Michael Gerson: Let's focus more on economic mobility than income inequality

Liberals are right that a combination of rising economic inequality (even if the rise is gradual) with stalled economic mobility is an invitation to destructive social resentments. Americans will accept unequal economic outcomes in a fair system. They object when the results seem rigged. That way lies the Bastille.

So the question comes to liberals and conservatives: If social mobility is the goal, what are the solutions? What can be done to improve the quality of teachers in failing schools, to confront the high school dropout crisis, to encourage college attendance and completion, to reduce teen pregnancy, to encourage stable marriages, to promote financial literacy, to spark entrepreneurship?

Both Democrats and Republicans should have something to contribute to the development of this agenda. Neither party, however, currently has much to say. And this is not likely to change until the discussion turns from equality to mobility.

via washingtonpost.com

Capitalism comes to Cuba, not with a bang but a whimper

For a half-century now, opponents of the Communist regime in Cuba have been waiting for the moment when it would all be over: Some event, probably Fidel Castro's death, would bring an end to his revolution—and suddenly Cuban exiles and American businesses would be setting up shop once again in Havana.

But with news that the regime is about to allow the buying and selling of real estate, it's worth asking the question: What if "the moment" never comes? Oh, Castro will die all right. But his brother is running the nation now, and he seems to be managing a careful—slow—movement away from socialism. What if the country simply evolves, instead of making a clean break?

It's been a long, long time since the U.S. embargo against Cuba—and our refusal to have diplomatic relations with the government—made sense. Those efforts didn't bring down the regime. (And our relationship with China pretty much undermines any philosophical reason we have for continuing the policy; it's simple geographic spite, aided by politician fears of the exile community.) At this point, the stiff-arm may be costing the United States both the political and economic opportunity to assist that country's evolution. And maybe Cuba is happy to proceed without perceived interference from the yanquis. But we may someday regret the lost opportunity, waiting for a moment that might never come.

What will the new poverty measures mean?

According to the New York Times, the poverty rate in America is about to fall—not because anybody's material circumstances have changed, but because the Census Bureau is adopting a "fuller" accounting of citizen well-being that looks beyond their cash income to also measure the government assistance they receive, as well as account for differences in costs-of-living for local areas. Here's the Times' chart giving an overview of the likely numerical changes:

I'm not sure how detailed the Census numbers will actually end up being: It would be nice if we could determine what percentage of the people who remain in poverty are employed, so that we have a sense of how many of these folks are "working poor"—that is, trying to provide for themselves, but unable to completely do so in the jobs they're able to obtain.

And as the Times notes: "Monday’s release are likely to offer fodder both to defenders of safety-net programs and fiscal conservatives who say the government already does much to temper hardship and needs to do no more." True. But more information will help—the debate should be based on detailed honest data, and not our worst ideological fears. (And that goes for both liberals and conservatives: If things are more hunky dory than we thought, we should focus our priorities and solutions accordingly.) On the surface, though, it looks like the liberals have something to crow about: The safety net really does save lots of people from poverty—which means our Great Recession hasn't been as devastatingly painful as it might otherwise have been.

That said, I'm not sure the Times frames the debate quite accurately: Conservatives aren't just arguing the government "needs to do no more"—many are arguing that government should do less, which seems to me like a recipe for disaster in this economy. Loosening the safety net probably won't grow the economy in any appreciable way, but it might devastate many lives. Republicans would help all of us if they focused less on contempt for the poor and a bit more on measures to give folks the way to earn their way up out of poverty—reducing the need for and strain on the safety net.

One more Max Boot comment today

Yes, it was the Bush Administration that signed the Status of Forces Agreement that is resulting in the United States pullout of Iraq. But Max Boot has a handy Obama-blaming response to that fact: Bush didn't really mean it:

As Condoleezza Rice notes, “when the Bush administration signed the agreement, it was understood by both the U.S. and Iraqi governments that there would be follow-up negotiations aimed at extending the deadline — a step that would be in both the U.S. and Iraqi interest.” 

Perhaps it really was impossible to reach an agreement on any extension, although I’m skeptical of that argument. But don’t cast the blame on Bush who’s been out of office for almost three years. The failure to renew the troop-basing agreement occurred on Obama’s watch and he will get the blame if Iraq falls apart (as well as the credit if it does not).

If the Bush Administration really thought the United States should stay in Iraq past 2011, one thing it might've done is negotiate a SOFA with a later deadline. It didn't. Once it put that deadline in place, the exiting of U.S. troops was always a possibility. Especially given that Iraq has a supposedly sovereign government that has increasingly itched to demonstrate its independence from the occupiers. Boot keeps acting as though the United States could've kept troops longer in Iraq if only Obama wanted it hard enough, but the legal and political boundaries—and I'm talking about the politics in both Iraq and the United States—are trickier than he suggests.

But I'm not sure why I bother to argue against Boot. He's fairly predictable at this point: Always for more, bigger, and longer war, and always dead-set on portraying the Obama Administration as weak and spineless.

Max Boot bemoans our lost victory in Afghanistan

Boot is so exasperated with those weak appeasers in the Obama Administration:

One of the most discomfiting aspects of the forthcoming U.S. pullout from Iraq is what it portends for Afghanistan. In a nutshell, it appears more and more likely that Obama will pull out of Afghanistan too, even though the war there is far from won. Thus we read in the Wall Street Journal today: “The Obama administration is exploring a shift in the military’s mission in Afghanistan to an advisory role as soon as next year, senior officials said, a move that would scale back U.S. combat duties well ahead of their scheduled conclusion at the end of 2014.” 

 The Afghan army is capable but still needs time to develop. If we pull out too fast the army could fracture and the entire country could be plunged into a civil war which would, among other possible consequences, allow Afghan territory to once again become a haven for Al Qaeda and other transnational terrorist groups. 

That seems a high price to pay for the president to be able to campaign for reelection on a promise of having ended George W. Bush’s wars. In reality these are America’s wars and they cannot be ended with a unilateral pullout—our premature departure simply risks handing an unearned victory to our enemies.

Maybe Max Boot should contemplate the possibility that we've already won in Afghanistan.

Do I mean that Afghanistan has become a Jeffersonian democracy, or that the Taliban have been decisively routed? No. But those weren't the goals of the war when we started. We invaded the country with the hope of destroying or capturing the perpetrators of the 9/11 attacks, and to punish the Taliban regime for harboring those perpetrators.

Mission. Accomplished.

Boot's second paragraph—"The Afghan army is capable but still needs time to develop"—could've been written any time in the last 10 years, and I predict it will be equally applicable 10 years from now. In certain respects, Afghanistan as a nation-state is a lost cause. So the wisest thing to do is for the United States to invest its diminishing resources in ways that offer our optimal chances at security.

I'm not sure there's enough original Al Qaeda left to have a "haven" anywhere, but the job of the United States isn't to keep Al Qaeda from existing—an impossible task—but to suppress, discourage, and defend against Al Qaeda's attacks. Given that the "homeland" terror attacks of recent years have been small-bore operations—one guy with explosive underwear, one guy leaving an SUV in Times Square, and one self-radicalized Army officer attacking his colleagues—there's very little to suggest that Al Qaeda needs a whole country as a haven, or that mooring of tens of thousands of troops in that country is  a wise use of our resources.

We have been in Afghanistan a decade. We have accomplished the vast majority of what we'll probably accomplish there. And it's not like we're ceding the ground to terrorists: Obama plans to leave counterterror operations in place—there's just going to be a whole lot less nation-building. It's an imperfect ending, but it may be the best we can hope for.

The poor are making poor choices. Right?

I want to read more deeply into this new paper about how debt is swamping the middle class—which makes the suggestion that the leverage problem is holding back America's economy. But in a quick overview, I couldn't help but notice this:

• The debt is highest among the middle class. Middle-income families before the crisis had a debt-to-income ratio of 155.4 percent in 2007, the last year for which data are available, for families with incomes between $62,000 and $100,000, which constituted the fourth quintile of income in our nation in 2007. This ratio is higher than for any other income group. Families in the top 20 percent of income (with incomes above $100,000) had a ratio of debt to income of 123.6 percent, and families in the third quintile (with incomes between $39,100 and $62,000) owed 130.7 percent of their income. Households in the bottom 40 percent of the income distribution (with incomes below $39,100 in 2007) owed well below 100 percent of their income.

In the Facebook thread on my payday loans post yesterday, there was some discussion—typical in these circumstances—that the poor are poor, and dragged down by the burdens of debt, because of the poor choices they make. And in some cases, I'm sure that's true. But honestly: It appears that the low-income folks of America might be the only ones not taking on far more debt than they can possibly afford.

Guilty as charged

Cooking is the easiest thing to do in the house. But what women are still expected to do, what my wife is still expected to do, is to remember when every sock in the house is about to get a hole in it, or when the kids are due for a dentist’s appointment or a play date – that whole recipe for family life, women still feel obliged to do it more than men. And so men do get a certain kind of cheap credit for being a family man just by cooking. Cooking is the showy side of domesticity.

via theamericanconservative.com

Gonna have to examine my conscience on that one...

Today in inequality reading: Stagnant wages

A new report from the Resolution Foundation, a British research organization that focuses on workers with low income, has done just that. The report covers 10 rich countries, and looks at the growth rate of median pay versus economic growth per capita from 2000 to the start of the Great Recession.

Here’s the key chart showing that ratio:

A higher ratio means that the pace of growth for median pay was close to the pace of growth for output per capita. A low ratio means that median pay grew much more slowly than did the economy as a whole.

Of the 10 countries analyzed, Finland showed the closest relationship between the living standards of the typical worker and improvements in the overall economy. The United States was on the lower end. From 2000 to 2007, median pay increased at a quarter of the pace of output per capita. In other words, the typical American worker did not share much in the country’s growing wealth even when the economy was good.

via economix.blogs.nytimes.com

The unseen casualties of a decade of war, continued

The U.S. is inadvertently financing human trafficking and worker abuse because of the federal government’s poor oversight of contractors operating in war zones, the Project On Government Oversight (POGO) told a congressional panel today.

Federal contracting regulations rely on self-policing and reporting to contracting officers, which has not been proven to be an effective way to monitor trafficking, POGO Director of Investigations Nick Schwellenbach told a subcommittee of the House Committee on Oversight and Government Reform.

Although the Department of Defense has made some improvements in combatting trafficking, there is still a notable lack of criminal enforcement. In the few investigations that have been conducted into alleged contractor involvement in human trafficking in war zones, some of the people making allegations were never even interviewed, Schwellenbach told the Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform.

“The lack of oversight of federal contractors has led to taxpayer dollars funding these terrible crimes,” Schwellenbach said. “The U.S. has a moral and legal obligation to do everything it can to protect its contracted workforce in war zones.”

via pogo.org

If you haven't read Sarah Stillman's June article in the New Yorker about human trafficking in U.S. war zones, you should. It's a heartbreaker.

http://www.newyorker.com/reporting/2011/06/06/110606fa_fact_stillman

We're still talking about Janet Jackson's 'wardrobe malfunction?'

LOS ANGELES (November 2, 2011) – The Parents Television Council® condemned the Third Circuit Court of Appeals ruling claiming the Janet Jackson striptease during the 2004 Super Bowl was not indecent and does not merit a fine. The PTC and its 1.3 million members led the public outcry after the incident by calling on the Federal Communications Commission to levy a hefty fine against CBS and its affiliates for violating the federal broadcast indecency law.

via parentstv.org

You know what's really indecent? That any part of our government is still occupied with a two-second flash of flesh that occurred nearly eight years ago. CBS clearly didn't intend to air such a moment; it hasn't led to a parade of prime-time stripteases—because alienating family viewers clearly isn't in the broadcast network's best interest. End it already.

Big corporations pay a lower tax rate

You often hear people argue that the United States’ corporate tax rate of 35 percent is much higher than other nations, but don’t be fooled. Thanks to loopholes, the actual tax rate is much lower—about 18.5 percent according to a survey of the 280 largest publicly traded companies by the left-leaning Citizens for Tax Justice. About a quarter of the companies paid less than 10 percent in taxes over the past three years, while 30 companies—including Boeing, Wells Fargo, and GE—appeared to pay no taxes whatsoever.

via thedailybeast.com

I don't actually have a clean take on this, though I thought it was important to note. It could be an argument for tax reform—lowering the rate but removing the loopholes. On the other hand: The loopholes always seep back in, and the new lowered rate would probably be seen as the ceiling, meaning that eventually the government would be deprived of necessary revenue.

And on the other other hand: Maybe the loopholes aren't always bad. Boeing didn't pay taxes, for example, because it used tax credits for creating 9,000 jobs. Would those jobs exist without the tax credits? I don't know; I suspect they probably would. But the incentive probably doesn't hurt, either.

George Will wants freedom of association ... for conservatives

There's a lot to unpack in George Will's column today about Vanderbilt University's decision to withhold recognition from the Christian Legal Society, a campus group that (naturally, given its orientation) wants to ensure that only Christians can be in its leadership.

I think Will goes wrong by starting to compare apples to oranges. Will must be quoted at length:

In 1995, the Supreme Court upheld the right of the private group that organized Boston’s St. Patrick’s Day parade to bar participation by a group of Irish American gays, lesbians and bisexuals eager to express pride in their sexual orientations. The court said the parade was an expressive event, so the First Amendment protected it from being compelled by state anti-discrimination law to transmit an ideological message its organizers did not wish to express.

In 2000, the court overturned the New Jersey Supreme Court’s ruling that the state law forbidding discrimination on the basis of sexual orientation required the Boy Scouts to accept a gay scoutmaster. The Scouts’ First Amendment right of “expressive association” trumped New Jersey’s law.

Unfortunately, in 2010 the court held, 5 to 4, that a public law school in California did not abridge First Amendment rights when it denied the privileges associated with official recognition to just one student group — the Christian Legal Society chapter, because it limited voting membership and leadership positions to Christians who disavow “sexual conduct outside of marriage between a man and a woman.”

It seems to me that these three cases, though, are entirely consistent. The first two uphold the rights of private organizations to choose their members and their message. The third doesn't change that! The Christian Legal Society still has a right to exist in the California case—it just doesn't have the right to use the college's funds and facilities if it's going to exclude some students from membership. As Justice Ginsburg said in writing for the majority on that case: "In requiring CLS—in com­mon with all other student organizations—to choose be­tween welcoming all students and forgoing the benefits of official recognition, we hold, Hastings did not transgress
constitutional limitations. CLS, it bears emphasis, seeks not parity with other organizations, but a preferential exemption from Hastings’ policy."

If anything, Vanderbilt has a stronger defense of its policy to deny the CLS the use of its funds and facilities: Unlike Hastings, it's a private university! Surely it, like the parade organizers and the Boy Scounts, has the right to chose its own expressive associations as well! But Will smells the smoke of pernicious progressive plotting:

Although Vanderbilt is a private institution, its policy is congruent with “progressive” public policy, under which society shall be made to progress up from a multiplicity of viewpoints to a government-supervised harmony. Vanderbilt’s policy, formulated in the name of enlarging rights, is another skirmish in the progressives’ struggle to deny more and more social entities the right to deviate from government-promoted homogeneity of belief. Such compulsory conformity is, of course, enforced in the name of diversity.

Shorter Will: Freedom of association is important ... for conservatives. If a private entity wants to exclude gays, he will defend to the death its right to do so. If a private entity wants to exclude a club that excludes gays, though, it's the death of freedom. Such a one-way conception of liberty isn't really liberty at all, is it? The shape of Will's argument is—as Justice Ginsburg suggested—seeking a privileged position for social conservatives under the rubric of seeking parity. That's usually what conservative groups accuse gay rights activists of doing!

It's worth mentioning that Will's column appears the same week as news emerges about Shorter University, a Christian college in Georgia that is now requiring its employees to abstain from pre- and extra-marital sex, including homosexual sex. I don't agree with Shorter University's theology—but it is a private university which takes no state or federal money. So even though I won't be sending my son there, I will defend the college's right to choose its associations. George Will would too, I imagine. He just doesn't apply the same standards in the opposite direction. Which means he's less attached to the liberty he claims to espouse than he is to opposing gays and liberals.

Community colleges on the rise

Comparatively affluent students are picking community colleges over four-year schools in growing numbers, a sign of changing attitudes toward an institution long identified with poorer people.

A recent national survey by Sallie Mae, the student loan giant, has found that 22 percent of students from households earning $100,000 or more attended community colleges in the 2010-11 academic year, up from 12 percent in the previous year. It was the highest rate reported in four years of surveys.

In the lengthening economic downturn, even relatively prosperous families have grown reluctant to borrow for college. Schools are finding that fewer students are willing to pay the full published price of attendance, which tops $55,000 at several private universities. More students are living at home.

via washingtonpost.com

My son's just 3 years old, but I've already spent a lot more time than I expected thinking about how best to provide his education. When he was born, I think I had a plan to get him into an Ivy League school. Now...not so much. It depends on his gifts and interests, of course, but I'm not interested in saddling either him or me with huge amounts of debt for his college experience. College will probably be important. An expensive college? Maybe not.

Solving the jobs crisis through despair

Some goodish news from the Fed...

The unemployment rate, it predicted, would still be at least 8.5 percent at the end of 2012, at least 7.8 percent at the end of 2013 and at least 6.8 percent at the end of 2014.

But at least that's a drop in unemployment, right?

Such reductions probably would come in part from people abandoning the search for work, rather than those finding new jobs.

 (Sigh.) Expect government officials to tout the falling unemployment rate even as other indicators—median wages, number of households in poverty—continue to stagnate or get worse.

The unseen casualties of a decade of war

Adolescent boys with at least one parent in the military are at elevated risk of engaging in school-based physical fighting, carrying a weapon and joining a gang, according to research presented today at the American Public Health Association’s 139^th Annual Meeting in Washington, D.C.

 

The study by researchers at the University of Washington’s School of Public Health looked at the strain of military deployment on U.S. families, particularly its toll on adolescent boys and girls whose parents are on active duty. The research is based on data from the 2008 Washington State Healthy Youth Survey of more than 10,000 adolescents in the 8^th, 10^th and 12^th grades of public schools.

The study finds that military deployment is associated with a 1.77 higher odds of physical fighting and 2.14 higher odds of gang membership among adolescent boys in 8^th grade. Girls in 8^th grade with at least one parent in the military were at twice the risk of carrying a weapon.

via apha.org

Media Research Center on the Herman Cain scandal: Clinton! Clinton! Clinton!

The Media Research Center seems to think the media is proving its liberal bias by covering the Herman Cain scandal so closely, whereas it strained to ignore the Clinton sex scandals of the 1990s. Which is weird, because my memory of the late 1990s is that political coverage was dominated, for a time, by news of Clinton's sex scandals. There was even an impeachment or something.

Nonetheless, MRC concludes:

When one contrasts the sexual harassment scandals of Democrat Bill Clinton, which included on the record accusers, with the hazy allegations against Republican Herman Cain, it becomes clear that the networks have enthusiasm for one and ignored the other.

That's interesting framing, because the "hazy allegations" against Cain are actually confirmed cases that were settled with monetary payouts a decade ago. That makes them somewhat more tangible than the MRC suggests, it seems to me.

Thomas Sowell defends usury

At NRO today, Thomas Sowell gets cranky about a California newspaper's investigation into "payday loan" companies and their practices. He particularly objects to a line suggesting that customers of such institutions are charged what amounts to an annual interest rate of more than 400 percent:

The 460 percent figure comes from imagining that the borrower is not just going to borrow the money for a couple of weeks, but is going to keep on borrowing every couple of weeks all year long.

Using this kind of reasoning — or lack of reasoning — you could quote the price of salmon as $15,000 a ton or say a hotel room rents for $36,000 a year, when no consumer buys a ton of salmon and few people stay in a hotel room all year. It is clever propaganda, but do people buy newspapers to be propagandized?

Sowell, having raised such questions, might've attempted to answer them.

That might've detracted from his screed, though, because the evidence is that quite a few customers actually do get caught in a debt spiral with these companies. In 2007, Michael Stegman did an overview of the industry for the Journal of Economic Perspectives:

Sowell, in the end, decries the story as part of a lefty plot to keep payday lenders from defending themselves:

Instead, we get the story of how the payday-loan industry, like most other industries, has lobbyists contributing money to politicians to try to be spared more regulations. This the investigative reporter calls “protecting” the payday-loan industry.

Protecting it from what? From the politicians. Some would call their campaign donations “protection money,” in the same sense in which the mafia collects protection money.

Not exactly. In California, the payday loan industry has put its muscle behind a bill that would boost their profits by letting them lend greater amounts of money at higher rates of interest. That's not defensive, it's aggressive. If Sowell's mafia analogy is correct ... well, let's just say the payday industry would be the guy in the leather chair, stroking a cat.

I suspect the broader argument is that payday companies provide a valuable service, which workers are free to use or not use. But it certainly appears that the systemic incentive is to put the working poor on the hook and encourage them to stay there for as long as is profitable. Sowell's fellow conservatives like to talk a lot about liberty from government, but payday loan lenders offer plenty of evidence there are other institutions that offer oppression, which is no less pernicious.

Rand Paul is really angry about the Herman Cain scandal story

Paul adds that fear of sexual harassment suits damages workplace relations.

“There are people now who hesitate to tell a joke to a woman in the workplace, any kind of joke, because it could be interpreted incorrectly,” he says. “I don’t. I’m very cautious.” 

via nationalreview.com

You know what else damages workplace relations? *Sexual harassment.* It's ok, I think, to be cautious about telling that dirty joke.

We know how to help the economy: Aid distressed homeowners

I found this recent magazine article very interesting. Here are a couple of key paragraphs from it:

Underwater homeowners can’t refinance at today’s rock-bottom interest rates, because they’re considered bad credit risks. They can’t move to where jobs are more plentiful or the pay is better, because if they sell their home, they end up owing the banks a bundle. But if they lose their job, their wages drop. If they have a medical emergency, they may fall behind on their mortgage payments and be foreclosed upon. If that happens, they and their family can lose both their home and their credit rating.

We don’t need another stimulus to fix what ails the economy. We need to fix the housing market. And the way to do that is to allow a mortgage cramdown in the context of a personal bankruptcy. Put simply, someone who owes $450,000 on a house worth $300,000 isn’t going to be helped that much by a lower interest rate. He would be helped​—​as would the housing market and the larger economy​—​if the lender could be compelled in a bankruptcy proceeding to write down the loan amount to $300,000, which is all the lender would recover in any case were it to foreclose on and then auction off the property.

Oops! That's actually two different magazine articles—the first paragraph comes from Robert Reich's piece in November's American Prospect, a liberal magazine. The second—and this is kind of shocking—is from Ike Brannon, writing in the conservative Weekly Standard.

Reich and Brannon have slightly different approaches to the issue, but their bottom line is roughly the same: Distressed homeowners should have their mortgages written down to reflect the post-bubble value of their homes—so that those owners don't owe more than what the house is worth. Banks make no less money than they would if they were forced to foreclose, but owners gain back some of their money and freedom to move to a new job.

Free those underwater homeowners, and they might start buying stuff again. When people start buying stuff again, demand will rise and the people who make and sell stuff will likely start hiring more people to make and sell that stuff. The economy would get new life.

Smart people on the left and right can see this. Yet a serious effort to help these homeowners doesn't seem to be in the offing, either from the president, his GOP rivals for the office, or Congress. Why not?

Blog news

First of all, a thank you to everybody who reads this blog regularly: October was the best traffic month I've had since returning to this Blogspot site after leaving Philadelphia Weekly. It's more gratifying to write this stuff when people are actually reading it.

Second of all: I'm certain I won't break that record in November. I have my (knock on wood) final diverticulitis surgery on Nov. 8, and preparations are already consuming my time and mental energy. I won't be here quite as much this month. I'm sorry about that. My hope is that being restored to full health allows me to write and opine more vigorously than before.

I had thought, for a little while after the first of my three surgeries, that I might abandon political blogging entirely. What I've discovered in recent months is that I have a passion for understanding and making sense of how the country is run, and how it might be run better. I want the blog to reflect my other interests, too: Parenting, cooking, reading, movies. But the core of it will continue to be learning and thinking about policy and politics. My hope is not to hew to orthodoxy, but to be an independent thinker. Maybe even "original thinker" on occasion, but I'll settle for independent at the least.

So I hope you're still here when I come back. Thanks again for reading.