Monday, April 21, 2014

One True Cause of Inequality

Deep thinkers are agog over Thomas Piketty’s new book on capitalism. Presumably, Piketty has demonstrated that capitalism inevitably generates inequality. He adds that inequality is a very bad thing.

Of course, Piketty lives in France where capitalism is barely on life support. The analysis aside, his policy proposals are recycled versions of the French Socialist platform. Link here.

Since the French Socialist government has just been repudiated by the French electorate, American intellectuals are glomming on to its failed policies. What could be more stimulating than trying out policies that have already failed.

Dare we mention that, by definition, French socialism is not the same as free-market capitalism.

I suspect that the war on capitalism has produced far more inequality than capitalism ever has. Surely, radical Marxist governments-- socialism heavy as opposed to socialism light-- have only excelled in producing mass starvation.

In the United States, the current administration has been creating more and more rules and regulations, the better to restrain capitalism by interfering in the markets. The Obamanauts believe that capitalism is intrinsically corrupt and corrupting, so they have, as much as possible, been trying to rein it in.

In the new Obamified economy producing wealth is less important than buying votes. Besides, the country is now running on funny money. Is the essence of capitalism money printing in the basement of the Federal Reserve?

Or, is Federal Reserve policy an effort to constrain the marketplace?

The result of current policy has been more inequality. If anything, it demonstrates that the more you mess with capitalism the more inequality you produce.

Meantime, this morning’s Wall Street Journal contains an article by Robert Mananto and Michael Crouch where they demonstrate that rising inequality correlates perfectly with the rise of single-family homes. And yes, I do know that correlation does not necessarily imply causation. I also know that correlation does not necessarily imply a lack of causation.

Broken and single-parent homes are the fallout from America’s great cultural revolution. Americans have been liberated from the traditional family structure. You know, the one that contained breadwinner fathers and homemaker mothers. Americans have overcome the nuclear family. Unfortunately, they are less well-off for as much.

Mananto and Crouch write:

The two-parent family has declined rapidly in recent decades. In 1960, more than 76% of African-Americans and nearly 97% of whites were born to married couples. Today the percentage is 30% for blacks and 70% for whites. The out-of-wedlock birthrate for Hispanics surpassed 50% in 2006. This trend, coupled with high divorce rates, means that roughly 25% of American children now live in single-parent homes, twice the percentage in Europe (12%). Roughly a third of American children live apart from their fathers.

Living in a deconstructed family is bad for your health or your emotional well-being. Presumably this means that children of broken homes are not capable of adding very much value to any enterprise they undertake. They do not have the good character or the intellectual skills to earn a decent wage. More and more they are becoming a permanent underclass, dependent on the government for their subsistence.

Even when opportunities are available, these young people do not have what it takes to profit from them.

Maranto and Crouch write:

In an essay for the Institute for Family Studies last December, called "Even for Rich Kids, Marriage Matters," University of Virginia sociologist W. Bradford Wilcox reported that children in high-income households who experienced family breakups don't fare as well emotionally, psychologically, educationally or, in the end, economically as their two-parent-family peers.

Abuse, behavioral problems and psychological issues of all kinds, such as developmental behavior problems or concentration issues, are less common for children of married couples than for cohabiting or single parents, according to a 2003 Centers for Disease Control study of children's health. The causal pathways are about as clear as those from smoking to cancer.

They continue:

More than 20% of children in single-parent families live in poverty long-term, compared with 2% of those raised in two-parent families, according to education-policy analyst Mitch Pearlstein's 2011 book "From Family Collapse to America's Decline." The poverty rate would be 25% lower if today's family structure resembled that of 1970, according to the 2009 report "Creating an Opportunity Society" from Brookings Institution analysts Ron Haskins and Isabel Sawhill. A 2006 article in the journal Demography by Penn State sociologist Molly Martin estimates that 41% of the economic inequality created between 1976-2000 was the result of changed family structure.

For the record, the Brookings Institute is a left-of-center think tank.

Those who hate capitalism and blame it for all the world’s evils would be unpersuaded. They are not going to admit that the cultural revolution that they promoted could possibly be responsible for the current social turmoil and the rising inequality.


Dennis said...

If only we had a capitalist country, but we don't because the government heavily influences almost every aspect of the economy.
If one remembers it was the government that made a lot of single families possible.

Anonymous said...

Amen. Patriarchy may be the buzzword of the cognoscenti, but the cultural revolution they encourage is incompatible with the materialist utopia they mean to create for all... except for themselves (more on that later). As long as human beings are involved, this will never happen (which is why they're simultaneously all Malthusians).

What is their cultural revolution designed to replace? Namely, the horrific "cliche" of father as head of household and mother as nurturing and stabilizing force. This arrangement has been mercilessly stigmatized in popular media, especially in the last 25 years. Yet economic outcomes are stark: the "new culture" is a fantasy, and the impact of its implementation has been disastrous, especially for children. We celebrate fringe lifestyles as the norm (benefitting media companies) and we use trillions in subsidies to cover it up (benefitting government bureaucrats). Inequality and social chaos spur demand for public sector services. Follow the money.

The academy has always been the leading edge of this transformation. Intellectuals long ago divorced themselves from the real impact of their social theories and moral/ethical speculations. The social sciences are a disaster, with undergraduate liberal arts curricula designed to mint relativist revolutionaries. Meanwhile, graduate programs turn out high priests of the new cultural religion: the fulfilled self. This supplies the next generation of non-thinking customers, and assures these customers will be fed a steady dogmatic diet of instant gratification, institutional cynicism, atheism and bacchanalia. Who said universities don't understand capitalism? You don't con people into spending $42,000 per year in tuition without marketing it as a ticket to higher intelligence and the good life. Tie that branding to a generation of parents obsessed with their children's self-esteem (which is all the parents ever wanted from their childhood), and you get a delicious, vulnerable prey... ahem, I mean "target market."

The inequality that Thomas Piketty and so many others in the intellectual-bureaucratic-political-nonprofit-journalism complex bemoan is born of jealousy. They detest and degrade the wealth-creating businesses that fund all their social experimentation. Intellectuals believe they possess superior intelligence. Of course this is more important and consequential to the meaning of life than anything coming out of a factory. Economic realities -- judged by where free consumers choose to spend their money -- say otherwise. And that infuriates the people who make their living based on their thoughts. They think businesspeople are stupid, that they don't deserve their wealth. That's because the intellectual class has no idea how wealth is created. Such pedestrian thinking is beneath them.

Anti-business, anti-capitalist intellectual rancor (and the supporting chorus of those who agree with them) is based in envy. Capitalism has to be stopped because of what it represents... not because the intellectuals have any alternative vocation. No, it's because it's not fair. And the standard of fairness is the comparison of what someone with a PhD. is compensated versus the earnings of a business owner whose success is based on scaling a mass-market product. As long is there is inequality in this economic dimension -- which their always will be -- the more the Thomas Pikettys of our world will publish their tracts of complaint, and the more accolades they will garner from their mutual admiration society: the vast majority of the thinking classes.


Sam L. said...

"Meantime, this morning’s Wall Street Journal contains an article by Robert Mananto and Michael Crouch where they demonstrate that rising inequality correlates perfectly with the rise of single-family homes."

WSJ's hed: "Ignoring an Inequality Culprit: Single-Parent Families

Intellectuals fretting about income disparity are oddly silent regarding the decline of the two-parent family."

My wife and I raised our kids in a single-family home.