Tag Archives: Inequality

What Teddy Roosevelt Understood That We Don’t

Back when Republicans were responsible stewards of the public good, Teddy Roosevelt waged war on monopolies. He understood that the virtues of capitalism–and they are many–required government protection. American commerce was no longer characterized by small merchants and farmers competing on a more-or-less equal playing field, and that made it imperative to constrain the powerful from dominating the marketplace and squeezing out the little guys.

In a recent column, Nobel prize winning economist Joseph Stiglitz points out that the problem of monopoly power is still with us, and still an enormous impediment to the proper working of a market economy:

In today’s economy, many sectors – telecoms, cable TV, digital branches from social media to Internet search, health insurance, pharmaceuticals, agro-business, and many more – cannot be understood through the lens of competition. In these sectors, what competition exists is oligopolistic, not the “pure” competition depicted in textbooks….

US President Barack Obama’s Council of Economic Advisers, led by Jason Furman, has attempted to tally the extent of the increase in market concentration and some of its implications. In most industries, according to the CEA, standard metrics show large – and in some cases, dramatic – increases in market concentration. The top ten banks’ share of the deposit market, for example, increased from about 20% to 50% in just 30 years, from 1980 to 2010.

Some of the increase in market power is the result of changes in technology and economic structure: consider network economies and the growth of locally provided service-sector industries. Some is because firms – Microsoft and drug companies are good examples – have learned better how to erect and maintain entry barriers, often assisted by conservative political forces that justify lax anti-trust enforcement and the failure to limit market power on the grounds that markets are “naturally” competitive. And some of it reflects the naked abuse and leveraging of market power through the political process: Large banks, for example, lobbied the US Congress to amend or repeal legislation separating commercial banking from other areas of finance.

Bottom line lesson: government should be an “umpire,” ensuring a level playing field, rather than a member of the “team” that has most effectively used its greater resources to game the system and co-opt the process.

As Stiglitz notes, unequal distribution of power in the marketplace drives inequality and undermines democratic institutions. It’s hard to disagree with his conclusion:

If markets are fundamentally efficient and fair, there is little that even the best of governments could do to improve matters. But if markets are based on exploitation, the rationale for laissez-faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.

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Rights for Me, Not So Much for Thee….

There’s plenty of information available detailing America’s troubling economic inequality; just recently, for example, Salon Magazine ran an article highlighting numbers that showed “America’s busted priorities” and their contribution to that widening gap. They presented the numbers in a variety of ways, but the summary tells the tale:

The following are averages, which are skewed in the case of tax breaks and investment income, as a result of the excessive takings of the .1% and the .01%. Details of the calculations can be found  here.

$8,600 for each of the  Safety Net recipients

$14,600 for each of the  Social Security recipients

$27,333 for each of the  Pension recipients

$54,740 for each of the  Teachers

$200,000 for each of the  Tax Break recipients among the richest 1%

$500,000 for each of the  Investment Income recipients among the richest 1%

The super-rich feel they deserve all the tax breaks and the accumulation of wealth from the productivity of others. This is the true threat of entitlement.

A recent investigative report from the New York Times confirms the suspicion that Salon’s numbers are not the result of inadvertence or accident. The subhead pretty much says it all: “The very richest are able to quietly shape tax policy that will allow them to shield billions in income.”

These numbers tell an important story, but they don’t tell the whole story: economic inequality both leads to–and results from–other kinds of inequality. It’s a vicious cycle.

Less affluent neighborhoods are less safe. Schools attended by poorer children have fewer resources and poorer results. Friends and relatives of poor Americans are unlikely to benefit from the networking that the more affluent use to find job opportunities. Access to quality healthcare remains unequal even after Obamacare.

Actually, what is even more troubling than these  persistent inequities has been the hysterical resistance to Obamacare’s very modest effort to extend health care to poorer Americans. A substantial portion of the public has responded to the Affordable Care Act with hostility and a truly unhinged animus. The assault has not focused upon reasoned concerns about aspects of the law; instead, opponents have indignantly rejected the very suggestion that access to healthcare might be a human right, or at the very least, a primary good that government should provide.

It isn’t only efforts to equalize access to healthcare that have met with hostility. Increasingly, we see  substantial support for unequal rights in other areas:

Americans place a higher priority on preserving the religious freedom of Christians than for other faith groups, ranking Muslims as the least deserving of the protections, according to a new survey.

Solid majorities said it was extremely or very important for the U.S. to uphold religious freedom in general. However, the percentages varied dramatically when respondents were asked about specific faith traditions, according to a poll by The Associated Press and the NORC Center for Public Affairs Research.

This reluctance to understand that rights are different from privileges—this inability to understand that no one really has rights if government gets to decide who gets them and who doesn’t—reminded me of Nat Hentoff’s 1992 book “Free Speech for Me, But Not for Thee.” If there is one area in which equality is supremely important, it’s equality before the law–and contrary to what too many Americans seem to believe, equality is not a zero-sum game.

There’s a significant “chicken and egg” component to these various manifestations of inequality—which comes first, economic deprivation or reduced social efficacy? We may not be able to answer that question, but surely we can figure out a way to break the cycle.

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The Not-So-Great Gatsby Curve

As the issue of inequality has become more politically and socially salient, researchers are increasingly “connecting the dots”–finding and measuring relationships between social phenomena that may not appear on the surface to be related.

It’s one thing to measure economic distances; to draw conclusions about the ability of low-income workers to afford to rent a two-bedroom apartment, for example. Such statistics represent only a fraction of the social damage done by rising levels of poverty and inequality, but they do offer a window into individual struggles that lead to other, less tangible and/or immediately obvious harms.

The United Ways of Indiana recently issued a comprehensive analysis of the financial distress experienced by “Alice”– Alice being an acronym for Asset Limited, Income Constrained, Employed. These were households with income above the federal poverty level, but below the actual, basic cost of living.  The research concluded that more than one in three Hoosier households cannot afford the basics of housing, food, health care and transportation, that 37% of Indiana households live below the Alice threshold, that these families and individuals have jobs, and many do not qualify for social services or support, and that despite the importance of their jobs to their communities,  they are unsure if they’ll be able to put dinner on the table each night.

Other researchers are beginning to investigate the ancillary effects of living like Alice–including the consequences for physical and mental health of individuals, the diminished prospects of their children, and the effects of inequality on America’s social fabric.

The Brookings Institution, for example, recently issued a disheartening study about inequality and stress.

Income and opportunity are increasingly unequally shared in the United States. It turns out that there are also significant inequalities in happiness, stress, and optimism about the future… The poor have lower levels of life satisfaction than the rich, they are far more likely to experience high levels of stress and worry, and they are far less optimistic about the future. They are also less likely than the rich to believe in the American Dream: that hard work can get them ahead.

An important question is how far these inequalities relate to each other. One of most well-known connections is the one between income inequality and intergenerational mobility, labeled the “Great Gatsby Curve” by Alan Kreuger. The idea behind the curve is that inequality in parental incomes (and other means) will result in even greater inequality for their children, as children’s opportunities are increasingly linked to their parents’ means.

The report makes the case that stress related to issues of survival–can I pay my rent this month? Will I lose my job if I stay home with my sick child?–is significantly different in kind and impact from the sorts of stress experienced by middle and upper income individuals. Those issues–Will I get that promotion? Will I get into my first choice law school? Will Heather go with me to the prom?– just aren’t in the same league, stress-wise.

The whole study is worth a read, but I was especially struck by the finding that there was “a higher concentration of both stress and worry among the poor in more unequal MSAs. Stress levels among the rich, by contrast, were essentially the same across cities.”

It has long been known that societies with stronger social safety nets have lower incidents of social dysfunction: everything from out-of-wedlock births, to divorce, to crime and violence. A recent study highlighted by Vox connected inequality to death rates.

Eventually, perhaps we’ll recognize that remedying the costs of social dysfunction is more expensive than a social safety net, and far more expensive than paying people a living wage.

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Perpetuating Inequality

The Washington Post’s Wonkblog recently reported on an education experiment in Ft. Lauderdale that holds so many lessons—not just about inequality, but about institutional and unintentional racism, the waste of human capital, and the difficulty of seeing things that lie outside our comfortable worldviews.

In 2003, Cynthia Park asked her staff to make a map showing where every gifted student lived in Broward County, Fla.

The result was an atlas of inequality.

“All of them were scattered in the suburbs and in the wealthier communities, where parents were more involved in education,” recalls Park, who oversaw the county’s gifted students program. “The map was virtually void in other areas.”

The map convinced Park that the district needed to work harder to identify gifted children from impoverished areas, and in 2005, it began giving a short test to all students in the second grade. Children who scored well on the test were then evaluated to determine whether they should be enrolled in the system’s gifted program.

The result? The district identified an additional 300 gifted children between 2005 and 2006—and the impact on racial equity was huge: 80 percent more black students and 130 percent more Hispanic students were now entering gifted programs in third grade.

Prior to this change in the method for identifying precocious children, the school district had relied upon referrals by teachers—a system used by many, if not most, school districts around the country. (Not, I am pleased to report, in IPS, which uses a system similar to the one in Ft. Lauderdale.) And therein lies the problem. As the Wonkblog notes

Critics say gifted programs amplify inequality because they disproportionately recruit children from high-income families — another example of how opportunity accrues to those already blessed with opportunity.

This is a perfect example of how systemic bias operates.

People who dismiss the notion of structural racism or advantage do so because they see bias as intentional, and success or failure solely as a measure of individual effort and/or merit. They look around and no one is burning a cross on that black family’s lawn, or otherwise displaying hurtful antisocial behavior, so they draw the (not-unreasonable albeit inaccurate) conclusion that bias is absent.

The Ft. Lauderdale teachers who failed to identify precocious poor children weren’t bigots—they wouldn’t have been in those classrooms, working with poor children, if they were. But like most of us, they’d been socialized to connect intellectual capacity with certain markers of behavior—markers that children from disadvantaged families are less likely to exhibit.

A similar phenomenon occurs when businesses have job openings. Positions tend to be filled via “networking.” The word gets out to people already in those networks, who mention the opportunity to their friends, and to people with whom they feel comfortable. People who look and sound and act like them. It isn’t intentionally nefarious—it’s human. It’s the way the world works.

But in the aggregate, these otherwise innocent social networks operate to keep advantage where it is, and to exclude access to those whose talents and abilities are less recognized, because they are expressed differently. These are the “old boy’s networks” that continue to constrain women’s progress, the continuing friendships of alumni from elite schools disproportionately populated by the offspring of wealthy families, and the many other “communities of interest”—professional or social—where, as the old saying goes, “birds of a feather flock together.”

America cannot afford to lose the contributions of talented citizens simply because that talent comes in unfamiliar forms. We need to break through the barriers that keep us from seeing each other accurately. The Ft. Lauderdale approach is one small step in that direction.

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Speaking of Inequality…

There is enormous focus these days on economic inequality, and for good reason. The gap between the top 1% and other Americans is growing, the middle class that built the country and ensured social stability is shrinking, and the likely consequences of those phenomena aren’t pretty.

In the United States, our Constitution guarantees us only equality before the law. Critics may quote Anatole France for the proposition that “In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread,” but there is much to be said for a system that protects individual liberties against encroachments by the state. In such system, however, efforts to ameliorate material deprivations are statutory, not constitutional, and as we continue to be reminded, statutory entitlements are vulnerable to efforts to punish poor people for their misfortune.

Most public discourse around “equality” tends to focus on these issues of legal and economic equality and the relationship—or conflict—between the two. We rarely focus on  a third kind of equality—democratic equality—despite the fact that it has a major influence on whether the country achieves the others.

Democratic equality simply means the equal right of each citizen to participate in the democratic process. It probably won’t come as a surprise to find that we aren’t doing terribly well on that front, either.

The influence of money in politics has grown exponentially since the Supreme Court’s ill-considered decision in Citizens United. (Actually, the problem started earlier, with the case of Buckley v. Valeo, when the Court first conflated money with speech) The result has been that those with money are able to “speak” much more loudly and effectively than the rest of us. When democracy becomes “pay to play,” there is no equality of participation.

It isn’t just money. In Indiana—which is unfortunately not an outlier— the legislature has used its power to make it more difficult to vote.

We have one of the strictest Voter ID laws in the nation—in order to cast a ballot, you must not only have a government-issued picture ID, that ID must have an expiration date. (This conveniently excludes the picture IDs issued by state universities.) Middle-class folks assume that it’s simple enough to obtain such identification, but for poorer people—particularly older black citizens who were born at home and lack a birth certificate—getting the necessary documentation can be both onerous and costly. (Despite pious rhetoric about deterring “voter fraud,” fraudulent in-person voting is virtually nonexistent.)

The Indiana legislature has also declined to enact other measures that encourage or facilitate voting by working-class Americans: keeping the polls open past six, establishing convenient voting centers, expanding early and absentee voting.

It’s bad enough that lawmakers see fit to erect barriers to voting rather than making it easier. But as I have previously posted, the most serious denial of democratic equality comes through partisan gerrymandering that produces an abundance of “safe” seats and eliminates voter choice.

Increasingly, especially at the state level, our legislators choose their voters—the voters don’t choose their representatives. So even when disadvantaged folks make it past the obstacles and manage to cast their ballots, they often find they are given no meaningful choice. A growing number of elections are uncontested.

As a result of democratic inequality, the people who would benefit most from the election of candidates willing to work for legal and/or economic equality have less access, less influence and less voice than their more privileged neighbors.

The system is broken.

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