E
EdwardATeller
Guest
Here is a nuanced analysis of the source of the widening gap in
incomes observed lately. Since it is nuanced and well-reasoned, I'd
suggest most liberals skip reading this since it will require actual
brain power to understand. If you read the 2nd grade crap posted as
liberal analysis, you certainly understand what I mean.
http://online.wsj.com/article/SB118394472972160566.html
<quote>
The Culture Gap
By BRINK LINDSEY
July 9, 2007; Page A15
Cut through all the statistical squid ink surrounding the issue of
economic inequality, and you'll find a phenomenon that genuinely
deserves public concern.
Over the past quarter-century or so, the return on human capital has
risen significantly. Or to put it another way, the opportunity cost of
failing to develop human capital is now much higher than it used to
be. The wage premium associated with a college degree has jumped to
around 70% in recent years from around 30% in 1980; the graduate
degree premium has soared to over 100% from 50%. Meanwhile, dropping
out of high school now all but guarantees socioeconomic failure.
In part this development is cause for celebration. Rising demand for
analytical and interpersonal skills has been driving the change, and
surely it is good news that economic signals now so strongly encourage
the development of human talent. Yet -- and here is the cause for
concern -- the supply of skilled people is responding sluggishly to
the increased demand.
Despite the strong incentives, the percentage of people with college
degrees has been growing only modestly. Between 1995 and 2005, the
share of men with college degrees inched up to 29% from 26%. And the
number of high school dropouts remains stubbornly high: The ratio of
17-year-olds to diplomas awarded has been stuck around 70% for three
decades.
Something is plainly hindering the effectiveness of the market's
carrots and sticks. And that something is culture.
Before explaining what I mean, let me go back to the squid ink and
clarify what's not worrisome about the inequality statistics. For
those who grind their ideological axes on these numbers, the increase
in measured inequality since the 1970s is proof that the new, more
competitive, more entrepreneurial economy of recent decades (which
also happens to be less taxed and less unionized) has somehow failed
to provide widespread prosperity. According to left-wing doom-and-
gloomers, only an "oligarchy" at the very top is benefiting from the
current system.
Hogwash. This argument can be disposed of with a simple thought
experiment. First, picture the material standard of living you could
have afforded back in 1979 with the median household income then of
$16,461. Now picture the mix of goods and services you could buy in
2004 with the median income of $44,389. Which is the better deal? Only
the most blinkered ideologue could fail to see the dramatic expansion
of comforts, conveniences and opportunities that the contemporary
family enjoys.
Much of the increase in measured inequality has nothing to do with the
economic system at all. Rather, it is a product of demographic
changes. Rising numbers of both single-parent households and affluent
dual-earner couples have stretched the income distribution; so, too,
has the big influx of low-skilled Hispanic immigrants. Meanwhile, in a
2006 paper published in the American Economic Review, economist Thomas
Lemieux calculated that roughly three-quarters of the rise in wage
inequality among workers with similar skills is due simply to the fact
that the population is both older and better educated today than it
was in the 1970s.
It is true that superstars in sports, entertainment and business now
earn stratospheric incomes. But what is that to you and me? If the
egalitarian left has been reduced to complaining that people in the
99th income percentile in a given year (and they're not the same
people from year to year) are leaving behind those in the 90th
percentile, it has truly arrived at the most farcical of intellectual
dead ends.
Which brings us back to the real issue: the human capital gap, and the
culture gap that impedes its closure. The most obvious and
heartrending cultural deficits are those that produce and perpetuate
the inner-city underclass. Consider this arresting fact: While the
poverty rate nationwide is 13%, only 3% of adults with full-time, year-
round jobs fall below the poverty line. Poverty in America today is
thus largely about failing to get and hold a job, any job.
The problem is not lack of opportunity. If it were, the country
wouldn't be a magnet for illegal immigrants. The problem is a lack of
elementary self-discipline: failing to stay in school, failing to live
within the law, failing to get and stay married to the mother or
father of your children. The prevalence of all these pathologies
reflects a dysfunctional culture that fails to invest in human
capital.
Other, less acute deficits distinguish working-class culture from that
of the middle and upper classes. According to sociologist Annette
Lareau, working-class parents continue to follow the traditional,
laissez-faire child-rearing philosophy that she calls "the
accomplishment of natural growth." But at the upper end of the
socioeconomic scale, parents now engage in what she refers to as
"concerted cultivation" -- intensively overseeing kids' schoolwork and
stuffing their after-school hours and weekends with organized
enrichment activities.
This new kind of family life is often hectic and stressful, but it
inculcates in children the intellectual, organizational and networking
skills needed to thrive in today's knowledge-based economy. In other
words, it makes unprecedented, heavy investments in developing
children's human capital.
Consider these data from the National Education Longitudinal Study, an
in-depth survey of educational achievement. Among students who
received high scores in eighth grade mathematics (and thus showed
academic promise), 74% of kids from the highest quartile of
socioeconomic status (measured as a composite of parental education,
occupations and family income) eventually earned a college degree. By
contrast, the college graduation rate fell to 47% for kids from the
middle two quartiles, and 29% for those in the bottom quartile.
Perhaps more generous financial aid might affect those numbers at the
margins, but at the core of these big differentials are differences in
the values, skills and habits taught in the home.
Contrary to the warnings of the alarmist left, the increase in
economic inequality does not mean the economic system isn't working
properly. On the contrary, the system is delivering more opportunities
for comfortable, challenging lives than our culture enables us to take
advantage of. Far from underperforming, our productive capacity has
now outstripped our cultural capacity.
Alas, there is no silver bullet for closing the culture gap. But the
public institutions most directly responsible for human capital
formation are the nation's schools, and it seems beyond serious
dispute that in many cases they are failing to discharge their
responsibilities adequately. Those interested in reducing meaningful
economic inequality would thus be well advised to focus on education
reform. And forget about adding new layers of bureaucracy and top-down
controls. Real improvements will come from challenging the moribund
state-school monopoly with greater competition.
Mr. Lindsey is vice president for research at the Cato Institute and
author of the just-published book, "The Age of Abundance: How
Prosperity Transformed America's Politics and Culture" (Collins,
2007).
</quote>
incomes observed lately. Since it is nuanced and well-reasoned, I'd
suggest most liberals skip reading this since it will require actual
brain power to understand. If you read the 2nd grade crap posted as
liberal analysis, you certainly understand what I mean.
http://online.wsj.com/article/SB118394472972160566.html
<quote>
The Culture Gap
By BRINK LINDSEY
July 9, 2007; Page A15
Cut through all the statistical squid ink surrounding the issue of
economic inequality, and you'll find a phenomenon that genuinely
deserves public concern.
Over the past quarter-century or so, the return on human capital has
risen significantly. Or to put it another way, the opportunity cost of
failing to develop human capital is now much higher than it used to
be. The wage premium associated with a college degree has jumped to
around 70% in recent years from around 30% in 1980; the graduate
degree premium has soared to over 100% from 50%. Meanwhile, dropping
out of high school now all but guarantees socioeconomic failure.
In part this development is cause for celebration. Rising demand for
analytical and interpersonal skills has been driving the change, and
surely it is good news that economic signals now so strongly encourage
the development of human talent. Yet -- and here is the cause for
concern -- the supply of skilled people is responding sluggishly to
the increased demand.
Despite the strong incentives, the percentage of people with college
degrees has been growing only modestly. Between 1995 and 2005, the
share of men with college degrees inched up to 29% from 26%. And the
number of high school dropouts remains stubbornly high: The ratio of
17-year-olds to diplomas awarded has been stuck around 70% for three
decades.
Something is plainly hindering the effectiveness of the market's
carrots and sticks. And that something is culture.
Before explaining what I mean, let me go back to the squid ink and
clarify what's not worrisome about the inequality statistics. For
those who grind their ideological axes on these numbers, the increase
in measured inequality since the 1970s is proof that the new, more
competitive, more entrepreneurial economy of recent decades (which
also happens to be less taxed and less unionized) has somehow failed
to provide widespread prosperity. According to left-wing doom-and-
gloomers, only an "oligarchy" at the very top is benefiting from the
current system.
Hogwash. This argument can be disposed of with a simple thought
experiment. First, picture the material standard of living you could
have afforded back in 1979 with the median household income then of
$16,461. Now picture the mix of goods and services you could buy in
2004 with the median income of $44,389. Which is the better deal? Only
the most blinkered ideologue could fail to see the dramatic expansion
of comforts, conveniences and opportunities that the contemporary
family enjoys.
Much of the increase in measured inequality has nothing to do with the
economic system at all. Rather, it is a product of demographic
changes. Rising numbers of both single-parent households and affluent
dual-earner couples have stretched the income distribution; so, too,
has the big influx of low-skilled Hispanic immigrants. Meanwhile, in a
2006 paper published in the American Economic Review, economist Thomas
Lemieux calculated that roughly three-quarters of the rise in wage
inequality among workers with similar skills is due simply to the fact
that the population is both older and better educated today than it
was in the 1970s.
It is true that superstars in sports, entertainment and business now
earn stratospheric incomes. But what is that to you and me? If the
egalitarian left has been reduced to complaining that people in the
99th income percentile in a given year (and they're not the same
people from year to year) are leaving behind those in the 90th
percentile, it has truly arrived at the most farcical of intellectual
dead ends.
Which brings us back to the real issue: the human capital gap, and the
culture gap that impedes its closure. The most obvious and
heartrending cultural deficits are those that produce and perpetuate
the inner-city underclass. Consider this arresting fact: While the
poverty rate nationwide is 13%, only 3% of adults with full-time, year-
round jobs fall below the poverty line. Poverty in America today is
thus largely about failing to get and hold a job, any job.
The problem is not lack of opportunity. If it were, the country
wouldn't be a magnet for illegal immigrants. The problem is a lack of
elementary self-discipline: failing to stay in school, failing to live
within the law, failing to get and stay married to the mother or
father of your children. The prevalence of all these pathologies
reflects a dysfunctional culture that fails to invest in human
capital.
Other, less acute deficits distinguish working-class culture from that
of the middle and upper classes. According to sociologist Annette
Lareau, working-class parents continue to follow the traditional,
laissez-faire child-rearing philosophy that she calls "the
accomplishment of natural growth." But at the upper end of the
socioeconomic scale, parents now engage in what she refers to as
"concerted cultivation" -- intensively overseeing kids' schoolwork and
stuffing their after-school hours and weekends with organized
enrichment activities.
This new kind of family life is often hectic and stressful, but it
inculcates in children the intellectual, organizational and networking
skills needed to thrive in today's knowledge-based economy. In other
words, it makes unprecedented, heavy investments in developing
children's human capital.
Consider these data from the National Education Longitudinal Study, an
in-depth survey of educational achievement. Among students who
received high scores in eighth grade mathematics (and thus showed
academic promise), 74% of kids from the highest quartile of
socioeconomic status (measured as a composite of parental education,
occupations and family income) eventually earned a college degree. By
contrast, the college graduation rate fell to 47% for kids from the
middle two quartiles, and 29% for those in the bottom quartile.
Perhaps more generous financial aid might affect those numbers at the
margins, but at the core of these big differentials are differences in
the values, skills and habits taught in the home.
Contrary to the warnings of the alarmist left, the increase in
economic inequality does not mean the economic system isn't working
properly. On the contrary, the system is delivering more opportunities
for comfortable, challenging lives than our culture enables us to take
advantage of. Far from underperforming, our productive capacity has
now outstripped our cultural capacity.
Alas, there is no silver bullet for closing the culture gap. But the
public institutions most directly responsible for human capital
formation are the nation's schools, and it seems beyond serious
dispute that in many cases they are failing to discharge their
responsibilities adequately. Those interested in reducing meaningful
economic inequality would thus be well advised to focus on education
reform. And forget about adding new layers of bureaucracy and top-down
controls. Real improvements will come from challenging the moribund
state-school monopoly with greater competition.
Mr. Lindsey is vice president for research at the Cato Institute and
author of the just-published book, "The Age of Abundance: How
Prosperity Transformed America's Politics and Culture" (Collins,
2007).
</quote>