Got your attention?
For the past couple of years I’ve been reading about the growing gap between the wealthy and the – well, everyone else, I guess. I never paid it much mind. My first thought was that this is the kind of talk that, when you look behind the generalities, has its origin in definitional chicanery and ginned-up studies. And it was mostly coming from The New York Times and other ideologically-motivated organs. And, of course, now we have the “Occupy” folks with their 1% v. 99% mantra.
I also thought – and still think, although this is not the point of this particular entry – that after a certain point of material prosperity that starts somewhere in the lower-middle-class, financial and social-status inequality doesn’t matter much to those above that point. I’m not saying it’s “right,” I’m saying it’s just not a huge deal to those folks. People who have air-conditioning, flat-screen TVs with cable or satellite, Internet access, and three meals a day don’t feel oppressed by truly wealthy people, much less by the people just next up the social ladder where they would someday like to be themselves. They may feel oppressed by the tax man, or illegal immigrants, and sometimes by the oil companies, but they’re not a fertile ground for revolutionary agitation. Witness the petering out of that very Occupy movement.
I don’t propose to get into the debate of whether certain people are overcompensated – thinking mainly here of certain financial executives, whose risk/reward seems out of whack and who appear immune to shareholder democracy. (Even there: We must have some kind of answer for why shareholders continue to elect directors who vote colossal salaries and bonuses and truly incomprehensible severance packages – no one’s bribing them or threatening them to do so.) I don’t think these guys are the main problem, at least as it is defined by the people who worry about this issue.
When I thought about this issue at all, I thought that there must be something going on that is reducing the supply of people who perform the functions in society that create the rewards that send them upwards on the food chain, or increasing the numbers of those who can’t or won’t perform those functions: Education; welfare; structural changes in the economy wrought by the digital revolution; revulsion to learning about math and science – any number of things that could change the incentives toward a distribution of wealth that looks different than it has looked in the middle-past and beyond.
These causes could be either pernicious or benign, but didn’t seem to me to be reasons to blame those who benefited from whatever it was that was increasing social and financial inequality. Even tax policy: We read of companies and persons who seem not to pay their “fair share” – but is anyone proposing that they should pay more than they owe after they take advantage of tax laws and regulations? (If the left argues that the government is corruptly influenced by these same entities to enact legislation favoring them, what makes the left believe that giving the government greater authority to regulate – greater even than taxation, the forcible taking of cash money from the population – is going to solve anything?) My point to myself, I guess, is that if inequality was increasing, it was not only in some sense “natural,” but perceived as natural by those not at the top of the pile, or at least as not resulting from the tyranny of unelected elites. Witness: Obama’s efforts at stirring up class resentment isn’t getting much traction, other than among his media acolytes and the usual suspects among his upper-middle-class college-educated supporters.
Still, there’s enough in me of the Nebraska egalitarian to worry about these numbers. Equality – of opportunity, if not of result – is something we all favor. And enough in me of the devotee of classic capitalism to wonder whether this is something that the theory needs to take account of, and correct if it can be corrected while maintaining capitalism’s heartbeat of freedom. (Capitalism presumes some kinds of inequality – there are winners and losers even where opportunity is equal.)
So it was with great interest that I read recent accounts of studies that seem to point the finger here in an unexpected direction.
The first is from, of all places, The Washington Post, and is by noted American political scientist James Q. Wilson (who, I am stunned to discover, died the day I wrote this). The title tells you where he’s going (link):
You may remember him from his “broken windows” theory of neighborhood deterioration and restoration, a theory explicitly adopted by Mayor Giuliani in New York City that is widely regarded as having measurably improved things there. The second is by iconoclastic scholar – generally regarded as conservative, but not always – Charles Murray in The Wall Street Journal, describing the results of his recent study from his new book Coming Apart: The State of White America, 1960–2010 (link):
Murray you may recall from his controversial work The Bell Curve.
I commend both of these articles to you; they’re eye-openers. Here’s a summary of their surprising findings, very different in some respects but with a fascinating similarity:
Wilson (RIP) first notes that the “rich,” the 1% as it were, are not a monolithic group. People move in and out of the upper tier of the wealthy with some fluidity: "A study by Thomas A Garrett, economist at the Federal Reserve Bank of St. Louis, found that less than half of people in the top 1 percent in 1996 were still there in 2005.” Moreover:
Mobility is not limited to the top-earning households. A study by economists at the Federal Reserve Bank of Minneapolis found that nearly half of the families in the lowest fifth of income earners in 2001 had moved up within six years. Over the same period, more than a third of those in the highest fifth of income-earners had moved down. Certainly, there are people such as Warren Buffett and Bill Gates who are ensconced in the top tier, but far more common are people who are rich for short periods.
He then cites studies that note that the wages of people with college educations have climbed, while those without have declined. The growing number of double-income families is also quite significant; the growing number of working women greatly influences these numbers.
And then he says something that is a different version with what I’d been thinking: “We could reduce income inequality by trying to curtail the financial returns of education and the number of women in the workforce — but who would want to do that?” Who indeed? Not even the Left.
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| James Q. Wilson (d. March 2, 2012) |
Greece.
Soaking the rich, he argues, won’t help and actually isn’t necessary:
The real income problem in this country is not a question of who is rich, but rather of who is poor. Among the bottom fifth of income earners, many people, especially men, stay there their whole lives. Low education and unwed motherhood only exacerbate poverty, which is particularly acute among racial minorities. * * *
Making the poor more economically mobile has nothing to do with taxing the rich and everything to do with finding and implementing ways to encourage parental marriage, teach the poor marketable skills and induce them to join the legitimate workforce. It is easy to suppose that raising taxes on the rich would provide more money to help the poor. But the problem facing the poor is not too little money, but too few skills and opportunities to advance themselves.
He also supports another one of my suspicions – that, in general, even the poor are becoming better off.
Poverty in America is certainly a serious problem, but the plight of the poor has been moderated by advances in the economy. Between 1970 and 2010, the net worth of American households more than doubled, as did the number of television sets and air-conditioning units per home. In his book "The Poverty of the Poverty Rate," Nicholas Eberstadt shows that over the past 30 or so years, the percentage of low-income children in the United States who are underweight has gone down, the share of low-income households lacking complete plumbing facilities has declined, and the area of their homes adequately heated has gone up. The fraction of poor households with a telephone, a television set and a clothes dryer has risen sharply.
In other words, the country has become more prosperous, as measured not by income but by consumption: In constant dollars, consumption by people in the lowest quintile rose by more than 40 percent over the past four decades.
So it is not so terribly surprising that there has not been an outbreak of class warfare, the efforts of the President and the Occupy guys notwithstanding. And that government income figures are misleading.
Wilson would not “blame the poor,” of course, but he does insist that if we want to reduce financial inequality we must find a way to improve the education along with training and employment opportunities for the truly poor. Wilson does not say it out loud, but it is apparent from his analysis that the poor themselves have a role in creating the conditions for their own advancement.
Murray is gloomier; he thinks America is “coming apart,” but the divide he’s worried about isn’t financial – it’s cultural. And he’s not even considering blacks and Latinos, focusing instead solely on whites, a population where one might expect to find a narrowing of cultural gaps. And he is also focusing solely on “prime-age adults,” ages 30-49. Up through the Sixties, he writes, the “American way of life” denoted “a civic culture that swept an extremely large proportion of Americans of all classes into its embrace,” encompassing “shared experiences of daily life and shared assumptions about central American values involving marriage, honesty, hard work and religiosity.” However:
Over the past 50 years, that common civic culture has unraveled. We have developed a new upper class with advanced educations, often obtained at elite schools, sharing tastes and preferences that set them apart from mainstream America. At the same time, we have developed a new lower class, characterized not by poverty but by withdrawal from America's core cultural institutions.
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| Charles Murray |
Focusing solely on prime-age whites, Murray finds dramatically increasing divergence between the educated, professional (which he calls “Belmont”) and the high-school only, blue-collar workers (“Fishtown) in marriage rates; single parenthood (“[o]n just about any measure of development you can think of, children who are born to unmarried women fare worse than the children of divorce and far worse than children raised in intact families”); “industriousness” (measured by males who say they are unavailable for work or who are settling for part-time work); crime; and religiosity.
He further notes that formerly, the upper-middle-class executive and the blue-collar worker shared many of the same cultural experiences – watched the same TV shows, took the same vacations, homes equipped with the same type of equipment and rooms. Now, however, the upper-middle class have pools, eat different kinds of foods, appoint their homes differently, take longer and ritzier vacations, read different books, watch different TV shows, raise their children differently, maintain their health more avidly, embrace different trends. And these divergences are even more dramatic in recent years among the “SuperZIPS,” those ZIP codes where the truly affluent live, usually remote suburban areas near major cities.
It made my heart glad to see Murray write that “the reforms of the 1960’s jump-started the deterioration.” The Sixties, in my view, were a miserable ten years for the long run, and I agree entirely with Murray that:
Changes in social policy during the 1960s made it economically more feasible to have a child without having a husband if you were a woman or to get along without a job if you were a man; safer to commit crimes without suffering consequences; and easier to let the government deal with problems in your community that you and your neighbors formerly had to take care of.
Like Wilson, Murray believes it is fruitless to rein in the better-to-do:
The economic value of brains in the marketplace will continue to increase no matter what, and the most successful of each generation will tend to marry each other no matter what. As a result, the most successful Americans will continue to trend toward consolidation and isolation as a class. Changes in marginal tax rates on the wealthy won't make a difference. Increasing scholarships for working-class children won't make a difference.
His remedies for this are desirable, but would be difficult to implement. He believes that the upper-middle class needs to stop being “nonjudgmental,” and to have the courage of its convictions about hard work, marriage, and the like, and stop acting like behaviors that lead to a life of hardship don’t make any difference. Bravo that.
His next suggestion, however, strikes me as quite improbable: He believes that the better-off should try to involve themselves more in the lives of the less-well-off by the choice of where they live, where they go to church, where they send their kids to school. “America outside the enclaves of the new upper class is still a wonderful place, filled with smart, interesting, entertaining people,” he writes. “If you're not part of that America, you've stripped yourself of much of what makes being American special.”
Well, Charlie, good luck with that. I moved into a “changing neighborhood” once, not for altruistic reasons, and once was enough. Well-off parents are not ever, no never, going to send their kids to schools where a noticeable percentage of the kids are unmotivated, haven’t been read to, and raise hell. They are not going to buy homes in neighborhoods where the residents tend to party late into the night. And when the well-off do venture into neighborhoods successfully, what happens? Property values go up, the existing residents can’t afford it, and there you have it – gentrification. What Murray advocates simply does not happen – diversity inevitably gives way to homogeneity. And you think developers are going to build new suburban neighborhoods with some “affordable” homes and some high-end? Who is going to buy high-end housing, where a large percentage of the buyer’s wealth is tied up in a home whose value is anchored to the value of less-desirable housing?
No, I think Murray’s own work and instinct about values gives us the, or at least an answer. It starts with an end to governmental paternalism. It continues with permitting the creators of capital to “discriminate” between people who will work, and competently, and those who will not or cannot. It allows employers to hire or not depending on factors which include their workers’ “lifestyle” choices, and allows educators to exclude from the classroom – leave behind, as it were – those children whose presence consumes enormous resources and retards the progress of those who are there to learn.
So, my title notwithstanding, no one is proposing to “blame the poor.” But resentment of and attempts to level the “1%,” or the 25%, or whatever cutoff the equalitarians would force on us, or punishing those who have developed the skills (or even inherited the brains) to prosper in the modern world, won't get us to equality. It will eventually get us – Greece.
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Thanks Steve. Very interesting article, as usual.
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