Thursday, June 02, 2016

The War on Social Capital

Camp Alphaville homework, Pettis edition
The real challenges for China, if you believe in the social capital constraint, are not about maintaining high rates of growth in the short term but rather of raising the levels of social capital in China. This is much more difficult and much more likely to be virulently opposed by the elites whose ability to constrain economic efficiency is precisely at the heart of their wealth – which consists of appropriating resources rather than creating resources – and of their power. It is, however, the only real way to sustain growth over the medium and long terms.
The United States is growing below trend in part because social capital has been destroyed and real capital has been misdirected into malinvestment, or worse, social capital destructive investment. The push for getting more women into technology is an example, not only is the money wasted, but the second-order effects create destruction of value throughout the industry if others buy into the concept and disrupt workplace cohesion. (If feminism is cancer, trolls are chemotherapy. A Twitter bot that responds to all feminist complaints with pictures of sandwiches is a low cost protection of social capital.)

The more pozzed the institution, the faster it will consume its capital and collapse. Bankruptcy happens slowly and then all at once, as in Mizzou and Ferguson.

Social Capital
The term generally refers to (a) resources, and the value of these resources, both tangible (public spaces, private property) and intangible ("actors", "human capital", people), (b) the relationships among these resources, and (c) the impact that these relationships have on the resources involved in each relationship, and on larger groups. It is generally seen as a form of capital that produces public goods for a common good.
Everyone has some amount of social and real capital. Poor people have the least real capital and rely most on social capital. The attack on "white privilege" is an attack on white social capital. For a poor or middle class white on the edge, this threatens their last remaining asset today, creating a sense of urgency. Hence Trump or Sanders. Sanders is the choice of the high time preference because he offers real capital today; for those of moderate time preference Trump offers jobs; for those with low time preference the goal is preservation of social capital and protection of ongoing social capital investment.

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