Wealth and Reproduction

Until about a decade ago, the recent trend was for the poor to have more children than the rich, both domestically and internationally. But, this trend has since reversed in the U.S., largely due to the impact of fertility treatments and factors surpressing fertility in the poor like a reduction in teenage pregnancy rates. But, this was a historical anomaly for the century or so that the trend of the poor having more children persisted. Prior to that point, the well to do in places as different as early modern England and China consistently had more surviving children than the poor.

It isn't unreasonable to infer that the rich had more children in part because mothers and children were less likely to die prematurely, for example, due to malnutrition, and that the reversal in the number of surviving children per family was due substantially to the fact that improved medical care caused almost every mother to survive childbirth and almost every child to live to adulthood.

READ MORE - Wealth and Reproduction

Where Are The Rich Getting Richer?

Is growing income inequality in the United States a national pheneomena?

The answer is "no", according to a report released back in 2006 entitled “Income Distribution and the Information Technology Bubble”, by James K. Galbraith and Travis Hale at the University of Texas (abstact utip.gov.utexas.edu/abstract.html#UTIP27).

Instead, a handful of IT and financial hot spots are driving almost all of the increaes in income inequality for the United States as a whole.

It is widely recognized that income inequality increased in the 1990’s, but nobody knows quite why. . . .

One says the culprit was declining unionization. Another ties it to immigration and outsourcing. A third theory is that the demand for high-level cognitive skills has increased, while other explanations range from changes in executive compensation to the lack of policy initiatives directed toward the working poor. . . .

Their study used data on average income and population by county available from the Bureau of Economic Analysis, available at bea.gov/bea/regional/reis. . . . their work does not examine inequality among individuals, but rather differences in average income across counties. . . . income inequality was flat in the first half of the 1990’s, then rose sharply in the second half. After 2000, the inequality index declined again.

[Which] counties that contributed the most to the increase in income inequality from 1994 to 2000 [?] . . . the five biggest winners in this period were New York; King County, Wash. (with both Seattle and Redmond); and Santa Clara, San Mateo and San Francisco, Calif., the counties that make up Silicon Valley. The five biggest losers were Los Angeles; Queens; Honolulu; Broward, Fla.; and Cuyahoga, Ohio.

What do the counties in the first list have in common? Their economies were all heavily driven by information technology in the late 90’s. This is true for the rest of the list of winners as well. Harris, Tex. (home to Houston and Enron); Middlesex, Mass. (home to Harvard and M.I.T.); Fairfield, Conn.; Alameda, Calif.; and Westchester, N.Y., were also among the top 10 income gainers in this period.

[H]alf the 80 American companies in the CNET Tech Index are in those top 10 counties. Furthermore, when income inequality decreased after 2000, the income drop in the high-tech counties contributed most to the decline.

New York, interestingly enough, showed large increases in per capita income both during the Internet boom and the Internet winter that followed.

[T]he income gains of the 1990’s associated with the technology bubble not only accrued to a relatively small number of people but also occurred in a relatively small number of geographic areas. . . . what would have happened to the index if just 4 of the 3,100 counties in the United States exhibited average income growth in the technology boom years. The four are Santa Clara, San Mateo, San Francisco (all associated with Silicon Valley) and King County, Wash. (home of Microsoft). . . . If the per capita income in just these four counties had grown at the same rate as the average in the United States, income inequality across counties would have changed little in the late 1990’s. In other words, only four counties drove most of the change across the 3,100 counties.

The resulting narrative is a slight variant of the finance industry's compensation is surging argument, expanded to include the information technology sector as well.

READ MORE - Where Are The Rich Getting Richer?

A Silly Argument And A Smart One

Mark Thoma at The Fiscal Times argues that "balanced budget rules can cause rushed decisions if the statutory deadlines for achieving balance leave little time for careful deliberation" in the course of arguing that Congress is disfunctional. This is silly.

How many times in my lifetime have state or federal legislatures gotten fiscal matters done in advance in a carefully deliberated manner, rather than right at a deadline? I can't remember a year that Congress didn't have a continuing resolution or passed all of the dozen different appropriations bills separately before the deadline came and an omnibus bill had to be pushed through, even in years when we haven't had divided government.

Colorado's joint budget committee is better, but still highly deadline driven. And, one of the key's to Colorado's deadlines - a joint set of legislative rules made necessary by a short session, amateur legislature and strong legislative services division are almost impossibly to constitutionally impose on Congress.

But, Thoma also has a worthwhile point to make:

[A]nother explanation that is often put forth to explain the change in congressional behavior is that legislators today are less patriotic than they once were. That is, nation used to come before party, but those days are long gone.

But patriotism is not the problem. What has changed is that we have become, in many respects, two separate nations living within a common border. Patriotism is as strong as ever within each nation, but there is very little recognition that the needs of the other group are legitimate or have any standing at all in policy decisions.

Thus, we are no longer indivisible. Justice for my group rather than justice for all dominates the political landscape and pollutes the policy environment. Until that is fixed–if it can be fixed–no amount of rules, triggers, ticking bombs, or other devices will set it right again.

The two nations thing isn't entirely Mark Thoma's invented rhetoric. For example, Texas Governor Perry, who has campaigned for the GOP Presidential nomination in Colorado recently, has publicly said positive things about the possibility of Texas leaving the United States of American again. The partisan divide between U.S. regions is as strong as it has been in recent memory and social class divides are also more intense in the U.S. than they have been in a very long time.

It isn't just the politicans. I frequently finding myself asking what the heck Republicans are thinking, because when I ask myself what someone who hates American would do and then compare it to what they are trying to accomplish, it very frequently seems to be the same thing. My civility instincts tell me that this is a horribly bad attitude that I should try to fight, but it is what comes to the surface emotionally whenever their latest idea comes up. Whatever agenda they are advancing, it is so profoundly distant from my reality that it makes no sense at all to me, much of the time, or violates deeply held values about the political process and policy substance of what makes our country special and uniquely American. Sometimes I wonder if we wouldn't be better off if Governor Perry got his wish and rid us of the influence that he and his have on our politics.

Then again, Thoma makes one more argument that is neither here nor there. He says that the press doesn't do a good enough job of holding politicians accountable. There is merit to that. Politicans are held accountable for very little of their destructive bad behavior and mischief.

But, I'm not convinced that the press is the most guilty party. It is hard to educate the large share of the voting public that isn't interested in paying attention, and the fact that the nation feels that it can get away with indifference is mostly a testament to a fairly healthy political culture in the formative period of the average voter, rather than being a purely negative indicator. Many of us managed to earn the privilege of not paying much attention because politics has tended to be incrementalist for the last few decades in the United States. Only when elected leaders really screw up in a way that forces a radical change that is contrary to the agreed rules of the political game, as we saw this year in Wisconsin and Minnesota, does the sleeping giant that is the American public wake up and start paying attention. We can be outraged about the process because we have been taught to expect better.

If the U.S. had defaulted on its debt and there had been dire consequences, the American public probably would have woken up and been determined to do something about it in 2012. But, a deal to complex and arcane and unlikely to be adhered to in the long term to make it interesting to the general public was reached, constitutional crisis was avoided, and the public will return to its slumber for a while.

I don't like the way that we are making our sausage and would like to reform it. The Republican balanced budget amendment proposal is a DOA way of addressing the problem. But, there is room for process reform and better ways of holding politicians accountable as well.

READ MORE - A Silly Argument And A Smart One

Evangelical Christianity's Ugly Side Is Inseparable From Its Virtues

Nicholas Kristoff, in a column this past Saturday, summed up what liberals don't like about Evangelical Christianity, in the course of arguing that the negative stereotype isn't universal since there are nice evangelical Christians out there (like the late Reverend John Stott of Britain, and liberal evangelicals like Jim Wallis of Sojourners fame and Richard Cizik) who don't make headlines the way that the hellfire and brimstone, or prosperity gospel TV evangelists do.

This may be true, but his spot on summary of liberal distaste of the Evangelical Christian movement deserves restating for future reference:

In these polarized times, few words conjure as much distaste in liberal circles as “evangelical Christian.”

That’s partly because evangelicals came to be associated over the last 25 years with blowhard scolds. When the Rev. Jerry Falwell and Pat Robertson discussed on television whether the 9/11 attacks were God’s punishment on feminists, gays and secularists, God should have sued them for defamation.

Earlier, Mr. Falwell opined that AIDS was “God’s judgment on promiscuity.” That kind of religious smugness allowed the AIDS virus to spread and constituted a greater immorality than anything that occurred in gay bathhouses.

Partly because of such self-righteousness, the entire evangelical movement often has been pilloried among progressives as reactionary, myopic, anti-intellectual and, if anything, immoral. . . .

Centuries ago, serious religious study was extraordinarily demanding and rigorous; in contrast, anyone could declare himself a scientist and go in the business of, say, alchemy. These days, it’s the reverse. A Ph.D. in chemistry is a rigorous degree, while a preacher can explain the Bible on television without mastering Hebrew or Greek — or even showing interest in the nuances of the original texts.

Those self-appointed evangelical leaders come across as hypocrites, monetizing Jesus rather than emulating him. Some seem homophobic, and many who claim to be “pro-life” seem little concerned with human life post-uterus. Those are the preachers who won headlines and disdain.

While I am more than willing to acknowledge that there are social gospel preaching intellectuals like Stott, a British theological writer, who are simultaneously humanistic and Christian, it is inaccurate to call him an "evangelical Christian" in the sense of the term that describes the movement within American Christianity that took off in the American South during the Second Great Awakening, with its "distinctives" having only remote and cryptic connections to earlier movements in Christianity that has spread and mutated from there, as opposed to its generic meaning of someone who is a Christian and actively engages in the business of trying to convert others to the faith.

There is a case to be made that this narrow sense of Evangelical Christianity makes positive contributions to society and doesn't deserve the wholehearted distaste which Kristoff explains that the movement has worked hard to earn. But, attacking it from the point of figures like Stott, Wallis and Cizik, who are either not a part of that movement at all, even if religious people in that movement do read what they have to say at times, or who are on its fringes trying to reform it from its flaws from a position of underdog movement insurgents, is not a credible way to redeem this movement.

If one is to redeem (or at least understand the moral basis of) narrow sense Evangelical Christianity, one needs to look at the positive or at least culturally important contributions of core followers of the very same people, at that core of that movement, who generate such liberal outrage, not the critics at its fringe.

Evangelical Christianity does have upsides: their willingness to engage in prison ministries, their willingness to acknowledge that their communities are broken and need fixing, their willingness to include the poor and working class as a part of their community rather than objectifying them as outsiders, their commitment to trying to reform people, their ability to unify a Southern ethnic identity that doesn't show up on census forms in the face of a dominant Northern national elite culture, their ability to devote private sector charitable effort to addressing the problems of the Third World, and their commitment to the possibility of a hopeful future even in moments when individuals think that their lives have reached dead ends.

This movement is fundamentally reactionary, myopic, anti-intellectual and immoral. For this movement these are features, not flaws. This movement is also inherently and centrally willing to include and support those who are down on their luck if those people submit to their broader cultural agenda. The two sides of the movement's agenda are mutually reinforcing and inseparable parts of what it means to be an Evangelical Christian in the narrow sense of that term.

Their stubborn, fact-blind righteousness is part and parcel of their unwavering attitude of hopefulness and acceptance of the inevitability of divine providence. Their anti-intellectual orientation is part of what puts this religious movement in a comfort zone for those who are themselves ill educated. One can't unify a cohort of people who as a matter of core ethnic identity refuse to acknowledge the legitimacy of the North's victory in the Civil War if you are aren't reactionary.

Evangelical Christianity offers a port in the storm for losers of many shades and stripes that more mainstream Christianity does not. Mainstream Christianity is more open to letting a depressing (for the core constituency of Evangelical Christianity) reality in, mainstream Christianity accepts the authority of intellectuals who necessarily have profound cultural distance from working class flocks as their leaders, and mainstream Christianity is more insistent upon the importance of not sinning in the first place relativite to the importance of never ending forgiveness without regard to culpability than the average self-identified Evangelical Christian knows how to manage. In a world of ugly people, a taboo against mirrors can seem attractive; Evangelical Christianity offers such a world.

If liberals want to make inroads into the people who make up the core of the Evangelical Christian movement, which is closely identified with, although not 100% identical to, the core of the American political conservative movement exemplified in the Tea Party movement and core of the Republican party, it will not suffice to embrace and encourage people who self-identify as Evangelical Christians but operate from outside or at the fringes of that movement.

Instead, liberals have to offer an alternative that can provide an authentic core identity and belief system that works for people who are uneducated and regularly down on their luck who need abundant forgiveness for their psychological well being because they can't figure out how to keep from sinning on a regular basis. They need an alternative that can maintain an unrelenting campaign of calling attention to the failures in their community that need fixing without raising the hackles that outside criticism does, who keep trying even though there is no source of relief in sight. They need to provide people with a worldview that can give them hope in the face of a lack of possibility. They need to offer some filter that can allow these people to make sense of a world that confuses them because they have their feet planted firmly in the past. These people have deep spiritual needs and neither mainstream Christianity nor secular philosophy are doing a good job of serving their needs.

If liberals can solve that riddle to meet those needs, or can change the world in a way so that a critical mass of people no longer need these things, Evangelical Christianity will wither away. Until then, liberals are fighting fire with paper. Every now and then it can smoother a hot spot that is getting out of control, but their own efforts to fight it also fuel the fire.

I suspect that if an alternative is found, it is as likely as not to be something other than mainstream Christianity. For example, Americanized Islam came close to leaping into that role under the leadership of Malcolm X for African-Americans. Mormons, while in many respects a part of the Evangelical Christian movement, similarly offer a different enough community and theological model to offer a genuine alternative to the traditional Evangelical Christian model, even though they do not completely break from that mold. It would likewise be unsurprising to seem some sort of innovation along these lines emerge from the non-denominational megachurch movement. Or, it could be something entirely different. But, until an alternative comes along, Evangelical Christianity, as pernicious as it is, will have staying power because it addresses needs that other movements do not for tens of millions of Americans.

READ MORE - Evangelical Christianity's Ugly Side Is Inseparable From Its Virtues

Merit v. Money In College Attendance

At the University of Michigan, more entering freshmen in 2003 came from families earning at least $200,000 a year than came from the entire bottom half of the income distribution. At some private colleges, the numbers were even more extreme. . . . [A]t Amherst. . . 22 percent of students now receive federal Pell Grants (a rough approximation of how many are in the bottom half of the nation’s income distribution). In 2005, only 13 percent did. Over the same period, other elite colleges have also been doing more to recruit low- and middle-income students, and they have made some progress. . . . [But] a Georgetown University study of the class of 2010 at the country’s 193 most selective colleges. As entering freshmen, only 15 percent of students came from the bottom half of the income distribution. Sixty-seven percent came from the highest-earning fourth of the distribution. These statistics mean that on many campuses affluent students outnumber middle-class students. . . .

[M]any of the most capable low- and middle-income students attend community colleges or less selective four-year colleges close to their home. Doing so makes them less likely to graduate from college at all. . . only 44 percent of low-income high school seniors with high standardized test scores enroll in a four-year college, according to a Century Foundation report — compared with about 50 percent of high-income seniors who have average test scores. . . .

[T]op colleges gave no admissions advantage to low-income students, despite claims to the contrary. Children of alumni received an advantage. Minorities (except Asians) and athletes received an even bigger advantage. But all else equal, a low-income applicant was no more likely to get in than a high-income applicant with the same SAT score. . . .

The United States no longer leads the world in educational attainment, partly because so few low-income students — and surprisingly few middle-income students — graduate from four-year colleges.

From the New York Times.

Amherst's efforts (which increased financial aid and replaced loans with grants for working class and middle class students) and the fact that even low and middle income students with good grades and standardized test scores have greatly reduced college attendance suggest that the gap in selective college attendance and in college attendance generally is driven to a great extent by financial need, not just the fact that children of smart successful people tend themselves to be smarter than their peers on average.

College campuses would still have student bodies from families that are far more affluent than the population at large even in the absence of alumni preferences in admission and financial need barriers. But, the low rate at which low and medium income families who are academically strongest attend college makes clear that we do not have a meritocracy and are wasting much of our nation's precious academic potential.

These facts drive my inclination to favor heavy funding of scholarships that are based on a mix of financial need and merit, rather than across the board per student subsidies, as an approach for public support of higher education at the state level.

A large share of the benefit of state funding for higher education benefits families that are already very affluent and can afford high tuitions without support from state taxapayers. Also, another large share of state funding for higher education in the form of tuition subsidies is devoted to students whose weak academic preparation for college leaves them unlikely to succeed, and a very large share of these students either swiftly drop out, or have mediocre academic performance and learn little they didn't come into school knowing.

In contrast, working class and middle class students who have the academic ability to prosper in selective institutions of higher education are often pressured by short term financial pressures to forego educations that would help them prosper and improve their socio-economic status, and would help the state and the nation make better use of its available supply of human capital. The evidence that these students would have a high likelihood of graduating, have good academic performance while in school and acquire a lot of genuine increased knowledge in the process, while enhancing their life chances and economic productivity is overwhelming. The evidence that it is financial need that is the main barrier to higher education for these students, much of which is recited above, is also solid. The current system does not provide these students with the level of financial support necessary to be meritocratic.

One of the least painful ways to change this lack of meritocracy would be to concentrate funds currently handed out indiscriminately to lower in state tuition for all at public institutions of higher education to provide grant aid to students with strong academic ability and financial need, rather than using those scarce public funds less efficiency to subsidize students from high income families and students whose marginal academic performance and standardized test scores to date indicate that they are likely to benefit less from higher education.

For example, if subsidies were denied to in state students from the top 25% in affluence in the current student body and from students in the bottom 25% in academic ability (two groups with not all that much overlap in raw number terms), the per student state subsidy for the remaining students could be roughly doubled, greatly increasing the affordability of higher education for academically able students, with no change in overall higher education spending.

This change in policy would probably actually increase the number of degrees awarded by public institutions of higher education, because increased enrollment and graduation rates for academically able students with financial need would probably have more of an effect than the decline in the number of academically marginal students who still manage to graduate and in the number of affluent students who decide not to go to college due to the absence of a state subsidy.

Of course, more funding for higher education may still be necessary. But it may be easier to secure public support for this spending when it is clear that it is being spent only to help those students who have both financial need and strong academic ability, and hence is more likely to produce economic benefits for the society at large.

Also, rather than assuaging our collective consciences by believing that we are doing a favor to academically marginal high school graduates admitted to open enrollment college and community colleges with state subsidies knowing full well that they are very likely to drop out in a year or two, possibly with student loans to pay and no degree to help them pay for those loans, we need to look harder at what kinds of programs and assistance for these kids would be more likely to produce results for them, particularly for those students who aren't inclined to enter military service, which has historically been one of the main American institutions providing a structured start in life to kids who aren't college bound.

READ MORE - Merit v. Money In College Attendance

Jobs Situation Still Bad And Other Bad News

There are currently 130.738 million payroll jobs in the U.S. (as of March 2011). There were 130.781 million payroll jobs in January 2000. So that is over eleven years with no increase in total payroll jobs.

And the median household income in constant dollars was $49,777 in 2009. That is barely above the $49,309 in 1997, and below the $51,100 in 1998. . . . The aughts were a lost decade for most Americans. . . .

There are currently 7.25 million fewer payroll jobs than before the recession started in 2007, with 13.5 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.1 million have been unemployed for six months or more.

From here.

The availability of jobs and the real wages paid in jobs are the numbers that matter most to the vast majority of Americans. Housing values relative to mortgage debt, for which we also have a lost decade or worse, is one of the few other numbers that matters for the minority of Americans, but majority of middle class Americans, who own homes.

Beyond those numbers, investment and retirement and education account balances matter, but far less so, and those numbers didn't have a great decade either. And, after that we worry about how the real wages get spent. An increasing share of real wages is getting spent on health care and college tuitions, and that squeeze on family budgets in most cases more than offsets the fact that taxes are the lowest that they have been in sixty years (although they are certainly not the least complex to comply with in that time period) and that financial investments are starting to bounce back.

A longer term perspective on the last few decades is also in order.

The lot of the working class in America has been basically stagnant for the last four decades, even as the economy as a whole has seen substantial economic growth in that time period. Less educated workers have had regular periods of unemployment and stagnant real wages, their children have had less opportunity for socio-economic advancement than their parents did. Even socio-economic advancement through marriage has declined. And, the institution of marriage has suffered tremendously for working class Americans. Divorce rates have surged and marriage rates have dramatically declined for the working class without sufficiently compensating increased stability in non-marital intimate relationships. At first, the same thing seemed to happen for more educated couples, but the trend for them reversed they are now less likely to divorce and more likely to get married and have successful marriages than their parents.

In the last couple of decades, the stagnation that hit the working class first has worked its way up the social class ladder. Soon, low level white collar workers were as squeezed a blue collar workers. In last decade or so, even lower level managerial and professional workers, and college graduates with less elite credentials have failed to capture a significant share of the expanding economic pie whose fruits have grown more and more concentrated at the very, very top. Just before the financial crisis, this concentration of wealth and income reached levels not seen since the eve of the Great Depression. Despite initial optimism that the financial crisis would have a leveling effect that would counteract these excesses, later assessments have suggests that this hasn't happened to nearly the extent most people has expected.

The economic story of the last few decades had still been a story of great prosperity on average until late 2007, and remains a story of prosperity over time frames longer than a decade. But, it has not been a story of shared prosperity. As a whole, economic growth has continued to match trendlines, but broken down by social class, the vast majority of Americans our economy doesn't look like its thriving.

Worse yet, we don't really have any good economic theory to tell us why this is happening and how to fix it. Economists have been so fixated on macroeconomic productivity growth and political economy virtues or lack thereof of government involvement in the economy, that they have been content to simply throw changes in the distribution of wealth between social classes in the economy into a black box whose results are measured but mechanisms are ill understood.

Sociologists and some economists at the fringe of the profession have observed qualitatively that this seems to be related to the increased importance of knowledge or creativity in our economy, but most are a far cry from being able to tell a coherent story that explains why we don't build things anymore and what is making this knowledge and creativity important, and whether there is anything short of outright transfer payments that could lead to a better deal for those who are not part of an information elite.

The obvious hope would be to create a better trained workforce that can better meet our nation's needs. But, given our already highly educated by international standards workforce, and evidence trickling in that passing out more credentials isn't necessarily producing gains for those who receive them that are all that great in excess of sorting effects, it is hard to say that this extremely expensive strategy for leveling the playing field would actually work. It appears that one of the main reasons that our European competitors, at least, have a more level playing field is that they do have more generous tax and transfer payment methods for directly equalizing outcomes and forcing people to share their prosperity. Not all prosperous economies have deindustrialized to the extent that the United States has, but there isn't decisive evidence to indicate that manufacturing goods is a better strategy than providing services.

One of the narratives floating out there, called the "Great Stagnation" suggests that the problem is not temporary. Instead, it may be a new status quo, as technologically driven advancements in technology slow down because we know a greater share of everything that there is to know, and the people who can expand the pie with their knowlege has to be sweeter (and hence is harder to share with others) because the available pool of people who can make those kinds of contributions to the economy is shrinking.

We aren't a poor nation. We have a high per capita GDP. We have a highly educated work force that devotes intense effort to keeping our nation's economy productive. Sustained homelessness and health threatening hunger are still very rare by international standards. Crime is modest. We pay a public health price for failing to provide universal health care, but many people who are uninsured end up not needing health care that costs more than they can afford and can't secure with credit. Housing is more affordable right now than it has been in a long time, and an average person can afford a pretty impressive package of goods and services, particularly when you recognize that technology has been today's versions of what we used to buy better in many respects than it used to be. Unemployment is high, but doesn't seem to be continuing to surge out of control. Even if our level of material prosperity per capita didn't increase at all, we can afford a pretty decent life for all with only some pretty modest tweaking of the status quo. Part of the policy issue before us as a nation is how much we need to continue to focus on making an already large economic pie bigger and need to have never ending economic growth, and how much we need to accept that we are producing what we can and make better distributions of it from a social welfare perspective.

The lack of a real national agenda or plan for recovery would be terrifying in other countries, but, while it certainly doesn't help moral much, our political leaders have long ago given up almost entirely on attempting to craft one in favor of throwing themselves upon the mercies of the decentralized decision making methods of a market economy that nobody really understands as well as they would like to understand it.

READ MORE - Jobs Situation Still Bad And Other Bad News

Financial Risk and Insecurity

A few stray thoughts on risk.

1. One of the core organizing principles of bankruptcy law, securities law, the policy analysis of appropriate debt-equity levels in corporations, the regulation of gambling, Social Security policy, mandatory insurance regimes and more is the notion that generally speaking, people should only be putting at risk money that they can afford to lose.

For example, SEC private offering rules limit allow only "accredited investors" to invest significant sums of money in investments that are not subject to the disclosure regimes that applies to publicly held companies. Generally, qualification for this class of investments is some combination of wealth and sophitication, and criticism of the rules often argue that they are insufficient because they don't adequately protect the unsophisticated wealthy. But, part of the reason for a purely wealth based restriction on investments that pose potentially higher risks than the ordinary investment is the notion that the wealthy can afford to lose the money and go on in life, while widows, orphans and middle class families cannot.

2. One of the common ways to define the line between the rich and the merely upper middle class is that the rich don't have to work to meet their needs, and instead, can rely on their wealth to support themselves.

One can imagine a similar tack in defining other social classes. The poor are those who cannot support themselves from either their property or their labor. The working and middle and upper middle classes, together, can support themselves through their labor but need to work to support themselves, with the differences between those classes being mostly the level of comfort that they can afford themselves and the kind of work thath they do.

But, another way of thinking about social class in the middle range is in terms of security. How secure is one's job? Do you have adequate life insurance if you died? Do you have adequate disability insurance if you were disabled on a temporary or permanent basis? Do you have health insurance to allow you to receive medical treatment if you are sick or injured? Do you have adequate insurance to deal with a serious casualty to a car or a home or a tort lawsuit against you? Do you have adequate insurance to avoid ruin if you were sued for professional malpractice? Do you have sufficient savings or access to credit to defend yourself or a family member adequately in the event of a criminal prosecution? Could you take advantage of an opportunity to send a child to a good quality, expensive private school or college? How long could you afford to be unemployed before your life would fall apart? Could you economically weather a drug addition for you or your family and pay for treatment?

One of the reasons that the financial crisis crept up on us is that while a lot of people were able to maintain their lifestyles on a day to day basis, that the insecurity and fragility of their lifes increased.

There are a lot of people who are on the brink of disaster. A money without income would cause them to default on their credit cards, their lack of health insurance or inadequate health insurance means that they could afford to pay for the medical bills in a major illness or injury, they have no savings to prevent even a small financial misstep in revenue or expenses from leading to the loss of a home to foreclosure, eviction from a rental home, or repossession of a car.

A large share of these individuals get lucky and manage. They do get in enough money to pay the bills by happenstance and good luck and clever financial juggling. They don't get sick when they don't have health insurance. The avoid criminal prosecutions. They find a job swiftly after losing their old one before it all falls apart.

One can have a modest income and not be insecure. A lot of low ranking civil servants (e.g. postal workers, school janitors, parking enforcement agents, pre-school teachers, and library assistants), enlisted soldiers, military veterans, union employees (e.g. many grocery workers), clergy and simply thrifty prudent people who have never had very high incomes fit in this category, for example. This class of the low income but not insecure also includes a lot of bohemian trust funders often toiling away in "glamorous" but low paying positions - as ballet dancers, artists, poets, performance artists, non-profit professionals, eternal graduate students and post-docs, and lower tier politicians.

There are also reasonably high income earners who are fairly insecure. Many athletes and entertainers can be expected to have brief careers that produce high but intermittent incomes. Properous prostitutes and drug dealers are in much the same situation. Some farmers and fishers and foresters and miners make good incomes when commodity prices are high and yields are good, but have the thin safety net of the self-employed and if they have significant leverage may risk losing it all in less good times. Personal injury lawyers can make a lot of money in one case and then have long dry spells. Also prone to bursts of wealth between slow periods are commission salespeople and employees of high end establishments who are compensated mostly with tips. There is a significant shift from having enterprises meet their needs from employees to having them meet their needs from a disorganized safety-net free class of one job at a time independent contractors that has increasingly moved up their income ladder.

A step down from those on the brink of disaster is the growing class of people who aren't entirely destitute but also can no longer afford to "play by the rules." They are in default on one or more debts. They didn't pay their car registration or the taxes they owed. Their mortgage is upside down in a recourse mortgage state and they have no realistic hope of selling their home in anything other than a short sale for the foreseeable future. They are missing tuition payments at private schools or colleges. The numbers over at Calculated Risk every month suggest that the percentage of people in this situation is soaring. Rather than being chronically poor, they are the formerly middle class and working class but are in the midst of the long fall without a safety net that American society makes possible

There has always been a class of people who are prone to intermittent unemployment, but this class of people has grown, and the class of people who are intermittently underemployed has has grown invisibly but dramatically: skilled tradesmen who become day laborers in bad times; teachers who become substitute teachers and retail workers in bad times; farmers who do handyman work when crop revenues are modest and more skilled construction work isn't available in the off season; construction business owners and engineers who do ordinary construction work rather than managing others when the industry is weak; CPAs who do simple book keeping when more sophisticated employment is not available.

Public policy has a few nods to these classes of people - the right to cure a mortgage or rent payment that is in default, the Chapter 13 bankruptcy, COBRA, the right to emergency stabilizing treatment at emergency rooms, credit counseling agencies, offers in compromise and installment payment tax plans, personal recognizance bonds and probation sentences for criminal defendants, and unemployment insurance, for example, but the effort isn't very comprehensive or thoughtful.

READ MORE - Financial Risk and Insecurity

Beyond Heritable IQ in Socioeconomic Success

IQ is one of the stronger predictors of socio-economic success in life, and success on a wide variety of other measures, and a lot of a person's IQ is heritable.

Personality, IQ and Success

In a result, largely contrary to the claims of Malcolm Gladwell in his book, "Outliers" in which he claimed that the famous Terman study which looked at life outcomes for a large cohort of California students with an  IQ of 135 or higher on the Stanford-Binet in 1921-1922, over their entire lifetimes, a recent analysis of that data has shown that IQ is a significant predictor socio-economic success at all levels within this elite subgroup.  Male teman study members with IQs in the bottom of the range for inclusion, IQ 135 (roughly the 99th percentile), had lifetime earnings (in 2008 dollars from ages 18 to 75) of about $2,350,000.  Those in the top 10% of the study group (roughly the 99.9th percentile), had lifetime earnings of about $2,700,000, a statistically significant 15% difference of $350,000 that was stronger at the end of their careers than at the beginning.  Averaged over 40 years, the average annual income of those at the bottom of the IQ range was $58,750 (in 2008 dollars) and the average annual income of those at the top of the IQ range was $67,500.

Thus, there were lifetime economic benefits to being a genius, rather than merely "gifted" but the benefits weren't huge either.

More interestingly, the study also had data on the "Big Five" personality traits (conscientiousness, extraversion, agreeableness, openness and neuroticism) of the the study participants, the most widely uses psychological description of general temperament.  Wikipedia notes regarding the Big Five that:

A number of meta-analyses have confirmed the predictive value of the Big Five across a wide range of behaviors. Saulsman and Page examined the relationships between the Big Five personality dimensions and each of the 10 personality disorder categories in the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV). Across 15 independent samples, the researchers found that each disorder displayed a unique and predictable five-factor profile. The most prominent and consistent personality predictors underlying the disorders were positive associations with Neuroticism and negative associations with Agreeableness.

In the area of job performance, Barrick and Mount reviewed 117 studies utilizing 162 samples with 23,994 participants. They found that conscientiousness showed consistent relations with all performance criteria for all occupational groups. Extraversion was a valid predictor for occupations involving social interaction (e.g. management and sales). Furthermore, extraversion and openness to experience were valid predictors of training proficiency criteria.

The personality impacts of Big Five personality traits in the general population were largely confirmed in high IQ populations.  Moreover, Big Five personality traits are independent of IQ in high IQ populations:

[E]ven though the Terman sample has a restricted range of IQ, there is substantial variation in personality. In fact, the Terman men do not differ from the general population in terms of personality.

Evolutionary pressures appear to quite consistently favor higher IQ in the long run, but some models suggest that evolutionary pressures on personality traits favor an ecological mix of personality types rather than a single personality, so no one personality trait has translated into "fitness" in the long run (of course, if it had, we wouldn't notice it, since it would mathematically fold into IQ by virtue of the way that IQ is constructed by psychologists).

Big Five traits are heritable, but not as strongly as IQ, although some of the weaker association may be a product of a less refined measurement instrument, as the Big Five personality traits have been consensus personality measurements only since the early 1980s, while the concepts of "g" and IQ are among the oldest in psychology, which has allowed more time to refine the measurement of the concept.

Of four recent twin studies, the mean estimated broad heritabilities on self-report measures for the Big Five traits were as follows:

Openness: 57%

Conscientiousness: 49%

Extraversion: 54%

Agreeableness: 42%

Neuroticism: 48% . . .

Many studies of longitudinal data, which correlate people's test scores over time, and cross-sectional data, which compare personality levels across different age groups, show a high degree of stability in personality traits during adulthood. More recent research and meta-analyses of previous studies, however, indicate that change occurs in all five traits at various points in the lifespan. The new research shows evidence for a maturation effect. On average, levels of Agreeableness and Conscientiousness typically increase with time, whereas Extraversion, Neuroticism, and Openness tend to decrease.  . . .

Cross-cultural research from 26 nations (N = 23,031 subjects) and again in 55 nations (N = 17,637 subjects) has shown a universal pattern of sex differences on responses to the Big Five Inventory. Women consistently report higher Neuroticism and Agreeableness, and men often report higher Extraversion and Conscientiousness. Sex differences in personality traits are largest in prosperous, healthy, and egalitarian cultures in which women have more opportunities that are equal to those of men. Both men and women tend to grow more extraverted and conscientious and less neurotic and agreeable as cultures grow more prosperous and egalitarian, but the effect is stronger for men.

Conscientiousness overlaps with ADD inattentive symptoms, and both of these traits are also correlated with digit ratio which is an easy to measure physical trait associated with natal testosterone level exposures.  Specifically: "More masculinized finger-length ratios show associations with ADHD symptoms, possibly acting through the trait mechanism of conscientiousness."  This is in line with the cross-cultural gender discrepencies observed in onscientiousness.

The second digit to fourth digit finger ration has been shown to be a reliable indicator of testosterone exposure in utero. If your fourth finger (your ring finger) is longer than your second finger (the one next to your thumb) you had a high exposure to testosterone when your mother was pregnant with you. This ratio has also been associated with genital size, aggression, ADHD and now conscientiousness.

Thus, a significant cause of conscientious personality and ADHD is congenital, but not hereditary.  Digit ratio and IQ over 130 are also associated.


Conscientiousness and neuroticism are both strongly correlated with ADHD inattentive type, in that order, and agreeableness, neuroticism, and conscientiousness are strongly correlated with ADHD hyperactive type in that order).  ADHD, with the strength of the relationship being strongest between conscientiousness and ADD inattentive type diagnosis (r=-0.59), is the strongest of the Big Five/ADHD correlations.

The Big Five personality traits aren't perfectly independent of each other, but they are sufficiently independent of each other than a four factor model captures significantly less of the variation in personality from person to person, and the Big Five measure was created with the express purpose of identifying maximally independent factors.

Four of the Big Five personality traits had a measurable impact on lifetime earning of men with IQs of 135 of more.  Neuroticism, surprisingly, was completely unrelated to lifetime income.  In 2008 dollar terms, comparing the lowest decile to the highest decile in each of the other four traits, the lifetime impact of being high in each of the traits was approximately as follows (reading from a line chart):

Conscientiousness:  $800,000.
Extraversion: $650,000
Agreeableness: -$350,000
Openness: -150,000

Each of these traits showed a more or less linear relationship between decile in a personality trait and its economic impact.

Thus, an extremely conscientious, extroverted, disagreeable, and close minded individual with an IQ of 135 of more would earn an average of $1,950,000 more than an extremely non-conscientious, introverted, agreeable and open minded individual.  The combined effects of these four personality traits was about five and a half times as great as differences in IQ between the 99th and 99.9th percentile.

Even the difference between being in the sixth and tenth decile for conscientiousness has as much of an economic impact as the difference between being in the 99th and 99.9th percentile for IQ.

These four out of five personality factors and IQ influenced both the amount of education that a person received and the amount that a person earned independent of education:

Our results highlight the importance of personality and intelligence on our outcome variables. We find that personality traits similar to the Big Five personality traits are significant factors that help determine educational attainment and lifetime earnings. Even holding the level of education constant, measures of personality traits have significant effects on earnings. Similarly, IQ is rewarded in the labor market, independently of education. Most of the effect of personality and IQ on life-time earnings arise late in life, during the prime working years.

This adds to a growing literature on traits other than IQ that are important to lifetime successes.

Grit and Success

Another recent study looked at "grit" as a factor in spelling bee success.  The famous rule of thumb, also discussed by Gladwell, is that it take "10,000 hours of intense training (plus or minus a few thousand hours)" to reach the pinnacle of expertise in a pursuit.  But, Gladwell glosses over the question of what traits are necessary to be able to stick to an intense training regime for that quantity of time. 

The spelling bee study first found that the key to performance in spelling bees was the amount of deliberate practice that a kid put into it, which "involved studying and memorizing words while alone, often on note cards" as opposed to alternatives like being quizzed by others or leisure reading:

With each year of additional preparation, spellers devoted an increasing proportion of their preparation time to deliberate practice, despite rating the experience of such activities as more effortful and less enjoyable than the alternative preparation activities.

But:

Why were some kids better at drilling themselves with note cards? What explained this variation in hours devoted to deliberate practice? After analyzing the data, Duckworth discovered the importance of a psychological trait known as grit. In previous papers, Duckworth has demonstrated that grit can be reliably measured with a short survey that measures consistency of passions (e.g., ‘‘I have been obsessed with a certain idea or project for a short time but later lost interest’’) and consistency of effort (e.g., ‘‘Setbacks don’t discourage me’’) over time using a 5-point scale. Not surprisingly, those with grit are more single-minded about their goals – they tend to get obsessed with certain activities – and also more likely to persist in the face of struggle and failure. . . . Here are the scientists: "Grittier spellers engaged in deliberate practice more so than their less gritty counterparts, and hours of deliberate practice fully mediated the prospective association between grit and spelling performance."

In other words, practice is what produces results, but "grit" (a.k.a. "tenaciousness" a.k.a.  “perseverance and passion for long-term goals.”) is the key psychological trait that determines how much someone practices.  And, like the Big Five personality traits, grit is largely unrelated to intelligence:  "Grit was found to be either orthogonal to or slightly inversely correlated with intelligence."  It is not independent of the Big Five personality traits, however, although it doesn't completely overlap:

Grit was strongly correlated with conscientiousness (r = .77, p <.001 and r = .73, p <.001) (2009). While Grit is related to conscientiousness measures, it also differs from conscientiousness in important ways. For example, while both Grit and conscientiousness are often associated with short term accomplishments, Grit is also associated with longer term and multi-year goals. This long-term persistence and dependability are important aspects that make Grit unique from conscientiousness.

Grit has been validated in settings other than spelling bees.

Grit provided incremental predictive validity . . . above and beyond the Big 5 personality traits; . . . higher levels of Grit were more highly associated with cumulative grade point average (GPA) in an Ivy league sample when compared to those with lower Grit levels (r = .25, p<.01); [and] that Grit predicted retention after their first summer in two classes of cadets at the United States Military Academy[.] . . . Grit predicts beyond the typical and unrelated cognitive construct of IQ and can account for variance over and above what is observed in the Big 5 personality construct of conscientiousness.

Grit also predicts the performance of Teach For America teachers in "under resourced public schools.", as does life satisfaction prior to entering the program.

A refined version of the test that Duckworth and Quinn used in the spelling bee study from 2009, with four fewer items and a different means of using answers to produce a scaled score strengthened  "the positive relationships between Grit and educational attainment, GPA, retention in college, and success in a national spelling bee competition."

As Jonah Leher notes in a blog post as Wired, one take away lesson from these studies is that there are personality traits that are largely unrelated to IQ which are important to socio-economic sucess other than IQ, which Steve Hsu sums as as the "W" factor, and which we are increasingly starting to be able to describe with psychological testing; like IQ, a meaningful part of these traits are genetic, congenital, or arise early in life, although there isn't good research on the relatively recently well defined trait "grit."

The other is a bit more subtle and I'll reproduce his observation in his words:

[T]here’s a major contradiction between how we measure talent and the causes of talent. In general, we measure talent using tests of maximal performance.

Think, for instance, of the NFL Combine: Players perform in short bursts (40 yard dash, short IQ test, catching drills, etc.) under conditions of high motivation. The purpose of the event is to see what players are capable of, to determine the scope of their potential. The problem with these tests, however, is that the real world doesn’t resemble the NFL Combine.

Instead, success in the real world depends on sustained performance, on being able to work hard at practice, and spend the weekend studying the playbook, and reviewing hours of game tape. Those are all versions of deliberate practice, and our ability to engage in such useful exercises largely depends on levels of grit.

The problem, of course, is that grit can’t be measured in a single afternoon on a single field. (By definition, it’s a metric of personality that involves long periods of time.)

The end result is that our flawed beliefs about talent have led to flawed tests of talent. Perhaps that explains why there is no “consistent statistical relationship between combine tests and professional football performance.” We need  . . . a test that measures how likely people are to show up, not just how they perform once there.

Mostly, we measure traits like "grit" or "W" indirectly, by looking at how well people perform academically or otherwise, after controlling for traits like IQ.

Poverty and IQ

So, we know that IQ is important to socio-economic success, and that there are independent contributions from at least a handful of personality traits that are independent of IQ.

We also know that IQ is related to poverty in a manner more complex than a Bell Curve model with highly hereditary IQ in which the stupid tend to be both poor and prone to have low IQ children, while the smart tend t obe both rich and prone to have high IQ children is involved.  This is because the measured heritability of IQ is lower, while the importance of environmental impacts is higher, in the poor than in the well to do.

Also, a large subset of mental retardation cases are not genetic and instead depended on enviromental factors like fetal alcohol syndrome, lead exposure and inadequate pre-natal nutrition, and labor and delivery medical care.  While high IQ appears to be rooted in a large number of small, cumulative factors, low IQ frequently has a single dominant cause that is different in kind from the causes of IQ levels within the normal range.  Alleviation of these mental retardation drivers is an important factor in the Flynn Effect (secular long term trends towards higher IQ in the same population from generation to generation over time).

Put another way, you are born with a maximum potential IQ, but seriously adverse environmental conditions, mostly associated with poverty, can prevent you from reaching that potential.  These environmental effects appear to be particularly strong during pregnancy and in the first few years of life. 

With that key observation in mind, the relationship between American performance on international tests of academic ability and poverty can be put in context in the nature v. nuture debate:

[T]he brutal reality is that U.S. schools that contain more than 25% poor children do abysmally--they are literally pulling the scores down:

If we subdivide the U.S. data in a very obvious way, we observe something, well, rather obvious:
But data available now tells us that poverty, as usual, had a huge impact on PISA reading test scores for American students. American students in schools with less than 10% of students on free and reduced lunch averaged 551, higher than the overall average of any OECD country. Those in schools with 10 to 25% of students qualifying for free and reduced lunch averaged 527, which was behind only Korea and Finland.

In contrast, American students in schools with 75% of more of children in poverty averaged 446, second to last among the 34 OECD countries.

We might not be living in a nation where one-third of a nation is ill-housed, ill-clad, ill-nourished. It's only one in five, give or take. . . . Until we get serious about reducing poverty, as well as breaking up large geographic concentrations of poverty, our average test scores will be poor.

This poverty effect is not simply a product of poor students having lower maximum potential IQ at birth because their parents are below average in IQ and poor as a result.  The conditions of poverty prevent thse children from achieving their potential.

You don't have to go far afield to see this effect, even within different schools that are mostly poor in the same district.  A child identified as "gifted" who attends North High School in the Denver Public Schools is far more likely to go to college and not require remedial work than a child identified as "gifted" who attends West High School, with an even more impoverished student body, a mile or two away.

In a nutshell

IQ,  which has a strong hereditary component in the absence of adverse environmental factors, has an impact on socio-economic success at all levels, but among the smartest, personality factors, which can mostly be summed up in a quite small number of measures like extraversion, conscientiousness, grit, agreeableness, and openness, are even more important with the high IQ population.  These personality traits also have some hereditary component, although probably significantly less than for IQ.  Envirommental conditions strongly assocaited with poverty, particularly during pregnancy and early childhood, prevents children from reaching their genetic IQ potential and also has a measurable impact (generally negative) on personality traits associated with socio-economic success.

Implications

This has several implications of importance:

1.  If we want to measure likelihood of success most accurately in a wide range of academic and occupational fields, a multi-dimension measure that captures both IQ and "W" factors is necessary. 

2.  While many "g" intensive activities that are proxies of IQ have been identified, less systematic work has been done to identify "W" intensive activites, like spelling bees, that are proxies for factors like "grit" and can be used to identify children who excel in these non-IQ dependent traits.

3. We should also devote research to ascertaining which occupational and academic pursuits are more or less "W" heavy, and whether there are pursuits like math and physics in the IQ demain within academics, where there appear to be theshold effects, i.e. where a minimum level of certain "W" factors are a minimum for real success, rather than making a linear contribution to outcomes.  Does one need a minimum level of "W" factors, for example, to make it as a special forces soldier or a medical doctor or an accomplished musician?  Similarly, are there occupational or academic pursuits to which individuals who are high in IQ but low in W factors, or high in W factors but low in IQ, are likely to be best suited?

4.  Much but not all socio-economic benefits of both IQ and W factors are mediated through practice and educational opportunities that must be available for people to take full advantage of what these traits offer.  Identifying IQ and W rich individuals is a beginning, not an end point in developing human potential.

5.  Research into the existent to which "W" factors are malleable and the environmental impacts that influence these factors is worthwhile because research on this for IQ has been exhaustive, but research for other factors has not been, because W factors as important to societal success as IQ, and because W factors appear to be less strong hereditary than IQ.  Indentification of enviromental factors that enhance "W" factors should be a priority for researchers.  What parenting and educational approaches best foster the non-environmental components of "W" factors and to a lesser extent IQ. 

6.  Long term success in activities from probation and parole to high school retention to college retention to adherence of mental health medications may be strongly related to W factors that vary from person to person.  This makes these factors attractive as components of validated statistical prediction tools to determine what management approach should be supervising people in these situations.  Individuals who have low conscientiousness or little grit may require more intensive supervision than those who lack it.

7.  The single most promising way to improve aggregate IQ and socio-economic performance in American society is to identify and address ways that poverty inhibits them.  Particularly attention should be devoted to reducing hardship and improving medical care for pregnant women and young children.  Another area where there is an already identified problem that can be addressed is to improve the quality of pre-college educational opportunities, college counseling and collegiate financial aid for children with established strong academic ability from less affluent families.

8.  To the extent that we can psychometric for selected "W" factors that are at least as good as those for IQ, there should be an active and open ended inquiry into what kind of patterns are seen in the residuals of performance in these combined measures.  This inquiry is useful even if the residual factors turn out to be matters such as pure luck or cohort timing that demonstrate that psychological factors related to socio-economic success have been exhausted.

READ MORE - Beyond Heritable IQ in Socioeconomic Success

Childhood Psychological Tendencies Persistent

Democratic socialists, including those in Britain, are much better at conducting very large scale, multi-purpose longitudinal studies than Americans, and those studies are starting to bear fruit. The British National Child Development Study tracks 17,634 children born in March 1958 for fifty years, checking in on the subject's progress at nine regular intervals from birth to the present and gathering detailed and accurate informaton each time from multiple sources in multiple institutions. What did they find?

In this article we assess and compare long-term adult socioeconomic status impacts from having experienced psychological and physical health problems in childhood. . . . Large effects are found due to childhood psychological problems on the ability of affected children to work and earn as adults and on intergenerational and within-generation social mobility. Adult family incomes are reduced by 28% by age 50, with sustained impacts on labor supply, marriage stability, and the conscientiousness and agreeableness components of the “Big Five” personality traits. Effects of psychological health disorders during childhood are far more important over a lifetime than physical health problems.

From Alissa Goodman, Robert Joyce, and James P. Smith, "The long shadow cast by childhood physical and mental problems on adult life", PNSA 2010.

The abstract poses the question as one of a particular childhood "problem" having a long term effect, but the results are equally consistent with the notion that psychological health has a large congential component, with much of the rest of the environmental component been based on the quality of one's early childhood environment, rather than later environment. In this view, the "problems" that a child experiences are simply manifestations of who a child is that persist throughout life rather than being the cause of later in life difficulties. In our mental health and IQ focused world, in which capacity to labor physically is largely unimportant socio-economically, it also isn't surprising that fitness that is physical, or the lack of that fitness is comparatively unimportant.

Alas, the early childhood window may be surprisingly narrow, and social class effects tend to be much more powerful than instructional effects. For example, according to another very large longitudinal study (n=13,776), the beneficial effects of full day kindergarten programs relative to partial day kindergarten programs in low income children tend to vanish by the third grade:

[T]he study found that the reading and math skills of children in full-day kindergarten grew faster from the fall to the spring of their kindergarten year, compared to the academic skills of children in part-day kindergarten.

However, the study also found that the full-day kindergarteners' gains in reading and math did not last far beyond the kindergarten year. In fact, from the spring of their kindergarten year through fifth grade, the academic skills of children in part-day kindergarten grew faster than those of children in full-day kindergarten, with the advantage of full-day versus part-day programs fading by the spring of third grade. The fade-out can be explained, in part, by the fact that the children in part-day kindergarten were less poor and had more stimulating home environments than those in full-day programs[.]

Social class linked intellectual achievement gaps are already great at age two.

Implications

The good news, for the parents of older children, I suppose, is that whatever good or bad your parenting has had on their lives, the older your children get, the less the quality of your parenting seems to matter. So, the pressure isn't as intense. A child's academic progress and character as a late tween is immensely predictive of the rest of the course of that child's life.

Then again, this may simply be a product of the fact that whatever parenting and educational quality was present early on continues to be present and having the same effect, with interruptions of these patterns being too rare to be statistically significant. Unless you are comparing kids who experience late childhood misfortune against their otherwise equal pre-misfortunte peers, you can really accurately measure the impact of those misfortunes on a child's life chances.

On the other hand, these studies are really terribly discouraging for those whose job it is to try to get people on track in life once their early childhood years have passed. The school system, for example, frequently becomes involved in a child's life only starting in kindergarten at age five or six years old, and the second study seems to suggest that it is already extremely hard to help kids who are developmentally behind at that point catch up to their more academically ready peers.

Needless to say, if your job is to turn around the lives of kids who have already started high school, fifteen years of accumulated inertia is just that much harder to reverse. If your job is to turn around the lives of adult prison inmates, the burden you must overcome is surely even more profoundly difficult to surmount.

As previous posts at this blog have noted, you may be born with a gene which is a powerful predicter of your capacity to sustain a long term marriage, and people who commit violent crimes as adults overwhelmingly are already continuing to have discipline issues that their peers have grown out of by the time that they are in elementary school: "it is extremely unlikely that an adolescent who has not been highly physically aggressive in the past will suddenly manifest significant problems with physical aggression." Such seemingly learned and social traits as succeptibility to bullying and one's likelihood of being a teenaged crime victim likewise show powerful genetic predispositions. The non-IQ factors that play an important part in life success seem to manifest just as early in life as academic ability does: Your ability to defer gratification at age four turns out to be a powerful discriminator for your life success a decade and a half later. Children likely to grow up to be psychopaths already start acting differently at age three (also here). A group of three non-IQ related genes can account to up to a 0.5 point difference in your GPA on top of any IQ effect.

We may live in the post-nature v. nuture synthesis of genes x enviroment, but the more we know, the more predictable our lives seem to be. For us, like characters in Greek tragedies, it seems that knowing our fates offers us surprisingly little help in changing our fates. Our genes are seemingly immutable, and most mental health genetic conditions are incurable, even if they are treatable in some cases. Many psychological predispositions have no established treatment. Even if you know you have a gene that makes you likely to have short lived relationships, there is no drug you can take to fix that and no solidly evidence based therapy that will solve your predisposition. Gene therapy hasn't reached that point yet, and given the implications it would have for personal identity and neurodiversity in society as a whole, perhaps this is a good thing.

Our enviroments, while theoretically mutable, aren't easy to change. And they seem to matter. People in the top fifth of the income distribution are twenty-eight times as likely to attend a selective college as those in the bottom fifth of the income distribution, for example. We don't choose our parents, and it seems as if those of us who are raised by someone other than our parents are usually worse off in the bargain - although perhaps starting off in a spot like that leaves one off poorly even with great improvement. And, of course, unlike J.K. Rowling or Eminem, most of us who find ourselves in poverty don't readily emerge from it to great riches by virtue of our intellectual talents. Parents who know that their poverty and lack of education is dragging down their children have little capacity to do anything about it. Even the heart wrenching option once available of sending tween or teen children into domestic service for a more prosperous family, or a scholarship funded tenure at a boarding school, in hopes that some of the benefits of that social class will rub off on them has largely vanished as options. Assortive marriage trends are reducing the availability of marriage as a means of class advancement, and American social class lines are deeper than those in contemporary Europe or earlier eras of American history. Just about the only thing a parent can do to improve the environment that the parent provides his or her children is to transform him or herself, which is a profoundly difficult matter.

Anecdotal evidence suggests that people do indeed change sometimes. But, the overwhelming weight of the statistics and studies tell us that this is the exception and not the norm, and becomes ever more exceptional as we get older. Kids who are well behind grade level in reading in the third grade are almost certainly not going to go to Harvard, are exceedingly unlikely to go to medical school or law school, and will have to struggle mightily and have considerable good fortune to earn a college degree of any kind. Kids who are perfect angels in fifth grade are exceedingly unlikely to have criminal justice problems or violence issues in the remainder of their lives unless they have a family history of a late manifesting mental health condition like bipolar disorder, or schizophrenia, or substance abuse, or experience a brain injury, or sustain PTSD.

I don't want the world to be this way. I'm a liberal. I believe in progress and opportunity and social mobility. I value education. Environment does matter, especially for the less well off, even if they can't change that environment themselves.

But, one can't simply ignore what study after study after study tells you either. One can look for loopholes and exceptions and ways to beat the system. There clearly are some and they should be leveraged for all that they are worth. The more I read these studies, the more that I am forced to conclude that policies designed to secure social justice have to focus more on developing meaningful productive paths for the people who we have in our society, and less on trying to transform people into something that they are not and cannot reasonably aspire to become -- especially for older youths and adults for whom the die is more firmly cast.

READ MORE - Childhood Psychological Tendencies Persistent

Class, Culture, Toilets and Time

I heard two recent stories about toilets in Asia in the last twenty-four hours.

HADENYA, Japan — The colossal wave that swept away this tiny fishing hamlet also washed out nearby bridges, phone lines and cellphone service, leaving survivors shivering and dazed and completely cut off at a hilltop community center. . . . With no time to mourn for their missing loved ones, they were immediately thrust into the struggle to stay alive in the frigid winter cold, amid a hushed, apocalyptic landscape of wrecked homes, crushed vehicles and stranded boats. They had scant food and fuel and no news from the outside world — not even the scope of the devastation.

On Wednesday, after the Japanese military finally reached them for the first time since the tsunami struck 12 days ago, by erecting makeshift bridges and cutting roads through the debris, they told a remarkable tale of survival that drew uniquely on the tight bonds of their once-tidy village, having quickly reorganized themselves roughly along the lines of their original community: choosing leaders, assigning tasks and helping the young and the weak. . . .

Almost as soon as the waters receded, those rescued here said, they began dividing tasks along gender lines, with women boiling water and preparing food, while men went scavenging for firewood and gasoline. Within days, they said, they had re-established a complex community, with a hierarchy and division of labor, in which members were assigned daily tasks. . . .

Refugee centers like this one in Hadenya exhibit a proud cooperative spirit, and also a keen desire to maintain Japan’s tidy perfectionism. Along the hallways, boxes of supplies lie stacked in orderly rows. The toilets are immaculate, with cups and soap neatly lined up. At the entrance, sheets of paper list names and assigned tasks for the day, like chopping firewood, carrying supplies and cooking.

From here.

How can you not admire a society that is organized enough to keep its toilets immaculate and its people well organized, even in the most dire circumstances?

Yesterday, I heard a story on the radio about the state of rail infrastructure in India (probably NPR or the BBC although I can't find a link to the story), where construction surges ahead in places like Mumbai, while the existing infrastructure is aging and underfunded. Particularly striking was an account of a train called the "Super" which was anything but. It's toilets, typical of passenger rail in India, were noxious. As another recent story on the subject sums it up:

For most visitors, rail travel in India is an indispensable part of any holiday, although an ability to overlook the often filthy toilets and deal with basic comfort and crowded carriages is required.

India has no shortage of cheap labor. Indeed, it has a government program that guarantees every person in India who shows up wanting to work a minimum wage job a certain number of days per year, usually on infrastructure projects. It also has trains full of people who could volunteer to do the work if organized properly. But, it doesn't. It has nausea inducing cesspools used only by the most desperate instead that make life miserable for train passengers and present a poor image of the country to every traveler domestic and foreign.

Meanwhile, Japan manages to keep its toilets pristine, even an isolated village devastated by a 9.0 magnitude earthquake and a tsunami that hasn't had contact with the outside world for a week and a half.

It is hard to chalk this difference to religion. Both Hindu and Islamic religious precepts give considerable attention to ritual purity and cleanliness; at least as much as the Shinto, Buddhist and Confucian syncretism found in Japan. Nor can one look to differences in climate - if anything, toilet cleanliness is more important from a public health perspective in sultry India than it is in frigid Northern Japan. Nor, must toilets on conveyances necessarily be putrid. Amtrak and most commercial airlines manage to have at least marginally clean toilets most of the time. Back in the era when trains were a leading means of intercity transportation in the United States, toilets on trains were cleaner than they are on Amtrak today.

Instead, it is a product of culture, and perhaps, in a not unrelated way, of economic development. Japanese communities place a premium on having decently clean toilets and are willing and able to organize themselves to secure them. India's rail culture continually drifts on the edge of mayhem and chaos, and the communities that use and manage it lack the will to decide that nasty toilets on trains don't have to be tolerated.

It isn't that South Asians don't prefer clean toilets to dirty ones. An ability to provide indoor plumbing and running water are now central to a young man's hopes of securing a good marriage match in India these days, very much as they were in the Reconstruction Era American South. But, for whatever reason, today's India is having trouble organizing itself as a society to secure this desirable thing.

American culture is somewhere in between. There are places - upper floors of office buildings, university classroom buildings, McDonald's restaurants, airports, the Cherry Creek Mall in Denver, and country clubs, where toilets are routinely tidy. There are other places - small rural gas stations, the Burger King restaurant at Cherry Creek North in Denver, public parks, the first floor of inner city libraries, outhouses at construction sites, and bus stations, where nasty bathrooms are the norm.

In America, toilet cleanliness is a pretty reliable social class marker. The higher the social class of the people who usually use it, the cleaner they tend to be, although this is also strongly a function in the institutional culture of the toilet operator. Toilet cleanliness is also something that is typically greater in private settings than in public ones in the United States, although there isn't a firm general rule.

There are other fascinating things one can learn from toilet culture as well. Americans, despite their strong ideological commitment to market approaches to economics, very rarely charge directly for using a toilet, although many establishments try to limit them to customers only, especially in areas with large numbers of transients. The decidedly socialist leaning French, by comparison, routinely charge a small fee to use a toilet, or at least expect users to tip an attendant. French fee for service toilets tend to be quite clean.

Toilets are interesting as a cultural indicator because they are impossible not to observe if you spend any amount of time someplace, because it is a universal indicator since every society has to have some way of handling the issue, and because it is pretty much impossible to hide their condition.

To the extent that toilet conditions reflect some version of economic development and social class, how "civilized" a culture is to use an out of fashion term and way of thinking, and there seems to be reason to think that this is something of a general trend, one also has to ask how much this is an effect of affluence, and how much it is a result of some attitude about how communal affairs are managed that gives rise to affluence. Are clean toilets a result of a shared high value afforded to a tidy and well ordered public sphere? Of shared social norms? Of minimal civic obligation? And, these these same values translate into affluence in the economy?

People like Mustafa Kemal Atatürk, the founder of the modern Turkish State, were convinced that this kind of thing was crucial to economic development. His agenda for reform included not just changes to the legal system and political system, but such cultural level reforms as the adoption of a national, Western style dress code designed to root out social and religious markers of the Ottoman era, despite the lack of an obvious connection between wearing suits and ties and conducting the affairs of a modern society. After all, as a former employer of mine enjoyed observing, the British conquered the world in shorts. But, it also seems that there really is something cultural that has to transform in the course of economic development.

One of the fascinating examples comes from British history in the early Industrial Era, one of the first places in the world anywhere that was organized socially and technologically on an industrial basis (continental Europe followed later, often heavily driven by government action as opposed to private investment). At that time and place was a cultural upheaval that included a greatly increased attention to punctuality and uniform time measurements. Clock towers went up all over England to keep communities synchronized. Many farm workers in the first waves converting to the industrial regime had great difficulty getting used to ideas like showing up on time and getting paid by the hour. While not many economists study international toilet cleanliness levels, there is an entire subfield of studies on the link between punctuality and time consciousness and economic development (see e.g. here and here and here and here and here and here and here). Economists study how fast people walk, how fast people talk, how timely trains are, and more. The aphorism about the Italian fascists is that at least they managed to get the trains to run on time. Standardized time zones have their origins in the efforts of train operators to coordinate their time tables.

Certainly, suits and ties are any more necessary to economic development than kimonos. Likewise, toilet cleanliness is not a cause of the rise and fall of great empires. But, one doesn't have to believe such absurdities to conclude that economic development and cultural transformation are inextricably intertwined, and that the development of some set of social virtues is as a critical a technology as the railroad or the internal combustion engine to attaining the economic scale and social coordination that is necessary for an affluent society.

READ MORE - Class, Culture, Toilets and Time

Did Unions Create The Middle Class?

Many people . . . believe there would be no middle class in America if unions did not organize a third of the workforce after World War II. That post-war era, the sixties, still represents one of the most prosperous eras in the nation's history. But that lesson has been lost on most people who oppose unions.

From here.

Krugman agrees.

I don't oppose unions. But, I am also deeply skeptical of the claim by union supporters, and of liberal economists like Krugman, that they were as important an ingredient in creating the American middle class as claimed.

The Comparative View

Consider, for example, Japan and Western Europe. Both societies are far more economically egalitarian than the United States. They pay their executives less, and have a far more even distribution of wealth. But, they do it in two radically different ways.

Japan's big businesses are formally unionized, but their unions are company sponsored affairs that are actually forbidden by law in the United States on the grounds that they would be too management controlled. Japan also has a fairly small public sector, a very paternalistic government, a fairly weak public sector welfare state, and role for married women that is anything but equal even though unmarried women have substantial economic equality with their married peers.

Western Europe is heavily unionized (compared to the United States) with unions that are much more vigorous in asserting their rights than American unions, and those nations also uniformly have a much more comprehensive public sector social welfare state than either the United States or Japan. Germany gives workers at public corporations seats on the Board of Directors of their companies. France tolerates the kidnapping of executives in the course of union-management negotiations and gives public sector workers a frequently exercised right to strike. Sweden has very high taxes that finance a public sector welfare state that makes marriage an economically unnecessary part of being a parent.

The United States has a union movement that was almost as powerful as that of Europe through the 1960s, but that has declined in the four decades since then. It has a public sector welfare state, but it is anemic. We work more hours per year than workers in any other country in the world, and have the most unequal distribution of wealth in the developed world, together with low taxes by developed world standards overall, as measured by tax revenues collected relative to GDP. We have arguably the weakest private sector union movement in the developed world, but have a large, but timid public sector union movement.

The Weak Chain of Cause and Effect

The weakening of private sector unions has not had some of the results that you would expect. Workplace safety is profoundly improved from the standards that prevailed four decades ago when unions were much stronger. The workers whose wages have stagnated have been in industries where unions were strong, not in industries where unions have never had much of a foothold, although, in those industries, union workers tend to be paid more than non-union workers. Disgruntled workers in an American workplace are more likely to call a trial lawyer than a union organizer. American workers have less job security than their peers in either Japan or Europe, although in Japan this is mostly due to a private sector understanding of fairness, while in Europe it is mandated by law.

Income inequality in the United States has risen more or less steadily since 1947. Changing rates of unionization have done very little to alter the trend line, which has arguably flattened a little for families in the bottom 95% of the income distribution in the last decade. Earned income inequality is risen in Europe as well, but has been mitigated by their tax codes and social welfare state, rather than fundamental differences in the structure of economic relationships between people within businesses.

Public sector workers in the United States got job security and good benefits first, and unionized second, many decades after the prevailing accommodation on the shape of public sector employment terms, conditions and compensation were well established.

Did Ethnic Diversity Play A Role?

Some people would argue that American tolerance for inequality has roots in a lack of shared ethnic identity found in both Europe and Japan. I can't rule that out. There is circumstantial evidence that heavy immigration in the late twentieth century has frayed the European consensus on the social safety net and management-labor relations.

Then again, the union movement in the United States has historically been strongest in places where massive immigration has been attracted by job creation, not economically stable places, or places with homogeneous populations. The only place in the agriculture sector that there has ever been any meaningful effort at unionization, for example, has been among immigrant farm laborers. To my knowledge, there are not now, and never have been any unionized plantations. Rural America has produced a great many co-operatives but very few unions.

The deepest economic inequalities in the United States are not in the South where there is the greatest ideological and historical tolerance of inequality in the form of slavery and then, in post-slavery racism, and where opposition to unions has historically been strongest. The plutocrats who have captured such an immense share of the national wealth tend to be based in places like San Francisco and New York City where the financial sectors are strongest, despite the high and progressive taxes that they face there and the strongly liberal local politics. The strongly anti-union Deep South is the home not just of pervasive black rural poverty, but of pervasive white rural poverty.

Southern anti-unionism at the grassroots level may be a product of discontent, in the context of Southern efforts to a great extent successful, to create the "New Rust Belt" in the American South, with existing union efforts to keep new manufacturing investment in the "Old Rust Belt" where their members held jobs in manufacturing companies. From their perspective, Northern manufacturing unions most important position was their opposition to relocating jobs to the South where they lived, rather than any deep felt concern about what it was like to work in a union shop, something few Southerners have experienced.

The current hotbed of union busting sentiment, Midwest states like Wisconsin and Ohio, have historically been relatively homogeneous and inclined to have politics that focused on the collective good. Wisconsin was the epicenter of Garrison Keillor's somewhat idealized middle class heartland where petty village quibbles and small town values prevailed over deep ethnic strife. Where Swedish Lutherans and German Lutherans considered their unions to be mixed marriages. Ohio was one of the first states to proudly embrace a land grant funded system of public education.

Working Class v. Middle Class

Another part of the conundrum of identifying the union movement with the middle class, is that until the relatively recent rise of public sector unionization, unions have been largely the province of the blue collar working class (aka lower middle class). The history of the American union movement is full a smudge faced miners, rank and file factory workers, postal workers trudging through rain, sleet and snow, firemen stinking of smoke, truck drivers and skilled tradesmen.

Today's union movement is more middle class than it used to be because the working class jobs that used to be its core constituency are gone or no longer unionized, while the relatively few middle class unionized jobs have survived and grown relatively more important to the movement as a whole.

The minimum wage and hour laws that unions worked to enact were all but irrelevant to middle class workers who were paid salaries and often exempted from their application. The workplace safety protections and worker's compensation regimes that unions pushed to enact didn't mean much to people who sat behind desks and cash registers all day. The fact that employers started to offer health insurance was as much a product of World War II era wage controls as it was a product of a healthy union movement and benefited non-union workers in factory offices as much as it did union workers on the factory floor.

The entire social class that was at the heart of the union movement has contracted, and the middle class that it now claims used to identify itself with management. Bank tellers have a great deal in common with factory floor workers. They aren't paid much. They are micromanaged. They are rank and file employees of large enterprises that thrive on coordinated mass production. But, factory workers who identified as working class unionized, while bank tellers who identified as middle class, didn't.

A college education and a union card used to be considered contradictions in terms; alternative directions in life. Union leadership is how smart young working class men who couldn't dream of securing a college education or the management jobs that came with it found a way to exercise power in the large institutions where they worked, just as they did as non-commissioned officers did in the military. Yet, a college education is now often considered the defining element of the middle class.

How did access to the college educations that were the thresholds to membership in the middle class open? Mostly through the GI Bill, and after that through the shift of selective institutions of higher education to merit based admissions in the 1960s and the parallel expansion of of state institutions of higher education to accommodate the needs of former soldiers entitled to it as a result of the GI Bill. The political resistance of the civil service that was created to meet this need to being downsized (at a time when higher education employees largely weren't unionized) and student radicalism, rather than labor union efforts, does more to explain why the gates to higher education remained open.

Conclusion

Does all of this mean that unions can't play an important role in strengthening the American middle class? No. They are eager to step up to the challenge and remake themselves as a movement, and it is a task worth taking on.

But, as a matter of history, it is not at all clear that unions played an important part in creating the middle class, which was instead apparently driven by the widening availability of higher education. Instead, unions actually worked hard to secure justice for the American working class and seemed to be making good headway in doing so until sometime around 1970, when that social class in American life entered a period of seemingly permanent economic stagnation.

READ MORE - Did Unions Create The Middle Class?