Taxing Our Patience
March 1999
By Robert Stacy McCain
“The purpose of the New Democracy Forum,” Joshua Cohen and Joel Rogers write in an “editor's preface” to The New Inequality: Creating Solutions for Poor America (Beacon Press, 1999), "is to foster honest, serious discussion of pressing national problems, and constructive debate about political solutions to them."
This is a lie. The real purpose of the New Democracy Forum, to judge by author Richard B. Freeman's contribution to this new series, is for left-wing statists to harangue us with misbegotten schemes to wreck our society, cripple our economy and deprive us of our liberties. An "honest, serious discussion ... and constructive debate" would imply the acknowledgement of valid disagreement with the very premises of such monstrous arguments as Freeman's, and no such acknowledgement is to be found in The New Inequality.
The New Democracy Forum is a series of thin paperbacks. The New Inequality is 85 pages and retails for $10. Apparently, the intent is to provide both a sort of "wonk lite" mind candy for the upper-end mass market, as well as something that can be used as assigned reading in college classrooms. In these 85 pages are collected contributions from nine different authors, in the form of a symposium. Freeman makes his argument in 28 pages, the symposiasts respond in 40 pages, and Freeman replies in five pages.
The whole shebang is introduced with a foreword -- here's a big red flag, pun intended -- by Robert B. Reich, Clinton's former Secretary of Labor. Having failed to strangle the current economic boom in its cradle, Reich is now safely perched in a posh sinecure ("University Professor of Social and Economic Policy at Brandeis University's Heller School," according to his thumbnail bio) where he is no doubt warping the minds of America's future leaders with his lunatic Trotskyist gibberish.
In fact, one might surmise the contents of The New Inequality merely by scanning the names of the contributors, who are a frighteningly homogenous assortment of lefties, mostly tenured radicals at elite universities. Freeman is "Ascherman Chair of Economics" at Harvard, another contributor is "Sterling Professor of Economics Emeritus" at Yale, two others teach economics at MIT, and one is "on the faculty of the Graduate School" of CUNY. Thrown in for token "diversity" are the founder/director (and for all I know, sole employee) of a feminist think tank, and the Southwest regional director of the (God help us) Industrial Areas Foundation. If these neo-Bolsheviks should ever gain any real influence in Washington, we're all doomed. One is reminded of William F. Buckley Jr.'s quip that he'd rather be governed by the first 100 names in the Boston phone book than by the combined faculties of Harvard and MIT.
OK, so what are all these lefties whining about? Reich describes it as "a two-decade-long trend toward widening inequality of wages" et cetera. This particular whine dates back to the Reagan administration, when the disgruntled losers who brought us LBJ's "The Great Society" commenced to complain about "the growing gap between the rich and the poor," for which they blamed Reagan personally. You got your girlfriend knocked up, dropped out of high school, and blew your disposable income on dope? Hey, no problem, you can blame it on the Gipper.
Reich is exactly wrong, and for purely political reasons. The declining fortunes of the American working class are not "a two-decade-long trend" (i.e., it didn't start with Reagan), but instead date back to the early 1970s, when the Arab oil embargo drove up the price of crude oil at the same time that new auto safety and clean air regulations were taking effect. Suddenly, there was a demand for safe, non-polluting automobiles that got good gas mileage. The Japanese had been making such cars for years, and Detroit didn't have a clue (e.g., the Ford Pinto and the Chevy Vega). Decades of growing union power had left Detroit with a workforce that was inefficient, inflexible and overpaid. The American auto industry, long the bulwark of our economy, began a downward spiral from which it has never completely recovered. Other heavy industries were sucked down in the vortex, and the old structure of economic security for the working class -- following Dad into the mill, the mine or the factory -- unraveled rapidly. By the time OPEC'sdeath-grip on the oil market was broken, a decade had passed, and industrial capitalists had found that they could get good labor cheap in places like Mexico, India and China.
Reagan had little or nothing to do with any of this, and it is hard to imagine what the contributors to "The New Inequality" would have had him do. A national "right-to-work" law to restrain the stifling influence of the union shop? Don't be absurd. But they've been bitching and blaming Reagan since 1981, and you can't expect them to stop now.
Besides the collapse of the old industrial economy, two major factors in the "growing gap between rich and poor" are (a) the growth and expansion of higher education, and (b) increased economic opportunities for women. Look at that short, two-item list again. Both (a) and (b) are generally considered to be very good things, and so they are -- especially for college-educated women. But for those without college educations, and particularly for men who did no more than graduate from high school, the combined effects (a) and (b) have led to a lot of resentment.
Go back to the 1950s. Under the GI Bill, thousands of returning soldiers had received college educations or home loans, courtesy of Uncle Sam. In the 1960s, their children were able to attend college with the help of student loans or grants, again courtesy of Uncle Sam. And since this was one way to avoid being drafted and sent to Vietnam, a whole lot of young men suddenly developed a keen interest in higher education. Their girlfriends followed them there. As the '60s gave way to the '70s, then, a lot of college-educated 20-somethings were pouring out of American universities, and -- the important thing -- they were pouring out two-by-two. While they were at college, many of these young people had fallen in love and married, and now these married, college-educated couples (think of Bill and Hillary Clinton) were entering the workplace. The percentage of women with college degrees increased rapidly, and it was these women's demands for respect and fairness in the workplace which was the real driving force behind the feminist upsurge of the '70s.
Now, let's do some simple calculation. In the "good old days," when a woman's place was in the home, the differential between family income was based almost entirely upon the wages of the male breadwinner. Most women worked, when they worked at all, as secretaries, teachers, nurses, waitresses and so forth. In such a world, the plant manager at the tire factory might make, say, $120,000, while the guy on the shop floor might make, $30,000. But in the modern, post-feminist era, a new situation develops. The plant manager makes $120,000 and his wife -- they met at college -- earns $80,000 working for a software company. The guy on the shop floor still makes $30,000, but his wife now earns $10,000 a year working part-time at the local daycare center (watching the plant manager's kids, no doubt).
Do we see now where much of the "growing gap between rich and poor" is coming from? The dual-income, college-educated couple now defines what we think of when we hear the expression "middle class," and it certainly describes the upper middle class households that are buying those expansive new suburban homes and those spiffy new sport utility vehicles. Furthermore, these upwardly-mobile couples are apt to postpone childbearing into their late 20s or 30s, and then to have fewer children than the less-educated working class couples, who often begin childbearing in their teens and tend to have more children on average.
As a result of these differentials, as the children of these families grow to maturity, the children of the upper middle class are apt to have grown up in a much higher per-capita income environment, with less sibling competition for parental attention, and because their parents can afford an expensive home in a desirable neighborhood, chances are they attended better public schools, or perhaps even private schools. The children of the working class parents, on the other hand, are apt to have had a substantially lower per-capita income background, sharing parental attention with more siblings, and attending mediocre schools. Because of the demonstrable correlation of socio-economic background and academic ability, and because academic ability is a prerequisite to admission into the ranks of the college-educated middle class, nothing short of the most radical left-wing agenda could even hope to eliminate the disparities which will inevitably show up in the second generation of this modern economy. The rungs on the bottom of the ladder of economic opportunity have grown very slippery.
But before you go pondering that "most radical left-wing agenda" just mentioned, remember that these gross disparities of income I've described are based on two-parent families. We know that more than 30 percent of all children are born to unmarried women. Of children born to married couples, more than 40 percent of those marriages will break up before the children reach age 18. In other words, more than half of all children will, at some point before they graduate high school, be living in a single-parent situation. And, unfortunately for those who wring their hands about income inequality, the incidence of single parenthood (whether through divorce or out-of-wedlock births) is much greater among those with less income and education.
The waitress at the diner is more likely to be a single mom than the assistant professor at the university. And the waitress' ex-husband is probably a lot more troublesome about child-support payments than the assistant professor's ex-husband, so that even if both women are divorced, the real income gap between them is a yawning canyon. It's the difference between a modest townhouse in a quiet neighborhood for the divorced professor and a one-room apartment on the wrong side of town for the divorced waitress.
Now go back to that "most radical left-wing agenda," and realize that whatever else it may contain, there is nothing in there that will force the waitress and the father of her children to remain married until their children are grown and gone. As Barbara Dafoe Whitehead has shown in her book, The Divorce Culture, and as Patrick Daniel Moynihan tried to warn America three decades earlier, it is the breakdown of the family which contributes most to the impoverishment of children. While the highly-educated, high-income elite can view marriage as a mere sentimental tradition, this is because their children (and they have fewer children) suffer less economic hardship as a result of divorce (and, in actuality, they have fewer divorces). But those with less income and less education have more children, who suffer more economic hardship, as the result of more divorces (and a whole lot more unwed motherhood).
We have "ended welfare as we know it," so the castoff mothers of the lower classes are now receiving less income. And we have stiffened enforcement of child-support payments, so the divorced women of the upper classes are receiving more income. Every "reform" effort aimed at solving this problem, in other words, has somehow managed to make it worse.
So what do Richard B. Freeman and his symposiasts suggest? Nothing useful. Freeman offers a five-plank platform for turning America into Sweden: "More redistributive strategies ... targeting interventions on the young ... 'social wage' ... taxing it progressively ... Encourage the growth of ... unions ... Target metropolitan regions as the building blocks of a more egalitarian economy." Yes, welcome to the Proletarian Utopia, and let's hope that our economic competitors in Asia and Latin America and elsewhere will just twiddle their thumbs while we shackle our economy with this kind of crypto-Marxist nonsense, which is suffocating the economies of France, Germany and other industrialized Western nations. If a more complete plan for wrecking our economy has not been suggested, it's only because Pat Buchanan and Dick Gephardt just can't quite see eye-to-eye on their protectionist populism.
Now, I could suggest a thing or two that might help ease the economic inequality about which Freeman, Reich, et al., are complaining. The first is that highly-educated couples with good incomes should have more children than the roughly 1.6-per-family average that now obtains for those with college degrees. This would lower the per-capita income at the top of the earnings scale, by divvying up the socio-economic benefits among more recipients.
Secondly, I might suggest that college-educated mothers whose husbands earn a good living should consider taking a few years off work to care for their children. (Yes, I suppose the reverse is just as viable, but "Mr. Mom" continues to be a rarity in the real world.) The upscale moms who quit their office jobs to stay home while their kids are toddlers would thus reduce their overall family income -- and if you're really upset about income inequality, that's good, right? And while the angry upscale moms are preparing to denounce me as a misogynist reactionary, they might pause to consider the alternatives suggested by Freeman & Co. Hey, ladies, these lefties plan on taxing you into the poorhouse and using that plundered loot to create a "social wage" for the unwashed masses, remember? So you might as well just mess up their statistical calculations by dropping out of the workforce for a few years and lavishing your attention on your own children. The federal government in all its fiendish brilliance has yet to find a way to tax the value of mom's kisses and cookies, although the marriage penalty is a step in that direction.
Well, this is not going to happen, is it? Career moms didn't spend six years in college so they could stay home and change diapers, even if doing so would help lessen economic inequality. And if such a common-sense, family-values prescription for this problem is doomed, so too is the Reich-endorsed socialist pie-in-the-sky stuff suggested in "The New Inequality." That's just the point. People don't like to be dictated to, and it matters not whether it's the family-values crowd or the crypto-Marxist crowd doing the dictating. We are Americans, and we like the freedom to do whatever we damned well please, and it doesn't matter if the "growing gap between the rich and the poor" turns into the Marianas Trench, we are going to keep on living our lives as we see fit. This is the kind of glorious selfishness that makes this a great country.
The only note of sanity in the radical symposium assembled by Freeman is sounded by University of Chicago economics professor James Heckman. Sounding very much like a Friedman-inspired free marketeer, Heckman briefly sketches the possibility that early education initiatives -- "an enriched Head Start program" -- might help ease the inequalities of skills which result in inequality of earnings. He also briefly explores the incentives of income-subsidy programs such as the Earned Income Tax Credit.
But in directly addressing Freeman's Swedish-style nonsense, Heckman must have struggled to keep from laughing out loud. Heckman writes soberly that "policies that reduce the demand for the unskilled, like minimum wage laws or increases in union wage scales, are generally bad ideas. They increase the wages of those who remain employed but at the same time have the perverse effect of increasing the inequality of the least skilled, and reducing their employment."
Well, exactly. There is a good slap in the face to Ted Kennedy, Robert Reich, the AFL-CIO and any other person so foolish as to think that another hike in the minimum wage is necessary. Teddy argues for increasing the federal minimum wage because, otherwise, the temptation would be too great for businesses to flee the oppressive People's Republic of Massachusetts for Mississippi or Tennessee. If Teddy can impose similarly oppressive conditions on Mississippi, then those businesses will instead flee to Malaysia or China, so that Teddy can feel good about helping the teeming Third World masses. God forbid a Kennedy should do anything that might benefit the people of Mississippi.
In the long run, the very inequality Freeman & Co. decry is to some extent a result of the same kind of policy prescriptions they offer. From FDR's New Deal to LBJ's Great Society, centralized economic control by the federal government was the object of liberalism, and the long ascendancy of that philosophy undermined the economic and social health of large segments of the American citizenry. The populations which were supposed to benefit from liberal policies have suffered the worst, and thus are ill equipped to benefit from the new opportunities that opened in the wake of reforms that began in 1981. Alone among the contributors to "The New Inequality," Heckman seems to perceive this.
What is most disturbing is that elitists like Freeman and Reich -- comfortable in their academic sinecures, utterly immune to the vicissitudes of economic reality -- should presume to posture as friends of the downtrodden toilers. The expansion of government intervention in economic life offers greater prestige and power to such apparatchiks, even as it drains vitality from the marketplace where less privileged folks must seek their daily sustenance and hope to earn their fortunes. These left-wingers are economic vampires.
Priced at $10, The New Inequality is cheap. In a just world, the authors would have to pay people to read such atavistic claptrap. Instead, they will tax all of us to pay the salaries of university professors who will in turn make this socialist drivel mandatory reading for students whose tuition is likewise subsidized by the taxpayers. And then we wonder why "education" is such a big issue for the liberals. To quote the eminent British philosopher Elvis Costello, "Don't start me talking. I could talk all night."
r.s.mccain@worldnet.att.net
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