Tag Archives: mobility

It’s a fact: inequality slows growth

My latest in Salon cites new research on the inequality and growth debate. Toward the end to the piece, I discuss the political implications of the findings:

First, we should not assume that the mere fact that inequality reduces economic growth will be enough to convince the rich to reduce it. 

On Twitter, @richisglorious objects:

 

Initially, I was tempted to respond simply that this is a slightly pedantic point – my argument is that even if the wealthy accept the proposition that inequality reduces growth overall, they may still oppose redistribution for other reasons.

As I thought about the question though, I realized the sentence is true: inequality reduces growth. To see why, simply imagine a perfectly unequal society where one person controls all income and everyone else has nothing. There will be no economic growth. Imagine a slightly less unequal society, where ten people control nearly all the income, and everyone else struggle to survive. Again, no growth. The question then, is not whether inequality reduces growth, it’s at what point inequality reduces growth.*

The evidence I summarize in my essay strongly suggests we might be at the point. Other research suggests this as well. But let us not re-litigate this and instead make an important distinction between good inequality and bad inequality.

In my interview with Branko Milanovic, we discussed this distinction. He tells me:

These two extremes [absolute inequality and absolute equality] are clearly not good. We know that the optimum must be at some point in-between. Now, we don’t know what it is. Is this the Gini of “X” or “Y”? We have no idea, but we have in mind a certain “good” range simply by observing things empirically or, sort of, heuristically looking at the world. We see that there are countries that do well economically and socially and what type of inequality they have. Moreover, we have now studies, and I’m quite encouraged by them, which  for the first time try to empirically ascertain what percentage of overall inequality is caused by so called bad inequality. And that leads us to the issue of “deserved” and “undeserved” inequality and social mobility.

The bad or undeserved inequality would be the one that arises from the factors over which you have no control: what was the income level of your parents, whether you were born male or female, what is your race, and things like that. Actually, these studies do show that, in some countries, a large chunk of inequality is due to these factors. Thus we can rank countries by their bad and good inequalities. The good inequality, calculated as the residual between overall and bad inequality, is inequality we effort, work, luck and so on.**

The studies to which he refers can be found here and here. They find, after studying Europe and the United States, that inequality which stems from factors beyond an individual’s control (father’s education/race) are correlated with lower growth. Their study of 23 U.S. states over a two decade periods finds, “Inequality is good for growth when that comes from differences in the returns to effort, while it is harmful for growth when that comes from differences in opportunity.” They also find a strong correlation between changes in total inequality and inequality of opportunity.

Inequality and Opportunity

I believe that there are persuasive reasons to believe that the much of the exploding income inequality in the U.S. is due not to the good inequality, but bad inequality. As inequality increases, the opportunities for rent-seeking through the political system, education system and labor market become greater.

It is also worth noting that good inequality quickly become bad inequality unless mitigated (see: Walton family). Call it the The First Law of Inequality: inequality tends to perpetuate itself unless acted upon by an outside force. Estate taxes and capital gains taxes can limit such rent-seeking.

To summarize: in a state of perfect inequality, there will be no growth. In the state of perfect equality there will be little growth. At some point, inequality will become high enough to choke off growth, mainly by reducing demand and opportunity. Most of the research here is being done by economists who aren’t as cocky as Reinhart/Rogoff and therefore uncomfortable declaring a cut-off point. Instead, we’ll have to use Potter Stewart’s maxim: “I know it when I see it.” I think we see it.

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* We might have a similar thought experiment with perfect equality, in which no one is motivated to work since they earn the same amount as everyone else. Even if we assume that Amour-propre provides some incentive, we can assume growth would be slower.

** The full interview will be available next week on the Demos Policyshop blog.

Are the Republicans serious about mobility?

The GOP’s response to widening inequality has long been similar to Sinclair Lewis’s Babbitt: “The sooner a man learns he isn’t going to be coddled, and he needn’t expect a lot of free grub and, uh, all these free classes and flipflop and doodads for his kids unless he earns ’em, why, the sooner he’ll get on the job and produce—produce—produce!” But between the fallout over Mitt Romney’s “47 percent” remark and a resurgence of progressive populism, Republicans realize they need a new, softer approach. It appears they’ve finally found one.

Paul Ryan recently appeared at the Brookings Institute’s “Social Mobility Summit” to announce, “We’re losing not only mobility, we understand that, but whole generations of Americans don’t know what this is.” Eric Cantor told Bloomberg, “All of us want to grow the economy … that means more jobs, upward mobility.” Mike Leewarned last year of an “opportunity crisis.” Cathy McMorris Rodgers’s response to the State of the Union included the line, “The president talks a lot about income inequality. But the real gap we face today is one of opportunity inequality…” And in a speech on the anniversary of LBJ’s “War on Poverty” address, Marco Rubio said that “it is this lack of mobility, not just income inequality, that we should be focused on.

“Mobility” is the party’s new mantra—but it’s based on a familiar delusion.

Mobility in many parts of America is abysmal. In some cities, children born in the poorest quintile have a less than 3 percent chance of reaching the top quintile. Across the country, a child born in the poorest quintile has a 60 percent chance of staying in the bottom two quintiles.

It’s a two-part problem. First, there is opportunity hoarding at the top, wherein the wealthy invest heavily in their children’s education and job prospects, while also passing their wealth on to their children. Then there is stagnation at the bottom, caused largely by reverse trends, economic and racial segregation, awful schools, and poor parents without much money to invest in children.

Why does the “land of opportunity” have such low mobility? Laissez-faire economic policies—massive tax breaks, untrammeled free markets, unregulated free trade, deep cuts to the safety net—have widened the income gap. While Republicans have tried tosever the link between mobility and inequality, research shows that the two issues areintimately connected: Societies and communities with high inequality have low levels of upward mobility. Josh Bivens of the Economic Policy Institute estimates that had income growth risen proportionally between 1979 and 2007, the median incomewould be $19,000 higher.

Republican pundits have their own theories on these problems, of course. They like to point to the disintegrating family and other social factors, even though a large swath of research suggests this is to mistake an effect for its cause. As for solutions, Ari Fleischer has argued for more (straight) marriage, Ross Douthat prefers chastising single mothers, Charles Murray wants the poor to emulate the values of the rich, and David Brooks wants… well, it’s not clear exactly. None of these proposals are serious about the problem, because being serious about the problem will require doing the one thing that Republicans hate: government spending.

Several Republican politicians have put forward specific policy proposals. Rubio’sbig idea, supported by Ryan, is to make the Earned Income Tax Credit (a tax break for low income workers) a monthly, rather than yearly, program. With the median income of American households $19,000 dollars below what it should be, students struggling under piles of debt, and millions trying to pay off underwater mortgages, such a plan, while welcome, is wholly inadequate. Lee and Rubio have both proposed modifying the EITC for married couples, to eliminate the “marriage tax” (whereby two single people who become married become ineligible for the program or take a benefit cut). However, if they increase the benefit, they’ll have to increase deficits. The only other option is to reduce the EITC for single mothers.

Rubio’s other idea (again supported by Ryan) is revenue-neutral block grants to the states, which means that states would have more leeway in how to spend the funds. “Revenue-neutral” is the key phrase here; if you’re not increasing spending, you’re just shifting around authority at best and sneaking in cuts at worst.

This is the catch-22 the Republicans are facing: The only way to increase upward mobility is more government spending. Schools need more money, unemployed workers need extended benefits, poor mothers need daycare, kids need Pre-K. The best way to be upwardly mobile is to get a job, which is a lot harder to do when Republicans are still criticizing the 2009 stimulus that created millions of jobs. It’s easier to move up if you have health care, but Republicans are cutting Medicaid. Paul Ryan wants to talk education, but Republican governors across the country are cutting education budgets to fund tax cuts.

Ryan argues that the real thing hurting the poor is big government: “Government is a very powerful tool. Too powerful, you might say. Just as it can build and encourage, it can frustrate and deter.” The actual data show that higher government expenditures increase upward mobility. That’s why countries like Denmark have much higher levels of mobility. We find the same correlation at the local level within the U.S.: Higher government spending leads to more mobility.

 

It is no surprise that the period with the most equal growth and upward mobility was the post-war era, when marginal income taxes on the wealthy topped 90 percent, the government invested heavily in infrastructure and education, and the social safety net was being strengthened, not vitiated. Today, booming countries like China and India are discovering that the government must bolster their middle class with a pension and safety net.

In his book, Social Democratic AmericaLane Kenworthy argues that social democracy—a fully-developed, European-style welfare state—will require the U.S. government to increase revenues by 10 percent of the national GDP, and he proposes a series of tax boosts to get us there. But most Republicans have signed a no-tax pledge, so social democracy is out of the question. If we can’t spend more on poverty, the only other method is lowering taxes on the poor (who, according to Republicans, already pay too little in taxes).

Republicans want a strong, upwardly mobile middle class and a weak government, but the two cannot coexist. Instead, Republicans will have to choose between social mobility and low deficits. Given the party’s obsession with cutting government spending, “mobility” will remain a hollow mantra, nothing more.

Originally published on The New Republic.

Live-blogging a response to my Marx piece

I’ve been tweeted this video more than a few times, so I figured I’d use this President’s day to put down some thoughts (I wrote this up on Monday, just got around to publishing it).

1:00 – Sean doesn’t define capitalism

It’s a 1,000 word piece, I can’t define everything.

1:21 – Molyneux defines capitalism as “respect for private property” and the “non-initiation of force.”

These are contradictory. There is no way to enforce property rights without violence (i.e. the state).

2:14 – Communism when implemented resulted in the deaths of hundreds of millions of people

I’m defending some of Marx’s predictions, not Stalinism or Leninism. Marx and Engels, of course, believed that democracy, not totalitarianism, represented the road to socialism (a revolution of the working class, not a vanguard party).

2:23 – Marx was wrong about the labor theory of value.

I’m daily amazed that the same people who champion Adam Smith will then pillory Marx for accepting the labor theory of value that the former developed.

2:52 – Millions died in agony

Again, because of totalitarianism. Also, I’m not interested in the vulgar parlor game of counting bodies (too common to debates about religion and Marx) but the slave trade and the Belgian occupation of Congo were both wholly “capitalist.”

3:00 – I’m over-afflicted with compassion for the endless victims

Very selective and politically beneficial compassion, but compassion nonetheless. It may be more useful to aim the frustration at Stalin, Lenin and Mao, rather than Marx, though.

3:37 – Cambodia

Perfect example here. Marx spent very little time on how socialism would come about and what it would look like (Capital was supposed to be 12 volumes, only three -four if you include the partial publication of Volume IV by Kautsky – were published). In the manifesto, Marx notes that the distinction between town and country should be eliminated, the KR did so by a violent forced relocation of the people in the city to the town. It strikes me that there is a more humane way to do this. I never really see a logical way to get from Marx’s work to the violence committed in his name (I would countenance one on the teleological view of history, but then Hegel is the problem. Also, my piece is specifically on marxian economics, not his theory of politics or morality).

5:00 – 11:00 – A list of ways that the U.S. is now socialist

I note that the progressive income tax was something Marx proposed, and it was something that did not exist before he advocated it.

Of course, what is so odd about libertarians is that they would almost certainly agree with Marx’s conception of government as a means for the bourgeoisie class to exert power.

It is odd that in a rebuttal of my argument that Marx predicted 2014, Molyneux literally goes through and shows how to varying levels the ten planks of the manifesto have been implemented. It’s incredibly conspiratorial, and would disagree on many, but it seems to prove my point (and appears to come from here).

11:44 – Capitalism means the government doesn’t interfere in private property rights

Here it is again. Always confused when libertarians make this argument. Without the government, you can have no private property, anyone bigger and stronger will just take your shit. Read Hobbes.

11:51 – Government can’t create currency in a capitalist system

Wow, this is getting very crazy.

12:00 – Children are indoctrinated in government schools

Okay, so we’re talking like, an Alex Jones type of character here.

12:45 – Governments create bubbles

Right, because they never happened before the federal reserve

13:00 – Sean is deluded.

Well, he might be right there

13:30 – The federal reserve caused WW2

I pass this assertion to you, dear reader, without comment. Okay, okay, I’ll comment. Milton Friedman, no friend of Marx, argued that the federal reserve’s folly in the aftermath of the Great Depression is that it did not act enough. So…

14:45 – Asserts that I have never exposed myself to opposing views

I interned at the Reason Foundation and the Fox Business Network and described myself as a libertarian from the age of 13 to about 18.

15:00 – Government causes recessions via monetary policy

Google Dutch Tulip Bubble. Very humorous to hear me described as a fundamentalist by a person who ascribes all evil in the world to governments.

15:34 – War on Drugs!

The war on drugs is a terrible policy. But this is an odd segue.

18:15 – Federal reserve is fascist!

Again… No comment

18:39 – The housing market crashed because of government (Community Reinvestment Act)

Not supported by the most comprehensive study of the financial crisis.

19:52 – Government shouldn’t take on debt, because that is a violation of private property

Really?

20:29 – Choke back anuerism when struck by [Sean’s] rank insanity

Lots of rhetoric, little argument.

23:38 – Globalization was greater one hundred years ago because you didn’t need a passport, labor was more mobile

I assume he’s talking about immigration controls, not travel. I don’t know the data here. I do know that the mobility of capital and goods has increased dramatically, and I suspect the same is true of labor. Anyone who knows history knows that immigration quotas have been a feature of American society for centuries.

24:00 – Sean lives in cliche

Pull out the plank in thy own eye before examining the mite in thy neighbor’s

25:00 – He views business as a jackal constantly eating up resources

As did Smith, Malthus and Ricardo. Most classical economists felt that imperialism was the invetible result of the tendency of the rate of profit to decline.

25:15 – Sean has never run a business and nor have most economists

I hear this one a lot. It’s a very silly argument rooted in an anti-intellectual mindset.

26:00 – Businesses satisfy consumer demand

Sometimes. I like what I get does not mean I get what I like.

26:40 – The idea that businesses destroy stuff is absurd

Google ozone layer, smoker’s lungs and Amazon rainforest

27:00 – “I don’t know what that means”

Yeah, I know

27:05 – Businesses don’t eat each other, they compete

Google Comcast and Time Warner.

28:41 – Small businesses are good, but unstable

True, and yes, he is proving my point.

29:45 – Walmart more satisfies people and is environmentally friendly

I like what I get, but do I get what I like? Also, Walmart is hardly a paragon of environmental virtue. Studies show it also depresses local economies when it comes around.

30:00 – Walmart reduces inflation

…By keeping wages low

31:21 – Big banks replace small banks because of politics

Always weird how much libertarians essentially parrot Marx’s theory about the bourgeois overtaking the economy and give him no credit for the idea. Also, again, he’s conceding my point.

32:48 – IPR is bad

Yeah, I know, I’ve written about it. Pretty big red herring though.

36:40 – In a free market if there is an excess of labor, the price of labor will go down, or people will become entrepreneurs

Yes to the first part. The second part is only true if there is enough demand.

37:00 – The progressive income tax does not fight inequality

See Thomas Piketty

To sum up:

This guy mainly just shits on the federal reserve for 30 minutes and occasionally references my article. He does know a lot of multi-syllabic words, which I’m sure will impress many, viewers more interested in style than substance.

I’ve been struck through-out this video of how well my prose stands up. Essentially, this is just a denunciation of the straw man I called elsewhere “vulgar Marxism.”

 

Noah Smith and Charles Murray are wrong

I’m currently working on a piece on inequality and mobility for Salon, and it’s going to be great. I’ve been thinking about the issues a lot, and I was surprised to see Noah Smith, a great economics blogger, write something I find pretty off the mark. He writes in support of Charles Murray’s book Coming Apart:

But there is a lot in this book that is neither mistake nor distortion, and identifies a major social problem in America today. Murray is not the first to report on the problem – I talked about it here before I had even heard of Coming Apart. But Murray brings a lot of numbers and details that really drive home the scale of the problem.

Basically, America is separating into aristocrats and peasants.

Murray never uses those terms. But that’s what it is. On one hand you have an upper-middle class and upper class who go to good colleges and have skilled jobs. These people tend to have healthy family values – they get married and stay married, they pay a lot of attention to their kids. They are civically engaged and physically healthy. On the other hand you have uneducated masses, who tend not to stay married, to leave child-raising to single mothers, and to neglect the kids. They are overweight, bedraggled, and disengaged from the community. The former he calls “Belmont”, the latter “Fishtown”, after two semi-imaginary neighborhoods where they cluster.

 

Murray correctly identifies education as the key thing separating the aristocrats from the peasants. But he also places too much emphasis on money. I know poor schoolteachers who live the “Belmont” lifestyle, and rich small businessmen who are as “Fishtown” as they come. Our threadbare aristocrats are a little like the Confucian scholar-gentry of old China. Our peasants are pretty recognizable too – they’re the lower classes from the Canterbury Tales.

If you live in America, you must have an inkling of these changes too. If you’re one of the educated class – and if you’re reading this, you probably are – then you must have had at least a glimpse of how the other side lives. You must have seen the awful “food” that they eat, the wrecked, destroyed state of their bodies. You must have at least seen hints of their broken, family lives. Just the other day I got my hair cut in a poor white neighborhood, and the barber spent the whole time telling me about “that bitch” who was the mother of his children. No matter how thick the Belmont Bubble, you must have seen hints like this. And if it doesn’t hurt you to see Americans living that sort of unhealthy lifestyle, then I don’t know what to say to you.

I honestly think this sort of thesis is wildly odious and I honestly hope to receive a tweet from Noah saying it was an elaborate hoax to parody absurd Conservative beliefs about poverty and inequality. Really, the whole post amounts to a grand example of post hoc ergo propter hoc, or as David Frum put it in his six part (!) review of Murray’s silly book,

To understand what Murray does in Coming Apart, imagine this analogy:

A social scientist visits a Gulf Coast town. He notices that the houses near the water have all been smashed and shattered. The former occupants now live in tents and FEMA trailers. The social scientist writes a report:

The evidence strongly shows that living in houses is better for children and families than living in tents and trailers. The people on the waterfront are irresponsibly subjecting their children to unacceptable conditions.

When he publishes his report, somebody points out: “You know, there was a hurricane here last week.” The social scientist shrugs off the criticism with the reply, “I’m writing about housing, not weather.”

Coming Apart details the social problems that have overtaken the poorer half of the white American population over the past generation. This population is less committed to the workforce than its parents and grandparents were. It has more trouble with the law. It has more children outside marriage.

None of this information comes as news to anybody. Social observers have been making these points for years. The novelty of Coming Apart is Charles Murray’s remarkable—and telltale—uncuriosity as to why any of this might be happening.

That is, maybe all of these bad things that are happening to American families are happening because of inequality, rather than what is causing the inequality. Now, the reason that elites and economists like the story Murray presents is because it makes them feel better about their success. “Hey man! I earned this!” they say. And people who aren’t doing so well, it’s because they are dumb stupidheads and promiscuous and lazy. Murray presents four virtues he thinks the richies have that poor people don’t:  industriousness, honesty, marriage, and religiosity. Let’s take them one by one.

Honesty:

The first value Murray discusses is honesty, and he points to two trends: higher incarceration and higher rates of bankruptcy among the poorer men. Murray does not question why the incarceration rate increased, rather, readers are left to assume it was a decline in honesty. In fact, numerous public policy factors explain the increase. William J. Stuntz of Harvard Law School argues in The Collapse of American Criminal Justice that the cause is three-fold: a collapse of rule of law, increased discrimination, and harsh sentencing . All of these disproportionately hurt the poor, who face stiff punishments while white collar criminals seem to avoid punishment altogether. Barbara Ehrenreich notes the irony, “Steal $400, you get four years in prison. Steal $600 million, you get a platinum parachute.” Because white collar crime is not “in your face” the sentencing isn’t as harsh. In contrast, petty crimes are often met with unreasonable response. As a result of the “three strikes law” in California, 360 people are serving life sentences for shoplifting. Twenty-four states now have some such “habitual offender” law. Two criminologists found that only 12 percent of the increase in the prison population between 1980 and 1996 and was due to increases in criminal offence (mainly drug crimes) while 88 percent was due to longer sentences and criminals being sentenced to prison rather than a non-custodial sentence . Becky Pettit and Bruce Western found that the risk of prison is highly correlated to education. The evidence indicates that policy, and not a lack of values has increased incarceration among the poor. Murray’s bankruptcy argument is similarly weak, since much of the recent debt accumulation has been caused by the “race to the good neighborhood” and most bankruptcies are brought on by medical costs (62.1 percent).

Marriage:

Next, Murray examines marriage, currently declining among the poor and working class. Marriage is a good, so if it is languishing, an underlying reason may become apparent. There is certainly an economic component to divorce. In the 2009 report, State of Our Unions, compiled by the Institute for American Values Jeffrey Dew writes, “newlywed couples who take on substantial consumer debt become less happy in their marriages over time.” In contrast, owning assets increases the likelihood of a marriage lasting. Finance is, in fact, the leading cause of marital strife,

More generally, conflict over money matters is one of the most important problems in contemporary married life. Compared with disagreements over other topics, financial disagreements last longer, are more salient to couples, and generate more negative conflict tactics.

Another change in marriage is structural. New technology reduces the economic incentive to marry, while birth control reduces the social incentive. Women can now pursue careers and are unwilling to be burdened down by marriage. The current generation is waiting longer to get married, decreasing the number of married couples. At the same time, divorces from the tumultuous 1970s are still inflating the number of divorcees. Betsey Stevenson and Justin Wolfers explain the result:

the proportion of the population who are divorced continued to rise through the 1980s and 1990s, and has only begun to level out in recent years. Thus, despite lower divorce rates and greater marital stability today, a larger proportion of our social networks are divorcees than at any point over the past century.

Although marriage rates may be more stable today, there has been an explosion of single motherhood, which may lend credence to Murray’s thesis. Two researchers from the National Bureau of Economic Research (Melissa Schettini Kearney and Phillip B. Levine), however, find that single motherhood is largely driven by other factors:

the combination of being poor and living in a more unequal (and less mobile) location, like the United States, leads young women to choose early, non-marital childbearing at elevated rates, potentially because of their lower expectations of future economic success.

A report by the British Rowntree Foundation had a similar finding: “young people born into families in the higher socio-economic classes spend a long time in education and career training, putting off marriage and childbearing until they are established as successful adults.” Women in the slow track, in contrast, face “a disjointed pattern of unemployment, low-paid work and training schemes, rather than an ordered, upward career trajectory.” This is largely due to “truncated education.”

United Nations, 2011

The chart above shows that countries, like the United States and Britain, which both have low levels of mobility have significantly higher rates of teenage pregnancy, lending credence to the thesis that Pickett and Wilson propose. Obviously, the absence of fathers is important, but as Pickett writes, “young men living in areas of high unemployment and low wages often can’t offer much in the way of stability or support.” Pickett and Wilson find a high correlation between inequality and single-motherhood and absent fatherhood. Although correlation is not causation, since fatherhood, childbearing, and marriage are all goods, it is unlikely the large swaths of the population would abandon them unless driven by external factors. If institutions, and not culture, are driving single motherhood and teenage pregnancy, then institutions can help ameliorate the problem. This seems to be the case: four researchers at the National Institute of Health found, “The overall pregnancy risk index declined 38%, with 86% of the decline attributable to improved contraceptive use. Among adolescents aged 15 to 17 years, 77% of the decline in pregnancy risk was attributable to improved contraceptive use.”

Industriousness:

Murray’s next value is industriousness. He argues that even during times when the economy has been improving, the middle class and poor have been dropping like flies out of the labor force, an assertion that is demonstrably false. A 2005 study by the Dallas Federal Reserve Bank found that,

[labor force] participation rates are pro-cyclical—positively correlated with economic output—and that the strongest correlation for males and females is between GDP today and participation two and three quarters from today. This supports the contention above that labor force participation decisions respond to changes in economic output with a slight lag.

Worse, Murray isn’t only wrong, he’s diametrically wrong. The report finds that the decline in labor force participation decreased more with more educational attainment:

In fact, labor force participation rates have risen among individuals ages 25 to 64 who lack a high school diploma—from 58.3 percent in 1994 to 63.2 percent in 2004. All other education groups have experienced declines, and the higher the education level, the greater the decline.

Thus, we see that those with the highest education (and thus most likely to be wealthy) are actually the most likely to leave the labor force.

Religiosity:

Murray’s final argument is religiosity, which he argues has been on the decline among the working class. Ronald Sider writes in Just Generosity that this may be a significant perpetuator of poverty, “the best predictor of whether young black inner-city males would escape the syndrome of drugs, crime, and prison was church attendance.” The author of the study he cites, Richard Freeman, acknowledges the possibility of alternate causation, that those who are more likely to escape from poverty are those who also attend church, and that church attendance follows from other behaviors. He even writes,

youths’ allocation of time and other activities are significantly influenced by market opportunities (or the youths’ perceptions thereof), with those who believe it would be easy to find a job if they had to find one more likely to engage in socially productive activities than others, and youths who see many opportunities to make illegal money less likely to engage in socially productive activities than other youths.

Either way, Murray argues that the working-class has become less religious, although his statistics suggest, as Freeman’s do, that the real problem is simply less churchgoing, since the church provides a safety net and social network, offering job opportunities and negative pressures on destructive pressures. The data suffers from questions of reporting accuracy; one study found that actual attendance was 50 percent lower than the reported number. Further, is it religion, or the social aspect of religion that accounts for its benefits? If the benefits come from the social network, it is possible that the decline in religious involvement may be compensated elsewhere with other forms of community involvement. Past studies have shown that church attendance can be driven by demographics, since younger people are less likely to regularly attend church. Given that income increases over an individual’s lifetime, this could explain the low attendance among the relatively poor (they are also relatively young).

My argument is that the cultural decline that we are all supposed to take Very Seriously is really do to the very inequality that elites want it to legitimate. I like Noah’s blog, and he has a great post on the labor/capital question that supplements well my Salon article on the topic.