Star Ford

Essays on lots of things since 1989.

The custodial economy

on 2018 August 2

We are in a gradual shift in the economy when more people’s economic lives are enveloped in custodial institutions such as day care, schools, prisons, and disability and elder services. This “custodial economy” is made up of part of the government and service sectors, and is not normally considered a sector in itself. However it is distinct because it involves two expanding groups of people, who are neither buyers or sellers in a market. Instead they consist of beneficiaries – the students, prisoners and other people whose lives are being occupied by and supported by the systems, and the custodians who are deriving income from running it – the teachers and wardens and so on.

This paper is meant just to shine light on this phenomenon and look at the history, economic forces, and some commonly believed myths.

The main points defining the custodial economy are:

  • The beneficiaries in general do not have jobs with earnings sufficient to support themselves. Without economic power, their world is partly or mostly run by other people.
  • The custodians are not being paid directly by the beneficiaries as they would be in a market system. Instead the beneficiaries are a third party to the transaction, with less economic power. It’s similar to the way users of social media act (often unwittingly) as a third party in the sale of data about them to advertisers. Likewise, students and prisoners neither buy or sell the services being performed on them, but they must be there to make possible the salaries earned by the people working for those systems.
  • There are fuzzy edges to these ideas – there is not an exact way to categorize every person or every job.

Does the custodial economy encompass all poverty programs?

No, they are different things. There is an underclass of people who are essentially discarded by the economy – they are not a party to any significant piece of the pie at all. The custodial economy by contrast consists of big and small businesses with a lot of money changing hands, and some of its beneficiaries receive a high value of services. You might consider the lack of power inherent in being a child or a prisoner to be a form of poverty, but it is different than the kind of poverty experienced by the underclass, which is more about having basic needs going un-met.

Money redistribution in the form of entitlements is also not part of the custodial economy. When someone receives cash, they can be the direct buyer in the market, without a third party. The custodial economy by contrast is all about workers receiving income while beneficiaries receive non-cash services (which they might or might not even want).

How is time spent in the custodial economy?

Economic discussions seem to often ignore time, but the two things we spend are time and money, and time deserves more attention.

I need to first digress to the “leisure time myth”: People used to say about innovations like dishwashers and the internet that they will make certain work go faster and easier, so therefore we will have more time to spend with family and other leisure pursuits. But the reality is that people do not want to spend more time with their family. Advances in automation do free up time, but our collective choice has been to use that extra time to compete for money on a different front. For example, the internet is a substrate of competitive economic activity that consumes a lot of time; it does not “free up” time. The amount of time used for leisure, religion, family time, sleep, eating and so on probably has not changed much over the ages despite radical changes in what people do for work. So in short, the leisure time myth is the false belief that progress frees up time.

This myth connects to the custodial economy because that economic sector is one of the growth sectors that is eating up the time freed up by automation. So, robots are doing the farming and manufacturing, and since we do not want more leisure time, we are inventing new things to do. Part of what we are inventing to fill up the time is expanding the custodial economy.

How has custodial time changed in history?

A common version of economic history says there was an age of agriculture where most people were farmers, then came an age of manufacturing, and now we are in the service economy, where most jobs have shifted away from manufacturing and agriculture to other services. That is true but it is missing a the custodial economy as distinct from all the other services.

Here is a chart of the last 200 or so years, showing our combined investment of time per person – how we spend our allotted hours of time over our lifetimes.

economy history

Agriculture was once maybe half the total hours and is down to around 2% today, as robots do a majority of the work in food production. Automation is gradually taking over all other jobs relating to meeting our basic needs, so the slice of the economy that relates to those basic needs is shrinking towards zero.

I’ve drawn the lowest bar as constant over time, representing the hours spent eating, sleeping, religion, family time and other leisure.

So while the top two chart slices are shrinking, and the bottom one is constant, the most interesting thing about the chart is the ballooning size of all those middle slices. The middle slices include time spent on providing services paid for by buyers (the service economy), time spent working in the custodial industry, and the time spent being the beneficiaries of it.

While it is hard to interpret data and make any exact conclusion about the growth rates, it is generally noted that over a long view of history, adolescence and retirement are gradually getting longer, prisons are increasing in size and cost, and diagnostic rates for disability and illness are ever growing. Thus it appears that the custodial economy is growing along with the size of the beneficiary class, and could be considered separate from the other part of the service economy.

Or, another way to think of it is that the number of robots expands in proportion to the number of people we call disabled, criminal, elderly and young.

Can we put people back to work and end permanent dependence on entitlements?

An ever-repeated plea is to help the poor get training for jobs so they can work, allow disabled people and teens to have productive jobs, and so on. If you open your eyes in any city it is easy to see all the things that need to be done that are not being done, such as better security, literacy training, building affordable housing, and so on. And there are millions of people who are seemingly idle who could do all that work. Consequently, any optimistic observer might say, let’s put the people to work!

But the pressure of capitalism does not work like that. As long as economic choices are made mainly in self-interest by the rich, we will not connect people to needs in the way that is obvious to anyone with their eyes open.

Instead what we are doing is purposefully expanding the beneficiary class, in order to expand the custodial economy. Every business owner wants it to grow. The two populations – beneficiaries and the custodians – have to grow together because all those care workers need people to take care of. And the force to expand that is driven by the expanded hours that we have, due to robots and other automation. Remember, with “extra” time, we sink that time into economic pursuits, so there is never really extra time.

The effect that we see is a change in language: The definitions of what constitutes young, old, and disabled are ever-expanding. At the same time we are seeing a narrowing of the skills and personality type needed to hold a job. The population is not changing drastically, but our definition of “employable” is changing. What we call “employable” is narrowing while the definition of “unemployable” is expanding.

There is a social belief system that goes hand in hand with the incentives of advanced capitalism. We now say that people cannot or should not work who used to work. For example we have a notion today that someone who is 15 years old is not ready to work, or should not be allowed to work, but a 15 year old a century ago lived under different assumptions, and was likely working. Today that same person is valuable economically not as a worker but as a body in school room so that the school can churn as part of the custodial industry. The same is true for the prison population: we claim that we need to be tougher on crime, but underlying that explanation is a sentencing machine with incentives to feed the prison industry.

Because of all this, I don’t think it is possible to reverse the trend of more and more classes of disability. Instead we will see more people joining the beneficiary class and more services replacing job income.

If we had enough money, could we end poverty?

There is a myth embedded in this question. Anyone who asks this question earnestly is probably assuming two things: (1) that we customarily apply our resources towards meeting our needs, and (2) the scale of needs is simply greater than what we can afford. Thus we perceive that we have a “shortfall” – too few resources.

The reality is a lot of work hours go towards things that are superfluous – they are not meeting basic needs. At the same time, robots provide for a big chunk of basic needs. The superfluous hours are increasing, while hours towards basic needs are decreasing. We can see this in the food production industry where fewer people are needed each year to process each ton of food, while more people are needed in areas of food patents, genetic engineering, marketing and legal – jobs that mostly didn’t exist 100 years ago. All these people are working exclusively for the owners of the food production chain in order to increase the owner’s competitive advantage and increase their assets, but all that work has no benefit to others.

Meanwhile for millions of people, basic needs including food and housing are not being met well.

So to answer the question, ending poverty would require less effort now than ever in history, due to automation, but our economic system has no incentive to do that. Any “extra” money gets used for competitive advantage, incurring more superfluous hours of work, rather than hours of work going towards basic needs.

How much money is there?

Money exists because it is borrowed. If one dollar is lent to a person, who lends again to a third person and so on down a chain of five people, that dollar counts five times in the total pool because each person in the chain says they have it. And that dollar is usually not backed by anything originally, since a bank can lend money it does not have. So those five dollars came from nowhere and they can keep multiplying indefinitely. Any by extension, all of the money outside of paper currency is counted in that way, so there is an immense uncountable amount that can expand as needed for any purpose.

However, there is a limit to the person-hours of work that can be done in a year, and so anyone’s realized wealth has that natural limit. This is another reason we need to think about time at least as much as money in economics.

Are the poor and disabled (unfairly) supported by working people?

One common narrative is that the wealthy and middle class people are paying taxes, while the lazy moocher class is receiving benefits, and therefore we have a system of wealth redistribution downwards, taking wealth away from people who “deserve” it (because they worked for it) and giving it to people who didn’t work for it. This is the myth of downward redistribution.

If we open our eyes, however, we see that poor people are working all around us and the output of their labor is being taken by the wealthy. There is an army of low paid workers building houses and cars and airplanes for the rich, and bringing them food and entertainment and everything they want. Just like any serf or slave system, the wealthy are being supported by everyone else.

The dominant redistribution pattern is upward, because the poor are mostly working for the rich. The only downward distribution is in the form of government offsets to the much larger upward redistribution.

Despite the fairly obvious truth of this, sometimes we think it is unfair that some of the poor are not working for their income. But considering that so much work is superfluous anyway, then is there any significant distinction between doing no work and doing superfluous work that only benefits the wealthy?

How can we create enough jobs?

I dislike this question because it assumes that more jobs is always the answer. So here is another question that yields a more useful answer: What are the factors that control how many jobs there are? The short answer is that there are only as many jobs as the owning class can use for competitive advantage. A job is what a business creates only as a last resort if they cannot find another way to bring in money. A business has the incentive to eliminate jobs as much as possible, so calling any business a “job creator” is twisting the facts.

What we could do, if there was political will, is to redistribute time in such a way that the hours spent by working people are benefiting our collective and individual needs better, rather than primarily benefiting the wealthy. Reducing the concentration of wealth – that is, spreading the spending more more equitably – would have the automatic and immediate effect of shifting economic activity towards better meeting everyone’s basic needs.

Final thoughts

Othering and capitalism are best friends because the laziest rationalization of greed is to pin it on superficial traits like gender and ethnicity. White men can isolate themselves in a deserving class and label everyone else as defective as a psychological protection against admitting greed; thus inequality feels natural and their souls are not tormented.

In times of technology advancement, we eject people from the workforce for the reasons listed above, and the owners use othering on many different variables as the tool to rationalize it. The consequence is that we invent new classes of disability over time, new ways to discriminate, and throw more and more people into labeled groups so that they are out of the workforce and into the beneficiary class.

I think there is a connection (but cannot prove it here) between the large scale othering that produces global violence and inequality, and the othering that takes place in each specific custodial setting like a classroom. The big othering took away the person’s power to contribute economically, and the little othering becomes the basis of these services – “we” providing for “them”.

Something else I cannot explain is how we appear to be making “progress” – more women in business leadership for example, but at the same time the custodial economy is growing. It could be that we are shifting discriminators: the use of gender and ethnicity is possibly easing slightly while the use of age, language, neurotype, and personality style as discriminators is expanding.

The 200-year graph at the top of the paper can be projected to a dystopian near future where the wealth gap is increased even more, only a tiny amount of labor is needed for what we used to call “production”, and 99% of everyone’s time is going towards only three things: being a beneficiary (which could mean playing video games while receiving services), being a custodian, or innovating on behalf of someone else’s wealth expansion.

The progressive economic conversations that seek to “create jobs” and integrate disabled people appear to be missing a lot about the future, and I often feel that what we call “progressive” is driven by mythology. It fails to include in its vision the fact that robots are not going away. It pretends that isolated efforts to do things better (like small organic farms and celebrating diversity and so on) can grow to be a power equal to the larger forces of the economy (the forces that create the custodial economy) but I fear that the latter is a far greater force.


This is based on a longer article here,



One response to “The custodial economy

  1. Jessie says:

    This is a lot like a thought I’ve been having for a long time now, about autistic people’s “value” to society–people frame us as burdens but there are so many people making massive amounts of money off that framing.

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