What an intellectual achievement this is. Incredible work sir. I will be thinking this through for the next little while. I'm not yet sure if I agree with everything here, but this piece has already impacted my thought in a profound way.
and fwiw I don’t entirely agree with my prescriptions either. the solution will be some amalgam of them to mitigate these extreme effects; however they are not without shortcomings.
Congressman Zoe Lofgren, D, representing Silicon Valley district since 1995:
Salvaging the Middle Class - I bet these are some "action items" here you have not come across before. At least I had not. Fascinating and well-researched analysis of the natural forces which tend to "hollow out the middle" (be it in business, sports, or other areas of human coordination ) along with pro-active steps to take to protect the American middle class. Thank you for your kind attention.
Wow what an incredible article. I read it all, even the appendices — it’s not even that long. I read Infinite Jest this year, that was 1k pages of rambling. People are pussies.
Something kinda unrelated, but due to relentless optimization pressure in AI models, you get similar “spiky” distributions. Super-human at some tasks, and horrendous as others. Same same but different, at least re: optimization leading to spiky distributions.
I guess the only true middle, that might not be able to be optimized away, is like VC funded startups (or similar early stage startup stuff). There isn’t room to optimize since the industry/company isn’t mature yet. Unless there will be some sort of meta-optimization of how to run the perfect startup in a cookie cutter fashion, but even then just fundamentally if there are 10+ companies fighting over the same market, being in one of those companies is like a temporary “middle”.
You can see this in the Bay Area where startup-hoppers have a good life, even tho they aren’t working for mega corps, nor boutique businesses.
ha, thanks man. elite executive function behavior.
and yeah early-stage industries and nascent businesses that lack a definitive barbell strategy or mature supply chains can have a middle. technologically resistant industries can hold out for a while too.
the VC-stage business qualifies as nascent. startups aren't an industry but a stage of business development, one that will likely always be inefficient/unoptimized by category; those companies are still calibrating, likely unsure what to really prioritize yet. more room for error, colorful variance, etc.
Y-Combinator is trying to meta-optimize the process; but it's so contingent on individual execution and unique ability rather than structure/process that it resists it pretty well. the more human variability can impact it, the more it's art and not algorithm.
Well, startup is the stage of a single business, but in aggregate it’s definitely an industry. Many “career start up people” in SF Bay Area.
They get a lot of hate for it, because they are one of the last rather upwardly mobile middle class segments of the economy. “Tech bro” used as a slur, etc. They can actually buy houses in nicer areas, which attracts scorn in California at least!
I think what happens is that there’s a big rollup in Venture Capital firms (happening now, that industry got way over extended). And once there are a few monopolist firms, all founders will be forced to bend the knee to a16z and get horrible terms, get wrung out of almost all equity in financing rounds, and the startup dream will be mostly captured by big VC.
For now tho, it’s a great way to be upper-middle class and work on cool projects!
This is excellent and relates to much I've been thinking about lately, including some of the exact solutions. Aside from distance tariffs, I've been thinking about everything else that relates to social health. I'd add kinship tariffs (promote family business, discourage hiring Indians (no such benefits for foreign nationals operating inside our nations)), mass production tariffs (more direct producer-customer interaction), AI tariffs to incentivize employing humans and so on.
Thanks man. Yeah there are many ways to shift incentives around. Trade off of efficiency/price for something higher value that doesn't show up in gross margins.
I admire your ability to analyze/write/think for the most part apolitically and amorally. So much more intellectually honest than most thinkers. Incredibly thought provoking, thanks for this.
Finally took an evening to finish this. Absolutely worth it! I hope you know that your work is appreciated. I know there is a lesson in there for young guys like me about their career choice. What exactly that lesson is I still need to ponder about.
Enjoyed the sharpness and originality of this synthesis. Many banger quotes in there.
When you got to the prescriptions I was like „hold up - the political economy of these seems unstable unless we go full totalitarian“ - and then you conceded that in the next section.
Forces of nature are hard to stop…
Sometimes I wonder if we are sleepwalking into a popular revolt against the forces of technocapital
When people used the word ‘capitalism’ i was wondering what they meant, it didn’t make sense to me. This makes more sense, to see it as one of the mystifying names we call this natural process. How we ideologically become this process ourselves. It explains the impotence of sloganeering and good intentioned political angles. And although i have only heard it quoted, it makes me think ‘ride the tiger’. You’re describing how one may ride the tiger maybe.
An anthropologist graduate was talking about ‘ontological flooding’ at a recent talk i went to. But he spoke of it as though it were some enriching psychedelic trip with no consequences no hazards. It sounded as though his institution wanted to become the ultimate host. No borders, no boundaries, ultimate host. Yikes! As though the clue were not in the name: flooding. Not bothering to ask oneself ‘can you swim, and for how long?’
Most/all of this is 'familiar' but masterfully integrated and overviewed into a coherent whole, and packaged with solutions (e.g. UBI, intervention) that rankle, but address the issue, not the symptom. Good argument.
Have to think this through more, but...isn't most of this facilitated aggressively because we're more connected -- both internet/search/antisocial media and transport logistics? Radical, unthought-through notion: if we're willing to UBI (awful) or make yet more government regulations (double awful) why not consider breaking down some of these connection accelerants? Didn't think it through at all, just dropping here b/c i think it applies in the problem domain you've laid out.
Unrelated/weird pivot -- or deranged poetic thought -- this split of a 50's style normal bell into a modern 2025 two ends of a barbell smacks of meiosis into two cells. Perhaps they can be segregated economically into distinct, disconnected, unrelated petri dishes where they would be de facto single normal curve mode actors again.
On the topic of network effects...these are symptoms in part of enforced or defacto moats. Censorship, blocks in android and apple store, abusive pay-to-play revenue share deals. etc. Maybe something could be done here....
I'm speaking off of intuition here, but I'll say it anyways: I'm skeptical of the notion that middles are inorganic or unnatural. It seems to me that this would only be true in relatively static, stable systems. In dynamic systems that are full of uncertainty, there's value in flexibility, interoperability, adaptability, et cetera. I'd imagine that there's such a phenomenon as a "bent" or "spiked" barbell with a total of three peaks. I have some background with military force design and related theories, and I know that highly specialized equipment/units, whether optimized for a trait like mobility or firepower or survivability, are quite difficult to come by on account of the dynamic and uncertain nature of warfare. I'm sure this phenomenon - uncertainty and dynamism creating space for a middle - exists in some important areas of the economy, or rears its head on the macro-level periodically.
None of this contradicts any of your points, I'm just imagining that unforeseeable factors might shake up a given industry periodically to revitalize the healthy middle.
What an intellectual achievement this is. Incredible work sir. I will be thinking this through for the next little while. I'm not yet sure if I agree with everything here, but this piece has already impacted my thought in a profound way.
thank you brother. honored to hear that.
and fwiw I don’t entirely agree with my prescriptions either. the solution will be some amalgam of them to mitigate these extreme effects; however they are not without shortcomings.
Anybody got any bright ideas for getting the analysis + action items read by those who wield enough influence to act on them?
email this essay to your local congressman, post haste!
Done, with the following comments to:
Congressman Zoe Lofgren, D, representing Silicon Valley district since 1995:
Salvaging the Middle Class - I bet these are some "action items" here you have not come across before. At least I had not. Fascinating and well-researched analysis of the natural forces which tend to "hollow out the middle" (be it in business, sports, or other areas of human coordination ) along with pro-active steps to take to protect the American middle class. Thank you for your kind attention.
https://open.substack.com/pub/thedosagemakesitso/p/midrange-jumpers-for-the-middle-market?r=3686we&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
Wow what an incredible article. I read it all, even the appendices — it’s not even that long. I read Infinite Jest this year, that was 1k pages of rambling. People are pussies.
Something kinda unrelated, but due to relentless optimization pressure in AI models, you get similar “spiky” distributions. Super-human at some tasks, and horrendous as others. Same same but different, at least re: optimization leading to spiky distributions.
I guess the only true middle, that might not be able to be optimized away, is like VC funded startups (or similar early stage startup stuff). There isn’t room to optimize since the industry/company isn’t mature yet. Unless there will be some sort of meta-optimization of how to run the perfect startup in a cookie cutter fashion, but even then just fundamentally if there are 10+ companies fighting over the same market, being in one of those companies is like a temporary “middle”.
You can see this in the Bay Area where startup-hoppers have a good life, even tho they aren’t working for mega corps, nor boutique businesses.
ha, thanks man. elite executive function behavior.
and yeah early-stage industries and nascent businesses that lack a definitive barbell strategy or mature supply chains can have a middle. technologically resistant industries can hold out for a while too.
the VC-stage business qualifies as nascent. startups aren't an industry but a stage of business development, one that will likely always be inefficient/unoptimized by category; those companies are still calibrating, likely unsure what to really prioritize yet. more room for error, colorful variance, etc.
Y-Combinator is trying to meta-optimize the process; but it's so contingent on individual execution and unique ability rather than structure/process that it resists it pretty well. the more human variability can impact it, the more it's art and not algorithm.
Well, startup is the stage of a single business, but in aggregate it’s definitely an industry. Many “career start up people” in SF Bay Area.
They get a lot of hate for it, because they are one of the last rather upwardly mobile middle class segments of the economy. “Tech bro” used as a slur, etc. They can actually buy houses in nicer areas, which attracts scorn in California at least!
I think what happens is that there’s a big rollup in Venture Capital firms (happening now, that industry got way over extended). And once there are a few monopolist firms, all founders will be forced to bend the knee to a16z and get horrible terms, get wrung out of almost all equity in financing rounds, and the startup dream will be mostly captured by big VC.
For now tho, it’s a great way to be upper-middle class and work on cool projects!
I'm halfway through. This is awesome. Will restack and thanks for providing thoughts. If I can muster an intelligent comment I will drop it in here.
This warms my heart! Keep going brother.
This is excellent and relates to much I've been thinking about lately, including some of the exact solutions. Aside from distance tariffs, I've been thinking about everything else that relates to social health. I'd add kinship tariffs (promote family business, discourage hiring Indians (no such benefits for foreign nationals operating inside our nations)), mass production tariffs (more direct producer-customer interaction), AI tariffs to incentivize employing humans and so on.
Thanks man. Yeah there are many ways to shift incentives around. Trade off of efficiency/price for something higher value that doesn't show up in gross margins.
I admire your ability to analyze/write/think for the most part apolitically and amorally. So much more intellectually honest than most thinkers. Incredibly thought provoking, thanks for this.
thank you for expressing that Paul. it's my pleasure.
I'll be chewing on this for a long time to come. Impressive work here, this piece is criminally under-circulated.
Finally took an evening to finish this. Absolutely worth it! I hope you know that your work is appreciated. I know there is a lesson in there for young guys like me about their career choice. What exactly that lesson is I still need to ponder about.
that really makes me happy to hear. thank you sir. and yes, much downstream application to things, including the career paths you prioritize.
Enjoyed the sharpness and originality of this synthesis. Many banger quotes in there.
When you got to the prescriptions I was like „hold up - the political economy of these seems unstable unless we go full totalitarian“ - and then you conceded that in the next section.
Forces of nature are hard to stop…
Sometimes I wonder if we are sleepwalking into a popular revolt against the forces of technocapital
Hot damn
This is super elucidating.
When people used the word ‘capitalism’ i was wondering what they meant, it didn’t make sense to me. This makes more sense, to see it as one of the mystifying names we call this natural process. How we ideologically become this process ourselves. It explains the impotence of sloganeering and good intentioned political angles. And although i have only heard it quoted, it makes me think ‘ride the tiger’. You’re describing how one may ride the tiger maybe.
An anthropologist graduate was talking about ‘ontological flooding’ at a recent talk i went to. But he spoke of it as though it were some enriching psychedelic trip with no consequences no hazards. It sounded as though his institution wanted to become the ultimate host. No borders, no boundaries, ultimate host. Yikes! As though the clue were not in the name: flooding. Not bothering to ask oneself ‘can you swim, and for how long?’
I always enjoy your thoughts in the comments
Whew. Done. Nice work.
Most/all of this is 'familiar' but masterfully integrated and overviewed into a coherent whole, and packaged with solutions (e.g. UBI, intervention) that rankle, but address the issue, not the symptom. Good argument.
Have to think this through more, but...isn't most of this facilitated aggressively because we're more connected -- both internet/search/antisocial media and transport logistics? Radical, unthought-through notion: if we're willing to UBI (awful) or make yet more government regulations (double awful) why not consider breaking down some of these connection accelerants? Didn't think it through at all, just dropping here b/c i think it applies in the problem domain you've laid out.
Unrelated/weird pivot -- or deranged poetic thought -- this split of a 50's style normal bell into a modern 2025 two ends of a barbell smacks of meiosis into two cells. Perhaps they can be segregated economically into distinct, disconnected, unrelated petri dishes where they would be de facto single normal curve mode actors again.
On the topic of network effects...these are symptoms in part of enforced or defacto moats. Censorship, blocks in android and apple store, abusive pay-to-play revenue share deals. etc. Maybe something could be done here....
Plenty to think about. Great work.
Having read Part i,ii, and iii - and before reading iv, i want to drop this reference for Coco Krumme's Optimal Illusions.
...off to read...
I haven’t read anything on economics as pivotal as this since I was fourteen. This is fine work, Dmitry.
I'm very honored by this. comments like this really make the effort feel worthwhile.
Accessible, well researched and perspective shifting. Thank you.
My pleasure
I'm speaking off of intuition here, but I'll say it anyways: I'm skeptical of the notion that middles are inorganic or unnatural. It seems to me that this would only be true in relatively static, stable systems. In dynamic systems that are full of uncertainty, there's value in flexibility, interoperability, adaptability, et cetera. I'd imagine that there's such a phenomenon as a "bent" or "spiked" barbell with a total of three peaks. I have some background with military force design and related theories, and I know that highly specialized equipment/units, whether optimized for a trait like mobility or firepower or survivability, are quite difficult to come by on account of the dynamic and uncertain nature of warfare. I'm sure this phenomenon - uncertainty and dynamism creating space for a middle - exists in some important areas of the economy, or rears its head on the macro-level periodically.
None of this contradicts any of your points, I'm just imagining that unforeseeable factors might shake up a given industry periodically to revitalize the healthy middle.