Monday, December 28, 2015

Koch-bought professor right about impact on inequality of “like marrying like,” but gives wrong ways to fix it

I never thought that I would agree with Tyler Cowen, a professor of economics at George Mason University, whom the mainstream media has been trying to turn into a “public intellectual” for the past few years.  Cowen, who is general director of the Koch-funded Mercatus Center, specializes in two types of illogical thinking; 1) proposing market solutions to problems created by markets; 2) Arguing about the impact on individuals instead of focusing on the impact on groups. 

Among Cowen gems of fallacious reasoning was his embarrassing critique of Thomas Piketty’s Capital in the 21st Century. Cowen’s argument tended to follow the pattern of staring at the trees so you won’t see the forest, which in this case means believing that the fact individual families gain and lose wealth through generations proves that over time more wealth does not tend to accumulate into fewer hands. By focusing on the trees—individual wealthy people, Cowen ignores the forest—the class of the wealthy—who have accumulated more and more of the wealth of the world and the United States over the past 35 years.

Earlier this year, Cowen used the same trick of ignoring the group to perform another feat of corporate justification in a New York Times article asserting that some workers—those who hustle, i.e., “are willing and able to turn their spare time to productive uses,”—will do very well in the freelance economy created by sharing services such as Uber and Airbnb. He ignores the statistics to argue about opportunity for those who possess the entrepreneurial spirit, the Holy Ghost and Holy Grail of American society as conceived by big business operators and their think-tank factotums.

Here it is the season of good will and good tidings, and I find that I agree with what Cowen wrote in “How aMarriage of Equals May Promote Inequality” a New York Times Sunday Business article under the rubric “Economic View.”

Cowen states that professionals tend to marry other professionals and blue and pink collar workers tend to marry each other, creating a natural disparity in incomes. The math is easy. Two lawyers making $250,000 a year have a household income of half a million, while a cashier earning $30,000 married to a janitor making $40,000 generate a household income of $70,000.


I didn’t need to read Cowen’s documentation to know he’s right, because in 1982 I used Stanford Research Institute Research to predict in a five-part television news special that “like incomes marrying” would be one of five factors that would lead to the United States becoming a nation of rich and poor in the near future. 

Yes, 1982. Professor Cowen, congratulations on catching up to the times. 

Once upon a time, many women didn’t work, and those who did made far less than men, so that “like incomes marrying” was an impossibility, except among the ultra-wealthy who often arranged marriages to preserve or increase family wealth.  

Cowen gives us a tired-sounding list of three potential cures, two of which are from the right-wing playbook: further experiments with charter schools and higher subsidies or tax credits for children. His third prescription is also tied to education: universal preschool. Let’s forget that there is nothing inherent in charter schools that improves educational outcomes, and focus on the common theme of education in Cowen’s suggestions, which he admits won’t do much. Both right-wing and centrist economists and social thinkers virtually all say that greater education will lead to less inequality, because the more educated worker will get a better job and make more money. It’s a load of hooey, for one reason: Someone has to take out the garbage, drive trucks, input raw data, change bedpans and perform other jobs that require little or no training. As long these jobs are misprized by society and paid extremely low wages, no amount of education will eradicate poverty and lessen inequality of wealth and income. 

Cowen forgets to mention the other factors that have led to a society of rich and poor, with a shrunken, almost moribund middle class: 1) Loss of union jobs; 2) Globalization; 3) New tax policies; 4) Automation and computerization. 

The real answer to reversing the trend of greater inequality of the income and wealth is to reverse the social and economic policies of the past 40 years so that those who make more money make a little less and those who make less money make a little more. A combination of raising the minimum wage, greater unionization of the work force, increasing taxes on the wealthy and a reversal of the privatization of government functions will go a long way to reversing inequality of wealth and income in the short run. 

Let’s return to our hypothetical two couples and imagine that the two lawyers make only $150,000 each and that the cashier makes $70,000 and the janitor makes $80,000. The professional couple still makes twice what the blue collar couple do, but the blue collar couple isn’t doing badly at a combined income of $150,000 a year. I haven’t run the numbers, but when we compensate for inflation, that seems more in keeping with the middle class spectrum of incomes in 1950’s and 1960’s, when we had a strong middle class and a large percent of the workforce unionized; that is, before professional and executive jobs received an enormous income boost and the income from other jobs started to stagnate. 

Unless we start paying everyone exactly the same and taking away everyone’s savings every five years, we will never achieve perfect equality, and no one says that we should. But the current situation has become intolerable to far too many people who used to consider themselves part of the middle class or thought they had a chance to improve their economic conditions.  

The problem, then, is not inequality per se, but that inequality has led to a shrinking of the middle class. The solution is not more education, but an end to the economic policies started by the Reagan revolution that have transformed the United States from a nation of the middle class into one of rich and poor.


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