Atlantic: You need not be in the 1 percent to be part of the problem anymore

“The 9.9 Percent Is the New American Aristocracy: The class divide is already toxic, and is fast becoming unbridgeable. You’re probably part of the problem.” (Atlantic) is making the rounds of my Facebook friends. The author says that he lives among the mansions of Brookline, Massachusetts where his pro-immigration neighbors seek low-cost nannies to come to their $3 million houses and take care of children. (See “Elizabeth Warren helps another politician raise money on a ‘get money out of politics’ platform” for my last post about a trip to this neighborhood.)

Figure 1 is kind of interesting. If you slice and dice American wealth enough times you can find some interesting patterns. The figure shows that the great rise in “wealth” for the top 0.1 percent has come mostly from the bottom 90 percent and not from the top 10 percent. This would be kind of upsetting in a constant-wealth and constant-population society. But in an economy that has been getting wealthier overall, does this mean that a substantial cohort of American families are actually getting poorer? That information cannot be determined from this upsetting-on-its-face figure. The figure also ignores immigration. We have been admitting tens of millions of low-skill immigrants. Most of them are in the “bottom 90 percent”. But they didn’t have wealth taken from them by the Top 0.1 percent. Most of them weren’t even here in the U.S. when the purported “taking” was occuring.

[Separately, in a non-market economy such as the U.S. I question statistics on “wealth.” The person who has the right to live in public housing in Cambridge, for example, has an official wealth of $0. Yet the person has the lifetime right to occupy, and often pass down to descendants, an apartment that could sell for $1 million. Also an entitlement to food stamps (SNAP), health insurance, a free smartphone, etc. Oxfam, when they’re not partying with paid women in Chad and Haiti, marks these apparent assets to $0 and concludes that low-income Americans are worse off than the poorest people in China and India. But if these folks living in Cambridge Public Housing or in taxpayer-funded housing in San Francisco or Manhattan would not trade places with the pooreset families in India, $0 seems like the wrong number.]

The author is a implicit but huge denier of the research presented in “The Son Also Rises: economics history with everyday applications”. Children who grow in a town with a highly ranked public school are likely to be successful because of the superior education that they receive. Certainly it could not be the case that towns in which successful parents live tend to contain children who will put up strong test scores and thus make it look like the local public schools are awesome. Example:

Nowhere are the mechanics of the growing geographic divide more evident than in the system of primary and secondary education. Public schools were born amid hopes of opportunity for all; the best of them have now been effectively reprivatized to better serve the upper classes. According to a widely used school-ranking service, out of more than 5,000 public elementary schools in California, the top 11 are located in Palo Alto. They’re free and open to the public. All you have to do is move into a town where the median home value is $3,211,100. Scarsdale, New York, looks like a steal in comparison: The public high schools in that area funnel dozens of graduates to Ivy League colleges every year, and yet the median home value is a mere $1,403,600.

(Note that this is pretty much the opposite of the advice that college admissions counselors give. If you have a smart kid and want him or her to get into college (and don’t want to check an official victim group status box that will guarantee admission), you’ll be told to move AWAY from towns such as Scarsdale.)

In an article on economics, the author treats marriage and divorce as being immune from economic incentives (the same magazine in 2017 published “America, Home of the Transactional Marriage,” taking the opposite perspective):

Since the 1970s, the divorce rate has declined significantly among college-educated couples, while it has risen dramatically among couples with only a high-school education—even as marriage itself has become less common. The rate of single parenting is in turn the single most significant predictor of social immobility across counties, according to a study led by the Stanford economist Raj Chetty. … The fact of the matter is that we have silently and collectively opted for inequality, and this is what inequality does. It turns marriage into a luxury good, and a stable family life into a privilege that the moneyed elite can pass along to their children.

Nowhere does the author mention that economic incentives have changed dramatically since the 1970s. Today, unless a high-income partner can be persuaded to marry, it is not economically rational to marry. Child support guidelines that were mandated at the end of the 1980s made it just as profitable to collect on an out-of-wedlock child as it had been to collect on the child of a marriage (see “History of Divorce”). Having sex for one evening with a medium-income partner is more lucrative than marrying a low-income partner (see “Child Support Litigation without a Marriage”). Having three children with three different sex partners is more lucrative than having children with one long-term co-parent. Having the government as a financial partner is better than being married to a low-income, or even a median-income partner. See, for example, Table 4 of the 2013 Work v. Welfare tradeoff study (the latest available), in which in the author’s home state of Massachusetts a single mom collecting welfare can get 118 percent of the state’s median salary. If she were to marry she would likely have a lower spending power (and, according to a TODAY Show poll, have a lot more stress because husbands are annoying and don’t help them enough with child- and household-related tasks). The genius who writes for the Atlantic does not consider the possibility that low-income Americans are just as smart and rational as he is, but face different choices and incentives.

[This is a common blind spot for high-income Americans. See “Paying the price for breakdown of the country’s bourgeois culture” (Philadelphia Inquirer) by Amy Wax, later a disgraced law professor (she said that students admitted under race-based affirmative action programs didn’t do well), and Larry Alexander, a non-disgraced (as far as I know) law professor:

Almost half of all children are born out of wedlock, and even more are raised by single mothers.

This cultural script began to break down in the late 1960s. A combination of factors — prosperity, the Pill, the expansion of higher education, and the doubts surrounding the Vietnam War — encouraged an antiauthoritarian, adolescent, wish-fulfillment ideal — sex, drugs, and rock-and-roll — that was unworthy of, and unworkable for, a mature, prosperous adult society.

But restoring the hegemony of the bourgeois culture will require the arbiters of culture — the academics, media, and Hollywood — to relinquish multicultural grievance polemics and the preening pretense of defending the downtrodden. Instead of bashing the bourgeois culture, they should return to the 1950s posture of celebrating it.

Professor Wax assumes that low-income Americans have a different (and inferior) “culture” to hers. It never occurs to her that the government set things up so that they could maximize their spending power by being “single mothers.” (Obviously they could have a higher spending power by becoming a dermatologist or marrying and staying married to a dermatologist, but those berths are limited whereas Welfare entitlements are, by definition, unlimited.) She watches people come to her school every day, pay tuition, and work to become lawyers. She presumably thinks that this is not because they came from a “culture” in which people wanted to become lawyers, but rather becuase of the salaries paid by law firms. Yet when she sees poor Americans behaving in a certain way, this is definitely attributable to “culture” rather than rational economic choices.]

On the third hand, maybe there is something to what this guy has to say. Here’s a recent Facebook posting from a friend. He is an engineer and his wife is a physician. They live in a suburb with highly ranked public schools, but pay for private school. Here is the school-related issue that concerns him currently…

So our son [Donatello]’s ocean school trip is on a 137 foot sailboat. They have the kids work on deck, and make us sign a waiver, but they don’t have any kids wear life jackets. I think that is nuts. But boat person culture is to not wear one. Few people do.

They explained that “They have all mandated safety equipment on board” and “Life jackets are bulky and hard to work in.” We have a Mustang Survival auto-inflating jacket! They are not hard to work in. This school bans peanuts but doesn’t use life jackets when working on deck?

(Not sure that his use of the term “boat person” is appropriate in the context of private school brats on a yacht… Perhaps this isn’t the best argument for an MIT education.)

The author concludes with a call for a planned economy, basically:

History shows us a number of aristocracies that have made good choices. The 9.9 percenters of ancient Athens held off the dead tide of the Gatsby Curve for a time, even if democracy wasn’t quite the right word for their system of government. America’s first generation of revolutionaries was mostly 9.9 percenters, and yet they turned their backs on the man at the very top in order to create a government of, by, and for the people. The best revolutions do not start at the bottom; they are the work of the upper-middle class.

Yes, the kind of change that really matters is going to require action from the federal government. That which creates monopoly power can also destroy it; that which allows money into politics can also take it out; that which has transferred power from labor to capital can transfer it back. Change also needs to happen at the state and local levels. How else are we going to open up our neighborhoods and restore the public character of education? … We should be fighting for opportunities for other people’s children as if the future of our own children depended on it. It probably does.

Why isn’t the immediate solution to stop low-skill immigration, including of “refugees”? If we are at imminent risk of a violent revolution and urgently need government action to raise the spending power and life quality of the lowest income Americans, why would we want to increase the size of this angry mob by 1-2 million people per year (low-skill immigrants plus children of low-skill immigrants). The author doesn’t consider the scale of immigration as something that the central planners should set.