System Failures

That international trade is strongly positive in its over-all effects is the strongly-held, consensus view among both economists generally and my social class in particular. I have no doubt that the economists’ perspective is correct, as far as it goes – meaning, that trade increases global wealth by making the best use of different nations’ comparative advantages – but it has nothing to say about those who lose out as a result of the improved efficiencies.

Global trade, like migrations and the constant, churning changes inherent to capitalism, disadvantages some while benefiting others. Creative destruction is the very engine of a free market. The creative part ultimately provides more benefits than are lost to the destruction part, hence the world’s rapidly increasing wealth, but usually the net losers as a result of these changes are different people from the winners, so to them the changes may well not be a good thing. Obvious examples would include the factory worker whose plant moves to China, the laborer who faces lower-wage competition from a Mexican immigrant or the retail worker whose employer succumbs to Amazon.

My social class – upper middle class or better, educationally credentialed, almost uniformly economically secure – strongly favors free trade and immigration both because we have been taught in school that they are Good Things and because, to put it bluntly, we disproportionately benefit from them. We’re not worried about competition from lower-wage, hungry-for-work immigrants, or the loss of our jobs to China, and we think Amazon is overwhelmingly convenient – because it is. We are smug in our knowledge that change can’t be stopped – and why shouldn’t we be? We’re surfing that wave.

I belabor all of that as a way of pointing out that the resentments of illegal immigration and free trade felt by so many whom the bien pensant consider deplorables are neither irrational nor rooted in racism. These resentments, like my own social class’s love affair with immigration and free trade, are rooted in self-interest.  If you’re a lower-wage laborer or factory worker, large scale immigration and free trade are not Good Things for you – they are sources of personal insecurity. Such people should no more be labeled bigots or ignoramuses for fighting both than we should be for pursuing our own interests. And we, as the beneficiaries of these changes, should be more aware of others’ downsides.

***

More broadly, our system has evolved to the point at which it can be fairly described as being rigged against the so-called deplorables and the actually poor. Members of those groups who will ever enroll at Harvard or other high-prestige, credentializing institutions are so few as to be classifiable as unicorns. Such institutions, like the elite boarding school and college I attended, don’t actually serve “youth from every quarter” (as “my” boarding school’s charter has it) – they overwhelmingly serve well-off kids from every corner and of every color, and consider that to be diversity enough.

Consider the situation of the poor – urban or rural, black or white: their children’s educational opportunities are abysmal – just look at the statistics for New York City’s public schools. The good news is that graduation rates are up: 76% of NYC students now graduate; the bad news is that of those graduates something like 80% need remedial help with reading, writing and math before being able to handle any college work (https://newyork.cbslocal.com/2013/03/07/officials-most-nyc-high-school-grads-need-remedial-help-before-entering-cuny-community-colleges/). In other words, only about 15% are ready for college or have the kinds of skills that might enable them to make a decent living without college. Anybody want to bet against the proposition that the great majority of the competent 15% are from among NYC’s non-poor public school kids? I wouldn’t.

So how much of a chance does a poor kid have of attaining even a minimal proficiency in basic skills through the public school system? Less than one in six, probably much less. And he can forget about excellence; his schools don’t do that. In connection with my work for Harlem Academy, I learned that the number of public school children from Harlem and the South Bronx who make it to the city’s public exam schools is usually zero. Their public school world is one in which – to quote the founder of The Waterside School in Stamford, CT (a school with an excellence-based mission much like that of Harlem Academy) about the public schools that would otherwise serve the children he teaches “pretty good is good enough”.

Progressives want us to believe that the only solution to the problems of the poor is to throw more money at entitlement programs and the existing public school systems. These are failed approaches that have only made the problems they seek to address worse. They have created reliable, dependent constituencies for the Democrats, though, so there’s that.

How much more money should we be throwing at the failing New York City public school system? The city currently spends about $17.5k per student per annum, ignoring the very considerable embedded capital cost of the buildings in which the schools are housed. The average nationwide is about $12k.

The problem isn’t a lack of money, it’s that the city’s school system has no accountability to parents, and is effectively run by and for the benefit of the teachers’ unions rather than the students. The teachers’ unions, in turn, kick back to the politicians who support the status quo – they are by far the largest and most reliable donors to Democratic politicians nationwide. It’s a nice setup for the unions and the politicians, not so much for the kids.

It’s not like the answers aren’t clear – charter schools, at a minimum, and vouchers, ideally, would give poor parents infinitely more choice about how and where their children would be educated – and with that power, they would gain the ability to instill accountability into the system. What poor parent can be happy about consigning his or her child to the present system? Which one wouldn’t want the ability to make changes to benefit his or her children? Presently, those doors are largely blocked, by Democratic officeholders in thrall to the teachers’ unions and, statewide, by the political power of suburbanites who like the status quo for their children, and don’t really want to think about its effect on others.

***

Education is far from only way in which the present system is rigged against the poor, but it’s the most important one. Let’s face it, if you’re poor and your nearly-adult child is barely able to read, he or she is screwed.

Another major factor in the way the system is rigged against the poor is that the mass of entitlement programs enacted since the War on Poverty haven’t cured the problem of poverty in our country, but they have managed to foster an environment that is conducive to multi-generational dependency and the breakdown of stable family structures. The percentages of black American babies born to single mothers has risen to 76%; the comparable statistic among non-Hispanic whites is 29% – and I would bet that those 29% are overwhelmingly poor; there probably isn’t much statistical difference between blacks as a whole (a disproportionate share of whom are poor) and poor whites. Poor people mostly aren’t marrying anymore; any guess as to why that might be?  

Always look to incentives. And never think ill of people for reacting rationally to the incentives that surround them. We have created perverse incentives for the poor. Those incentives are fostering new, different behaviors, and creating a class that is both economically and socially ever-farther from bourgeois norms.

Not only do we mis-educate the poor, and incentivize them to avoid marriage, we actively disincentivize them from entering the on-the-books workforce by making entry-level work scarce through minimum wage laws, and absurdly expensive to the poor through payroll taxes and lost government benefits. Google government disincentives to work and you’ll find a lot of graphs illustrating my point; one of my favorites, which was produced by the Pennsylvania Department of Public Welfare (https://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/11-2/welfare%20cliff.jpg), shows that a single woman with a child receives only about $10,000 of net economic benefit from her first $29,000 of legitimate earned income and less than no net benefit (because of foregone benefits) from any raise until she reaches an earned income level of nearly $70,000. Not exactly encouraging her to enter the workforce or work her way up, are we? Oh, and working off the books won’t cost her a dime in foregone benefits or taxes.

So, comfortable liberals feel little guilt about the poor – we’re spending a lot of money on them, you see! – and they tell themselves that the poor are still poor either because they’re black (and racism!!!) or because they’re deplorable whites, and therefore not worth a second thought. We upper-class types don’t exploit the dependent poor; we throw money at them and look away.  

They’re not poor – and stuck in the mud – because they’re black or deplorable. They’re suffering because we have put in place systems that have the effect of stacking the deck against them in a very big way.

And don’t think they don’t know it.

M.H. Johnston       

7 comments to System Failures

  • DP  says:

    Explosive

  • KH  says:

    Breaking new ground with this one. Thanks.

  • Anonymous  says:

    Excellent post. Send this one off to the WSJ and NYT op-ed departments. It is well written and supported by data and references.

  • Anonymous  says:

    Often you seem to generalize what Democrats and liberals think and do.

    We are lucky that we now have republican leadership that can right this misdirected course. Building on tax reform and immigration policy instituted in his first two years all our woes should be eliminated with Donald’s leadership and the great group of people he has surrounded himself with to forfill his well thought out agenda.

  • Dennis Paine  says:

    “Excellent post. Send this one off to the WSJ and NYT op-ed departments. It is well written and supported by data and references.”
    __________

    I second this!
    Mark, please consider doing so.

  • Anonymous  says:

    Over the sweep of history, the main reason that societies have declined, as the scholars Daron Acemoglu and James Robinson have written, is domination “by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people.” The name of Acemoglu’s and Robinson’s book on this phenomenon is, “Why Nations Fail.”

  • John Primm  says:

    I too believe you need to send this off to WSJ, WaPo and the NYT…not that I think any will print it but this is great work and needs a wider audience.

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