The great unbundling

We are all caught in an inescapable network of mutuality, tied in a single garment of destiny.

– Martin Luther King Jr., Letter from Birmingham Jail, 1963

There’s much talk these days of a loneliness epidemic. Derek Thompson’s The Anti-Social Century profiles a country where people increasingly eat, work, and live by themselves. This is part of a long-standing trend; a quarter-century ago, Robert Putnam’s Bowling Alone documented the collapse of civic associations, from bowling leagues to men’s clubs. The scapegoats, then and now, are technology–television in the 1960’s, the internet today. Even falling marriage and birth rates are pinned on social media and smartphones. But are electronics truly responsible for severing social connection, or are there deeper forces at play?

Things come together

The American national mythology centers around the pioneers, rugged men who left civilization behind to make a life for themselves on the wild prairie¹. In the popular imagination, these individuals packed all their belongings into a prairie schooner and set off thousands of miles into the unknown, combating drought, locusts, and hostile natives in pursuit of true freedom.

Reality was somewhat different. Most pioneers traveled as part of larger groups, following well-trodden paths established by prior waves of migrants. They licensed land from the government under the Homestead Act of 1862, pledging to work the property for 5 years in order to show they’d built a viable farm, subject to their neighbors’ witness testimony. Every Sunday, families went into town to worship, trade, and gossip. Though they lived far apart and transportation was inconvenient, people did their best to stay in touch, because their survival depended on it.

By the late 19th century the frontier was closed, while the Industrial Revolution was in full swing. Independent farmers gave way to masses of factory workers, who squeezed shoulder-to-shoulder into auto factories and steel mills. Their dreadful working conditions gave rise to radical politics and unions, as well as both religious movements such as Walter Rauschenbusch’s Social Gospel and secular humanist ones like Stanley Coit’s Settlement Houses. These in turn produced the early-20th century civic institutions such as the Kiwanis and Lions Club.

The century between the Civil War and the Kennedy Administration was a period of social thickening, where people were brought together by economic and security needs. The Great Depression and World War II injected government into the process, with New Deal programs and the draft bringing men of all regions and social strata into closer proximity. Towards the end of the 20th century, however, a new reality took over.

Things fall apart

In the late 1970’s, the US economy suffered from simultaneous weak growth and high inflation. To combat this, the government embarked on a wave of deregulation. This is popularly associated with Ronald Reagan, but it was the Carter administration, often remembered as the last gasp of New Deal liberalism, that started dismantling the bureaucracy. The Airline Deregulation Act of 1978, for example, abolished the Civil Aeronautics Board; the Motor Carrier Act of 1980 loosened up trucking; and the Staggers Rail Act did the same for railroads later that year.

Meanwhile, the private sector was eager to break up the large conglomerates that dominated economic life. International Telephone and Telegraph Corporation owned hotels, insurance, and bakeries; Gulf and Western, mocked as “Engulf and Devour,” spanned from auto parts to film studios. The premise of the conglomerate was that the profits of a strong division could subsidize a weak one. It was, at its core, an insurance pool–a private machine for cross-subsidy, smoothing the fortunes of its parts by binding them together, thereby keeping workers employed and preserving continuity.

But to a new generation of Wall Street managers who believed they could diversify portfolios better than company C-suites, this was anathema. They preferred lean, focused firms that didn’t entangle themselves with irrelevant business lines. When KKR took over RJR Nabisco in 1989, they immediately fired 2,000 people at the Atlanta headquarters, then spent the next several years dissecting the organization, selling off the European food business, canned fruit lines, etc., to “unlock value” and eliminate the “conglomerate discount”, which led to losses of thousands more jobs. Sometimes the mere threat of a hostile takeover, as with Goodyear in 1986, forced firms to cut headcount in order to juice stock prices.

In 1988 economist Andrei Shleifer asked an obvious question: where, exactly, did the corporate raiders’ famous premiums come from? The orthodox answer was efficiency–value conjured by sharper management and fewer staff. Shleifer proposed that much of it was not created at all but merely transferred. Every firm, he argued, is held together by implicit contracts: promises too long-term and contingent to commit to paper, yet understood all the same. A worker might be underpaid in his thirties on the tacit assurance that he would remain employed in his fifties. A town would build its schools around a manufacturing plant on the assumption that it would employ residents for decades. These promises had value because the company was trusted to honor them, while the activist investor got rich by being willing to break them.

Too simple, sometimes naive

By increasing profits via breaking implicit commitments, corporate raiders destroyed the concept of moral credit in business life. Since the dawn of history, civilization has perpetuated itself via the apprentice laboring for scraps to learn a trade, the soldier risking his life to retire with a pension, the wife putting her husband through school so he can secure a better job. Each is a sacrifice made today, staked on a repayment later.

Moral credit differs from financial credit in an important way: it need not always be repaid directly to the lender. “Pay it forward” is the bedrock of community, because it adds to the pool of public good upon which any collection of strangers depends. The congregant who tithes to his church is not writing a loan to be called in. He acts in the faith that the good a man does comes back to him in time, through hands he does not expect. This is the credit a society actually runs on, and it has quietly drained away, until all that is left is the financial credit a court will enforce.

What stands in for moral credit, if anything at all, is the vesting schedule, non-compete, or prenuptial agreement. These are sometimes touted as clear-eyed replacements for naive trust, but they are nothing of the kind, because they are not promises at all. A promise is a commitment to do right by someone; these are threats–don’t screw me, or else.

A world that can no longer extend trust must purchase deterrence instead. Lawyers, audits, and the rest of the standing army of mutual suspicion don’t come cheap. Such is the price we pay for not being able to rely on a promise.

It’s all on you

Deconglomeration was simultaneously efficiency and breach of faith, and a good share of what the shareholder gained was simply what the stakeholder lost. Strip out the cross-subsidy, reprice the isolated pieces, and mask benefit transfer as value creation–this was a playbook that would infringe upon more and more areas of life.

One was the way Americans save for old age. For a generation the private pension had been a defined benefit: the employer promised a fixed monthly sum for life and shouldered the risk of making good on it. That risk was pooled, spread across thousands of workers, and belonged to the company rather than the retiree. The pension was, by design, a promise of shared fate between the worker and his employer.

The 401(k), slipped into the tax code in 1978, reversed every one of these terms. A defined benefit became a defined contribution: no longer a guarantee of what the worker would receive, but a ceiling on what the company would put in. The risk slid off the corporate books and onto the individual’s. If the crash came in the year he meant to stop working–as it did, for millions, in 2008–he retired poorer, or not at all.

Worse, the risks no longer offset one another but stacked: a recession is precisely the moment when savings crater and jobs are likeliest to vanish. Where the old pension had gathered uncorrelated risks and smoothed them across a population, the 401(k) compounded risk and loaded it onto a single individual. It was deconglomeration performed on a human life, turning retirement from counter-cyclical support to pro-cyclical accelerant.

The same maneuver was repeated across health insurance, employment, and housing. A man who had once belonged to several risk pools was turned into the sole insurer of his own life, marked to market in every direction at once. Without backstops, he becomes defined entirely by momentum–when the going is good, it often gets better, but once difficulties arise, everything comes crashing down.

Winner take all

Volatility in the economic landscape is worsened by an uncomfortable fact: in a post-industrial economy, most sectors are winner-take-all. A 1950’s automaker employed hundreds of thousands of workers. WhatsApp, on the other hand, had ~55 employees when Facebook acquired it for $19 billion.

The capital efficiency of the information economy is staggering, and the corollary is that the share of value flowing to labor has collapsed. The new ideal–the holy grail of the AI age–is the one-man unicorn: a single creator who, with sufficient leverage from powerful tools and cheap distribution, captures all the upside of his business. The great-man theory of entrepreneurship is plausible in a way it has never been before.

Even the startup, the rare corner of the new economy that still ran on something like shared fate, is being unbundled along the same seam. The options pool was a collective bet: everyone took a salary below what they could have commanded elsewhere in exchange for a slice of the same upside, so that the founder and the fortieth engineer were wired to rise or fall together.

What the last two years have produced instead is the acqui-hire, in which the company survives on paper while its best people are bought out from under it. In July 2025, after a planned sale to OpenAI fell through, AI coding startup Windsurf accepted a $2.4 billion buyout from Google that hired away its chief executive and a clutch of top researchers. A normal acquisition would trigger antitrust review and oblige the buyer to cash out the common stock. The license-and-poach does neither, so value left through the side door while the corporate husk, and the rank-and-file’s equity in it, were left hanging.

The old risk of joining a startup was that it would fail. The new risk is that it will succeed–that the work will prove valuable enough for someone to buy the talent and IP while leaving the rest of the company behind. Losing is, and has always been, shared. Winning, however, is increasingly reserved for the few².

Members only

In a cruel twist, those who built this world clearly don’t believe in it. The elite understand the value of cross-subsidy and counter-cyclical insurance. The unemployed graduate of an Ivy League university is not a falling knife but a temporarily mispriced asset; the alumni network doubles as a mutual-aid society. The executive who steers his company into a ditch leaves on a golden parachute, which is a defined-benefit pension: a sum guaranteed regardless of performance, of exactly the kind his class spent a generation abolishing for everyone else. At the top, old institutions survive; they’re merely closed to outsiders.

This arrangement has an older name than elite: a class that closes ranks to catch only its own when they fall is a nobility. The modern iteration differs from the medieval in that it is defined less by bloodline and more by wealth, but the effect is no different. The most capable, well-resourced individuals secede from public life, as keen to preserve their private protections as they are to prevent public ones.

There’s a cold rationality to this: contributing to a pool filled with less fortunate individuals means one is unlikely to ever recoup one’s investments. It’s also corrosive, because elite detachment produces unending cycles of poverty. Every functioning society relies on those with the means to perform public service without guarantee of being repaid. The alternative is not a republic, but a flesh market, where the first and most important thing about a man is his price.

Every man an island

We are lonely because we have no sense of shared fate with those around us. We turn to astrology instead of church because our spirituality is undiminished while the church pew is occupied by someone whose fortunes no longer rise or fall with our own. We prefer television to the social club not because the former is more entertaining, but because the latter is no longer a collection of people who empathize with us. Gadgets do not pull us away from the crowd; they merely attempt to fill the void society has left.

To embed yourself in society requires believing that you’ll be cared for by the group when the chips are down. When no such promise is credible, commitment is unjustified. In this light, many degenerate phenomena become rational. Jobs, which pose concentration risk, give way to side hustles. Marriages, which can’t be expected to last, are replaced by situationships. Five hundred acquaintances take the place of a few close friends, despite the fact that not a single one can be called upon in a time of difficulty.

Optionality is the ultimate prize–perhaps the only assured one–in a world in which nothing is reliable. Self-help books trumpet “finding community”, as if it hasn’t always been a human birthright. For those outside elite circles, little is ascribed and everything must be achieved. All love, if it can be called that, is conditional. One must perform and justify one’s existence in every context, which is sold to the public as “meritocracy”. In reality, it’s the denial of accumulation, a way to reset individuals and transfer their value to those who are not subject to such judgments.

Trends in technology, business, and politics accelerate this trend. If the 20th century was defined by the atom bomb, the 21st is likely to be remembered for the atomization of society. In response to the risks being pushed onto them, individuals learn to diversify themselves like portfolios. But such an approach is not tenable, because this imposes on each person the same inefficiencies that sank the old conglomerates.

Having split himself to survive, modern man will find, to his horror, that it makes him a less desirable investment. As he tries to collect the shattered pieces of himself in a world that has no more network of mutuality, no single garment of destiny, society marches on, having already declared him obsolete.