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Chapter 1: What is elite overproduction and why is it relevant?
Coming up on the podcast, elite overproduction. What happens when we produce too many graduates and the economy doesn't produce the jobs that are commensurate with those graduates? Do they get frustrated? Do they become a volatile constituency? And if so, what happens next? It's all about elite overproduction. It's coming up in a couple of minutes.
Lingikasino. Välitöntä viidettä. Aitoa jännitystä. To understand the economy, you have to understand human nature.
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Chapter 2: How does elite overproduction lead to political instability?
And the podcast today is going to be about a book that I'm reading at the moment, which is a book by a fella called Peter Turchin. It's called End Times. Now, John, it's not the most uplifting title. Elites can't release the path to political disintegration, John. But it is really, really fascinating.
I feel so energized now, Mike.
I know, I know. Don't I bring you all the good times? Don't I bring you all the good tidings? But no, it is interesting because in the context of what Sinead O'Shea, in the context of what Sinead Sullivan has been saying in the last couple of weeks and people's
talking about Ireland and talking about the States and talking about the general sense of disharmony, the general sense of, yeah, things are going well on paper, but in practice or in private, people feel that their world is not so much falling apart.
On the contrary, people don't think it's falling apart, but they're just not really, really achieving what they want to achieve, given their expectations, given their education, etc. And this guy, Peter Turchin's view, is a thing called climodynamics. Clio dynamics. It's a new pursuit.
I've never heard that word before. What does clio refer to?
Clio, John, is the name of the Greek mythological muse of history. And dynamics is the science of change. So what they're saying is, why do we see? Again and again, great empires, great civilizations, they rise. They rise quickly. they consolidate, they expand, they appear to be imperious, and then they begin to disintegrate, dwindle, and ultimately collapse. Now, Turchin's saying, why is this?
Because this is something we see all the time. No civilization has ever been permanent. Every civilization has been temporary. Like some, like the Roman Empire and the Greek Empire went down for quite some time, but not really. The heyday of the Greeks was about 200 years, maybe 300 years maximum. Romans, about 500 years.
Yeah.
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Chapter 3: What is the significance of the barista with a master's degree?
overproduction of young graduates with advanced degrees, declining trust in the public realm, and exploding public debt. These seemingly disparate social indicators that don't seem to be associated with each other or connected with each other, he says, are actually related to each other dynamically.
And he said, historically, these types of developments have served as leading indicators for looming political instability. And what he's saying is that since the 1970s, all these factors in the United States have taken a turn for the worse. Jesus.
And his data has pointed the years around 2020, around now, when the confluence of these trends is expected to trigger a spike in political instability. So that was his basic idea. Well, he's not wrong, is he? He's not wrong. And he's saying these hidden forces are not so hidden
So people are trying to say there's a conspiracy theory or there's some outside shift, there's a big technological change, and that is what's precipitating the angst and the fear. He's saying, no, no. He said, it turns out that since the very first complex societies have been organized...
Chapter 4: How does the education system in Ireland contribute to elite overproduction?
This is about 5,000 years ago. And again, I speak about that in the book, The Sumerian Civilization, etc. No matter how successful they might be for a while, eventually they all run into problems. All complex societies go through these cycles of alternating stretches of internal peace and harmony, periodically interrupted by outbreaks of internal warfare and discord.
And his basic idea is the United States and the West in general is coming to this sort of peak, right? And his key metric or a key metric is the following. He said, basically, what happens is the social pyramid gets top heavy.
Too many people are educated to become the elite and after a while these people end up competing with each other and that the social disharmony comes not from the very poor rising up but from those people who were educated to be and were prepared for becoming the elite They no longer see a pathway to the elites because it's blocked to them and they are the ones who revolt.
Out of pure frustration.
Out of frustration.
Yeah. Out of frustration. And disappointment and feeling like that you've been had.
Feeling that you've been had, right? So put that now in your pipe and smoke it, as we used to say in the old days, John, right? Okay. I'll skin it up. Exactly. Skin it up there, right? Before you take solace in the herb, my friend, let us...
Let us have a look and see, could these type of things, or at least straws in the wind, be evident in our own little benighted civilization, the Irish civilization?
Can I just say before you start, when you're talking there about kind of slightly in Armageddon terms, you know, we're heading for this...
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Chapter 5: What role does the public sector play in absorbing overeducated graduates?
If you are a fan of the Dave McWilliams podcast and you can give us the scene where bring out the gimp was... followed by Zed is Dead, we will give you a copy of the End Times Peter Turchin's book on elites, counter-elites, and political path to political disintegration. So now that we have got our gimp suits on, John has spoken the herb, let us get going, right? What an image.
I know, fucking hell, that's doing my head in. I was in a bar the other night, John, and I was talking to a young barman. And what was fascinating for me is that the conversation switched from how you're doing to economic history. And he's a fan of the podcast. And we started talking about a certain, not so much highfalutin, but unusual esoteric
part of economic history, which was Hyman Minsky's notion that equilibrium doesn't exist and that all stable societies are inherently instable. And instability is actually a function of stability. Sounds like a laugh. No, of course it's a laugh, John. This is the sort of thing where I'm not talking to you.
When you're not smoking the herb in your gimp suit, I'm talking about these notions to barman. And I thought, you know, this is fascinating. I asked him, how does he know this stuff? And he said he had a master's in economic history and he was pulling pints in a bar. Right. And I thought to myself, does this matter that the barman is overeducated for what he's doing?
And then the thought struck me that, you know, when you go into a coffee shop, does it matter that the barista who you're asking for a double espresso from actually probably is a double first from some university? And I think it does. And I think that this is what Turchin's talking about. It's a leading indicator of what Turchin called elite overproduction.
And the elite overproduction is... The best way to imagine it, John, is Turchin basically says that most societies have conveyor belts. And those conveyor belts are... transport people from one social class to another. And as long as the conveyor belt is going upwards, everyone's hunky-dory. But what happens if the conveyor belt turns into sort of an elite game of musical chairs, right?
So let's say, for example, the musical chairs are the elite jobs in a society. Now, as every year passes, as more and more ambitious people come into the room to acquire those chairs, and they expect one of those chairs, when the music stops, if those chairs haven't expanded commensurate with the amount of people who come into the room, more and more people are left without a chair.
And it's not that the number of chairs doesn't increase as the economy grows. It does, but nowhere near the rate of the amount of expectant players who come in.
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Chapter 6: How is AI impacting job opportunities for graduates?
And as the room becomes fuller and fuller and the amount of disappointed players expands, there will eventually be a fight over the chairs, right? So that's his essential imagery. And what he's saying is that all societies have a tendency when the civilization is coming to an end, or at least is coming towards a moment of generational political discord, to have the same sort of dynamic, right?
So we come back to our friend, the barman, who has this degree in economics, right?
Yeah, yeah.
Today, Ireland is the most educated population in the European Union, with the second highest percentage of third-level education degree holders in the world. But nearly one in three degree holders work in jobs that do not require third level education, like the barista or the bartender.
And moreover, a recent study said the likelihood of Irish graduates working in high status employment had fallen significantly. from 67% in 2005 to 54% in 2020, right? So what this means is that young people can't secure jobs that are commensurate with their level of education. Yeah. And of course, on top of that, they're probably living at home with their parents.
So they can't get homes commensurate with their expectations. Their ambitions are therefore dashed. And this creates a certain amount of resentment.
Oh, man.
This is exactly what Turchin is talking about.
Like this is so pertinent to me at the moment where, you know, three of my girls are still in college. One is finishing masters. The others are finishing their degrees and they're heading into this world of, you know, do they go into work or do they continue education and do a postgrad or a master's or something, you know?
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Chapter 7: What are the implications of elite overproduction on social dynamics?
But this is exactly what Turchin's talking about. What he's saying is an underachieving, and I mean relatively, I don't mean underachieving as a person, but relatively, an underachieving cohort of overeducated people who were brought up and educated to expect more from the economy than the economy is delivering, they become frustrated and politically volatile.
And his view is the constituency that eventually moves to destroy the status quo that their parents have built. And he says that modern revolutions will not originate with the abject poor, but with the relatively rich, and more than the relatively rich, the relatively disappointed.
Yes.
And this is a problem that you've just highlighted. It's happening all over the Western world, right? And it kind of exists when the cast of educated citizens who expect to join the elite with good jobs and prospects and salaries, status and homes, find their ambitions thwarted by the reality that there's only so much room at the top and many of them are locked out of that.
And this is elite overproduction. So when a very large educated social group emerges who can't find their place at the apex of society, they will revolt. And when the jobs of what their grandparents did are being done by immigrants, these newly aspirant people professionals who are basically the product of economic success of their parents and the product of upward social mobility.
They expect more. When the economy delivers less, they get angry. Now this, I believe, is a fascinating
snapshot of where ireland could be going i've just given you the figures you've given us the personal testimony right and you talked about master's degrees this is interesting so years ago in the late 1980s when i graduated from college right i think the figure was only 14 percent of irish people went to university right so then that particular
piece of paper was really a passport into upward social mobility. If you went to college, if you did well, if you got the piece of parchment, chances were you were going to actually move ahead economically, status-wise, socially, etc., right?
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Chapter 8: How does emigration serve as a coping mechanism for elite overproduction?
Today, 70% of school leavers go to university. And that creates far more competition in the career market. And then, as you said, because a primary degree is no longer enough, right? More and more graduates shunt themselves into more and more education to try and gain access to a number of privileged jobs. And I'll give you a figure. This is extraordinary.
Between 2007 and 2024, the number of Irish people enrolling for a master's degree doubled from 30,000 to 66,500. Wow. Yeah. And of course, the more master's degrees we produce... the more the value of those master's degrees falls, doesn't rise because everyone has them.
As you've always said before, when you're talking about the paradox of aggregation, you know, the master's degree was the thing that actually made you stand out. Now, when everyone has a master's degree, no one stands out.
Yeah.
You know, it's a little bit like priority boarding on Ryanair. You know, when everyone's priority boarding, no one's priority. So it becomes not useless, but they're not nearly as valuable. And competition just goes through the roof.
Yes. So the paradox of aggregation and economics, just to remind our listeners, is basically the notion of the guy who stands up in front of you at a football match, right? So he stands up in front of you to get a better view. That's the guy doing the Masters.
But he doesn't realize that by standing up in front of you, he blocks your view, and then you stand up, and then you block the view of the fellow behind you, and he stands up, and then he blocks the view of the person behind him, and suddenly the entire stadium is standing when we paid to sit. That is the paradox of aggregation.
And it's exactly the same as, you know, the master's degree, the PhD, all that sort of carry on. I mean, you know, I did a master's years ago. I'm sure it was really a tiny percent of the population. And then... I remember that was the degree that was essential to get into the central bank.
So there was a social contract, which is you want to be an economist, you do your undergraduate degree in economics. If you want an economics job, you've got to do this master. So in a way, it was like you're buying a passport. into a sort of a rarefied cloister where you could become an economist, you could learn economics, you had a career path. And now, as you said, when everyone has one,
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