Economic Mobility Requires the Nearly Impossible
theatlantic.com
theatlantic.com
He writes that the upper class of FTE workers, who make up just one-fifth of the population, has strategically pushed for policies—such as relatively low minimum wages and business-friendly deregulation—to bolster the economic success of some groups and not others, largely along racial lines.
The idea that raising the top marginal tax rates 3-5% or raising the minimum wage 4 or 5 bucks will combat inequality is laughable.
The cognitive dissonance between the cause of class (and the related race) inequality and the policies suggested to combat it never fail to blow my mind.
Slavery was a legal, government subsidized industry. The Jim Crow south that systematically stripped the black community of their property rights was built on a system of state and federal laws. The highly regulated, highly subsidized mortgage loan industry had reams of racially divisive rules that barred the black community from building generational wealth during the most important period of general economic prosperity in perhaps the history of the world following WWII.
American governments spent 200 years systematically robbing various ethnic groups of their rights, but bullshit pieces like this blame it on affluent white people that vote for candidates that have ideological problems with the minimum wage.
Gimme a break.
The cause of economic inequality is several generations of government disrespect of individual property rights and monetary policy that slants competition toward those that can pool assets - banks.
This jacks up the price of housing for the middle class and poor to a ridiculous degree, to the point that in many markets over 75% (!) of post tax income is being spent on housing.
I suspect this is the real reason we aren't seeing inflation from so much money being poured into the economy, all the money of the "have nots" is being sucked away by insane real estate costs, thus the prices of goods that are traditionally tracked by inflation indicators are unable to rise.
This is what is meant by the erosive power of monetary policy, in a very real way it is destroying the wealth of everybody but the 1%, because they cant do anything but pour an increasing large share of their earnings into housing costs (which continue to escalate).
There's other more ways in which monetary policy siphons this eroded wealth to the rich. Mostly by foisting people and less-than-full-agency aggregation of 99%er wealth (pension fund manangers, etc) into corporate welfare via the stock market (because you need to make a return on investment to preserve wealth in the face of inflation). Another way the linkage between our monetary policy and economic structure creates inequality is by enabling the wealthy to take advantage of leveraged investments schemes (Forex, ETFs, etc) off of low-interest rate sources - the ibanks that fund these sorts of activities have a much more direct access to the federal reserve than you or I.
The 'capitalism screws the poor' narrative is so tiresome, not because it is oft repeated, but because it truly misses the structural reasons why the capitalist system we have now screws the poor.
That was a mouthful - point being - if this interests you, it's probably worth checking out monetists; they predicted our current spectre of stagflation.
Which is all to say - monetary policy is a useful tool, a good rope - for pulling in inflation by raising the interest rate - but pushing a rope for stimulating it. Not all monetary policy is negative; the overnight lending rate was always intended to operate with a premium to punish poor lenders and reward good ones, and stimulate the economy by lowering lending burdens in times of stress, but monetary policy was never intended to replace fiscal and regulatory burden sharing between civilizations aims and capital investments. But that's what it's become - all capital investments are now passed off, in failure, to ultra low interest rates or bail outs, which is skewing the market.
Ultimately even self proclaimed monetist Alan Greenspan couldn't keep his hands off the dials and creatively interpreted economic growth to mean something that was nonsensical to anyone except the investment class.
Also, Greenspan was clearly a Keynesian - and, IMO, rather/depressingly naive or proud, from his bio. Smart guy, horse blinders.
I suppose it's a bit loose to say that the poor are entitled to ameliorative effects of technology - but they are entitled to not be cheated by the government, and if they weren't cheated by the government then they would be enjoying a higher quality of life from lower prices.
Yes, obviously Greenspan acted as a Keynesian, but he was trained and continues to believe himself a monetarist. That's the point. Monetarism still believes in the seductive idea that stability can be achieved by fiddling with the money supply - they just would prefer to relegate it to some computer program or something algorithmic, but that STILL encodes the normative biases of the individuals who choose the criteria for the algorithms. So even if you could have a 'top man' in place that is so virtuous or autistic as to keep his hands off the dials during crises, it would STILL screw the poor. Point being: There's no categorical difference between a Keynesian and a Monetarist, just a matter of degree of recklessness.
[0] but other people have means to protect themselves from inflation, mostly investments which yield higher than inflation. Really rich people benefit greatly from leveraged financial instruments, which are tougher in a deflationary regime. In other words, via inflation we are stealing from the poor to make it easier for the wealthy to get really wealthy, and it seems the recurring pattern when society gets overleveraged, the solution is to bail out the really wealthy - socializing the pain of risk.
I think you've hit the nail on the head. This is my belief as well; while it is apparent that monetary policy can be useful, the old adage goes "if all you have is a hammer, everything starts to look like a nail".
It appears that instead of doing the correct (and politically difficult) thing from a fiscal, tax, and policy perspective, we just keep lowering the interest rates and waiting for the next upswing.
Which where the Chilean experiment[1] with apolitical fiscal policies will be interesting to observe. I've not seen much on it since, but it'll certainly be tested in the not too distant future.
[1] http://www.economist.com/blogs/freeexchange/2013/10/fiscal-p...
And who makes up the government that writes and votes on these laws? And who uses their money to influence the people in these positions?
My guess is the upper class of FTE works in the top 1/5 of the population? Although, maybe it's more apt to say the 1% or 0.1% who are not workers?
Does the author include the business owners and elites in their top 1/5 of the population? Or are they a different subset as they are not workers?
Slavery. Jim Crow. Subsidized discrimination. The war on drugs. Several generations of government coercion used for evil. Peter Temin is advocating to fix the problem with more coercion.
Am I supposed to believe that we've somehow evolved past prejudice? That prejudiced people won't gain influential office and use Temin's prescriptions to target those they hate? Sounds like more of the same.
Let's break the wheel and give everyone the same opportunity.
As a bleeding heart libertarian, I always wonder why liberals want to place more burdens on business - force them to pay more in wages and health benefits - instead of just having the government provide health care and increase the Earned Income Tax Credit and make it easier for employers to pass the EiTC to eligible workers through the payroll tax.
In other words, just like the government can have business pass taxes to the government on behalf of the employees why not just the opposite, have the government give businesses credits to pay employees through the already existing EITC?
[1] America is Regressing into a Developing Nation for Most People https://www.ineteconomics.org/perspectives/blog/america-is-r... https://news.ycombinator.com/item?id=14158310
[2] Why Poverty Is Like a Disease http://nautil.us/issue/47/consciousness/why-poverty-is-like-... https://news.ycombinator.com/item?id=14201822
This is quizzical. Most cities spend more money per pupil than suburbs and rural areas; which suggests that poor education in urban areas is a function of institutional corruption and not lack of funding.
I think you might mean "This is questionable". Quizzical is an adjective applied to people's expressions or behavior, implying that they are puzzled, confused, or questioning. It is not an appropriate word for suggesting that an argument is dubious.
[Assume a standard grammar Nazi mea culpa here, if language corrections are annoying to you.]
[Assume a standard grammar allied powers mea culpa here, if language corrections are annoying to you.]
> thæm
I suspect the so-called Allied powers are trying to instigate a war, but we will not be provoked.
> i read gp as using quizzical as a verb
That reading of gp's intent, while plausible, still involves an in-apt usage of the word. At best, you might say "This makes me quizzical", but that would still be an awkward way to express your doubts about the validity of the argument.
It also has to do with lack of support at home. Suburban households are more likely to make sure their kids do their homework, come to parent teacher conferences, and discipline their kids when they do wrong.
Poorer families lack the resources and time to make that happen. My sister has taught at 3 such schools over 10 years and lack of parental support for education is the norm.
I think we're going to need more concrete recommendations than that.
Aree you going to say the same thing about Jim Crow laws? There has been a systematic will to enslave and degrade black people in America, and this is a continuing effort.
Are you mad, or are you posting from the wrong century?
Reality is tough, huh?
Jim Crow laws are from 1965, they directly connect to this country's history of slavery. That is not "so old" at all. And variations of Jim Crow laws still persist to this day, hence the Voting Rights Acts. That there are clever derivatives of these practices does not at all mean "they are so old they have no resemblance of". Yes foolish person, they do have resemblance of.
http://www.huffingtonpost.com/entry/pasadena-texas-voting-ri...
For some book ideas so you can work on your ignorance of this present day relevant history: https://www.nytimes.com/2017/03/16/books/review/chris-hayes-...
Once you involve market forces, and worse, the issuing of stock leading to ownership by a class that demands immediate returns of money for their investment, private agencies are seemingly required to screw over citizens, because that's how you extract money from them in large quantities.
Contrasted to that, the bureaucracy of public entities is a much more insignificant problem. Public internet might be sort of 'third world', but right now they are kicking our butts in that, and Comcast might be working hard (meh…) but they are not working for you, they are working to extract capital out of you in the most efficient manner possible.
Once you include the caveat of 'all citizens' (even in Podunkville) it's not even an argument anymore. There's an assumption that it's right and proper to hose Podunkville because they're not the big city and shouldn't have nice things if their productivity doesn't warrant it, and this assumption is fair to challenge or even contradict outright. I'm rooting for Podunkville (the big city doesn't need my ideological help) so I'm in favor of public entities.
I guess we'll be seeing some experimentation, in that we're likely to see a heavy swing to privatization right now, and most likely a counter-swing in four to eight years. Should be worth keeping track of how it all works. That 'all citizens', though, that's a conditional which is at the heart of the discussion.
He makes a strong point.
Now, I'm a white guy, my father owned a small business after selling his scanning electron microscope company to a bigger player. He paid for my University education outright including rent. I had to work for any spending money I wanted, but I basically had a free ride into my current programming job.
A poor black kid living in a high-violent-crime area who is the child of a minimum-wage-working single mother, is not going to have the same chances.
If he gets caught underage by cops with a six pack of beers or a jar of mixed hard-alchohol stolen from a liquor cabinet, or good forbid enough marijuana for a joint, he's not going to be able to rely on his parents' to hire the lawyer to get those charges removed.
This is (according to this article and others) traceable in a large part back to slavery. But it also comes from gererational poverty. Lack of parental resources leading to malnutrition, which leads to inattention in school, parental long hours at work leads to a lack of attention and corrective feedback. Or the parents are addicted to something and modelling bad behavior to begin with.
The child in these cases starts innocent and realistically has an infantessemal chance of success.
The solution is for government programs to tax me and people like me to provide simple things that can help break the cycle of poverty.
Free breakfast and lunch for kids, raise minimum wage, etc...
The Palmer Luckey's of the world have to catch on to just how fucking privileged they are as middle class white kids.
These articles don't deserve to be rejected outright under "bias" they're based on real solid research.
It'd be even better to end institutionalized racism, institute a mass pardon program, and pay reparations to the victims of Nixon's stupid escalation of the war on plants:
At the time [1994], I was writing a book
about the politics of drug prohibition. I
started to ask Ehrlichman a series of
earnest, wonky questions that he impatiently
waved away. “You want to know what this was
really all about?” he asked with the
bluntness of a man who, after public disgrace
and a stretch in federal prison, had little
left to protect. “The Nixon campaign in 1968,
and the Nixon White House after that, had two
enemies: the antiwar left and black people.
You understand what I’m saying? We knew we
couldn’t make it illegal to be either against
the war or black, but by getting the public
to associate the hippies with marijuana and
blacks with heroin, and then criminalizing
both heavily, we could disrupt those
communities. We could arrest their leaders,
raid their homes, break up their meetings,
and vilify them night after night on the
evening news. Did we know we were lying about
the drugs? Of course we did.”
edit: John Taylor Gatto [1] points out in one of his books that black families were pretty stable post-civil-war, until the governments started sending black men to prison for teh ganja. Children do better when they have a father around.
I'm curious if you've ever lived in these areas and had friends that fit the description of your comment.
I think you'll find that inner city kids get just as many breaks as suburban white kids. You'd have a point if it was the black ghetto kid in the suburbs being caught at a party - but within the city environment absolutely no way. The kids who got in trouble for that stuff growing up were on their 14th chance.
I lived in such a neighborhood and had local friends growing up. It took a lot to get arrested for something as simple as a joint. You were generally well known as a troublemaker by then, and rightfully so.
The typical response to those issues was dumping out the liquor/drugs and telling the kid to go home unless he was a known problem, in which case yeah - the cops used broken window policing to get them off the streets.
We're not going to solve inequality by nudging people up from the bottom. We've gotta tackle the elephant in the room: capital pays more and capital is easier to move around than labour. That's all there is to it.
If you want to refine the cause of inequality, that's fair, but on the face of it, calling it political and somehow therefore invalid or a weak argument, is itself weak and invalid.
I'd refine it by saying the reason is when exploitation is considered valid and moral, it exists for a purpose. It is OK to select your targets, where you gain and they lose, if they don't stop you. It's finders keepers losers weepers. It's a game of might makes right. You either agree that there are superior people with superior ideas and it's morally OK to exploit others, or you don't. But I consider exploitation the superset cause of inequality.
The specific instance of this exploitation in American history has been various kinds of servitude, varying from targeting races (African, Chinese, Irish, Italian). And even today there's exploitation that's class based: trying to make public institutions in a democratic tradition a pay for play, or privatized. Justice, education, privacy - these are products to be paid for, and if you can't pay, you get none or you get lower quality versions.