13 thoughts on “Harvard’s Stars Ponder Income Inequality”

  1. The reluctance to acknowledge the role of elite corruption and predation in increasing inequality seems remarkable to me. The closest anyone comes, is an oblique and ambiguous reference to our increasingly dysfunctional democracy: “What can we do realistically, given the present economic and political [reality] . . . ”

    So, let’s imagine you are in the bottom half. The precious 1% (or 1/10th of 1% more likely) have taken your house, your job, your pension, your retirement savings, your children’s college education and now they want your Social Security. Where’s the problem?

    Katz is quoted, rationalizing extremely high “compensation” for chief executives of large corporations. Where is the careful reasoning we should expect of the best and brightest? Does anyone imagine that a $20 million payday might lead to short tenures at the top? To corrupt financial reporting standards? To high-risk manuevers? To a short-term mentality of “I’ll be gone, you’ll be gone?” We have added hundreds of billions to the national debt, rescuing financial institutions and the economy from incompetent and corrupt executives, who were paid millions, none of whom have been prosecuted, few of whom have even been penalized economically, and we’re talking about raising the minimum wage?! Improving public schools?

    1. Well, I read it a little differently: the panelists are wistful for smaller inequality of the 50s-70s, and they point to institutional arrangements of the time (notably, strong industrial unions) as having had a lot to do with it. They seem to assume (and it seems me they are likely right) that absent a thumb on the scale, things will go on much as they are now. So they suggest making the schools better, so kids from poorer families can compete.

      My guess is you can’t get the unions back - they depended on conditions for manufacturing being much more favorable in the US than in our trading partners, and that’s not true anymore and there’s no reason to think it ever will be again. The only unions which are surviving are the public sector unions, which get their gains from increasing taxes on other citizens, and which are getting increasing pushback from those other citizens (eg Governor Brown, Wisconsin, New Jersey).

      1. What keeps unions from coming back is hostility to unions. It’s not about the manufacturing base. There are plenty of service-sector unions. Making the schools better won’t, of course, really help kids from poor families compete, because the returns to higher education have been decreasing. What it might do it give the kids from poor families a better understanding of the political structures they live in. And that’s why it’s generally opposed, the way universal literacy has almost always been opposed by oligarchies.

      2. On schools, obviously a complex problem…

        It may seem like the same thing, but I would argue instead of making schools better, we need to radically transform them. The implication I’m getting at is that schools as currently configured are doing about as well as you would expect them under the circumstances, which can be generally summed up as concentrated poverty. Proposals like school choice, weakened unions, pay for performance, charters, etc. all emphasize the *job* schools are doing. But this is like using the wrong tool for the job and trying to figure out how to use it better.

        Concentrated poverty is an economic and social reality. But what we can do is treat the population with the seriousness it requires. If we really want to give this population an equal education, we have to invest orders of magnitude more in interventions. All the research shows that poor student populations are facing incredible emotional, cognitive, etc. disadvantages, and we are asking schools to make up for it. My suggestion is to target at-risk populations, dramatically reduce class-sizes, set up coordinated intervention teams at each site that work with social workers, counselors and home aids to deliver family-specific interventions, refer parents for classes (work credit should be given, treating parenthood as the job that it is), invest in after-school programs and community centers designed to build human and social capital, and bring back an emphasis on the trades.

        We can’t expect poor families to perform at the level of middle class families. Many would decry this as paternalism, but I think it is almost disrespectful to the challenges they face to pretend that they can do better than they can - and then (therefore) blame them when they fail. “Schooling” for the poor needs to be completely rethought, and taken out of the old 1:30 student:teacher ratio, where the outcomes are more Darwinian than anything else. Actually acknowledging their plight, and truly offering them interventions that work would ultimately be less paternalistic than anything, as it believes in them in an authentic way, as opposed to a feel-good fantasy about what we would like them to be that set them up for failure.

        1. Brother, can you spare $100 billion? It would be cheaper to make the poor less poor, and less obviously stuck in an underclass, than to rethink just the schools in this way.

        2. “Proposals like school choice, weakened unions, pay for performance, charters, etc. all emphasize the *job* schools are doing. But this is like using the wrong tool for the job and trying to figure out how to use it better.”

          Some of these approaches do allow schools to improve wrong tool or not. For example, New Orleans’ public schools have improved a lot in recent years. And are continuing to improve. When creative destruction doesn’t or is prohibited from working, you may have to settle for chaotic destruction. In the case of New Orleans’ schools, it was a hurricane.

          1. Even if that’s true, it won’t help inequality. We will just have more smart people who can’t find jobs to pay off their student loans.

            If each of us is conditioned to accept that a dog-eat-dog world is the best we can hope for, then nothing will change.

            There’s no substitute for unions and for progressive politics. Never has been, never gonna be.

          2. “There’s no substitute for unions and for progressive politics. Never has been, never gonna be.”

            Except that the number of people who disagree with you; and conservatives too for that matter; is growing.

  2. Bruce Wilder says:
    December 5, 2011 at 8:47 pm

    “The reluctance to acknowledge the role of elite corruption and predation in increasing inequality seems remarkable to me. ”

    This was the usual blah-blah-blah I’ve come to expect from such panels, and the deliberate and typical Harvard covering for elite criminality reluctance to acknowledge … does not surprise me. That’s part of Harvard’s mission, to predate on society.

    And, of course, the intellectual level was piss-poor, which for a link from Matthew does not surprise me, either.

    1. Unless, just unless - similar policies have been implemented. Let’s call them ‘neoliberal’, just to make up a word from random letters.

  4. OK, so maybe our plutocrats are not especially evvviiiil. Grant that, despite the evidence. Still, why would we not want to inquire into how institutional arrangements promote increasing degrees of inequality? How do rich people get rich? Is the process so entirely independent of what makes people poor that we just assume that *the* problem is a deficiency among the poor? And, how do poor people get poor and remain poor? Is that process entirely independent of what makes some people, rich?

    To take the simplest example, if the rich get (relatively) rich by reducing the wages of the (relatively) poor, isn’t that a factor in inequality? I suppose that’s what people are getting at, when they reference rates of unionization: that the working class has lost some of its bargaining leverage vis a vis the business executives and capitalist owners.

    I take dave schutz’s point over paul’s, I think. Industrial unions on the AFL-CIO model, at least, were bargaining over economic rents. De-regulation of transportation and liberalized trade in manufactured goods combined to eliminate the rents that the Teamsters in trucking, or the airline unions, or the auto and steel workers were successfully bargaining over. So, score one for neo-liberal reform.

    On the other hand, the devastation of midwest manufacturing in the last 15 years has been due to financialization of the economy. It began with the “strong dollar” policy of the late Clinton years, complementing the Asia currency pegs (“savings glut”) which fueled the housing bubble. If we don’t change that soon, the whole of the advanced global economy may be mired in an intractable depression, a la Japan, in which the lives of much of the working and middle classes are cannibalized. Score two for neo-liberal policy, but treating that as a fiat accompli, which cannot be reversed, is equivalent to national suicide. Two European democracies in recent weeks have been decapitated by bankers. The banker’s coup hypothesized by Baseline Scenario’s Simon Johnson isn’t just figurative. At this point, the state, itself, and not just unions, public sector or otherwise, is in play. But, perhaps I digress.

    How do rich people get rich in America, today? I don’t know what the optimal degree or level of inequality is. Talking about inequality in the abstract, as a statistical artifact on the most general level, makes me uncomfortable for that reason. I wouldn’t think perfect equality could ever be anything but a shared, and extreme, poverty. Inequality of some degree would arise out of a positive-sum game of social cooperation in productive economic activity. Inequality could arise, though, out of unrestrained domination, pushing social cooperation into realms, where the net is reduced, to enhance the relative status of the dominators. Is that where we are, today?

    It seems to me that there is plenty of evidence that the U.S. economy is structured to promote making the rich, richer, by means of making the poor, poorer. We are preserving an outsized and parasitical financial sector, marked by rampant control fraud, by means of a prolonged and severe economic depression. Interest rates on savings are vanishingly small and fees imposed on small savers are multiplying, while payday lenders and credit cards proliferate at usurious rates. The bankruptcy laws increasingly favor the lenders and collection agencies over working and middle-class borrowers, preventing the discharge or adjustment of their debts; imprisonment for debt is becoming possible again, in many states.

    The health care sector in the U.S. costs twice what it does in other advanced economies, and is expanding, driven by for-profit insurance, whcih can be nothing other than parasitical. The only reforms on the political horizon are promises to expand it further, in one way or another. Medical bankruptcy is commonplace in the U.S. I’m sure most of actual medical care is professional and caring, but at the margin, and in gross, it is predatory: it is reducing welfare and transferring income and wealth upward.

    Higher education, now financed by borrowing that makes peons out of many college students, is witnessing an expansion of proprietary, for-profit schools, and a shrinking of state-financing.

    These are serious, salient conditions in the U.S. economy. And, yet, the discussion gets side-tracked into a discussion of reforming public education (which, by the way, on the grade-school and high-school level, has been slowly improving over the last generation, as complaints about its performance have been ritualized).

    1. You know what might actually help? We need a progressive think tank of economists to go in and explain to Congressional Democrats what they need to be doing. I don’t care if it takes a decade to get anywhere. The economy wasn’t ruined overnight, after all. I think too many of them are still believers in “free” trade. Call it a Clinton hangover. (Though I’m sure Clinton meant well.)

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