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We’ve grown accustomed to hearing a lot about the one percent. Yet it’s the “favored fifth” – the top 20 percent of the income distribution – that Brookings Senior Fellow Richard Reeves asserts is the greater problem. “The rhetoric of ‘We are the 99 percent,’” Reeves writes, “has in fact been dangerously self-serving.” From supporters of Elizabeth Warren to Donald Trump, upper middle class Americans everywhere claim they want to unrig the system. But far more than they’d like to admit, they are the ones who are rigging it. From exclusionary zoning policy to the mortgage-interest deduction to the 529 college savings plans, the upper middle class constructs glass floors for their children, perpetuating inequality and impeding social mobility for the remaining 80 percent of Americans. Richard Reeves joins me to discuss all this and his recent book, Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About it.
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This was a very interesting interview. I would have to read Richard’s book to see exactly why the current state of things is so bad, since he used a lot of catch phrases that imply that fair outcomes are the real story, and I am not sure that is what he meant. So the top 20% have “rigged” the system to keep them and their children well off, and have stymied the effects of the lower 80% to compete? The examples he cites aren’t very convincing to me: tax deductions for home ownership (but about 60% of Americans own a house, so…), college savings plans (but the top 20% also pay way way more for their education, even after these deductions, yes?), land zoning (but I am going to guess the examples he cites are mainly in wealthy areas like coastal California and New York and DC. I live in Colorado, and land zoning isn’t really a big deal here: there aren’t big segregated neighborhoods all over the place to the extent I think he imagines defines the average American experience.) School districting is an issue, but it isn’t really the top 20% that is opposing the solutions to that, like school choice and charter schools: that pretty much cuts between Left and Right, not between the top 20% and the bottom 80%.
The host seemed very uncritically accepting of redistribution as a solution to problems of inequality. I think I would be much more inclined to join Richard in shaking my head at these kinds of problems if I didn’t see that the majority of problems of poverty have to do with things people actually do: drug addiction, crime, dysfunctional family relationships, etc. He says at one point that the upper middle class is looking down at the lower rungs and saying that things look very bad down there. But if you get inside that sentiment, you’ll probably see that the things that make the lower socio-economic rungs “bad” have mostly to do with these kinds of human behavior patterns: crime, drugs, etc. It isn’t simply that only making $40,000 a year in America is some kind of living hell- it’s the environmental factors that you then have to live around if you have to rent a place in an affordable neighborhood, and that comes from things people do, so its sort of a non-sequitor to simply talk about them in terms of dollars. At least Richard seems to acknowledge the human factor in these issues much more than many economists do. But I left this podcast unconvinced that this is a really big problem that needs the kind of moral rethinking that he describes. Perhaps the America of 1917 needed to think very seriously about inequality and social mobility, but I am not convinced that the America of 2017 really does.
This seems like a ridiculous conspiracy theory.
Local governments fund schools, perhaps the funding should be allocated to each school per student, so the crowded schools in bad neighborhoods would get better funding. Thats up to local school districts, and if your school district is spending its resourced inequitably thats on the few voters who vote for school trustees, and school trustees.
The other point I would like to make, that most reasonable, rational tax reformers are for a flat tax – so that marriage penalties and home ownership deductions go away.
Children of successful people are themselves successful because they have good examples to learn from, and have involved parents who push their children to achieve. I think many children suffer from low expectations.
I also dont like that you equated success with college education – there are many paths to success in the trades. I think long term stable employment is key to financial success. Trades people are always in demand – welders to HVAC and other technicians – ask Mike Rowe how many open jobs there are at any given time. Also because a trades education takes less time, and is much less expensive than a even a bachelor;s degree (which is no ticket to employment) a trades person will have much lower debts and be out earning a living years sooner… I think these are factors that are completely overlooked when think of the earning potentials of the trades.
Your statement about zoning – reminded me of Mark Steyn going on about how the Federal government owns a land mass in this country that’s two thirds the size of the Hapsburg empire. (I have no idea if that is true, but I wouldn’t be surprised if it was). He said this when there were those cattle farmers standing on their rights to use the King’s grounds for cattle grazing somewhere in the west a year or so back, and how in England way back in like the 1300’s or something there was an act that stated the people were allowed to use the forests for general purposes like hunting.
I’m inclined to agree that there is too much local regulation. I live in Key West, and everyone talks about the local bubba system, as far as permits and other things for business go. We don’t have enough low income housing – why – because like everywhere else there are ridiculous restrictions on building heights. We definitely could use some more apartment buildings down here. The local wealthy now all rent their houses out as vacation rentals and there is a restriction on other people getting such licenses for their houses – as they need to protect their own rent seeking behaviors. They claim this helps keep lots available. I’m dubious.
Another nice example is charter schools. The wealthy set up charter schools, which I plan to take advantage of, for their kids at the expense of the tax payer. This is the most egregious thing I can think of. Now, I get to pay taxes twice (or more) for public schools so the well connected and wealthy can send their kids there – Um, send your damn kids to a private school (I say as a taxpayer).