Written over 3 hours at Starbucks in Los Gatos with The Prodigy blasting in my ears. I did not cite any of the stats, but will provide source if you email me. Most of the data points are from the Brookings Institute, economist Robert Reich, Joseph Stieglitz (“The Great Divide”), Naomi Klein (“Shock Doctrine”) and several Elizabeth Warren interviews.
Justice for the Few
The Declaration of Independence provides hope with the admonition of securing our unalienable rights, which includes life, liberty and the pursuit of happiness. Why should children be excluded or at least start their life with an insurmountable deck stacked against them? This is indeed a moral problem facing the US that will either seek to argue for spreading opportunities to all, or a consolidation of opportunity for those born to wealthy parents. Within this narrative, the onus is on us to think through the complexion and contours of justice and fairness.
When considering the distribution of basic rights and liberties, children are the worthiest candidates for equality. They are a special group given they have no control over the parents or the environment they are born in to. In the US today, kids born into poverty have the slimmest opportunities of transcending poverty when compared to other developed countries. The unfortunate reality is that most children born into poverty in the US are sucked into a viscous cycle that entraps middle-class families. Consider that median income is lower than it was in 1978 (adjusted for inflation), while median housing/rent has increased since 1978, and our government continues to financially gut our education system, while college tuition has increased by $9,000 compared to 1980-81 (adjusted for inflation). America carries the unprivileged honor of being a country where the life prospects of an American are more dependent on the income and education of a child’s parents than in almost any other advanced country for which there is data. Probably the most important reason for lack of equality of opportunity is education: both its quality and quantity.
A key point in this discussion is that no one makes it on his or her own. The senseless Conservative jargon of rugged individualism that expects you to pull yourself up by your bootstraps is meaningless when you have no straps on your boots. The truth is that those at the top get help from their families compared to those lower down on the ladder. This opportunity gap is seen near where I live in the Silicon Valley within the city of Palo Alto. On the west side of highway 101 you have an upper class with school kids gaining access to a plethora of top schools with top tier teachers, highly educated tutors on every corner, SAT prep courses in every shopping center, and STEM (science, technology, engineering and math) programs to name a few. While next door in east Palo Alto, you have an underserved non-white population with children surrounded with above average homicide, crime, and gang rates. But’s let keep things in perspective with regard to California overall, it is still a state in which last year more money was spent on prisons than in than the education system. When it comes to the development of children, it really does take a village.
Another reality to the inequality gap reveals troubling systemic implications. Externalities are the side effects or consequences – often covert – that are the results of the economic policies in place. Such systemic externalities with regards to income inequality are correlated with inequalities in health, access to education, and exposure to environmental hazards, all of which burden children in more segments of the population. Indeed, nearly one in five poor American children are diagnosed with asthma, a rate that is 60% higher than that for non-children. Learning disabilities occur almost twice as frequently among children in households earning less than $35,000 a year than they do in households earning more than $100,000. The externalities of the enormous income gap we see in the US serves to entrap children from social mobility. Joseph Stiglitz points out that 42% of children who are born into poverty (in the US) will remain in poverty as adults; which is more devastating than any other advanced country- even Great Britain which has a history of class structure (where only 30% of their children remain in poverty as adults).
“In a recent study that looked at Americans in selective colleges, only around 9 percent come from the bottom half of the population, while 74 percent come from the top quarter.” Robert Reich
Social mobility in the US has been stifled with the advent of colleges serving as cash cows rather than bastions of development. College graduates earn more than $12,000 more per year than those without college degrees; the gap has almost tripled just since 1980. While colleges ought to serve the purpose of equipping future innovators, it has nevertheless turned into big business for banks salivating over collecting student loans. Student debt for seniors graduating with loans now exceeds $26,000, about a 40 percent increases (not adjusted for inflation) in just 7 years. But an “average” like this masks huge variations. According to the Federal Reserve Bank of New York, almost 13 percent of student loan borrowers of all ages owe more than $50,000, and nearly 4 percent owe more than $100,000 – these debts are beyond the abilities of the student to pay; and this is evidence by the soaring delinquency and default rates. Some 17 percent of student loan borrowers were over 90 days or more behind in payments at the end of 2012. And tuition? Well average tuition, room and board, at four year colleges is just short of $22,000 a year, up from $9,000 (adjusted for inflation) in 1980-81. And even more startling, in 2013, the total student debt came to around one trillion dollars, which surpassed total credit card debt for the year.
At what point do we say something needs to change? The ethic that needs to be advanced is not equality of outcome, but equality of opportunity. I am not saying that a heart surgeon ought to earn the same income as a school janitor. I am simply stating that both should have equal opportunity to carve out their future careers from whence they exit the womb.
To accomplish this task will take a vast change in our government’s economic policies. Before I am charged with being a socialist, you must consider the period of shared prosperity between 1945-1970’s. You had tax rates that never crept below 70%, a GI Bill, and strong unions that breathed life into a bourgeoning middle class. But the tipping point came in the Nixon and Reagan era that has brought about a destabilizing form of unrestrained capitalism that is rigged for the wealthy. With tax cuts for the elite igniting the myth of trickle down economics, massive de-regulation, lack of accountability between banks “too big to fail,” and an inept government that did not adapt to globalization and technological advancements.
My point is this: There comes a tipping point when moral principles need to be addressed and parsed. We have already reached the tipping point. When it comes to equality of opportunity and social mobility, it’s time we pull the wool from our eyes and consider economic policies that benefit the whole rather than the few. We are all better off, when we are all better off.