterpoint to every criticism you ever hear about Silicon Valley—that it’s just a callow boys’ club, that its apps and virtual realities don’t make the world of flesh and blood a better place, that it solves problems of convenience but doesn’t cure the sick. And she is the toast of an elite, in tech and politics alike, that wants to believe the Edisonian spirit lives on in the digital age.

But the Edison box—despite long hours, endless effort, the best tech team that all that venture capital can buy—simply doesn’t work. And over time, as the company keeps expanding, it ceases to be an innovator and becomes instead a fraud, passing off tests from normal draws as results from a single prick, sweeping bad results from single-prick testing under the rug, and using all its money and influence and big-time backers to reassure skeptics and discredit whistle-blowers. Which succeeds until it doesn’t, at which point the company simply evaporates—a $4 billion valuation and all the venture capital that sustained it gone like that, leaving a fraud prosecution, a bestselling exposé, and the inevitable podcast and HBO documentary to sustain its founder’s fame.

That’s the story of Elizabeth Holmes and Theranos. It’s a big story, definitely. But our third story is bigger still, and it isn’t finished yet.

An Internet company decides to revolutionize an industry—personal transportation, the taxi and limousine market—that defines old-school business-government cooperation, with all the attendant bureaucracy and incompetence and unsatisfying service. It sells itself to investors with the promise that it can buy its way to market dominance in this sclerotic field and use its cutting-edge tech to slash through red tape and find unglimpsed efficiencies. On the basis of that promise, it raises billions upon billions of dollars across its ten-year rise, during which time it becomes as big as promised in Western markets, a byword for Internet-era success, cited by boosters and competitors alike as the model for how to disrupt an industry, how to “move fast and break things” as the Silicon Valley mantra has it. By the time it goes public in 2019, it has $11 billion in annual revenue—real money, exchanged for real services, nothing fraudulent about it.

Yet this amazing success story isn’t actually making any sort of profit, even at such scale; instead, it’s losing billions upon billions of dollars, including $5 billion in one particuarly costly quarter. After ten years of growth, it has smashed the old business model of its industry, weakened legacy competitors, created a great deal of value for consumers—but it has done all this without any discipline from market forces, using the awesome power of free money to build a company that would collapse into bankruptcy if that money were withdrawn. And in that time, it has solved exactly none of the problems that would have prevented a company that needed to make a profit from building such a large user base: it has no obvious competitive advantages besides the huge investor subsidy; the technology it uses is hardly proprietary or complex; its rival in disruption controls 30 percent of the market, even as the legacy players are still very much alive; and all of its paths to reduce its losses—charging higher prices, paying its workers less—would destroy the advantages that it has built.

So it sits there, widely regarded as one of the defining success stories of the Internet era, a unicorn unlike any other, with billions in losses and a plan to become profitable that involves vague promises to somehow monetize all its user data and a specific promise that its investment in a different new technology—the self-driving car, much ballyhooed but as yet not exactly real—will square the circle and make the math add up.

That’s the story of Uber—so far. It isn’t a pure Instagram fantasy like the Fyre Festival or a naked fraud like Theranos; it managed to go public and maintain its outsize valuation, unlike its fellow money-losing unicorn WeWork, whose recent attempt at an IPO hurled it into crisis. But like them, it is, for now, an example of a major twenty-first-century company invented entirely out of surplus, less economically efficient so far than the rivals it is supposed to leapfrog, sustained by investors who believe its promises in defiance of the existing evidence, floated by the hope that with enough money and market share, you can will a profitable company into existence, and goldwashed by an “Internet company” identity that obscures the weakness of its real-world fundamentals.

Maybe it won’t crash like the others; maybe the tens of billions in investor capital won’t be wasted; maybe we won’t be watching a documentary on its hubris five or ten years hence. But Uber’s trajectory to this point, the strange unreality of its extraordinary success, makes it a good place to begin a discussion of economic decadence—as a case study in what it looks like when an extraordinarily rich society can’t find enough new ideas that justify investing all its stockpiled wealth, and ends up choosing between hoarding cash in mattresses or playing a kind of let’s-pretend instead. In a decadent economy, the supposed cutting edge of capitalism is increasingly defined by let’s-pretendism—by technologies that have almost arrived, business models that are on their way to profitability, by runways that go on and go on without ever achieving liftoff.

Do people on your coast think all this is real? When the tech executive asked me that, I told him that we did—that the promise of Silicon Valley was as much an article of faith for those of us watching from the outside as for its insiders; that we both envied the world of digital and hoped that it would remain the great exception to economic disappointment, the place where even in the long, sluggish recovery from the crash of 2008, the promise of American innovation was still alive.

And I would probably say the same thing now, despite the stories I’ve just told—because notwithstanding Billy McFarland and Elizabeth Holmes, notwithstanding the peculiar trajectory of Uber, many Silicon Valley institutions deserve their success, many tech companies have real customers and real revenue and a solid structure underneath, and the Internet economy is as real as twenty-first-century growth and innovation gets.

But what this tells us, unfortunately, is that twenty-first-century growth and innovation are not at all what we were promised they would be.

The Age of Deceleration

In 2017, the year after a socialist challenged for the Democratic nomination and a populist Republican was elected president, the US economy passed a notable milestone. For the first time, as measured in dollars adjusted for inflation, the median American family—the typical household; the modern equivalent of the nineteenth-century small farmer or the 1950s suburbanite—was earning more than $60,000 a year.

To have an election roiled by populism amid such apparent plenty might seem unusual. But some context is clarifying. The peak income year of 2017 wasn’t the top of a long climb but just a return to a previous high: that $60,000 median income barely exceeded the median income in the previous peak year of 2007, which in turn barely exceeded the peak of 1999. In other words, in sixteen out of the eighteen years between the turn of the millennium and the Trump presidency, the average American family earned less market income—a lot less, in the bad years—than in the last year of the Clinton presidency. And one layer down from household income, in the household wealth that income is supposed to build, the stagnation was also striking. In 2017, ten years after the wealth piled up by the housing boom turned out to be illusory, the median American household was worth about $97,000, slightly below late 1990s levels.

In 2017 the unemployment rate passed a notable milestone as well, dropping to 4 percent, defying post–Great Recession pessimists who had feared that it would remain permanently elevated. But like the household-income trend, that milestone was less impressive in context: it had taken seventeen years to return to the unemployment rate of 1999, neither wage growth nor productivity growth had returned to the 1990s pace, and the workforce participation rate, which counts the millions of American adults who are no longer even searching for work, was almost 4 percentage points lower than it had been at the turn of the millennium—a jobs gap, relative to the Clinton era, that represented almost ten million additional nonworking Americans. Among men, the gap was particularly stark: the 11 percent of prime-age men who weren’t working in 2018 was the highest rate since the Great Depression.

All economic indicators are vulnerable to some critique, every grim data point can be caveated and qualified, and the ones I’ve just cited are no exception. Some of the decline in workforce participation reflects a growing number of adults who are in some sort of school. The decline in two-parent households explains part of why family income has stagnated; treat people as singletons rather than households, and the picture looks better. And the stagnant median-income numbers don’t include the topping-off provided by various transfer programs and welfare benefits; throw in the benefits supplied by our ample deficit spending, and household income has clearly risen since 1999.

These complexities mean that you should be wary of anyone who comes to you bearing a catastrophic story about the American economy; a tale of immiseration and collapse. In fact, the United States is still an extraordinarily wealthy country, its middle class still prosperous beyond the dreams of centuries past, its welfare state still effective at easing the pain of recessions and buoying the poor.

But if narratives of stark decline are false, it’s entirely reasonable to look at the last fifty years of developed-world economic history, the entire late-modern era, and see an era of deceleration followed by stagnation.

The deceleration began around the time of the moon landing. In the United States, hourly wages peaked in the early 1970s and dipped thereafter, household income growth began to slow, the larger economy experienced so-called stagflation and three sharp recessions under Richard Nixon, Jimmy Carter, and Ronald Reagan. Though perhaps the inflection point had really arrived slightly earlier. One of the striking patterns of the modern era was logarithmic economic growth, in which the time it took for the global economy to double in size grew shorter and shorter and shorter every century after 1492, pushing us, in theory, toward the infinite growth that utopians dub the Singularity. But that pattern had broken around the time that John F. Kennedy was promising to put a man on the moon, and the doubling time for the global economy has been slowing ever since. In this sense, 1960, to borrow a quip from Scott Alexander, was “the year the singularity was cancelled.”

In response to these post-JFK economic disappointments, policy makers of both political parties embraced the policy mix that now gets labeled “neoliberalism”: lower taxes and deregulation, free trade and anti-inflationary monetary policy. By the late 1990s, this response seemed to have been somewhat effective: household wealth was growing, workforce participation climbed as more and more women entered the labor force, overall growth rates were pushing back up toward 4 percent, wages and productivity were rising. But then the dot-com bubble burst, and thereafter straightforward stagnation became the order of the day, with weak recoveries, weak household income growth, declining productivity and household wealth, and far more workforce dropouts than before.

This disappointing fifty-year experience is not America’s alone. Just as the long postwar boom in the United States was matched by the trentes glorieuses—the glorious thirty years—in France and many of its European neighbors, the downshift toward stagnation since the 1970s has been shared across the developed world, albeit with regional differences in the details. On the Continent, median income growth has been slightly better and workforce participation somewhat higher than in the United States, but overall growth has been even more disappointing: the “Eurosclerosis” in the 1970s and 1980s, an even slower recovery than America from the 2017 financial crisis, and a steady decline in productivity growth, which has averaged just 0.5 percent in the eurozone over the last decade—half the United States’s already unimpressive rate. In Japan, growth was more impressive during the 1970s and 1980s, leading to the brief post–Cold War panic over looming Japanese hegemony. But thereafter the deceleration was more sudden, as after the early 1990s Asia’s most developed economy entered its own lost decades, from which the loose monetary policy and labor market reforms of Prime Minister Shinzo Abe have only partially enabled an escape.

The differences between Europe, America, and East Asia are real, but what’s more striking are the basic similarities between the world’s three most developed regions. Twenty years ago, it was common for Americans (especially American conservatives) to regard stagnation as much more of a European problem than an American one, and to believe that the United States’s free-market policies and commercial culture were preserving a vigor increasingly absent in dirigiste France and corporatist Japan. But America looks less unique today—less dynamic, less exceptional—and the distinctions between the economies of the developed world look more like the narcissism of small differences.

To be clear, there is still more economic dynamism in the United States than in, say, Italy or Greece. But not as much as the clichés of American exceptionalism would suggest. American entrepreneurship has been declining fairly steadily since the 1970s: during the Carter presidency, hardly an ideal time for the American economy, 15 percent of all US businesses had been founded in the previous year; today that rate is about 8 percent. It’s become harder to survive as a nonincumbent, with the share of start-ups failing in the first year having risen from around 20 percent in the mid-1980s to closer to 30 percent today. In 1990, 65 percent of US companies were less than ten years old; today it’s about 52 percent. The total “firm formation rate,” as a percentage of the number of firms overall, has dropped by a third over the last thirty years. And those firms increasingly sit on cash or pass it back to shareholders rather than invest it in new enterprises. According to a recent report from Senator Marco Rubio’s office, private domestic investment averaged 8 percent of GDP between 1947 and 1990; in 2019, despite a long recovery and a corporate tax cut intended to get money off the sidelines, the investment-to-GDP ratio was just 4 percent.

This suggests that the people with the most experience starting businesses and getting rich look around at the available investment opportunities and see many more start-ups that resemble Theranos and the Fyre Festival than resemble Amazon or Apple—let alone the behemoths of the pre-Internet economy. And the dearth of corporate investment and innovation also means that the steady climb of the stock market has boosted the wealth of a rentier class—basically, already-rich investors getting richer off dividends—rather than reflecting or driving a general increase in prosperity. A 2019 paper by three economists titled “How the Wealth Was Won” found that 54 percent of the growth of US companies’ stock market value reflected “a reallocation of rents to shareholders in a decelerating economy,” while actual economic growth accounted for just 24 percent. “From 1952 to 1988, less than half as much wealth was created” in the stock market, the authors note, “but economic growth accounted for 92 percent of it.”

The decline of investment and the rise of the sh...

Table of contents

• Cover
• Title Page
• Dedication
• Epigraph
• Introduction
• Part 1: The Four Horsemen
• Part 2: Sustainable Decadence
• Part 3: The Deaths of Decadence
• Acknowledgments
• About the Author
• Index
• Copyright