It's Hard to Fight Poverty....

So why try?

If you define the American Dream as the Horatio Alger myth, no doubt, its exaggerated and unrealistic. But if you define it more modestly as,

...a “social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are.”

Sure, that may be a somewhat utopian ideal, but why not strive for it? Why is Robert Samuelson so quick to discard the idea that we can, as a nation, aspire to achieve a level of equity in which children aren't discarded based upon their parents' economic circumstances, but are instead given an opportunity to achieve consistent with their abilities?

Samuelson complains that people were urged to pursue college degrees that did not return economic reward, and that people were encouraged (even facilitated) into buying homes that they could not afford. But the fact that a minority of college students and homeowners have bad experiences, in no small part due to overreaching, doesn't lend any support to the argument that they, or the much larger number of people who don't overreach, should not have the opportunity to reach in the first place.

Samuelson confuses equality of opportunity and equality of outcome. Can he truly not see the difference?

David Brooks on the Work Ethic

I had intended to follow up my post, David Brooks vs. The Facts, by challenging his assertion that "nations like Germany and the U.S." are rich because we share "values, habits and [a] social contract upon which the entire prosperity of the West is based", to be distinguished from the European nations presently in crisis, but a flood of others have already done the job. I will grant that it's true, you will find commonalities between western democracies, but as those others have pointed out, when Brooks attacks nations like Greece and Italy and praises Germany he ignores Germany's higher social spending, lower average annual hours worked, high government spending, and embrace of social democracy.

Brooks states a basic philosophy that most people would describe as fair:

People who work hard and play by the rules should have a fair shot at prosperity. Money should go to people on the basis of merit and enterprise. Self-control should be rewarded while laziness and self-indulgence should not. Community institutions should nurture responsibility and fairness.

He's also correct that you can undermine that ethos, one of the obvious lessons we can draw from the communist experiment. But I think he's being both parochial and incorrect when he argues that there exists some form of Northern European / North American work ethic that simply doesn't exist in the rest of the world. I also think he misunderstands the genesis of the work ethic and what sustains it.

Let's start with Brooks' observations about the supposed decline of work ethic, something he believes is a new phenomenon,

Right now, this ethos is being undermined from all directions. People see lobbyists diverting money on the basis of connections; they see traders making millions off of short-term manipulations; they see governments stealing money from future generations to reward current voters.

Does Brooks believe that lobbyists are new? That historically they have not diverted money "on the basis of connections"? Such a belief would seem to be completely at odds with history. As for "traders making millions off of short-term manipulations", since when is that new? When we transitioned from Jimmy Carter telling us to tighten our belts to Ronald Reagan's ushering in the era of "Greed is Good", we witnessed the Savings and Loan debacle, insider trading scandals, and plenty of evidence of crony capitalism. Brooks' notion that workers have suddenly become lazy because "they see governments stealing money from future generations to reward current voters" seems absurd.

Although it's true that Medicare costs more than one would have anticipated when the system was created, and as it turns out Social Security is on the whole a good deal for most lower- and middle-earning workers (and not such a bad deal for workers who want some level of affordable disability insurance), does Brooks truly see that the nation's living up to its promises to workers who have paid into those systems over the course of their working lives constitutes "theft"? And if he does, why the praise for social democracies like "Germany and the Netherlands" that "steal" even more money to ensure that retirees avoid poverty and citizens have access to quality healthcare? It's simply not the case that the work ethic has materially changed since the housing bubble burst, or that it is weakened by offering workers the promise of eventual retirement or access to medical care.

Further, in speaking of nations that "have lived within their means, undertaken painful reforms, enhanced their competitiveness and reinforced good values," he explicitly omits mention of the United States. That's fair, given that by Brooks' measure we do not appear to have done any of those things. Yet there we are, in Brooks' mind, sitting at the top of the heap of exceptional nations due to our work ethic. What gives?

As with "kids these days" editorials, people have been writing about the decline of the work ethic pretty much since the time it was first conceptualized. Brooks seems to be asserting two contradictory thoughts - first, that the U.S. has a remarkable work ethic as compared to the rest of the world, and second that it is newly threatened by the scandals of the past six years.

I am reminded of John McCain's comments from a few years ago, suggesting that Americans are too lazy to perform hard physical labor, and wouldn't spend a season picking lettuce even at $50 per hour. If a willingness to pick lettuce or work in sweatshop conditions for wages that are a small fraction of that $50, it would see that Americans have nothing on the poor of the world - China has no shortage of workers willing to toil in factories for long hours under unpleasant conditions, Southeast Asia is full of factories producing consumer goods in what can reasonably be called sweatshop conditions, and we use thousands of Mexicans, both legally and illegally in the U.S., to harvest crops, clean houses, cut lawns, or work in the building trades. You could draw a comparison to the working poor of the industrial revolution, who also worked ridiculous hours in horrible conditions for meager pay. The commonality, of course, is not "habits, values and social capital" or a delusion held by the workers that their jobs will lead to "a fair shot at prosperity" - it's their lack of better alternatives, and fear of what will happen if they lose their meager remuneration.

Even though by historic standards, taxes are low, without presenting any evidence to support his claim Brooks contends that people are put off working by the notion that the government is "stealing" their money to support unworthy others. Can Brooks name one person who has "Gone Galt" due to the fact that our nation hasn't completely eliminated its comparatively meager social safety net, or because seniors get Social Security and Medicare? One person who has so much as slacked off at work over outrage over lobbying in Washington? When the Tea Partiers rose up against the financial industry bailout, did they quit their jobs? What am I missing?

The real lesson from financial crises is that, at the pit of the crisis, you do what you have to do. You bail out the banks. You bail out the weak European governments. But, at the same time, you lock in policies that reinforce the fundamental link between effort and reward. And, as soon as the crisis passes, you move to repair the legitimacy of the system.

Let's relate that suggestion to the U.S. - what did we do after the financial industry bailout to "reinforce the fundamental link between effort and reward" or "repair the legitimacy of the system"? The steps the government took would seemingly fall under Brooks' conception of "stealing money from future generations", with a huge reward going to a privileged special interest, well represented by lobbyists, as opposed to "current voters". But no, it's not stealing to take hundreds of billions of taxpayer dollars from future generations in order to ensure that bankers never miss a bonus - that's "necessary". But if you promise somebody approaching retirement, who has paid into Social Security and Medicare for their entire career, that you will fulfill the promise that it will be there when they retire, Brooks apparently sees an act of "theft". (Does Brooks endorse any financial industry reforms that will make that industry less of a lottery, help ensure that there won't be additional crises and tie pay to actual performance?)

Although taking away the social safety net, job security, decent wages, and the other factors that helped our nation develop its middle class may in fact be effective at creating a population desperate enough to take any work at any wage, it would seem to move us much more toward the ethos of China or Cambodia than that of Germany. The retort, "But we'll still have the Horatio Alger myth", seems like small solace.

Inequality, Opportunity and the "1%" Metaphor

David Brooks presents one of his trademark "two types of people" columns, in which he attempts to distinguish between the urban super-rich (the beneficiaries of "what you might call Blue Inequality") and the economic differences in the rest of the country between those with a college degree and those without ("what you might call Red Inequality"). I've heard of the "Royal we", I guess this is Brooks' counterpart. Of "Blue inequality", Brooks tells us,

Roughly 31 percent started or manage nonfinancial businesses. About 16 percent are doctors, 14 percent are in finance, 8 percent are lawyers, 5 percent are engineers and about 2 percent are in sports, entertainment or the media.

I guess that's Brooks' way of trying to argue that anger at the 1% is misplaced - it's not doctors, engineers or entertainers who blew up the economy or who profited from the bailouts. It's not even the lawyers. Brooks, I believe, is being deliberately obtuse here, focusing on wages and not wealth, and also in treating the "1%" figure as literal instead of as a metaphor. (As Paul Krugman has noted, to avoid a metaphor the better number to use would be "the top 0.1 percent — the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.")

Brooks, using broad, unsupported stereotypes, complains that people are focusing on the wrong problems. Why do we focus on what Brooks calls "Blue inequaltiy"?

That’s because the protesters and media people who cover them tend to live in or near the big cities, where the top 1 percent is so evident. That’s because the liberal arts majors like to express their disdain for the shallow business and finance majors who make all the money. That’s because it is easier to talk about the inequality of stock options than it is to talk about inequalities of family structure, child rearing patterns and educational attainment. That’s because many people are wedded to the notion that our problems are caused by an oppressive privileged class that perpetually keeps its boot stomped on the neck of the common man.

It's fair to note that in attempting to define "Red inequality" Brooks is largely describing a category of people who don't fall into either the literal or metaphorical 1% - Brooks recognizes the metaphor when he cries, "Look over there at the real problem, Red inequality", but if he is going to insist that the 1% is to be taken literally the reason people focus on what he calls "Blue inequality" is because that's where you're going to find most of the members of that literal 1%. I guess we're calling them "blue" because the nation's largest cities tend to vote for Democrats, never mind that the elite he's talking about are more apt to range, on a political color chart, from purple to bright red.

I see the references to "the 1%" as being more metaphorical. Over the past thirty years of middle class stagnation, 1% of the population has fared very well. And although the overlap is imperfect, when the financial elite came close to crashing the world economy, landing us in a protracted recession and 'jobless recovery', they were rewarded with hundreds of billions of dollars in bail-out funds, courtesy of the rest of us, that allowed them to maintain their sensational salaries and bonuses, and in some cases to enjoy record earnings and bonuses even over the course of this recession. Brooks elides the early Tea Party from history, perhaps because he has a short memory, perhaps because he doesn't want to acknowledge how easily they were coopted by corporate America, and perhaps because they don't fit his hollow man attack on "liberal arts majors like to express their disdain for the shallow business and finance majors who make all the money", but he should take another look - the Tea Party movement got its start as a reaction to TARP. Brooks' "Red inequality" is a different story.

Brooks doesn't appear to read his fellow Times columnists, but a few days ago Tom Friedman wrote a column that does a much better job of identifying what the "1%" metaphor is about: People want justice, and increasingly see the system as rigged:

Our financial industry has grown so large and rich it has corrupted our real institutions through political donations. As Senator Richard Durbin, an Illinois Democrat, bluntly said in a 2009 radio interview, despite having caused this crisis, these same financial firms “are still the most powerful lobby on Capitol Hill. And they, frankly, own the place.”

Our Congress today is a forum for legalized bribery. One consumer group using information from Opensecrets.org calculates that the financial services industry, including real estate, spent $2.3 billion on federal campaign contributions from 1990 to 2010, which was more than the health care, energy, defense, agriculture and transportation industries combined. Why are there 61 members on the House Committee on Financial Services? So many congressmen want to be in a position to sell votes to Wall Street.

In terms of "Red inequality" Brooks makes a valid point, but on the whole he misses the forest for the trees.

Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 percent more than the average high school graduate, according to the Fed chairman, Ben Bernanke. Now the average college graduate makes more than 75 percent more.

Moreover, college graduates have become good at passing down advantages to their children. If you are born with parents who are college graduates, your odds of getting through college are excellent. If you are born to high school grads, your odds are terrible.

In fact, the income differentials understate the chasm between college and high school grads. In the 1970s, high school and college grads had very similar family structures. Today, college grads are much more likely to get married, they are much less likely to get divorced and they are much, much less likely to have a child out of wedlock.

I can sympathize with the idea that our nation would be better off if more people succeeded academically, but we're not going to educate our way back to equality. But that would require us to accept any number of conceits: That everybody is college material, that getting a college degree confers an automatic benefit in the job market regardless of school or major, and that a virtually unlimited number of well-paying job opportunities are waiting to be taken by new college graduates. As Paul Krugman puts it,

Workers with college degrees have indeed, on average, done better than workers without, and the gap has generally widened over time. But highly educated Americans have by no means been immune to income stagnation and growing economic insecurity. Wage gains for most college-educated workers have been unimpressive (and nonexistent since 2000), while even the well-educated can no longer count on getting jobs with good benefits. In particular, these days workers with a college degree but no further degrees are less likely to get workplace health coverage than workers with only a high school degree were in 1979.

So who is getting the big gains? A very small, wealthy minority.

The social problems that Brooks associates with "Red inequality" are real, and the problem is growing:

In the 1970s, high school and college grads had very similar family structures. Today, college grads are much more likely to get married, they are much less likely to get divorced and they are much, much less likely to have a child out of wedlock.

In other words, by Brooks' own statistics, high school grads used to fare much better despite not having degrees, so it stands to reason that the changes have nothing to do with college. The biggest differences are that high school graduates can no longer expect to earn a middle class income, and that many have had a difficult time transitioning into a new economy in which they have to accept low-paying, low-prestige jobs in the service industries. For a lot of these people, a college degree would mean delaying entry into the job market, incurring tens of thousands of dollars in debt, then having to accept low-paying, low-prestige jobs in the service industries - that is to say, the same thing, but worse.

I truly wish the solution to our nation's problems were, "Make sure everybody graduates from high school prepared to go to college, then have everybody get a college degree." As difficult as that would be to accomplish, I suspect it would be easier than finding actual, working solutions. Perhaps that's why we have the college fixation - it's easier to offer up a combination of denial and wishful thinking than to come up with even a partial solution with "real world" application.

"Who Are You Going To Believe - David Brooks Or Your Lying Wallet"

Hacks like David Brooks invest a lot of energy spouting absolute nonsense designed to convince people that the economy is great for everybody. Another reality check for Brooks:

When it comes to the way Bush is handling the economy, 23% of registered voters approve of the way Bush is handling the economy and 72% disapprove.

Brooks, presumably, would attribute that to mass delusion... at least in public. I'll assume that, despite the content of his columns, he knows better.

Human Capital

A recent column by David Brooks, A Human Capital Agenda, left me a bit perplexed. He endorses as "conservative" a slate of ideas not traditionally associated with conservativism, tosses in a platitude or two to appease the "family values" crowd, and embraces the Horatio Alger myth in defense of inequality. I know he calls himself a conservative, but what does he believe that means?

He embraces Bush's early endorsement of "compassionate conservativism", an idea that never got off the ground, as a "masterstroke [that] should be instructive to anybody running for president today." I could sarcastically ask, "Who says they haven't noticed? Find me a candidate who isn't spouting a load of nonsense that he or she doesn't actually believe." But Brooks seems sincere in this call for conservative populism. He continues in his column with a call for better investment in public education, including the provision of quality daycare for the children of "disorganized single-parent homes". (I guess organized single parents and disorganized "intact" families will have to continue to pay their own way.) To make this call "conservative", he endorses school vouchers - who cares that there is no evidence that, on the whole, they provide any meaningful benefit to their recipients.

He also endorses an expanded wealth transfer from the rich and middle class to the poor in the form of "increasing child tax credits to reduce economic stress on young families". And in almost ths same breath he deplores "liberal populists" who believe in "redistribution policies".) He obviously doesn't consider himself to be a liberal populist, but he tells us, "Conservatives and independents do not" believe in redistribution policies. So again, what does that make Brooks?

Brooks presents the platitude, that his human capital agenda "means encouraging marriage, the best educational institution we have". Sure. Let's shutter the schools, marry preschoolers to each other, and we'll have the best educated society in world history. I would ask what Brooks is thinking, but with the possible exception of "this prattle will make some of my less thoughtful, 'family values' readers happy," he obviously isn't.

Brooks also advances this idiotic caricature:

Liberal populists believe the global economy is so broken all the benefits of it go to the top 0.01 percent. Independents and conservatives observe that hard work still leads to success. Liberals emphasize inequality. Moderates and conservatives believe inequality is acceptable so long as there is opportunity.

In the 1980s, Republican supply-side policies helped spur investment. Today, the world is awash in money. That’s not the problem. Instead the shortage is in people to invest in.

Gee... So the reason that wages aren't rising for the poor and middle classes has nothing to do with the nature of our system. It's that they don't work hard enough, and aren't a worthy "investment." Brooks ovestates his case - not every independent or conservative is as quick to lock Horatio Alger into that type of bear hug.