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Class, Not Race
In New Geography, Joel Kotkin proposes a better way to look at what’s happening in America:
Today America’s class structure is increasingly ossified, and this affects not only minorities, who are hit disproportionately, but also many whites, who constitute more than 40 percent of the nation’s poor. Upward mobility has stalled under both Bush and Obama, not only for minorities but for vast swaths of working class and middle class Americans. Increasingly, it’s not the color of one’s skin that determines one’s place in society, but access to education and capital, often the inherited variety.
Worries about upward mobility have been mounting for a generation, and according to Pew, only one-third of Americans currently believe the next generation will do better than them. Indeed, in some surveys pessimism about the next generation stands at an all-time high.
But race is not the main determinant in looking to the future. The greatest dismay, in fact, is felt among working class and middle class whites, who are generally much more pessimistic about the future for themselves than are either African-Americans or Hispanics.
So it’s not race, but class — that word that Americans recoil from, reflexively — that’s behind the current uneasiness, pessimism, and even anger in the American electorate. The idea that the system is stacked against you if you’re not born into the right social class is incredibly powerful: it’s as if all our anxieties about taxes, government spending, crony capitalism, and wealthy, lefty social preferences all converge and ripple out of the same place.
Conservatives don’t like to talk about class:
Republicans, particularly those closest to Wall Street, also seem to have a problem even admitting the existence of the class issue. Conservatives economists repeatedly downplay ever greater insecurity about jobs, the affordability of decent housing and generally lower net worths for all but the highly affluent. Convinced that any discussion about these issues constitutes unseemly “class warfare,” the right’s intellectual leadership seems incapable of addressing these concerns.
But also because the way to really address the inequities in the current system seem to require that conservatives and Republicans be willing to look at things like the tax code, at the way capital gains taxes are calculated and imposed, and maybe at the way the government spends money, which right now seems to favor either gigantic corporations with long arms in DC or insane progressive leftist commies and government employee unions. It’s easy to see why nobody’s itching to do that.
Here’s what worries me: we already know that the American voter is easily persuaded that government spending is an acceptable solution. They proved it twice when they voted for Obama; yes, yes, I know he’s currently unpopular, but anyone who thinks that this means that Big Government spending is on the wane is living in Fantasyland. So if the American voter is still wobbly when it comes to spending, what kind of spending should we be engaging in?
(And I’m going to duck quickly because I know some of my Ricochet friends are about to throw a chair at me… But still: a thought experiment.)
Kotkin goes out on a limb, here, which will probably raise the hackles of solid small-government folk:
Ultimately, the best way to address class concerns, as well as those of minorities, would be to spark strong economic growth, particularly in the energy, manufacturing, and construction sectors, which tend to offer higher wage employment for them. Both Latinos and African-American made their biggest economic strides when the economy was booming under Presidents Reagan and Clinton, both of whom have been criticized for “trickle down” policies.
In the old Democratic Party, from Truman to Clinton, this approach would be an easy sell. A policy that encouraged building new water facilities, expanding domestic energy, manufacturing and construction, particularly single family homes, would have widespread appeal to working and middle class voters. But a growth agenda likely would face much opposition from the president’s green gentry base, who seem perfectly content with an economy that rewards insiders, venture capitalists, and companies that employ few people, largely the best educated and positioned.
I’ll crawl a little bit out on that same limb, along with Kotkin and a few others. If we assume, from a practical standpoint, that the federal government is going to spend money, that the American people who voted for Reagan and Obama still harbor a soft spot for a Big Federal Program, then what?
What would you say about an unapologetic pro-American government, focused on economic growth, middle class income, an end to crony capitalism, border security, a robust military, higher tariffs, and energy independence? It would have been, not too long ago, the Pat Buchanan administration. I’m not saying I agree with it, or would advocate its positions, but — looking at the politics, it makes a certain sense.
Published in General
As long as we’re taking money from other programs to start new programs, but other than that there’s no room left to spend. Medicare is going to quickly overtake what little discretional spending we have left.
We need to grow the economy quite a bit more before we can afford to spend any more, and you can’t grow the economy by displacing the private sector with public spending, either taxed or borrowed. The reason people feel poor right now is that wages are sticky so they didn’t fall during the deflationary recession because people can’t accept a wage reduction. We have strangely low inflation for a recovery so it’s taking forever for businesses to get real wages down where they should be just by keeping them steady.
Essentially, what you’re asking is what can we do to bribe the irrational voters who don’t understand how the economy works. I’m sympathetic to this position, but the only way we can use it to our advantage is if we trick voters with some “project” while not spending any new money. I don’t know how likely this strategy is to work out.
The solution to an ossified class structure is a rapidly growing economy. Whenever there were periods of high economic growth, high class mobility resulted.
A good way to look at it is to imagine the economy as a racetrack, with individuals as cars of different capabilities and potentials. If there are only a few lanes, only the cars in front get to run at their full potential and capability. The rest are limited by the cars in front of them. They have to maneuver around them before running flat out. On the other hand, if there are as many lanes as cars, no car is limited by the other cars, and can be run to their full potential.
A good example of this was what became the United States immediately before the American Revolution. There were so many opportunities, and so many chances for growth, virtually everyone had a chance to run at full potential. Birth mattered less than ability.
In so far as the Democrats stifle economic growth they foster what they claim to oppose: economic imbalance and the lack of opportunity for the poor. But the Democrats need the poor, so they want more of them.
Seawriter
Congrats, Rob, on finding a post that got me to re-up my membership.
Yes, yes, a thousand times yes.
The purpose of a national government is to serve the interests of those people who are already citizens living under that government. Not international corporations. Not people who want to live here in the future. Not the oppressed on the other side of the globe.
The American Middle Class is shrinking, and ignored. There are a lot of reasons for that. But there are lot of votes to be had by interested politicians who actually pay attention to them: Lower immigration, non-interventionist foreign policy, more protective trade policy, massive tax-code simplification, funding useful infrastructure projects, and yes…even soaking the rich for both optical and financial reasons.
This new word limit will– thankfully for you all– limit my ability to expound a bit on that last point. Suffice it to say that, overall, our tax regime is nowhere near the bad side of the Laffer Curve. Also, the purpose of such a Populist program has to include an understanding of “peak jobs.”
America’s problem at this juncture is “the other guy’s transfer payment.” The transfer payments I get I deserve. The other guy is sucking on the government teat. America’s problem at this juncture is that we have two wings of the National Statist Party that alternates flapping Dem and Rep wings while claiming to run things in Washington for us. The National Statist Party has been wholly successful in scaring us voters into feckless whining about “the other guy’s transfer payment” while we focus on the risk of losing our own. It’s as if all political mirrors in America have been painted over or borrowed from the fun-house. The “other guy” is not wholly responsible for creating this juncture.
The NSP buys off you and buys off me. It pretends to listen to our feckless whining all the while practicing Public Choice Theory–their horizon is not the long-term health of the country, but the short-term necessity of re-election. So…….
Since we seem “stuck” in the bog of our own building, perhaps focusing on “Kotkin-esque” spending is worth a try. China willing.;-)
I’m going to go out on a big government limb here. Tell me why this is a bad idea.
Last year the Cato Institute claimed that your average Missouri welfare household received an average of $26,837 per year. If you start at age 21 you’d get $1.1 million in transfer payments by the time you’re 65. But it’s doled out in such small amounts that all it does is keep you dependent.
Would it make more sense to replace welfare with a seed program, one-time payouts of up to $500,000 that could be used for either education or a business plan? The bottom line is that you would sign away the right to participate in any other “social safety net” for the rest of your life.
To me the upside is that a larger amount of individuals controlling smaller investments in the economy would probably better directed than large sums of money controlled by small politically connected groups.
And there is one bit of deregulation I would also reverse. Banks need to be smaller, not larger. Break them up and confine them to their communities as they once were.
The American Promise has always been that you can work your way up. That promise is now debatable.
Conservatives have always trusted that Promise as an article of faith. To question the Promise was almost heresy. But the rest of the country doesn’t necessarily believe that Promise anymore … and they have good reason to disbelieve it. There’s a widespread perception that The Market, as it exists now, isn’t fair. Why? Experience. Because in 2008, most of the country crashed, lost their homes’ value, but the stock market (i.e., the wealthy) suffered barely a speed bump. While the rest of us have had to deal with a crummy job market, the stock market is bursting through new ceilings every few days. While the rest of us struggle, the rich are protected. People now believe that The Market isn’t fair.
The essence of liberal theory is that we can’t rely on the Market to bring justice. People won’t go back to the Market until they can trust it.
Before anyone will agree to shrinking the government, we have to restore trust in its only alternative, The Market.
Oooh. I like that. Except I would do it this way: Make it two stage. You get an immediate, non-taxable payment of $100,000, then a second non-taxable payment of $400,000 three years later. After that — no government assistance.
That way they can blow the first chunk foolishly, survive for 2-1/2 years without government assistance, and appreciate the need to preserve the final payment.
Seawriter
Minus the tariffs, I’d get behind it. I’m not a huge fan of the term “energy independence” because it doesn’t mean what it’s meant to mean, but I’m wholly in favor of letting the energy industry do its thing.
I am sympathetic to that approach, E.J. But the fact is that the majority of people are, by definition, of below average intelligence. And I think it would take a person with intelligence noticeably above average and a decent work ethic to not screw up such an opportunity.
So I like it in theory, but suspect as a matter of pragmatism that such a program would wreck the country. There is a chance I am underestimating the ingenuity of the market in figuring out a way to increase the success probabilities in such an endeavor. But the program I’ve outlined above would cost less and has a lower difficulty setting.
@Tom: The United States went from being a Colonial backwater to a world-bestriding economic behemoth with high tariff. Seeing how we now largely have a colonial economy, again, I think your bias against a more protectionist scheme is misplaced.
Free trade was great when we had little competition. Them days are over.
This is simply economically false. Free trade makes us richer independent of the situation outside our shores. You might not like the results for curtain subgroups, but in the aggregate, tariffs are like shackling yourself.
Which is why I suggested breaking it in two parts. Let them screw up the opportunity on the first chunk. Having to live for two years without government assistance should make folks wary about blowing off the second chance.
Seawriter
You are of course, familiar with the Smoot-Hawley Tariff?
The notion that a protective tariff could have ANY positive economic impacts is laughable. How do higher prices for consumer goods help anybody – Most of all the poor and middle class?
The very first thing we need to do is kick out the illegal immigrants who are taking all of the low skill jobs which lower class Americans aren’t taking because they have more attractive non-work alternatives.
Immigration control is the only tariff I could get behind.
EDIT: I should also note that protectionists conveniently “forget” that free trade has brought thousands and thousands of jobs to this country when foreign auto manufacturers “outsource” jobs here from other places – and that’s just one example. Free trade allows comparative advantage to work, and in the end it benefits all consumers.
Charles Murray painstakingly addresses the class issue in his latest (?) book. The problem isn’t actually the ossification of the class structure, it’s the behavior of the people in the lower classes. His book addresses only whites, so as not to offend. If lower class people were to stay in school, work hard, marry and have children in a nuclear family, they wouldn’t be stuck in their class. And, why does the government affirmatively need to spend money to achieve growth? Why not just step out of the way of businesses that want to expand? Lower taxes and regulations and there would be a boom in middle class jobs. Coupled with a more conservative lifestyle, there would be no end to what the middle class could achieve.
Because such people have non-work alternatives that sustain them. End of discussion.
When you have section 8 housing vouchers, WIC, direct payments and every other welfare program under the sun, a person would have to be earning the equivalent of $35,000 per year to replace that imputed income. It isn’t rational to assume that people would want to replace “not-work” with “work” in that scenario.
Citation required.
I fear people are too present oriented.
What if the government created a program that was sort of a military/college mélange? At 18, whether you graduated high school or not, you go off to a secluded campus. Here you go through some sort of military-lite training – physical and mental. After a year you ship off to perform some domestic service for a year. Then you come back to campus for 2 years of some sort of technical training to make you employable.
During those 4 years the government covers all expenses and sets aside $10,000. $5K goes into a bank account and $5K into a retirement account. When you graduate you get access to the $20K in the bank acct.
Rob, you recently mentioned (on the podcast I think) that the 18-22 year-olds make most of the trouble. This keeps the vulnerable out of trouble, gives them a leg up, and provides a future reward. That reward, hitting at retirement, helps too.
Seems like a more a practical sell would be to make the argument that stronger families = a stronger economy. Kids have better outcomes growing up in intact families than not. Generally, communities with more intact families experience less crime, better schools, and higher per capita incomes. After much saving and struggle, we just moved from a working class/middle class community to a middle/upper middle class one, and the opportunities for my kids and quality of life are far better. And people work hard to afford to live in communities that provide status and opportunities to their kids. But here’s the wrinkle, my family’s recent upward mobility was made possible in part due to legislation sponsored by a Democrat and moderate Republican, so go figure. Help increase upward mobility with tax breaks and incentives.
No it isn’t.
Behavior which the government rewards.
The government is so intertwined. How does it just step out?
An end to crony capitalism AND big government spending projects? Where do we find the angels?
Government doesn’t create wealth. Pandering to Americans’ baser instincts by pretending it can doesn’t help anything in the long run.
The lack of branch banking in the US was a significant cause of bank failure during the depression, though. Canada, which unlike US states, had not outlawed branch banking, did not have similar bank failures. Allowing bank to have branches in diverse, geographically scattered communities is a sensible way of insuring against local catastrophes.
From whence this Promise? From whom? Since when? And what does “up” mean?
Let’s refine this even more. At age 18 you’re eligible for four yearly payments of $20,000 IF you enroll full-time in a state university. $30k/year IF you enroll in college AND join a military reserve.
After the fourth year you would be eligible for the remainder of your seed money provided you completed your degree.
Mike Lee, Marco Rubio and others have some good ideas about appealing to middle class people or aspiring middle class. I do think conservatives need to directly address voters’ fears about the downward spiral in their lives and the loss of the sense that it is possible to move up. There are conservative ways to do this. We have been arguing ad nauseum about whether or not it is possible to suddenly downsize government. Certainly there are a lot of places where waste could be eliminated–useless and duplicate agencies and programs come to mind. Romney would have been good at that. But I think a winning platform might be: downsizing wasteful spending and overweening government while reorienting some of that spending toward border security (saving jobs and creating jobs in fence building), increased military (jobs and careers for the young) and just getting out of the way of the energy and other sectors, tech for example, that supply good jobs.
I think this is partially right, and the mobility argument is also partially right. The problem is that in each (partially-correct) case, logic leads to the wrong policy solution.
Historically, lower classes were characterized by living off their labor, while upper classes were characterized by living off accumulated capital. The middle class is characterized by skilled labor, which comes about through upper-class values — thrift, education, discipline, delayed gratification.
The middle class has flourished because America has offered mobility to people from lower-class backgrounds who adopted upper-class values. Unfortunately, today there is no reward (or even negative reward) for adopting good values. If you aim to work your way up the ladder by maintaining a stable family arrangement and working for someone else, you will be worse off than if you take public benefits. And if you aim to pull yourself up by being an entrepreneur, the government at all levels –local, state, and federal — will be an obstacle, or worse, use regulatory powers and licensing requirements to shut you down.
The policy answer is straightforward, but very difficult: The government must be scaled back. The welfare apparatus must be scaled back. The regulatory apparatus must be scaled back. More functions — including education — must be devolved to the private sector. The answer is most emphatically not greater spending or greater intervention.
Unfortunately, the loudest critics of paring back government are self-styled advocates for the poor and minorities. That’s another reason why it’s so critical that we separate race and class in our thinking.
But Canada is a much smaller population.
When I was a child and all banks were locally owned, my lower middle class parents knew their banker. And he knew them. Back then when you got promoted in the banking business you still remained in the community you served. Now promotions mean moves to another city and many times another state.
So then…. what?
Upward mobility–that’s always been the assumption of Americans hasn’t it? That’s why we have the well-known term “the American Dream.” This reminds me of the students who attempt to edit my law professor husband’s work for law reviews. Sometimes they want a citation for practically every word.
In a lot of ways, I think this was the appeal of Rick Santorum in 2012. Unfortunately he wasn’t able to form a clear and concise message.
But the fact that he couldn’t build a winning campaign around this platform doesn’t necessarily mean that a better candidate couldn’t.
(Scott Walker?)