Social democracy and equal opportunity

by John Quiggin on January 29, 2012

 

My critique of Tyler Cowen’s post arguing the unimportance of social mobility has started off, or maybe merged into, of those old-fashioned blog firestorms we used to have back in the day, now also reticulated through Twitter – a few links here, here and here. But rather than criticise Cowen further, I thought I would try to work through the bigger issues involved from a social democratic perspective[1].  In particular, as discussed in comments here, should social democrats favor policies to enhance social mobility, or does mobility between generations make inequality even worse, for example by justifying what appears as meritocracy?

 

 

It’s helpful to start with some facts, and the big one is that inequality of opportunity and inequality of incomes (or, more generally) outcomes are strongly positively correlated. The US and UK are notable as being highly unequal societies in both respects. More precisely, as would be expected on the basis of even momentary thinking about the ways in which parents try to help their children, highly unequal outcomes in one generation are negatively correlated with intergenerational mobility in the next. 

 

That brute fact kills off one of the central ideas put forward by lots of ‘Third Way’ advocates among former social democrats, namely that it’s fine to have the highly unequal outcomes produced by free-market liberalism if you can get a modest amount of extra growth in aggregate, since governments can use education and similar policies to ensure that everyone has a fair chance at the big prizes.  If a highly unequal society allows parents to give their children an unbeatable headstart, then the idea that we can offset greater inequality of outcomes by more efforts to promote equality of opportunity becomes problematic at best.

 

Matt Cavanagh in Against Equality of Opportunity takes the dilemma seriously and argues for the abandonment of equal opportunity on the basis that it is inconsistent with a market society.  That’s pretty much the actual position of most Third Way supporters[2] though not too many are willing to say so.

 

Moreover, the factual basis for the claim that free-market liberalism actually produces higher growth is weak, though the evidence isn’t as clear-cut as for the relationship between unequal outcomes and unequal opportunities.  The time-series evidence goes the other way – the strongest period of economic growth for the US and other (then) leading countries was during the post-1945 ‘Great Compression’.  The comparison is even sharper now that we’ve had a few years of highly unequal austerity.

 

So, the Third Way position appears unsustainable in every way. On the other hand, as long as you accept some role for markets, or even just for individual choice, different people will experience different outcomes in life. It seems obviously sensible, for example, to allow people a choice between working hard in paid employment, and buying goods and services in the market, or spending more time at home, providing directly for themselves and their families[3]. And, if people are allowed to take real risks, some will turn out relatively well and others relatively badly.

 

There is no reason, however, why freedom of choice, even within a generation, requires the grotesque inequalities produced by market liberalism. In fact, by punishing any choices that don’t produce a high income, market liberalism reduces the range of effective choices. Tyler Cowen makes this point, using the examples of the US and Europe, here (his point 4, though of course it’s not intended this way).

 

Once we have unequal outcomes in one generation, there will be a tendency to transmit them to the next. But if the distribution of income within a given generation is reasonably equal, there is lots of scope for government action to give everyone in the next generation access to the same broad set of choices and opportunities. 

 

The most obvious measures relate to wealth and education. Taxes on inheritance and capital gains can discourage the transfer of large accumulations of wealth from one generation to the next. As regards education, the crucial element is centralised funding, with a commitment to offset, rather than reinforce, inequalities in starting points. That is, schools in poor communities should get more resources rather than less, to offset both the poorer starting position of the students and the greater opportunities of schools in wealthy areas to secure support of various kinds for parents.

 

 How does this relate to concerns about meritocracy? The more that differences in outcomes reflect different choices from a given set of opportunities, rather than differential success in climbing a well-defined hierarchical ladder, the less this seems to me to be a concern. 

 

As always, I’m hoping for comments to point out (preferably in a non-snarky fashion) weaknesses in my argument and to help me clarify my thoughts. So, go to it.

 

 

 

 

 

 

fn1. I’m not going to attempt a definition of social democracy. But I’m thinking about a policy view that would take the best elements of the Keynesian/welfare state polities that was developed in the decades after 1945 and extend it to cover a much wider range of people and concerns than those of the developed-country male-earner households who were taken as the model participants in those polities.

 

fn2. The term is pretty much dead, along with the idea that the Third Way would transcend the divide between social democrats and free marketeers, rather than just split the difference as many times as the opinion polls appeared to require. But the political tendency it represents is very much alive, as shown by the general capitulation to the zombie economics of austerity.

 

fn3. This glosses over all sorts of problems, from involuntary unemployment to the distribution of work and consumption within households. But however these problems are resolved, the choice I’ve described will remain important.

{ 95 comments }

1

paul 01.29.12 at 2:39 am

Oh, good, I want to know why a white guy at a public university in some unincorporated part of Virginia thinks social mobility is a bad idea. What next, Bill Kristol on meritocracy?

I think I gave up reading MR when a post I can no longer find extolled the pleasures of commuter driving and I realized I would never understand anything he had to say about anything.

2

John Quiggin 01.29.12 at 3:11 am

The go-to guy on meritocracy is Saul Bellow’s son, whose name I can’t recall right now. He wrote a book in favor of nepotism,then, as Lawyers, Guns and Money has pointed out, provided a living self-refutation

3

William Timberman 01.29.12 at 3:12 am

Somewhere in the middle of all this measuring of incomes and outcomes, I’m thinking that someone should say something about knowing the price of everything and the value of nothing. Or, to put it another way, should we feed the poets as well as the bankers? And if so, since they haven’t any assigned place in our beloved capitalism, how much should they get, and from whom?

Well, I hear some smug libertarian saying, if no one will pay to listen to them nowadays, these poets, then maybe we don’t need them any more. Maybe. And after them, classical musicians as well. Who’ll miss them? After all, the status-conscious patrons keeping them afloat at present can always find something or someone else to patronize, and the rest of us can easily make do without them.

But what happens when teachers, farmers, assembly-line workers, machinists, computer programmers, and God knows what else become equally superfluous? What happens when lawyers, financial advisors, and bodyguards are the only ones considered worth a living wage? Will we still love capitalism then?

4

David Kaib 01.29.12 at 3:25 am

A better question than the value of individuals to the economy is the value of the economy to the people.

I don’t mean to be snarky, but I don’t feel any better about someone being deprived because his/her children or grandchildren might be rich.

5

Bill Snowden 01.29.12 at 3:40 am

Tyler Cowen makes this point, using the examples of the US and Europe, here.

This is, I suspect, intended to link to something.

6

Sev 01.29.12 at 3:46 am

“should social democrats favor policies to enhance social mobility, or does mobility between generations make inequality even worse, for example by justifying what appears as meritocracy?”

I see your point in questioning this on the grounds that it can be used to rationalize extreme inequality of results, but as your next para points out, practically speaking there is strong linkage between opportunity and results. Education is perhaps the prime example of an arena for equal opportunity oriented policies, and one with considerable political salience for left of center policies. Higher ed costs are a big issue here in the US, both for students and their families (as referenced in Obama’s SOTU) and also, NYTimes informs us, in Chile (http://www.nytimes.com/2012/01/29/opinion/sunday/student-protests-rile-chile.html?hp?hp) as well as UK and elsewhere. Of course some of the politics run counter to this, with some middle class voters opposing paying for education for lower income kids, “illegals,” and for other early interventions such as child nutrition. Perhaps anti-discrimination laws would also fall into the equal opportunity category, as might at least basic health care.
While these don’t substitute for progressive taxes, fair wages, antitrust/anti-corruption rules etc, they and the claim of elementary justice they embody would seem to get us at least part of the way to both a higher mobility and more equal society. And as you note in the Cowen post, now under attack.

7

Iain Coleman 01.29.12 at 3:52 am

That is, schools in poor communities should get more resources rather than less, to offset both the poorer starting position of the students and the greater opportunities of schools in wealthy areas to secure support of various kinds for parents.

Would it not be better for the children of poor parents to get more resources, given to the school which they attend? That way not only would they resources be more efficiently targeted, but well-performing schools would have a positive incentive to take on students from poorer families.

8

Bloix 01.29.12 at 4:03 am

(1) #2 – Adam Bellow.

(2) I would argue that unchecked inequality of opportunity over several generations is incompatible with a market society. Wealth, once it reaches a certain amount, is no longer about the ability of its owner to consume. It represents political power. And unlimited wealth held over several generations means political power concentrated in self-aware, inter-connected families. Once a few powerful families control the government, market society is dead.

9

geo 01.29.12 at 4:39 am

WT @3: Will we still love capitalism then?

If we’re true to our principles, we will. Fiat lucrum, ruat caelum.

10

shah8 01.29.12 at 4:41 am

Nah, I’m for social inequality, actually. In practice, I think most educated people are for social inequality. I think it’s silly to rail against third wayers about letting social inequality rise. I think it’s more important to press third wayers about equal pay for equal labor. The important trend here, is not social inequality per se, but declining returns to productivity for the masses. If we’re having an unequal society because people are willing to pay to watch and emulate Tiger Woods, that’s really not a problem. If we’re having an unequal society because Carly Fiorina gets big bonuses and political power because of her ability to network based on her ability to extract (instead of creating) wealth, then that’s a problem. I think it’s a good thing to have heros, even if he’s Steve Jobs. I think it’s also important to understand that heros are going to do what they’ll do, with only a little encouragement–there’s no need to pay obscene salaries. The people that really want obscene salaries are, the bulk of them, people who can’t win much without a lot of cheating and thieving. Most of them have the brains and education, but don’t have the character or obsession (with the things we’d like people to be obsessed about).

Simple, graduated income tax with reasonably high tax brackets. The *real* tax work is going to be about eliminating subsidies, cracking down on purchased laws and bid rigging, market rates for national resources, and closing tax loopholes. The problem with the rich isn’t that they’re rich. If you tax ‘em at high rates, you won’t collect very much. The problem with the rich is that they warp the social fabric in order to maintain the social order that sustains their wealth. Not only do they have lots of wealth, it’s expensive for the society to maintain itself as being congenial to the wealthy.

11

William Timberman 01.29.12 at 5:32 am

geo @ 9

All of Gibbon reduced to a single geo-engineered motto. God, I love it here sometimes, especially after a day spent fending off the carnival barkers, halo-painters and jingoes who seem to own every last megaphone in the country. A tip o’ the hat to you, sir.

12

shah8 01.29.12 at 6:11 am

What can you say to Magic Potion N. 9? Sometimes pithy works.

13

Eric Titus 01.29.12 at 6:15 am

@Shah8
I hate to be contrary, but I doubt changes to the tax code would have a significant effect. Inequality is not created by regressive taxation–indeed the US’s tax system is more progressive than, say, France. Most good literature I have seen implies that changing the tax code isn’t the way to improve social inequities–unless you are funding the right policies.

Similarly, increasing the inheritance tax, as Quiggin advocates, would not by itself improve outcomes. Most transfers of social, political, and even economic capital happen while both parties are still alive. And I’ve seen claims that intergenerational transfers are actually more important lower down the wealth ladder, so policy would have to be carefully designed.

Instead, I would argue that inequality is the result of structures of production in the economy, and tax policy treats the symptom, not the problem. Progressive obsessions with progressive taxation and redistributive policies have led them to abandon the goal of making fundamental changes to the economy. Indeed, we’ve forgotten how to do it.

So what politically viable options would I propose? Reward companies who hire well-paid workers. Make it easier for high school grads to get jobs by encouraging recruitment in high schools. Reduce credentialism in government bureaucracies. Reform lending rules in favor of borrowers. There are any number of small ways in which the economy can be nudged in a positive direction.

14

Jeffrey Kramer 01.29.12 at 6:22 am

Serious question (since I don’t read many economists): when Cowen and others say that more redistributionist economies don’t perform as well as more market-oriented ones, do they typically mean that more market-oriented economies will produce:

1) higher GDP per capita;
2) higher median GDP per capita;
3) higher GDP per capita even for the lower half, even comparing earned income + government benefits in the more redistributionist economy with the same in the more market-oriented economy;
4) higher GDP per capita even for the lower fifth, using the same standard as in 3);
5) a better life for even the lower half/lower fifth, considering factors which aren’t well measured by GDP (like technological progress);
6) other?

15

shah8 01.29.12 at 6:32 am

*Eric Titus*, I think you should reread what I said.

Now, gotta write this down before I forget:

When Matt Yglesias or, sometimes me, talks about allowing inequality to rise (tax + redistribute) in exchange for overall rising living standards, we’re effectively talking about using bezzle in order to change toxic instrumentalies and crowd out toxic people. Supporting a lesser devil who’s inclined to share a bit more power. Most places are poor because they have rapacious leadership who prevents the formation of independent institutions. Turn a money spigot on those people, such that they concentrate on gathering that, instead of beating up kids for lunch money (and they in turn, build lemonaide stands), and you’ll do good, even with heightened inequality.

Of course, the problem with dealing with reactionaries is that they forget all the parts of the program that doesn’t involve free money and power, and they’ll spout mutilated versions of the ideals so people don’t get what’s wrong…

16

Gaspard 01.29.12 at 8:16 am

A constructive attempt to engage Cowen etc (who are also keen on ideas like heritability of IQ and so on) would have to look at statements like “a highly unequal society allows parents to give their children an unbeatable headstart”, and “schools in poor communities should get more resources rather than less”.

To what extent is the better showing of Scandinavian countries and Canada on mobility (correlation of intergenerational income) down to education or to other arrangements such as humane work contracts (increments for long services etc.) with lower levels of casualisation for relatively unskilled work?

Looking at this OECD report, socio-economic integration in schools would seem to be more important than school resources, but on segregation the anglo-saxon countries are in the middle, which would indicate education is not the only driver.

The ideal of outcomes being driven by choice rather than some kind of hierarchy of talent and effort seems quite a stretch, given that many useful and reasonably paid jobs are not particularly pleasant. Even with compulsory integration of schools and strict labour laws, job sorting can never turn out ideally for everyone.

17

derrida derider 01.29.12 at 8:25 am

I’ve always thought that a very effective rebuttal to people like Tyler if they say “oh immobility isn’t so bad” is to point out that a nepotistic society is likely to be extremely inefficient, in the economists’ sense. A mind is a terrible thing to waste, and all that.

18

John Quiggin 01.29.12 at 9:20 am

@JK, They focus on making a case for (1), which is at least debatable. The remaining steps are either assumed, or argued with the kind of dubious advocacy typical of bodies like AEI

19

John Quiggin 01.29.12 at 9:22 am

@DD I’m planning a companion post on libertarianism and opportunity

20

Martin 01.29.12 at 9:27 am

Disclosure: I consider myself to be a liberal.

If you are going to argue against liberalism, the strong argument to be made would be that if everyone competes as hard as they possibly could, ‘irrelevant details’ such as wealth of the parents etc, will become important determinants in the data of mobility.

You see this in political competition as well, when competition has driven the positions of the candidates pretty close to one another, then facts that are outside the control of the candidates become important determinants. When there is a substantial disagreement between the candidates on the other hand you either have a polarization ( twin peaked distribution) or a land-slide (one peaked distribution).

I see this as being close to Cowen’s argument, however the conclusion one could draw from it is the opposite: we do not want parent’s wealth and other irrelevant determinants, determines someone’s place in society, we should do something about it.

The question then becomes whether you can separate children from their parents wealth or compensate other children for a lack of wealth to such an extent that it matters less than it does. I don’t think that’s possible without the creation of considerable other problems. I see one possible solution and that is to create a shift in preferences. For example, people such as Bill Gates and Warren Buffett, give their children an education and give away their own money to charity with as a result that there is no creation of dynastic wealth. This sort of behavior should be socially encouraged.

There is another issue, I have not touched upon and want to include now in the end and that is that wealth is often a proxy for a certain knowledge including connections to people. For example, if no one ever told you what you have to do to get into an (elite) university how are you ever going to do that? How do you even know what to do in such circumstances?

If that – differences in knowledge – is the driver of inequality, then the solution seems easier, educate young people about this difference or create competing elite institutions that take those differences into account, institutions comparable to the French and European Concours for admissions to certain educational facilities or to certain jobs.

You could test either explanation, by for example taking the requirement of reference letters and extra-curricular activities as proxies for that knowledge and see if you can explain part of (the lack of) the inter-generational mobility by how often that is required in certain countries. If there is zero effect, wealth seems more important, if there is some effect, we could probably increase inter-generational mobility by educating people about the use of, or outlawing the use of those selection criteria.

21

roger 01.29.12 at 10:59 am

I agree with Shah8 at number 10 about social inequality with one small codicil: that the inequality not be reflected in money. Money doesn’t reflect anything about the inequalities that count – that is, the inequality of doing something well. That should accrue social praise, and praise is where social inequality comes in. Admiration, regard, that kind of thing. But as for money – it is the simplest thing in the world to make the distribution of money more equal, which would allow social inequality based on regard to flourish.

As for the argument from hard work to wealth – this is a tax created delusion. In the current American tax system, if Mr. Money bags can somehow connect his yacht to his ‘job”, he is awarded abundant tax credits. Meanwhile, if the grocery store clerk, after her miserable forty, babysits or housecleans for Mr. Moneybags, she has every incentive not to declare this work to Uncle Sam. Hence, the top 1 percent depicts itself, and is depicted in the press, as hard working. A recent NYT article about the 1 percent featured the factoid that “they work longer hours, being three times more likely than the 99 percent to work more than 50 hours a week, and are more likely to be self-employed,” and left it at that. But a quick look at their poster boy for hard worker, Adam Katz, who owns Talon Airlines, should have led to questions about what this work consistw of. According to the NYT, Katz is such an energumen he might just help load the luggage on one of his planes! According to an interview in Ocean Homes, however, Katz has plenty of time to work in his 2000 square foot bedroom, which doubles as a home office (ching ching!) and Katz tells us that all is not so stressful among the plutocrats. asked about the worst element in living in a house facing the ocean, Katz said: “Cold temperatures and wind are pretty intolerable during the winter months, which is why we head down to the Bahamas and live and sail around on the yacht.”

I’m sure that yacht ends up paying for itself as a tax writeoff.
Let’s have social inequality based on regard, rather than money, and all will be well.

22

Eli Rabett 01.29.12 at 11:10 am

#10 (with a tip o the hat to #9), is the place to start. As Shah said, the problem is not that the rich are getting richer, but that they have been able to rig the game against everyone else. The diffusion of prosperity into the middle and working classes driven by unions and the labor shortages of the post war years has been reversed. Places where inequality is limited have strong labor movements.

In addition to the strategy of inviting the press and the politicians to sup at the trough the oligarchy has cooked up a distracting stew of racism, homophobia and envy to feed to Kansas.

23

Guido Nius 01.29.12 at 11:34 am

I agree but is there a significant difference between this analysis and the principle behind the difference principle?

Because, you know, it would be good if we could, provisionally for sure, come together in one analysis.

24

Henri Vieuxtemps 01.29.12 at 11:55 am

Yeah, like WT 3, and roger 21 I question the connection between the ‘meritocracy’ thing and money. Money, as a means to exploit people, to consume more than you produce, valued by the amount of labor.

What would a perfectly meritorious ‘social democratic’ society look like?

25

gordon 01.29.12 at 12:09 pm

The idea that high social mobility is in some sense a sufficient palliative of the effects of high inequality is itself wrong. For a start, that idea contributes nothing to the consideration of how to treat the poor. You could derive a policy of complete indifference or even exploitation of the poor from the “mobility is enough” position. I for one would not subscribe to such a policy. Encouraging social mobility might be – probably is – part of a sensible policy response to excessive inequality, but I don’t see that it is sufficient in itself.

26

Jeffrey Kramer 01.29.12 at 12:19 pm

John @18: that’s pretty astonishing, isn’t it? I’d think that even the roughest kind of utilitarian calculus would acknowledge that another dollar for Bill Gates contributes less happiness than another dollar for someone in the middle, and even the most dedicated wealth-worshippers woud acknowledge that the drinkers who rejoice that their average income has just taken a huge jump because Gates walked into the bar are unclear on the concept.

27

Tim Worstall 01.29.12 at 12:34 pm

“The most obvious measures relate to wealth and education”

If education is the solution and education as it is currently done isn’t solving the problem doesn’t that mean that the problem is with the way education is currently done?

“requires the grotesque inequalities produced by market liberalism”

But is it market liberalism in and of itself which is producing the inequality? Or is it perhaps an outcome of market liberalism as it is right now? It is, for example, entirely possible to make the case (and people far grander than I have made it) that rising in country inequality and falling global inequality have the same cause: not market liberalism as such but that part of it which is globalisation. When the gross international inequalities which globalisation is reducing are reduced then in country inequality might reduce (note, might, I only float it as an idea) as well as the influence of globalisation passes as with a pig through a snake.

28

Matt McIrvin 01.29.12 at 1:23 pm

Inequality is not created by regressive taxation—indeed the US’s tax system is more progressive than, say, France. Most good literature I have seen implies that changing the tax code isn’t the way to improve social inequities—unless you are funding the right policies.

If, however, the greatest political obstacle to funding the right policies is that people go around saying “the country is broke” as a blanket response, then saying “well, the billionaires certainly aren’t broke” is a way to work around that. If just raising income taxes isn’t enough to make up the gap, well, they’ve accumulated a lot of wealth, and wealth inequality actually greatly exceeds income inequality. But in the US you’re not allowed to just confiscate wealth, so you go for inheritance and gift taxes (which have to rise in tandem, since otherwise people can just do their distribution before they die).

These things might not be so great in themselves, but when people say we can’t have a social safety net because we don’t have the money, well, there’s all the money. We can make the tax code less progressive again once we’ve got France-level social welfare and it doesn’t matter so much.

Keep in mind, too, that while they only say it out loud among their own kind, most Republicans at this point (including Mitt Romney, though not Newt Gingrich) actively want to raise taxes on the poor and middle class while also cutting spending.

29

Watson Ladd 01.29.12 at 1:59 pm

People arguing about the impact of particular credentials in education should look at South Korea where a single exam determines your fate. I don’t recall it being an outlier on inequality measures. And I’m quite comfortable with inequality caused by wage differentials: naturally a doctor will make more then other people. But my impression was that a lot of the inequality in the US was due to capital ownership, which receives preferential tax treatment, and unlike Henri’s bad reading of Marx, actually commands more labor then it consists of. (Not that alienation is eliminated by rewarding labor equally either. Capitalism constrains us all)

30

Henri Vieuxtemps 01.29.12 at 2:12 pm

naturally a doctor will make more then other people

What’s natural about it? Does she hate her work so much she needs to be paid extra to do it?

I’d imagine a toilet cleaner naturally would make more than other people.

31

michael e sullivan 01.29.12 at 2:37 pm

Supply and demand, Henri. While few people *want* to clean toilets for a living, nearly anybody *can* do it.

Toilet cleaners *do* naturally make more money than people in other, more pleasant jobs that require no more specialized skills.

32

Watson Ladd 01.29.12 at 2:44 pm

Henri, we can clean our own toilets, but we can’t diagnose appendicitis ourselves.

33

marcel 01.29.12 at 2:49 pm

Shah8 wrote: Sometimes pithy works.

Shah8 wrote:When Matt Yglesias or, sometimes me, blah, blah, blah … even with heightened inequality.

Keynes wrote:It is better that a man should tyrannize over his bank balance than over his fellow-citizens and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative. (GT, chap 24 pt 10)

With a weak attempt at an apology ;)

34

Henri Vieuxtemps 01.29.12 at 3:06 pm

Um, michael, I’m afraid your explanation raises more questions than it answers.

Assuming that many more people would like to be doctors (regardless of the monetary reward) than to clean toilets, the supply/demand thing (accepting, for the sake of argument, that it, indeed, naturally translates into monetary reward) should point to the opposite direction.

35

SR819 01.29.12 at 3:40 pm

@Jeffrey Kramer, there is hardly any evidence that free market laissez faire economies perform “better” on any measure relative to redistributionist economies. It’s a myth perpetuated by economists looking to justify the status quo.

I think the market mechanism will always perpetuate inequality, and while economic “scientists” may claim this inequality is due to differences in productivity (neoliberal economics teaches us that wages equal the marginal product of labour) the reality is that the vast disparities in wealth are due to power relations, and the fact that private property and the “market” itself are not simply benign institutions, but were developed purely to serve the ruling class.

Can I just add I really enjoy reading this blog and the thought provoking posts. As an economics undergraduate student, I regularly have to endure lectures telling me that privatisation is good, wage inequality is natural, unemployment is due to laziness etc. As someone on the “left”, it’s good to read some critical thoughts on society.

I really think that society would be better served if we abolished economics as a discipline. The subject has perpetuated unjustifiable social failings throughout history, and is no more a “science” than Astrology. The Marginal Revolution blog just sums up with a pseudoscientific enterprise economics is. They argue against social mobility and try to sell these ideas using bogus economic principles that make no sense whatsoever.

36

roger 01.29.12 at 3:44 pm

Our problem is that we have confused the doctors of 1910 when with the cooperation of the doctors’ guild and the state we gave monopoly medical power to doctors and doctors in 2010, where the technology, education and therapy are very different. We should naturally be working on dramatically increasing the number of medical professionals who can do much of the work of the doctor or the dentist in order to dramatically decrease the cost of medical care. When the social benefit of the doctor’s work is outweighed by the cost of that work to the extent that a major portion of the population can’t afford it, the doctor is actually producing something negative – especially as these people are caught within a system in which they can’t effectively treat themselves. The reason I can clean my toilet but I can’t prescribe myself drugs for x ailment that I can read about on the net is not because doctor’s are educated, but because the state has decided, for reasons of ‘health’, to give the doctor monopoly power over prescriptions. Without that power, doctors would not be making the kind of meritocratic money they now make.
Thus, doctors owe us. And we should procede as a society accordingly.

37

mpowell 01.29.12 at 3:46 pm

I don’t really know how to talk to people who don’t think it’s natural that a doctor make more than a toilet cleaner. Being a good doctor requires a near lifelong commitment in willpower, planning and intelligence that even most members of the middle class can’t achieve. For the forseeable future I don’t see there being a surplus of supply there.

JQ is quite right to point out the correlation between inequality and a lack of social mobility. But it’s hardly surprising that Cowen and his ilk fail to make this jump. After all, they’re already willing to blame the poor for their outcomes because of ‘free will’. I’d like to see what would happen if you gathered 100 libertarians in a room and told them, “okay, now I’m going to magically cause you to relive your lives as the children of poor parents. As you well know, 90 of you will be living in poverty as adults, but none of you should be concerned because you will all have the choice to avoid that outcome.” You might see some change of heart.

You guys are talking about tax policy a lot and this is looking in the right direction to see the difference between the middle class and the rich, but my feeling is that if we developed a single-payer health plan in the United States, this would be a lot less of an issue. The policy change required isn’t tough to figure out even if it is unlikely to happen politically. But it’s a different sort of concerns you should be looking at if you are trying to figure out what to do to help the poor. And there I think the single biggest impact the government could have would be to end the war on drugs and change the incarceration structure of the prison system.

38

roger 01.29.12 at 3:54 pm

PS, for an example of a medical group using the power of the state to make money in spite of the negative health effect of the cost, see this NYT article: http://www.nytimes.com/2007/10/11/business/11decay.html?scp=4&sq=dentists&st=cse

I especially like these paragraphs:

“With dentists’ fees rising far faster than inflation and more than 100 million people lacking dental insurance, the percentage of Americans with untreated cavities began rising this decade, reversing a half-century trend of improvement in dental health.

Previously unreleased figures from the Centers for Disease Control and Prevention show that in 2003 and 2004, the most recent years with data available, 27 percent of children and 29 percent of adults had cavities going untreated. The level of untreated decay was the highest since the late 1980s and significantly higher than that found in a survey from 1999 to 2002.

Despite the rise in dental problems, state boards of dentists and the American Dental Association, the main lobbying group for dentists, have fought efforts to use dental hygienists and other non-dentists to provide basic care to people who do not have access to dentists.”

We dont speak enough about the massive state interventions that shift money to the upper class. We should.

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Henri Vieuxtemps 01.29.12 at 3:55 pm

Being a good doctor requires a near lifelong commitment in willpower, planning and intelligence that even most members of the middle class can’t achieve.

Even if it’s true, what does it have to do with money? Are they doing it all for money? Surely not all of them: Medecins Sans Frontieres pays $1,500/month.

40

chris 01.29.12 at 4:09 pm

given that many useful and reasonably paid jobs are not particularly pleasant

Actually, some useful and unpleasant jobs are quite poorly paid.

Let’s take garbage truck drivers as an example. Unless you want everyone in the society to have to drive his or her own garbage all the way to the dump (which is clearly inefficient and a traffic nightmare), someone has to drive the garbage trucks. An individual can escape garbage-truck-driving as a career by pursuing higher education and more valuable skills etc., but someone still has to drive the garbage trucks. Theoretically, even if *everyone* had much more valuable education and skills, someone would *still* have to drive the garbage trucks, even if they were throwing away a medical degree to do so. Returns to education rely on finding a job that fits appropriately into a structure of mutually supporting jobs (you can’t be a modern doctor unless someone somewhere is manufacturing syringes, drugs, etc. and transporting them to your hospital, to name just a few).

It’s no good simply *saying* “anyone can learn to drive a garbage truck in two weeks” (even if true) — someone has to devote a substantial number of the hours of their lifespan to *actually driving the damn garbage trucks*. Hours they will never see again on this earth.

So you can either be a society that pays garbage truck drivers decently, or a society that doesn’t, but you’re relying on the labor of the garbage truck drivers (and also the other truck drivers, retail clerks, waiters, janitors, and many other unglamorous jobs) for the continued functioning of your society and the maintenance of your own lifestyle, whether you pay them decently or not.

And focusing on educating the next generation to get them better jobs misses the point — no matter how well educated, they can’t *all* get high-status jobs at the same time. All the necessary jobs have to be filled by someone. This is not to say that education is useless, on either an individual or societal level. It isn’t. But education will not mysteriously convert your society into one that doesn’t have a blue-collar class. Someone still has to drive the garbage trucks.

In other words, all societies are Omelas (probably even hunter-gatherers, one way or another), and it cannot be walked away from.

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chris 01.29.12 at 4:14 pm

I’d like to see what would happen if you gathered 100 libertarians in a room and told them, “okay, now I’m going to magically cause you to relive your lives as the children of poor parents. As you well know, 90 of you will be living in poverty as adults, but none of you should be concerned because you will all have the choice to avoid that outcome.” You might see some change of heart.

Actually, I bet you wouldn’t. Most, if not all, of them would be convinced that they, individually, will outperform the others. The ones who have already discovered the folly of this belief are no longer libertarians.

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Zamfir 01.29.12 at 4:18 pm

“Even most memebrs of the middle class”? Are members of the middle class the go-to example for willpower, planning and intelligence?

And don;t know how it works in all other countries, but here (government paid) doctors’ schools have strict limits on the number of fresh students, and in some other countries I know that the private tuition is sky-high. In both cases, the scarcity of doctors is caused by a bottleneck that is put in very much on purpose.

The basic deal behind it is not that crazy: the profession regulates itself, keeps the professional standards high and its members somewhat honest, in return it gets to award itself safe and well-paid jobs. When done well, that’s a good setup for everyone involved, even it protects well-paid people from job competition.

The alternative of race-to-the-bottom competition is not that attractive, in a business where you can’t have the faintest clue how to judge the quality of the work.

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bert 01.29.12 at 4:18 pm

bq. Let’s have social inequality based on regard, rather than money, and all will be well.

To be properly progressive, it’d need to be run by the public sector, though.
Europeans do this with great sophistication. The British honours system is a state monopoly and, the occasional bout of Lloyd George inflation aside, has been run very effectively as a going concern. Party funding would be impossible without it. Some spoilsports like Rupert Murdoch remain aloof, but others like Conrad Black buy into it with great enthusiasm. Somewhere in Saul Bellow (Humboldt’s Gift?) he describes showing his prized Legion d’Honneur to a Frenchman, who sniffs at it and says “cadre agricole”. If income inequality is harmful, other avenues are needed for indulging the narcissism of small difference among the needy and insecure upper echelons.

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bert 01.29.12 at 4:27 pm

Talking of Adam Bellow, didn’t John Rawls’ son identify the United 93 memorial as an enormous muslim crescent aligned submissively towards Mecca? There’s a joke there that someone’s doubtless already made about making moral judgements from behind a veil of ignorance.

45

michael e sullivan 01.29.12 at 4:39 pm

The point is that supply is constrained not just by who wants to do something for a living, but by who can learn to be good enough at it to meet normal requirements, and how much time and money they have to spend in order to do so.

Most typical people can learn to clean a toilet to standard requirements in a day or two, if they haven’t already learned from having it as a chore in their household.

I expect that far more people can be doctors than currently are, due to the cartel-like nature of our current system, but I don’t suppose that anyone who wants to be, can or should become a doctor. I would expect that it is at least as difficult a skill to learn as being a computer programmer, accountant, or expert toolmaker, and almost certainly more difficult than most trade skills.

There also being a great deal of overlap between those with the talent to become a doctor, and those with the talent to learn much other highly-skilled work, the 20-25% of the population with such talent and the ability and willingness to develop it is in high demand all across the economy, while a very large share of the population that has the skill necessary to clean toilets is in no particular demand anywhere.

If the number of people who have little way to earn a premium for their services other than to take on unpleasant labor is greater than the number of workers needed for unpleasant tasks, then the premium for taking on such labor will be small, compared to the premium for rare and highly valued skills.

As long as we remain far from full employment and with an unpleasantly low baseline (low minimum wage or market clearing unskilled wage, and poor social safety net), that premium for work that is merely unpleasant but not especially difficult is likely to remain quite small.

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Watson Ladd 01.29.12 at 4:40 pm

Zamfir, I’m not sure how cartels are good for consumers. We still don’t know the skill of our doctors, even if the cartel keeps quality higher then it otherwise would be.

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edo 01.29.12 at 4:56 pm

“That is, schools in poor communities should get more resources rather than less, to offset both the poorer starting position of the students and the greater opportunities of schools in wealthy areas to secure support of various kinds for parents.”

I think a key causal factor must be made explicit here: segregation. Unequal outcomes tends to cause segregation. Segregation cause further unequal outcomes and massively unequal INFORMAL opportunities. We really need to pay heed to the links Elizabeth Anderson investigate in The Imperative of Integration.

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Henri Vieuxtemps 01.29.12 at 5:12 pm

Sorry, michael, I’m not buying any of this. Maybe to become a surgeon you do need some decent coordination – maybe (sorry, I’m skeptical). But I’m quite certain that anyone can become a physician – have you seen a physician? Zamfir is most certainly right that there’s absolutely nothing natural in this.

49

edo 01.29.12 at 5:28 pm

Michael e Sullivan:
If you by “natural” mean likely outcome under certain market conditions then obviously yes. But if you used the term morally then your remarks have no or very little relevance. A social system is morally faulty when individuals who spend 40+ hour work weeks on activities that (1) bring essential societal goods and (2) are dull and likely relatively damaging to their health but still (3) pay much, much lower than people doing more stimulating and healthy work. A society worth fighting for should correct the market in those cases.

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David Allen 01.29.12 at 5:45 pm

One of the major paths of upward economic mobility for poor and lower middle class Americans during the 40’s, 50’s and 60’s was union membership. Construction and industrial unions negotiated wages and benefits for less educated workers that allowed them incomes sufficient to support a middle class lifestyle and send their children to college. This path has been closed off with the elimination of most of the union movement in the US, with the consequent decline in standard of living for those without much education.

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Zamfir 01.29.12 at 6:08 pm

Watson, most people, including doctors, are decent human beings who like to do their job well and not screw over people. In a system where they can’t profit from screwing people over, normal courtesy means that you can have quite some (but not infinite) trust in doctors.

Once you make a system where doctors can make decisions that affect their own bottom line (like, if I stitch this one up quickly, I can put in an extra patient before the end of the day), you make a system where the natural tendency is for the least trustworthy figures to rise to the top. And then you have to fight that tendency with all kinds of oversights and checks and transparencies and rankings that are bound to fail in such complicated environments.

So, yeah, I am in general in favour of paying doctors good money, then keep the market far away. But it’s tricky to balance, and from time to time it results in idiotically rich doctors.

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dbk 01.29.12 at 6:18 pm

(1) Re: Cowan’s point (4), discussed in JQ’s previous OP and relevant to this one as well: this explanation sounds rather strained (“children of underachievers” etc.). Why not consider that enhanced mobility in Western Europe is in fact a beneficial and desirable outcome of social welfare programs in the second/third generation? This is basically the explanation provided for the equally surprising fact that Western Europe generates more entrepreneurial activity than the U.S., viz. those protected against catastrophic life events through social insurance can actually engage in more “risky” (viz. entrepreneurial) behavior. Why should this surprise us?

(2) An academic I consult occasionally re: income inequality/limited mobility and what’s to be done about it is sociologist Lane Kenworthy (U of Ariz). He has a blog called “Consider the Evidence” and a new book out called “Progress for the Poor” (OUP 2011). The blog has links to pieces he’s written that more or less summarize his findings. IIUC, rich countries can use various measures to address persistent poverty. His findings generally suggest that the bottom 25% are helped most by net entitlement programs, and the next 25% by a combination of entitlement programs and wage increases (tied to growth rate, not inflation rate btw). This does not seem surprising somehow either – rich Western European countries do entitlement programs better than the U.S. (esp. universal health care), and if (as even Cowan admits), mobility appears to be very limited indeed in the bottom quintile of the U.S., then gradual weakening of net entitlement programs for the most vulnerable would logically lead to ever-decreasing mobility for this group.

(3) At the risk of further derailing this thread, I don’t think anyone is trying to argue that physicians should not be paid well for their work (rather than “cartel”, I believe a professional group that ensures a limited pool of practitioners who command large incomes is referred to as a “guild” profession); the question indirectly posed by the OP, and directly connected with it, is “How can a society ensure that even the poorest of a physician’s young patients has at least a reasonable chance of following in his footsteps?” Leaving aside all other attendant costs/sacrifices, given the astronomical financial cost of attending medical school in the U.S. today, this seems to be to be a fairly emblematic question.

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SR819 01.29.12 at 6:25 pm

There’s a certain irrationality in allowing market forces to determine people’s wages IMO. We’re still stuck in a “subjective theory of value” world which was initially promoted by right wing economists, which is a very convenient idea since it suggests that if an MNC is paying workers a seriously low wage, it’s because the workers’ work is only worth that much to the firm. This is grossly unfair IMO and leaves the bosses with the political power. Why not have a central authority determine the number of doctors etc that are required? By letting the market rip, we don’t get the perfectly competitive utopia promoted by neoliberal economists, rather you end up with unforgivable social injustices with huge disparities in wealth.

54

geo 01.29.12 at 6:42 pm

Roger’s argument @21 about inequality seems to go to the root of the matter. Of course inequality is inevitable, but not inequality of financial reward. Differences in esteem are the truly just and rational unequal rewards for superior performance, along with differences in satisfaction and responsibility. Being a doctor is harder but also more satisfying than cleaning toilets, and people are more grateful when you do an outstanding job. But a doctor doesn’t need five times as many calories, or five times as much living space, or a five times more expensive car, than a toilet cleaner. So why give him/her five times as much money?

This is all said much better and at definitive length in Michael Walzer’s great Spheres of Justice,and before that, in some of the best prose in the language, by John Ruskin.

55

SR819 01.29.12 at 6:50 pm

Assuming that we can’t abolish the market any time soon and that truly radical policies are difficult to pass through immediately, I think we should simply have both a minimum wage and a maximum wage to try to lessen inequality.

Let’s be clear, wants are not “unlimited” unlike what neoliberal economists say. Doctors don’t need five times more expensive cars, you’re right. The same arguments applies to other high wage occupations. Moreover, I think there should be a basic income that is given to EVERY individual in the country, that is high enough to ensure everyone has a high quality standard of living, can afford food and drink, pay the bills and have more than enough to enjoy life rather than worrying about how to allocate his scarce income. We impose far too high costs on the unemployed, and benefits still leave the unemployed facing psychological costs due to the uncertainty and fear that the payments will be stopped if they don’t find a job after a certain period. We are rich enough to be able to afford these policies, the only reason they’re not implemented is because the right have shifted the terms of debate so far to the right that these basic proposals are seen as being radical.

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Guido Nius 01.29.12 at 6:59 pm

55 is bang on, let’s call it the maxmin policy.

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Matt Cavanagh 01.29.12 at 7:17 pm

Interesting post, and I’m grateful to John for mentioning my book. I’m mostly happy with the way he situates my views in the debate (or at least the views I had at the time I wrote the book – they have changed a bit, though not that much).

On the post itself, and the current debate, the first thing to say is that I entirely agree with John’s demolition of Tyler Cowen; and as John says (in the first link), since Cowen isn’t stupid, the weakness of his argument is all the more revealing. However, I think we can be confident – or UK readers at least can be confident – that the idea that we shouldn’t care about social mobility isn’t going to get anywhere politically.

The second thing to say, and this is probably the point on which John and I are in closest agreement, is that the common tendency to set up equality of opportunity in opposition to equality of outcome – arguing that equality of opportunity is the answer to realising that equality of outcome is impossible or impossible without excessive cost – is wrongheaded. I still have my doubts about how attractive and coherent and robust each of the ideals is, but I agree that they are more attractive and coherent if they are combined, rather than if a wedge is driven between them.

In other words, if you object to inequality of opportunity (or ‘grotesque’ inequality of opportunity), you should also object to inequality of outcome (or ‘grotesque’ inequality of outcome) – and I think this is true on both empirical and principled grounds. John cites the empirical grounds (the correlations between the two); in my view, the only good principled arguments tend to apply to both, as well.

As for policy, I agree with John that “if the distribution of income within a given generation is reasonably equal, there is lots of scope for government action to give everyone in the next generation access to the same broad set of choices and opportunities”; and also that “as regards education, the crucial element is centralised funding, with a commitment to offset, rather than reinforce, inequalities in starting points. That is, schools in poor communities should get more resources rather than less, to offset both the poorer starting position of the students and the greater opportunities of schools in wealthy areas to secure support of various kinds for parents.” Indeed, I’m confident that the last Labour government (in which I worked – though not on education policy) tried to do just that, to the extent that it believed it could, given various kinds of constraints – including political. I am sceptical that, when the dust settles, the current government’s approach will measure up as well in this respect, for all the Lib Dem talk about the pupil premium.

Where the last Labour government did less, clearly, was in relation to the other aspect John describes, of taxes on inheritance or capital gains; though again, while Labour did not increase them, it at least defended (and continues to defend) the principle and the current level of inheritance tax, whereas the Conservatives clearly oppose it.
These last two points, about policy, are two reasons why I think John goes too far at those points where he seems to dismiss modern centre-left governments and parties as having entirely “capitulated”. I always dislike the tendency, in people who think there should be more difference between the main parties, to exaggerate that by saying or implying that there is no difference, or no difference worth fighting for, that centre-left parties or governments don’t count as in any sense left or egalitarian etc. I think it’s lazy, as well as politically counter-productive.

(Any CT readers who are interested in other ways in which I don’t agree with John, but which run deeper into the egalitarian debate, should follow the second link in the para where he mentions me: my comment is the last in the thread there.)

Matt

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Ed 01.29.12 at 7:17 pm

“I really think that society would be better served if we abolished economics as a discipline.”

It should never have separated from politics, and we need to revive the concept of political economy. Aristotle’s lost book on economics is sorely missed.

This is one of the best threads I’ve seen on this blog, particularly roger # 37 and christ # 41.

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Watson Ladd 01.29.12 at 7:20 pm

SR18, what does a central authority know about the conditions that make for needing more or fewer doctors? Hayek was partially right: the price system serves as a means of coordinating information. Contra Walzer not all work is created equal: the creator of a pit where no one wants one has done a lot of work but doesn’t deserve a reward for it. (I think we’re committing fratricide right now: I doubt any of us are against massive redistribution under the current circumstances)

You also say wants aren’t unlimited, so its okay to redistribute. That’s probably not the case: many of us would like the freedom afforded by having a guarantied ability to work, which having money can afford. Rearrange social relations could also do that, but it would need to be a fairly effective guaranty to replace the value of having money.

60

Stephen 01.29.12 at 8:58 pm

sr819@55
“Moreover, I think there should be a basic income that is given to EVERY individual in the country, that is high enough to ensure everyone has a high quality standard of living, can afford food and drink, pay the bills and have more than enough to enjoy life rather than worrying about how to allocate his scarce income. “

Hmmm. Fine, maybe, if you make it EVERY individual who does useful work (though I think you may hit serious difficulties in defining “useful”; or the amount of mental or physical effort to be put into doing an acceptable amount of work; and other variables).

But what about those who would be happy to enjoy “a high quality standard of living, afford food and drink, pay the bills and have more than enough to enjoy life” and never do a hand’s turn of work from one year’s end to another?

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Henri Vieuxtemps 01.29.12 at 9:13 pm

what does a central authority know about the conditions that make for needing more or fewer doctors?

in the case of doctors – everything. The need for doctors has nothing to do (obviously) with any price system.

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edo 01.29.12 at 9:24 pm

Watson Ladd: The optimal system for information coordination is contingent on technology. We today have immensely better computation tools to run on wast riches of quantitative public health data. The data and tools will increase exponentially. The case for increased regulation and planning in health care and other key sectors is bolstered in lockstep with technological progress. Hayek is increasingly irrelevant.

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Ed 01.29.12 at 9:37 pm

“But what about those who would be happy to enjoy “a high quality standard of living, afford food and drink, pay the bills and have more than enough to enjoy life” and never do a hand’s turn of work from one year’s end to another?”

Have you not read some of the other threads here (or on Marginal Revolution itself for that matter)? Automation is advancing that the problem is finding work for the people who want to “do useful work”, let alone the sort you are worried about. Its no longer the day of every had in the field or the harvest doesn’t get brought in. This is really a sea change in, well, political economy that unfortunately most people haven’t caught on to.

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Tom Bach 01.29.12 at 9:46 pm

Ed has it exactly right. At this point the issue isn’t lazy proles won’t work but rather broken economic system can’t employ. The latter problem is the one that demands a new method of wealth distribution.

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gordon 01.29.12 at 10:41 pm

SR819 (at 55) and geo (at 54) raise another issue – the “height of the pyramid” problem. How high should the social pyramid be? This, like treatment of the poor, is another issue about inequality that mobility by itself won’t solve.

By the way, I suspect that doctors (at least in the US) get paid a good deal more than five times what toilet cleaners get.

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Watson Ladd 01.29.12 at 11:31 pm

I’m not so sure about Ed and Tom’s points. Prolonged mass unemployment has existed before even when the standard of living that was possible was much lower. If the economy was better more people would be working, which would improve their standard of living. Clearly we can support everyone with only 55% of everyone working: odds are we would want 65% of everyone working and satisfying more of their needs.

67

krippendorf 01.29.12 at 11:49 pm

Opportunities to extract rent are alive and well, even in “liberal” market economies, it’s just that these opportunities they have become more and more asymmetric as the rent-generating institutions that benefited workers in the bottom half of the wage distribution fell victim to market “reform.” In point of fact, a larger proportion of workers in the US are licensed than are members of unions: Kleiner & Krueger put the former at about 30%, compared to less than 15% unionized. Weeden (2002) estimates the net (education and experience-adjusted) wage returns of being in a licensed occupation at about 9%.

This is relevant to the debate over doctors (and dentists) wages. But, licensure is more widespread than most people realize. There are some 200-odd occupations in the US, out of the 500 or so in the census scheme, that are partially or wholly licensed. To be sure, most of these occupations don’t enjoy as much control over admissions standards and rates as doctors, dentists, or lawyers.

68

kotzabasis 01.30.12 at 5:45 am

John Quiggin

You cannot socialize social mobility by legislating equal opportunities and outcomes. Human nature is unequally divided between hard working productive imaginative ants that provide for their future, and cicadas that live and sing the pleasures of the day with the everlasting hope that others will provide for their tomorrow. To achieve your social mobility you will have to EQUALIZE human desires, propensities and abilities, qualities that nature has so unequally and unjustly distributed among humans. That is, you will have to revolt and overthrow the sovereignty of unequal nature and replace it by your straightjacket equality in which you will place these qualities. (And in an intellectual lapse this revolt will also be against the title of your blog, “…No straight thing was ever be made.”). Thus, your social mobility will not be issuing from the action of a terrestrial human being but from an ‘act of God’. Your social schema is the cry of a creationist against Darwinian evolution. You can play and relish your role as a ‘social creationist’ but you can do so only by taking leave of the realm of nature and entering the celestial realm of wishful thinking.

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reason 01.30.12 at 9:18 am

“Human nature is unequally divided between hard working productive imaginative ants that provide for their future, and cicadas that live and sing the pleasures of the day with the everlasting hope that others will provide for their tomorrow. “

Cartoon view of the world alert!

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John Quiggin 01.30.12 at 9:25 am

A bit more of the cartoon view from his website

The Liberal political courtesans Paul Krugman, Maureen Dowd and Frank Rich, not to mention the less charming ones of the New York Times, provocatively egged on by their young ‘madam’ Arthur Sulzberger, are transforming the sweetness of their profession into the bitterness of their politics against the war.

No more replies to this troll, please

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Stephen 01.30.12 at 9:28 am

Ed@63, Tom Bach@64:

I’m not sure why Tom thinks the problem is “lazy proles”. In my experience, the desire to live well without working occurs in people of all social groups: Tom may wish to consider why he associates it only with the working class.

And nobody needs Ed to tell them that agriculture and manufacturing have been extensively mechanised and automated. Point is, though, that there are a fair number of tasks that have not been, and will not be for the foreseeable future. If society offers “a high quality standard of living, afford food and drink, pay the bills and have more than enough to enjoy life” – I interpret this as being something very much more attractive than current social security payments, for which it is not an easily recognisable description – then why should anyone do the necessary tasks?

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reason 01.30.12 at 9:39 am

geo @54

“But a doctor doesn’t need five times as many calories, or five times as much living space, or a five times more expensive car, than a toilet cleaner. So why give him/her five times as much money?”

What world do you live in? 5 times?

73

Z 01.30.12 at 9:40 am

Someone still has to drive the garbage trucks.

Or to quote Jean-Claude Passeron, “Those who rejoiced that a rise in educational level meant you could discuss Homer with your gardner discovered with horror that one could have a master degree in classical Greek and become a gardner”.

I seize the opportunity to recommend Les places et les chances, from François Dubet, as a worthy contribution to this debate.

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edo 01.30.12 at 10:26 am

Stephen: If a task is essential for society but is such that it is bad for people while doing it, or has harmful consequences for their health, then a fair society would (a) technologically automate the task so no person need do it, (b) restructure the task so it is no longer bad/harmful for the worker or (c) provide extra benefits sufficient to outweigh the bad/harmful aspects.

A universal basic income is a means for such fairness to be implemented. If each individual has the economic power to opt out of bad/harmful tasks then that generates great incentives for society to come up with (a)(b)(c) solutions.

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Peter T 01.30.12 at 11:59 am

This term ‘meritocratic” worries me. I mean, it sounds good – but best at what? When? Best for whom? And what confidence do we have that, if there is a best, that we would recognise it? Our history to date hardly justifies such a belief. If a meritocracy is not to end up as a free for all among those who think they are best (and that their bestness is the need of the moment) – something very like the male side of life among the baboons – then we need to be in rough general agreement on a LOT of things, and to have a good process for recognising changes that bring new kinds of merit to the fore.

I think a better recipe for social success is to have lots of short social ladders than a few long ones – and each with some degree of economic and political independence.

76

Chris Bertram 01.30.12 at 12:17 pm

Nice quote Z, where is it from exactly? A friend of mine, now a professor of economics at a UK university, was a plumber when I first knew him. During his postgraduate studies he continued to work as a plumber when he could (in fact he’s never done better financially in academia). During one job, his posh clients were arguing about who did what to whom in some bit of ancient mythology. Both were wrong, so he corrected them. This was not appreciated.

I think we need another post here at CT on other social mobility and the other dimensions of social stratification with appropriate nods to Bourdieu/Passeron and Walzer – I’m sort of planning this, but no promises.

77

Z 01.30.12 at 1:18 pm

where is it from exactly?

I had quoted from memory (and thus misquoted it a bit). Here is the complete quote with reference (note that if you do want to quote it precisely, several on line sources misplace it within the article; hopefully, the reference below is exact).

Le changement [d'attitude envers la culture] ayant été rapide, on peut voir les mêmes individus ou les mêmes groupes qui affirmaient il y a peu que la « démocratisation de la culture » serait réalisée « lorsque le jardinier pourrait lire Platon dans le texte » se voiler aujourd’hui la face en constatant qu’on risque de se retrouver jardinier avec une licence de grec.

J-C Passeron L’inflation des diplômes Remarque sur l’usage de quelques concepts analogiques en sociologie (Revue Française de Sociologie 23 (1982) page 583).

I’m sort of planning this, but no promises.

Eagerly waiting for this. The French sociological tradition has a long history of discussing this topic, and until recently, my impression was that it had had no impact in the English speaking world; an effect that I would have attributed to the the pervasive myth of high social mobility. Now that, as John wrote, there seems to be a not inconsequential change of mind towards this issue within the general public in the anglo-spheric world, I am guessing that interesting synthesis work can be done. Krugman meets Bourdieu, so to speak.

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bert 01.30.12 at 1:47 pm

Robert Frank’s latest book includes a policy proposal: a sharply progressive tax on annual household expenditure. It’s an argument worth reading in detail, drawing on his long habit of looking for parallels between market economics and natural selection. Bankers’ bonuses (and bankers’ vodka-pissing ice sculptures) are both a social signal to a peer group and an example of market failure, in the same way that mooses’ oversized antlers are.

Incidentally, if you look at his homepage, you’ll see his son is in a band called The Nepotist.
Everything is connected.

79

dsquared 01.30.12 at 2:22 pm

(and bankers’ vodka-pissing ice sculptures)

Actually this famed table-decoration was made for the birthday party of Dennis Kozlowski, CEO of a manufacturing and engineering company. I am thinking of making a collection of all the crimes & misdemeanours which are being retrospectively attributed to “bankers”. In an awful lot of British journalism, for example, Harry Enfield’s “Loadsamoney” character is remembered as a trader of some sort, when in fact he was a working class skilled tradesman (a plasterer, specifically – the last time we had a boom and bust cycle in these isles we were a little bit more honest about the extent of public participation).

80

bert 01.30.12 at 2:42 pm

Quite right.
Also, Kozlowski ended up in prison. Shouldn’t be confused with a banker.
I was reaching for an example of investment banking excess. Is there a better one I could have used? Any come to mind, Daniel?

81

Chris Bertram 01.30.12 at 2:52 pm

@dsquared – Ah yes, but when you corrected me re Enfield, you did concede that the Loadsamoney persona was adopted enthusiastically by plenty of City types.

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engels 01.30.12 at 3:19 pm

I am thinking of making a collection of all the crimes & misdemeanours which are being retrospectively attributed to “bankers”.

If you’re planning to put this on public display I’d like to contribute a 1cm long Stradivarius which could be shown alongside…

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bert 01.30.12 at 3:33 pm

If it’s any consolation, I don’t think Robert Frank would get too far up on his high horse about the lavish spending of bankers and others in the 1%. For him, it’s a response to perverse incentives. Just like he wouldn’t jab his finger at a moose.

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liberal 01.30.12 at 5:12 pm

The problem is very, very simple to describe: economic rents. Bad for both equality and efficiency.

Strange that only one commenter above has mentioned them.

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Tom Bach 01.30.12 at 5:19 pm

Stephen:
I was using “lazy proles” as a short hand for the nonsense view that there are masses of folks who would rather not work in.

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geo 01.30.12 at 5:50 pm

reason @72: What world do you live in? 5 times?

Just thought I’d experiment with understating rather than overstating an argument. As a sort of polemical calisthenics.

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Alex 01.30.12 at 5:52 pm

The more that differences in outcomes reflect different choices from a given set of opportunities, rather than differential success in climbing a well-defined hierarchical ladder, the less this seems to me to be a concern

I agree with the general thrust of this, but I think it needs expansion to be clearer/better. Two points:

1. We need more than the opportunity to choose. Some politicians have a policy of “school choice”, but what happens when certain choices get oversubscribed? Some will lose out. Even if we want everyone to be able go into what field they want (though see pt 2 below), we have finite resources.

So to get our egalitarianism right, we need to get our social safety net right. How about some sort of basic income that you keep, in or out of work (this improves choice/freedom)? Also, it should be properly cradle to the grave this time, with single payer social care (not just health care) for those who need it, and follow New Zealand in its no-fault compensation scheme.

2. We need to be clear about the different distinctions of choice. Personal choice v social choice. Even if society can provide all the resources necessary to allow everyone to choose which profession they want to go into, that doesn’t mean we should do so. We need to look beyond equal opportunity in an atomistic sense.

First, because the decision making for which jobs are created is a social one, not a personal one. What we need to do is look at the ownership of, yes, the means of production, and who makes the investment decisions in the economy. Keynes called for the “socialisation of investment”. Why not do that?

Second, it is quite clear that opportunity for the poor is reduced when many of the services they rely on are in private hands. Many privatized utilities should be renationalized.

Third, we need to think about equal opportunity not just in terms of “what career/income do you want to have?” but also in a political sense. In politics, one of the goals of democracy is to allow everyone an equal opportunity at being an MP/Congressman or even the Prime Minister/President. Now, this is not achieved properly in practice because of the way political financing and the corporate media work, but the general idea is sound. Any one of us can stand for election and if we have what are seen to be good ideas (this is a meritocratic idea, but “merit” in this case is not just about technical expertise, but also a candidate’s morality) we can, in theory, be elected.

Now why shouldn’t we put this form of equal opportunity to work in our economic system? There is not a shred of this kind of equality of opportunity in the workplace. Bosses get appointed over the heads of workers – why not instead bring in some kind of workplace democracy? This improves equal opportunity, since every worker in a business would have an equal right to try and become the manager or whatever, and produces a better meritocracy since no-one has a right to wield power over those they aren’t accountable to, but it also goes hand in hand with lower Gini coefficients, since workers can (if they wish) set more egalitarian pay ratios.

And in terms of choice in the personal sense, we can bring in our toilet cleaner here, and compare him/her with a corporate executive. We’re constantly told that we can’t clamp down pay at the top because then they’ll just go somewhere else. Well, one of the things that does separate an executive from a toilet cleaner is this choice. The toilet cleaner can either scrub the loos, or become a member of the reserve army of labour. The executive can, on the other hand, choose to work for a different company. We need to give the cleaner more choice and the executive less. Workplace democracy achieves this, since workers get more choice, and executives can’t just pick a company to work for.

What I’m saying is, yes, let’s have post-war social democracy, with all the bells and whistles on too – but don’t forget the socialism.

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john c. halasz 01.30.12 at 8:32 pm

@80:

Stephen Schwartzman threw himself a multi-million $ birthday bash just before Blackstone went public. Though he’s not quite a banker.

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Bloix 01.30.12 at 8:41 pm

The point I was trying to make in # 8, made better than I could make it:

“If we can just get those taxes down to nothing and eliminate all impediments to inheritance, we should be able to successfully recreate the British aristocracy in a generation. The founders would be proud.”
http://digbysblog.blogspot.com/

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Stephen 01.30.12 at 9:11 pm

Tom Bach@85
“I was using “lazy proles” as a short hand for the nonsense view that there are masses of folks who would rather not work in.”

Very awkward and antiproletarian shorthand, and I think there may be a word or more left out at the end.

But anyway: some things really are nonsense. “One fine day in the middle of the night, two dead men got up to fight”; nonsense, certainly.

“Some people, if offered ‘a high quality standard of living, afford food and drink, pay the bills and have more than enough to enjoy life’ would prefer not to work”; not, I think, nonsense. Nor untrue. We can argue about the exact value of “some”, which would of course depend on the value of “high quality” and “more than enough to enjoy life'; but surely it is indisputable, even if unwelcome to Tom, that for very moderate values of “high quality” and “enjoying life” quite a number of people would prefer not to work.

Hell, there are unexorbitant values of those for which I would prefer not to work myself. Wouldn’t you, Tom?

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kotzabasis 01.30.12 at 9:32 pm

John Quiggin
Why are you shifting the ground to the issue of war by referring to my caption about those three commentators of The NYT who were totally wrong in their assessment on the OUTCOME of the war in Iraq? (It is obvious that you are also, as apparently are the majority of commentators on this theme, a companero of the anti-war camp and clearly attempting to ‘mobilize’ prejudice against my comment.) Is it because you cannot run intellectually on the potholes of your ground on social mobility, after I identified and indicated them to you in my comment, and that you are incapable of filling these potholes with rational argument? And your plea to other commentators not to reply “to this troll” reveals a lot.

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bert 01.30.12 at 9:38 pm

jch @ 88
John Thain’s antique commode is a good place to start (here’s the actual bill: pdf).
There’s plenty of examples. dsquared won’t say there are, and he can’t say there’s not, so saying nothing is probably seems like the best option. But he picked up fairly on a mistake I made above, and his wider point is right too. The 1% and the bankers are different groups. They overlap rather than map precisely. In the States, the overlap is 13.9%, if you count by income excluding capital gains (pdf). When Reagan came in it was less than 8%.

Perhaps my focus on bankers comes because it’s bonus season again. This year, there’s added controversy from the bonus awarded to the current CEO of a bank that posted the biggest corporate loss in British history and was effectively nationalised in 2008 (although its shares are still listed). My previous comment in this thread at #43 was kind of flippant, but it might be relevant that the government tried to manage this bad news by leaking about moves to strip the previous, disgraced CEO of his knighthood.

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engels 01.31.12 at 10:37 pm

Yes, social mobility can be a wonderful thing…

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gordon 02.01.12 at 10:40 am

dbk, a recent Kenworthy post examines the link between inequality and mobility (and even refers to this blog post) , and raises the interesting question of the extent inequality of outcomes could coexist with equality of opportunity:

http://lanekenworthy.net/2012/01/31/inequality-mobility-opportunity/

He suggests this might be possible if you have: “…affordable high-quality early education, K-12 schooling with late tracking and equal funding, and widespread access to good-quality universities. And perhaps also comprehensive prenatal care”.

Of course, you have to admit the possibility that these services would not be suppressed by the oligarchs. Nevertheless, it’s worth reading. I found his conclusion “…if we want to reduce inequality of opportunity, reducing income inequality isn’t the only way…” interesting because it is the mirror image of the suggestions I made above at 25 and 65.

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gordon 02.01.12 at 10:42 am

That (at 94) was a response to dbk at 52. Sorry, forgot the number.

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