Most journalists, scholars and policy wonks are members of the upper middle class. This undoubtedly influences their (OK, our) treatment of inequality. Those of us in the upper middle class typically find it more comfortable to examine the problems of inequality way up into the stratosphere of the super-rich, or towards the bottom of the pile among families in poverty or with low incomes. It is discomfiting to think that the inequality problem may be closer to home.
Pointer from Mark Thoma.
I recommend the entire Reeves piece. Readers of Robert Putnam, Charles Murray, and this blog will not be surprised that
the gaps by income in family structure are striking. There are more never-married than married adults (aged 35 to 40) in the bottom 40 percent of the income distribution (37 percent v. 33 percent). In the top quintile, the picture is reversed: a large majority of household heads (83 percent) are married, while just 11 percent have never been married
Reeves’ concern:
Efforts to increase redistribution, or loosen licensing laws, or free up housing markets, or reform school admissions can all run into the solid wall of rational, self-interested upper middle class resistance. This is when the separation of the upper middle class shifts from being a sociological curiosity to an economic and political problem.
He links to a piece from Reihan Salam several months ago.
Take away the mortgage interest deduction from a Koch brother and he’ll barely notice. Take it away from a two-earner couple living in an expensive suburb and you’ll have a fight on your hands. So the upper middle class often uses its political muscle to foil the fondest wishes of egalitarian liberals.
The latter, of course, coming largely from the upper middle class.
Brink Lindsey and Steve Teles like to point out that there are policies available that, contra an old book from Arthur Okun, could both reduce inequality and improve economic efficiency. However, these are the policies on which the upper middle class is dug in.
Why would we “take away” the mortgage interest deduction when or was created for reasons?
Inspired, amazingly, by Peter Singer with whose conclusions I usually disagree that many moral sentiments may have served functions in the past no longer relevant and thus need to be overturned…… maybe the ‘feeling’ that more equality is better was appropriate in a time when inequality was more probably a sign of theft/corruption/abuse of power in a zero growth /zero sum era.
I support a BIG (Basic Income Guarantee) of $200/week for adult USA citizens to replace Minimum wage laws, TANF, SS, SSDI, housing vouchers, most post secondary education subsidies and SNAP but such a program would most likely increase measured inequality. So all this talk of inequality as big problem (is that a pun) is for my thinking. I would like for the BIG to reduce the left right debate to the size of the BIG. There would still be issues with medicare and medicaid and programs for the severely handicapped but it would less that what we have to deal with now. Inequality should just be mitigated through the BIG and reasonably progressive taxation.
“I would like for the BIG to reduce the left right debate to the size of the BIG. “+1
I’ve long thought that a big gain from a basic income would be the clarity it would be bring to policy debates that often involve left and right talking past one another (possibly deliberately).
Sounds kind of speculative.
And then we can go back to old English law like:
“In the same year (1530) first appeared the celebrated Act for the punishment of beggars and vagabonds and forbidding beggary, and requiring them to labor or be whipped.
…
“(1535) Another statute against sturdy vagabonds and rufflers found idling after being assigned to labor, and already having their ears so slit, are punishable with death.”
The ear slitting refers to the loss of an ear after multiple convictions
“to “Scolers of the Universities of Oxford and
Cambridge that go about begging not being authorized under
the seal of the said Univeraities” as well as to other beggars
or vagabonds playing “subtile, crafty and unlawful games
such as physnomye or palmestrye.””
So that would take care of any university adjunct problem that might arise.
The point is that making people wards of the state eventually leads to more and more infringement upon their liberty and freedoms, not less.
BTW inequality seems to not extend to my town (Gainesville FL.) My son hated school and so went to work as a plumber right out of high school. Living with us for 2 years he was able to save enough to add to some college money that he got from my father to buy a condominium like the one at the link below for cash. People like him in this area live lives very similar to the upper classes.
http://homes.gainesvillerealestatetalk.com/idx/photogallery/a128/358198
Journalists and academics who are angry about inequality are indeed angry about inequality that is “close to home”
Specifically, they are bothered by the inequality between Ivy League grads from rich families who studied liberal arts and Ivy League grads from rich families who went into finance.
Underlying all this is the seldom explored subject of the motivations of the individual members of these categories (I avoid “classes”). There is a further need to understand the ways in which motivations are formed, particularly at the very beginning in families or proxy situations. Therein we may find clues to the continuing fragmentations of social organizations that make up society and are reflected in its economic activities.
Another departure might be a Jacobi “inversion” in the relationships of distribution (economic and other) amongst the categories. Instead of considering the “labour share” of an economy vis a vis “managerial” or “capital” share, invert the process to consider how to evaluate or quantify the inputs of each to the aggregate output of result.
One could approach that inversion in the academic area (as far down as middle school) with how do we value the input of teachers of writing, grammar and literature (and of their purposes) while we complain of those inadequacies in the “real” world. What teachers’ inputs are most valued, what “administrative” functions (by comparison)?
I’m not sure if I qualify as upper middle class (probably not), so maybe this is my class interest talking, but to me, the author’s conclusion is bass ackward. He describes one group of people as being educated, economically and socially successful, politically influential, and exhibiting high rates of stable family formation. He describes the second group as declining in social mobility, socially and economically unstable. He concludes that the success of the first group is “dangerous.” Uh, what? Isn’t it the failures of the second group that we ought to be more worried about? Furthermore, if the second group was doing better, I’ll bet the first group would be significantly less resistant to the things the author’s complaining about, namely the school and housing market reform. If you have an increasingly lumpen proletariat, you can’t expect the bourgeoisie not to try to keep them at arms length, no?
They can play games with cause and effect. Wealth causes you to find a stable mate, etc.
The Reihan Salan piece seems to be one part envy seasoned with leftover resentment from his teen years, one part (trust-fund-)liberal-editor-greasing, and at most one part analysis. At a certain point he writes government ought to “squeeze the wages of upper-middle-class professionals, who can afford to take a hit…” without the slightest hint of irony. The simple fact is that both marginal rates and income-based-taxes-as-a-fraction-of-individual-income (State and Federal income taxes plus Social Security and Medicare taxes) are already highest on Salan’s “upper-middle-class” (folks in the 19.9% sandwiched between the not-so-upper middle-class and the 0.1% actual rich). Tax rates and tax-fraction-of-income decline from the “upper middle class” to the very rich, so the upper-middlers Salan dislikes are already brutally and unjustly “squeezed.” Worse, who is Salan to say “they” (those awful people) “can afford to take a hit?” Why? Are they morally inferior to everyone else? Don’t their utils matter?
For all of that, Richard Reeves’ piece is worse. As we expect from Brookings, it is basically propaganda written to order for the extreme rich trying to confuse and divert potential political opponents. Reeves admits early on (fourth graf) that “the poor have not fallen behind the middle class in recent decades.” But then he pegs at 80% the line between middle class and rich which belongs at 99.9%. He disguises this move by the simple expedient of averaging the gigantic wealth gains of the private-jet rich in with his whipping-boy “upper middle class.” Numerically that’s akin to averaging {20, 20, 20, 20, 20, 2000} to get mean=350 even though mode and median are just 20. The actual “upper middle class” is only slightly above trend for the rest of the “middle class” and “poor”– for many years all significant gains have gone to the very rich.
Higher education? As we all know, that’s mostly signalling, and now represents a form of punitive taxation on the upper middle class to discourage wealth accumulation by those (<=99.9%) who pay income tax at the 40% marginal rate for salaries rather than the 20% rate for "carried interest" and crony-capital gains. Upper-middle-class parents are now required to impoverish themselves to bestow the markers of respectability on their children, without which said children will be degraded to the ranks of the poor, almost Untouchable. (Note that "merit" scholarships have been abolished in favor of "need based aid" which is calibrated to achieve perfect price discrimination, backed by the full power of the Federal government with criminal prosecution for perjury if a parent tries to weasel on the Federal Financial Aid Form.)
Voting? It is mostly a distraction, for all that it entertains the "scribal class." For several decades the two parties have espoused virtually identical policies. It doesn't matter whether the "upper middle class" votes for Tweedledum or Tweedledee– it gets policies favored by the very rich, including unabashed crony capitalism and variations on the Bernanke Put which, for very rich people, privatize profits and socialize losses.
Marriage and social class? Here Reeves is most subtly diabolical. First he writes that "to the extent that upper middle class Americans are able to form planned, stable, committed families, their children will benefit…" You might think that is a good thing, behavior other folks might want to emulate, but no! Those children will "…be more likely to retain their childhood class status when they become adults," which, Reeves instructs us, is "an economic and political problem," a "threat […] posed by the perpetuation of upper middle class status over the generations."
According to Reeves, we need to "increase redistribution" (of income and wealth, not good behavior) from the "upper middle class" (i.e., people who might otherwise compete with the very rich) to the poor– to prevent "inequality harden[ing] into stratification." Otherwise, Reeves quotes Salan to suggest, "upper-middle-class Americans threaten to destroy everything that is best in our country."
I have a better plan: let's abolish the crony-capitalist privileges of the very rich which are far-and-away the main drivers of "inequality" in America. If constrained to play on the same field as Reeves' "upper middle class" the very rich will merge with them over a generation or two, thanks to reversion toward the mean. Increased circulation at the top will promote increased circulation from the middle-middle and lower-middle too, in part by reducing upper-middlers' demands for junior-crony accomodations. Upper-middle-class Americans embody most of "what is best in our country." Instead of trying to abolish them, we should try to expand their ranks.
If any remaining "inequality" is so distasteful to Americans we can limit the immigration of poor people which, as Arnold Kling pointed out previously, drives inequality at the low end (partly by driving down wages at the bottom, but mostly by ensuring a steady supply of new poor people to be "unequal" to established citizens).
Fun exercise for students of political history: re-read Richard Reeves’ essay while substituting the word “kulaks” for each instance of “upper-middle class.”
Even though he writes for Brookings I don’t think that Reeves is actually a Communist, but it is clear which school of propaganda he has studied most carefully.
The racket is that calling for things like “more free college” makes the problem worse and perpetuates it as a political opportunity.
Any time I see a group of politicians not making a problem even worse, I think “oh, these ones are just incompetent.”
Excellent summary.
The ultra rich beat down on the UMC (the people doing most of their difficult technical work for them and entertaining them), and then use imported lumpen as shock troops to squeeze from both above and below. If anyone in the UMC who studied hard, married well, and whose working a 60+ hour week notices the scam just call them a racist.
I don’t think the upper middle-class is dug in to protect restrictive licensing for hair-braiders, tour-guides, flower-arrangers, and the like. They don’t work in these jobs or generally have any financial interest in them. And as we’ve seen, most of the upper-middle class has been strongly on the side of Uber, not that of licensed cab drivers (which is why Deblasio lost that battle in New York).