“Inequality Starts In The Crib”: The United States Is Not A Meritocracy
The entire conservative ideological program on economics depends on cosmic justice: the idea that those who develop talent and work hard will succeed as they deserve, while those who are lazy and without skills will fail as they ought. That meritocratic concept is the justification for slashing all forms of assistance to the poor and the middle class from food stamps to healthcare. Further, if the rich got there by just deserts, then they should get even more money to keep being so productive for everyone else.
But if it turns out that there is no meritocracy–if the rich get there through privilege and luck rather than industry and talent–then the entire rest of the conservative agenda morally falls apart.
It just so happens that a new study shows that the United States does not, in fact, have a meritocracy:
America is the land of opportunity, just for some more than others. That’s because, in large part, inequality starts in the crib. Rich parents can afford to spend more time and money on their kids, and that gap has only grown the past few decades. Indeed, economists Greg Duncan and Richard Murnane calculate that, between 1972 and 2006, high-income parents increased their spending on “enrichment activities” for their children by 151 percent in inflation-adjusted terms, compared to 57 percent for low-income parents….
Even poor kids who do everything right don’t do much better than rich kids who do everything wrong. Advantages and disadvantages, in other words, tend to perpetuate themselves. You can see that in the above chart, based on a new paper from Richard Reeves and Isabel Sawhill, presented at the Federal Reserve Bank of Boston’s annual conference, which is underway.
Specifically, rich high school dropouts remain in the top about as much as poor college grads stay stuck in the bottom — 14 versus 16 percent, respectively. Not only that, but these low-income strivers are just as likely to end up in the bottom as these wealthy ne’er-do-wells. Some meritocracy.
What’s going on? Well, it’s all about glass floors and glass ceilings. Rich kids who can go work for the family business — and, in Canada at least, 70 percent of the sons of the top 1 percent do just that — or inherit the family estate don’t need a high school diploma to get ahead. It’s an extreme example of what economists call “opportunity hoarding.” That includes everything from legacy college admissions to unpaid internships that let affluent parents rig the game a little more in their children’s favor.
But even if they didn’t, low-income kids would still have a hard time getting ahead. That’s, in part, because they’re targets for diploma mills that load them up with debt, but not a lot of prospects. And even if they do get a good degree, at least when it comes to black families, they’re more likely to still live in impoverished neighborhoods that keep them disconnected from opportunities.
Everything about the conservative economic agenda is wrong not only on the merits (supply-side economics is a proven logistical failure, for instance), but from its very philosophical underpinnings.
There is no meritocracy. The rich do not get ahead by their industry and talent, but by luck and connections. It’s more about who you know, than what you know. Which means that anyone defending the right of the rich to take even more money is exalting a system as indefensible as the divine right of kings.
By: David Atkins, Political Animal, The Washington Monthly, October 20, 2014
“The Forever Slump”: The Debate Between The ‘Too-Muchers’ And The ‘Not-Enoughers’
It’s hard to believe, but almost six years have passed since the fall of Lehman Brothers ushered in the worst economic crisis since the 1930s. Many people, myself included, would like to move on to other subjects. But we can’t, because the crisis is by no means over. Recovery is far from complete, and the wrong policies could still turn economic weakness into a more or less permanent depression.
In fact, that’s what seems to be happening in Europe as we speak. And the rest of us should learn from Europe’s experience.
Before I get to the latest bad news, let’s talk about the great policy argument that has raged for more than five years. It’s easy to get bogged down in the details, but basically it has been a debate between the too-muchers and the not-enoughers.
The too-muchers have warned incessantly that the things governments and central banks are doing to limit the depth of the slump are setting the stage for something even worse. Deficit spending, they suggested, could provoke a Greek-style crisis any day now — within two years, declared Alan Simpson and Erskine Bowles some three and a half years ago. Asset purchases by the Federal Reserve would “risk currency debasement and inflation,” declared a who’s who of Republican economists, investors, and pundits in a 2010 open letter to Ben Bernanke.
The not-enoughers — a group that includes yours truly — have argued all along that the clear and present danger is Japanification rather than Hellenization. That is, they have warned that inadequate fiscal stimulus and a premature turn to austerity could lead to a lost decade or more of economic depression, that the Fed should be doing even more to boost the economy, that deflation, not inflation, was the great risk facing the Western world.
To say the obvious, none of the predictions and warnings of the too-muchers have come to pass. America never experienced a Greek-type crisis of soaring borrowing costs. In fact, even within Europe the debt crisis largely faded away once the European Central Bank began doing its job as lender of last resort. Meanwhile, inflation has stayed low.
However, while the not-enoughers were right to dismiss warnings about interest rates and inflation, our concerns about actual deflation haven’t yet come to pass. This has provoked a fair bit of rethinking about the inflation process (if there has been any rethinking on the other side of this argument, I haven’t seen it), but not-enoughers continue to worry about the risks of a Japan-type quasi-permanent slump.
Which brings me to Europe’s woes.
On the whole, the too-muchers have had much more influence in Europe than in the United States, while the not-enoughers have had no influence at all. European officials eagerly embraced now-discredited doctrines that allegedly justified fiscal austerity even in depressed economies (although America has de facto done a lot of austerity, too, thanks to the sequester and cuts at the state and local level). And the European Central Bank, or E.C.B., not only failed to match the Fed’s asset purchases, it actually raised interest rates back in 2011 to head off the imaginary risk of inflation.
The E.C.B. reversed course when Europe slid back into recession, and, as I’ve already mentioned, under Mario Draghi’s leadership, it did a lot to alleviate the European debt crisis. But this wasn’t enough. The European economy did start growing again last year, but not enough to make more than a small dent in the unemployment rate.
And now growth has stalled, while inflation has fallen far below the E.C.B.’s target of 2 percent, and prices are actually falling in debtor nations. It’s really a dismal picture. Mr. Draghi & Co. need to do whatever they can to try to turn things around, but given the political and institutional constraints they face, Europe will arguably be lucky if all it experiences is one lost decade.
The good news is that things don’t look that dire in America, where job creation seems finally to have picked up and the threat of deflation has receded, at least for now. But all it would take is a few bad shocks and/or policy missteps to send us down the same path.
The good news is that Janet Yellen, the Fed chairwoman, understands the danger; she has made it clear that she would rather take the chance of a temporary rise in the inflation rate than risk hitting the brakes too soon, the way the E.C.B. did in 2011. The bad news is that she and her colleagues are under a lot of pressure to do the wrong thing from the too-muchers, who seem to have learned nothing from being wrong year after year, and are still agitating for higher rates.
There’s an old joke about the man who decides to cheer up, because things could be worse — and sure enough, things get worse. That’s more or less what happened to Europe, and we shouldn’t let it happen here.
By: Paul Krugman, Op-Ed Columnist, The New York Times, August 14, 2014
“Bizarre Looking-Glass Ideology”: Deficit Scolds Are The Most Crazed Ideologues In America
A new Congressional Budget Office report shows that the projected increase in the national debt has slowed dramatically. Good news for deficit scolds, right? Not for Ron Fournier, who still thinks the nation is on its last legs:
Only in Washington, the place where you land when you fall through the looking glass, could this be hailed as good news… Our deficit levels (annual totals of red ink) are stalled at breathtakingly high levels — and are projected to soar again in a few years… Scary news, right? Not according to many media outlets and a cynical leadership class in Washington. Some news organizations focused on the sugar-high of good news — the (temporary) dip in deficits.
Think of a reporter covering a shooting. The police tell him the victim is dying of blood loss. Is the headline “Shooting Victim Expected to Die” or “Blood Flow Slows for Shooting Victim”? [National Journal]
Fournier’s economic analysis, if it may be so dignified with the phrase, is comprehensively wretched. As I’ve argued, the real problem with the deficit is that it’s coming down way too fast. Premature austerity has crippled the economic recovery and kept millions out of work. The biggest economic problem facing the nation is unemployment, which outweighs the stupid deficit by Graham’s Number levels of importance.
But the main problem is that his scold case is weak even on its own terms. Fournier understands neither what is driving the increase in the national debt nor why that might be a problem — all of which betrays a bizarre ideology that holds that pain must be inflicted before any gains can be made.
The huge increase in the annual deficit in 2008-09 was driven by two things: first, the economic collapse, which caused revenues to fall and spending to increase as people drew on safety net programs like unemployment insurance. Second, the Recovery Act, aka the stimulus, which provided a one-time surge of spending to restore aggregate demand and get people back to work. Though the stimulus was not nearly large enough to fill the hole in demand, this is what macroeconomic policy is supposed to do in a recession (a fact that Republicans were happy to accept when they were in power).
The long-term debt and deficit projections, on the other hand, are entirely about health-care spending. As Peter Fisher once said, the government is basically an insurance company with an army, and for many years the price of health care increased much faster than the rate of economic growth. This made government spending on health care (mostly Medicare and Medicaid) consume an ever-greater portion of the federal budget. Past CBO projections just assumed this trend would continue, which accounts for past reports predicting that the national debt would eventually eat the whole budget.
What this means is that Fournier’s preferred solution for dealing with this trend — higher taxes, fewer entitlements — is completely pointless. We have to fix the problem of rising prices, otherwise eventually a single tablet of aspirin will consume the entire federal budget. And the price problem is driven by awful policy design, not excessive generosity. America manages the rare trick of having very patchy and stingy social insurance that is simultaneously incredibly expensive. We spend more government money per person than Canada does — and the Canadians have universal single-payer coverage.
Fewer entitlements or higher taxes will get you a few years of breathing room before price increases eat up all the savings — and the whole point of Fournier’s column is that a couple decades of breathing room is still grounds for hair-on-fire panic.
Luckily, since the passage of ObamaCare, price increases have indeed slowed dramatically. That, plus a new projection that interest rates will stay low for a long time, accounts for the new CBO analysis showing slower debt growth. Just why this is happening is a matter of some dispute; I suspect it is partly the result of several programs in ObamaCare designed to bring prices down, and partly that health-care prices are already so high they’re running into resource constraints.
I think the fact that Fournier is patently uninterested in any of these things, and favors a policy that would accomplish nothing whatsoever on the deficit by his own standards, reveals that the pro-austerity school of punditry isn’t about the deficit at all. Instead, he says that his entitlement-cutting agenda is “going to happen sooner or later, painfully or more painfully.” As with David Gregory, the pain is the operative concept. The centrist definition of responsible politics holds that the American people must suffer a little more to keep the nation healthy. It’s only the “hateful partisans” who are keeping the wise, reasonable moderates from making those tough bipartisan compromises to slash social insurance and inflict pain.
But make no mistake: This has nothing to do with economics, and everything to do with the bizarre looking-glass ideology of “serious people” in Washington, D.C.
By: Ryan Cooper, The Week, July 24, 2014
“If It’s Too Expensive, Don’t Send Them Off To War”: Instead Of Austerity And Slogans, VA Needs Full Funding And Accountability
The troubles at the Veterans Administration are not just a serious issue for veterans. They are a serious issue for every American who believes the federal government can and must meet the basic commitments necessary to maintain a civil society.
Unfortunately, that seriousness is not reflected in the frenzy of fingerpointing that has developed as a response to “the public’s outrage over excessive wait times and rigged recordkeeping at Veterans Affairs hospitals” — an outrage that the president of the American Federation of Government Employees (AFGE), the union that represents caregivers for vets refers to as “more than justified.”
There is no question that the VA has a problem that must be addressed.
The question is whether the politicians in Washington are ready to address it.
The most predictable of the political careerists, Republicans and Democrats, seem to think that firing VA Secretary Eric Shinseki will somehow “fix” things, or that the removal of a few failed managers will suddenly create a functional VA. But that is an absurdly insufficient response.
Depending on what reports regarding the agency reveal, there may well be a place for new leadership and a management shakeup. And those changes might briefly produce a fantasy of action and improvement. But that is all it could be: a fantasy. And a cruel fantasy at that.
Neither the immediate crisis, nor serious issues relating to the long-term future of the VA, will be settled with a mere reorganization of upper management. The real issues are closer to the ground. The VA needs to have enough doctors, nurses and aides to provide the care that is needed – and the doctors, nurses and aides who are now on duty must have the resources and the flexibility to assure that this care is delivered in a timely and responsible manner.
That is not now the case.
“When we look deeper into this issue of extended wait times for veterans to receive an appointment, we have to recognize that understaffing is a major culprit,” explains AFGE president J. David Cox Sr. “All around the country, medical facilities are understaffed, with numerous frontline care positions going unfilled. How can the VA expect to keep up with the growing needs of our nation’s heroes if it doesn’t properly staff its facilities?”
AFGE notes that, “According to the Independent Budget for the Department of Veterans Affairs, developed each year by leading veterans groups, funding levels will remain an estimated $2 billion short in FY 2015 and approximately $500 million short for FY 2016.”
Members of Congress – at least those who pay minimal attention to veterans issues – have for some time been aware of the funding shortfall. Yet, too many of them have resisted calls for action.
The reason is that the current Congress is packed with partisans who are more concerned with maintaining an austerity agenda than with caring for Americans who are in need.
Too many members of Congress continue to prattle on about how government is the problem, about how spending must be cut to meet their imagined bottom lines, about how the resources are not there to keep promises to vulnerable Americans – even if the resources are always there for wars of whim and a military-industrial complex that provides daily evidence of the extremes to which waste, fraud and abuse can be taken.
The current Congress includes a striking number of members who express open antipathy to meeting the guarantees that have been made to all Americans, including veterans. These members of Congress are so unthinking in their approach, so cruel in their budgetary calculus, that they casually, in some cases gleefully, presided over a government shutdown last fall.
Republicans get blamed for advancing the austerity agenda, but it is important to remember that more than a few Democrats have compromised with it. And the difference between those who promote austerity and those who make the compromises that allow for austerity means very little to Americans who are stuck on the waiting lists that are created by budgeting that owes more to Ayn Rand tomes than accounting textbooks.
The VA crisis is a wake-up call.
It is time to get serious. It is time to abandon austerity, and to recognize that core commitments cannot be compromised in order to maintain ideological fantasies.
Senate Veteran Affairs Committee chairman Bernie Sanders, I-Vermont, tried to get ahead of a host of issues concerning veterans in February, when he proposed comprehensive legislation to improve VA health care, education and job-training. Though it was strongly backed by the American Legion, Veterans of Foreign Wars, Disabled American Veterans, Iraq and Afghanistan Veterans of America and other organizations representing vets, the measure was blocked when most Senate Republicans opposed it. To Republicans who suggested the measure was too expensive, Sanders said, “”If you think it’s too expensive (to fund veterans programs), then don’t send them off to war.”
Last week, Sanders announced that he would reintroduce his plan to allocate $21 billion more for veterans initiatives over the coming decade. He is, as well, proposing a new VA accountability measure. The latter legislation removes bureaucratic barriers and makes it easier for the Secretary of Veterans Affairs to make management changes that are necessary to protect those who have served in the military.
The Sanders approach recognizes the need to move beyond the failed responses of America’s austerity-minded politicians while at the same time increasing accountability. It’s a smart long-term fix that eschews the easy sloganeering and empty promises of those who would politicize the VA crisis.
Conscious of the urgency of that crisis, the senator plans to move quickly to get both measures to the Senate floor. “In recent years, as a result of the wars in Iraq and Afghanistan, 1.5 million more veterans have entered the VA health care system,” says Sanders. “Congress must do everything possible to make certain that the VA has the financial resources and administrative accountability to provide the high-quality health care and timely access to care that our veterans earned and deserve.”
By: John Nichols, The Nation, May 25, 2014
“Why Resentment Is Key To Conservative Politics”: Making People Hate Each Other Is At The Core Of Right-Wing Politics
Jay Nordlinger raised an issue yesterday at The Corner that is really a fundamental part of American politics that people should make sure to understand:
Many of us have asked a question for many years, and especially in the last few years. It goes something like this: “How can conservatives win elections against Santa Claus, or Robin Hood? Against candidates offering free stuff? Against candidates who blame people’s problems on the greedy rich, keepin’ ’em down?” In other words, how do you beat the socialists?
Obviously, this came up during the 2012 presidential campaign. It’s materially the same as what Mitt Romney was ruminating about in his infamous 47 percent remarks, but it’s also how Romney explained his loss after the fact. To be generous about it, it is somewhat of a disadvantage to run for office promising to do less for people than your opponent.
Mr. Nordlinger enlisted the wisdom of British Education Minister Michael Gove to help conservatives understand how to win with an austere message.
“Tocqueville pointed out — though he wasn’t the first — that, in a democratic system, there’s always a tendency to gravitate to the guy who offers free stuff, or who is prepared to pander to achieve power. But I have more faith in human nature, in that people do want to think better of themselves, people do want to take control of their own lives and make an enterprise of their own existence. People do recognize that being dependent on others is debilitating, and people also have a low tolerance for lead-swingers and others who seem to be taking advantage of their own hard work.”
(“Lead-swinger” is a British term for “idler,” “slacker.”)
“I think the way to win the argument, however, is not just to rely on people’s desire to improve their own lives, and their impatience with those who are not being similarly strenuous, but to make the point that conservative ideas are the best way of achieving the sorts of goals that progressives profess to believe in.”
Once again, we can see how these folks divide the world into a bifurcated land of enterprising strivers and idle moochers. Conservatives have an easy time understanding the world as a “fallen” place where sin is ever-present and perfection always eludes even the best of bureaucratic planners, but they seem to have great difficulty in understanding that the world is also a place with broken people who through genetics, environment, or misfortune are in need of societal assistance. As long as there is some accountability, they are pretty good at forgiveness, but compassion and empathy are tremendous challenges for them.
But, quite aside from all that, we can see that resentment is the key ingredient in their political toolbox. Mr. Gove argues that conservatives have to do more than just appeal to folks’ impatience with people who aren’t as strenuously enterprising as themselves, but he does acknowledge that appealing to that impatience is the starting point.
There are severe problems with this. For starters, the way this tends to manifest itself is in scapegoating and stereotyping certain groups of people who are classified as insufficiently enterprising. In America, this means blacks and Latinos. So, while the political strategy may start out as colorblind, it immediately transforms into racism.
Secondly, this idea that being on government assistance is “debilitating” is an exhortatory argument that, while having merit, is no way to deal with those who are genuinely in need. Public policy is not the same thing as life advice. We give assistance to mothers with dependent children because the children need food and clothes regardless of why the mother is unable to provide these things herself.
Thirdly, this constant appeal to resentment is not morally edifying for the people who are targeted by it. Rather than telling them that they are doing a good thing by contributing to the upkeep of our infrastructure and the needs of the poor, they are told that people are taking advantage of them and that they should be able to keep all the fruits of their labor.
But this appeal to resentment is seemingly an indispensable strategy for the rich, who need it to rally support for policies that will allow them to grow ever-richer and avoid any kind of constraints on their activities, even if those activities degrade the environment, harm consumers, or lead to an economic calamity.
Making people hate each other is at the core of right-wing politics.
By: Martin Longman, Ten Miles Square, Washington Monthly, May 7, 2014
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