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.

14 Comments

  1. Tony Doe

    May 17, 2018 @ 1:53 pm

    1

    Philg: Forgetting for a second that the author still hasn’t exercised his/her adolescent Marxism, uberthoughtcriminal Charles Murray wrote an excellent book on this called “Coming Apart” which actually explains this exact class divide.

  2. superMike

    May 17, 2018 @ 5:00 pm

    2

    I’m with you. It can’t be good for the bottom tenth of the labor market’s market power to be constantly importing competition. (Immigration in its current form has got to be bad for income inequality; it’s also probably not great for the environment)

  3. dwight looi

    May 17, 2018 @ 5:16 pm

    3

    Success is not a crime and failure is not righteous. Wealth is not a sin, and poverty is not virtuous. Income inequality is a great thing; possibly the best motivating factor for the masses to get ahead in life as long as there is a very real shot at moving up. And, upward mobility is abundant in the United States of America — possibly more abundant here than anywhere else on Earth. Why do you thing everyone is trying to come here???

    I don’t hate the rich. I want to be the rich.

  4. philg

    May 17, 2018 @ 5:39 pm

    4

    dwight: If someone prefers to be a migrant to the U.S. rather than to, say, Germany or Sweden, are you sure that this is evidence of greater upward mobility potential? Couldn’t it simply be evidence that migrants perceive that they can enjoy a higher quality of life and spending power by collecting welfare in the U.S. compared to collecting welfare in Germany or Sweden? In Germany, for example, in a recent post we learned that 80 percent of refugees are unemployed. So the sensible comparison for them to make among countries would be to look for the one with the most generous welfare system.

  5. dwight looi

    May 17, 2018 @ 7:12 pm

    5

    philg: Let me rephrase it… why do you think everyone is trying to come WORK here? I was a F1 guy, then an OPT guy, then a H1 guy, before I got my green card and citizenship — took me 14 years. My wife is also a (legal) immigrant. Her parents came to the USA with three daughters from the Cantonese province of communist China in 1998. Her dad cut fish at the market. Her mom worked at the food counter. They had to learn English, they haven’t gone to college, they had $1500 in the bank and they lived in one rented room. All three daughters ended up graduating UC Berkeley – two of them Cum Laude. Today, one is an eye doctor, one is a bio-statistician and one is a principal @ a CPA firm. So much for not being able to make it in America if you start broke at the bottom of the ladder with colored skin.

    Why shouldn’t we, or any nation, choose immigrants who will likely benefit our economy and quality of life over those who won’t? Why are we prioritizing immigration from Shit Hole countries whom we cannot vet and who have limited education or skills? If “white guilt” ridden Europe wants to be STUPID and become the welfare basket to the world, let them. Why should ANY immigrant qualify for ANY welfare or entitlements for 10 years post arrival? Why should we even accept ONE refuge unless it fits our specific foreign policy objectives or is a person in demand in our labor market? If you are are going to be a drag, go to someplace else; Merkeland loves you we prefer a useful bodies here.

  6. anon

    May 17, 2018 @ 7:57 pm

    6

    > why would we want to increase the size of this angry mob by 1-2 million people per year

    “We” don’t want this, but the madmen (ie: economists and politicians) who believe exponential economic growth can continue forever, do. Annually increasing the population by 0.6% * 3x economic multiplier yields an effortless >2% GDP growth which can pay bigger budgets to buy more votes. But GDP is increased by more govt debt + higher housing prices + new workers paid lower wages. GDP growth is not a measure of an improving stand of living for Joe Average (that would be lower prices + higher wages).

  7. Vince

    May 17, 2018 @ 9:03 pm

    7

    why would we want to increase the size of this angry mob by 1-2 million people per year

    I haven’t seen evidence that “low skilled” immigrants are a particularly angry group. However, there appear to be a lot of right wingers on the internet (presumably not “low skilled”), such as Dwight here, who are very angry. There are also seems to be a lot of confusion about what these low skilled immigrants do when they arrive. Do they seek employment and thus drive down the wages or low skilled Americans, or do they sit on their rear ends and collect welfare?

    And if other immigrants become doctors, CPAs, and statisticians, that must drive down the wages of Americans working in those fields.

    Also, there is quite bit more income mobility in comparable countries:

    The United States had about 1/3 the ratio of mobility of Denmark and less than half that of Canada, Finland and Norway.[3] France, Germany, Sweden, also had higher mobility, with only the United Kingdom being less mobile.[3]

    https://en.wikipedia.org/wiki/Economic_mobility

    Canada, by the way, admits many immigrants annually.

  8. Jack

    May 17, 2018 @ 10:08 pm

    8

    If success is highly correlated with intelligence and intelligence is largely inherited then it is not clear why there should be “income mobility” except as societies move from wealth based on inheritance (the countries Vince approvingly lists) to wealth based on intelligence — which is largely the situation in the US today and why Dwight’s in-laws came here and are doing quite well. If the US was never based on inherited wealth then it should have less income mobility than say jolly olde England with its long history of Dukes and Duchesses and Estates and so on. But so what?

  9. Vince

    May 17, 2018 @ 10:57 pm

    9

    it is not clear why there should be “income mobility” except as societies move from wealth based on inheritance (the countries Vince approvingly lists) to wealth based on intelligence

    I doubt that there’s any evidence that such movement explains anything. The Wikipedia page that I linked to indicates that there is a bit less mobility in the UK.

  10. Frances Qii

    May 18, 2018 @ 1:00 am

    10

    Phil, are you reading Steve Sailer’s blog or Twitter feed? It sounds like he may be a fellow traveler of yours.

  11. Federico

    May 18, 2018 @ 7:19 am

    11

    “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.”

    Silly me, I would have though staying married is both a choice and work, and not something one could buy. Clearly my parents (married so far 49 years) must have spent lots.

  12. philg

    May 18, 2018 @ 8:28 am

    12

    Frances: I hadn’t heard of Steve Sailer before. I found https://www.unz.com/isteve/

    I’m not sure that I love this guy. Right now on his home page he has a headline “NYT Demands Volunteers for a Struggle Session Against Stereotypes” and then the short piece underneath reveals that in fact they are only ASKING for volunteers.

    This is kind of how the NYT itself does headlines versus stories!

    He does link to an interesting journal paper in another post: “The Value of Smarter Teachers: International Evidence on Teacher Cognitive Skills and Student Performance”

    https://www.aei.org/wp-content/uploads/2018/04/Hanushek_Piopiunik_Wiederhold_JHR.pdf

    “All empirical strategies consistently indicate a robust positive relationship between teacher cognitive skills and student performance. In the OLS estimation with the full set of controls, we find that a one standard deviation (SD) increase in teacher cognitive skills is associated with 0.10-0.15 SD higher student performance. To put these estimates into perspective, they imply that roughly one quarter of gaps in mean student performance across our 31 countries would be closed if each of these countries were to raise the median cognitive skills of teachers to the level of Finnish teachers (the most skilled teachers by the PIAAC measures).”

    https://www.unz.com/isteve/my-1979-book-review-of-tom-wolfes-the-right-stuff/ is interesting for me!

    If I had to pick my doppelganger among today’s web publishers it would be someone more like Ann Althouse! https://althouse.blogspot.com/

  13. Mike

    May 18, 2018 @ 12:20 pm

    13

    Give Sailer some more time. He’s a noticer like you. One of my favorites: Why Lesbians Aren’t Gay

  14. GermanL

    May 18, 2018 @ 3:47 pm

    14

    @Vince “There are also seems to be a lot of confusion about what these low skilled immigrants do when they arrive. Do they seek employment and thus drive down the wages or low skilled Americans, or do they sit on their rear ends and collect welfare?”

    Why do these two things have to be mutually exclusive? Couldn’t it be that the low skilled immigrants are a mix of both?

    “Canada, by the way, admits many immigrants annually.”

    Canada takes immigrants based on a point system. Germany, Austria, Switzerland, and most other european countries have been doing the same (however now with the open door policy for refugees this was no longer the case in Germany). Have you ever tried getting a Blue Card in Europe? What about emigrating to Canada? Can you pass the point system? http://www.cic.gc.ca/english/immigrate/skilled/crs-tool.asp

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