Downward mobility

David Brooks writes about one potential aspect of the Great Unwind, namely downward mobility.

At the beginning of every recession, there are people who see the downturn as an occasion for moral revival: Americans will learn to live without material extravagances. They’ll simplify their lives. They’ll rediscover what really matters: home, friends and family.

But recessions are about more than material deprivation. They’re also about fear and diminished expectations. The cultural consequences of recessions are rarely uplifting.

He notes that we are likely to see something not seen before in the United States, namely a reversal of the trend to move up the class ladder over time.

This recession will probably have its own social profile. In particular, it’s likely to produce a new social group: the formerly middle class. These are people who achieved middle-class status at the tail end of the long boom, and then lost it. To them, the gap between where they are and where they used to be will seem wide and daunting.

The phenomenon is noticeable in developing nations. Over the past decade, millions of people in these societies have climbed out of poverty. But the global recession is pushing them back down. Many seem furious with democracy and capitalism, which they believe led to their shattered dreams. It’s possible that the downturn will produce a profusion of Hugo Chávezes. It’s possible that the Obama administration will spend much of its time battling a global protest movement that doesn’t even exist yet.

This downward movement will force many people to once again endure deprivations that they worked long and hard to leave behind as they worked their way closer to living the American Dream.

In this country, there are also millions of people facing the psychological and social pressures of downward mobility.

In the months ahead, the members of the formerly middle class will suffer career reversals. Paco Underhill, the retailing expert, tells me that 20 percent of the mall storefronts could soon be empty. That fact alone means that thousands of service-economy workers will experience the self-doubt that goes with unemployment.

They will suffer lifestyle reversals. Over the past decade, millions of Americans have had unprecedented access to affordable luxuries, thanks to brands like Coach, Whole Foods, Tiffany and Starbucks. These indulgences were signs of upward mobility. But these affordable luxuries will no longer be so affordable. Suddenly, the door to the land of the upscale will slam shut for millions of Americans.

The members of the formerly middle class will suffer housing reversals. The current mortgage crisis is having its most concentrated effect on people on the lowest rungs of middle-class life — people who live in fast-growing exurbs in Florida and Nevada that are now rife with foreclosures; people who just moved out of their urban neighborhoods and made it to modest, older suburbs in California and Michigan. Suddenly, the home of one’s own is gone, and it’s back to the apartment complex.

Dmitry Orlov points out that due to their grossly inefficient and corrupt work environment, Russians were well prepared to endure one particular aspect of economic collapse—the lack of anything to do. Post-collapse Russians were happy to idle away the hours, having never learned to find their fulfillment in work. But Americans have a very different attitude. Spending extended periods enjoying the company of friends and family is not their idea of a good time. Americans find their satisfaction in doing something, or at least in deluding themselves that they are doing something.

Finally, they will suffer a drop in social capital. In times of recession, people spend more time at home. But this will be the first steep recession since the revolution in household formation. Nesting amongst an extended family rich in social capital is very different from nesting in a one-person household that is isolated from family and community bonds. People in the lower middle class have much higher divorce rates and many fewer community ties. For them, cocooning is more likely to be a perilous psychological spiral.

Unfortunately, as we moderns ascended the social heights, when we reached a new level we often kicked out the ladder we climbed to get there. And now when we find ourselves forced to reverse direction, we find that the things that allowed us to exist comfortably at lower levels are no longer available to us. Mother and Dad and that comfortable home equipped us to venture out into the wide world, but now that the wide world has turned us away we return to find that Mother and Dad and home are no longer there to welcome us back—and that it was our leaving that destroyed them.

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