Economic Despair

More and more, I am reminded of that old adage that “it ain’t what you don’t know that hurts you, it’s what you know that just ain’t so.”

A recent research paper from the Brookings Institution investigated one of those “things we know,” and came to some disquieting conclusions.

When it comes to staying in school, many economists talk about the “aspirational effects” of income inequality. When students look around them and see a better life, they are incentivized to invest in their own human capital—such as investing in their own education.

But what if that conventional thinking is wrong? What if inequality doesn’t incentivize students at the bottom of the income ladder to work harder, but rather disincentivizes them? This is one of the questions Melissa S. Kearney and Phillip B. Levine sought to answer in a new paper published as part of the Spring 2016 Brookings Papers on Economic Activity.

Among other things, Kearney and Levine found that low-income children growing up in states that have greater income inequality are dropping out of high school at higher rates than are children living in states with less income inequality.

The authors point to a concept they call “economic despair,” or a feeling that economic success is unlikely because the distance from the bottom to the middle of the ladder is too far to climb. If a student perceives a lower benefit to remaining in school, then he or she will choose to drop out—even if they aren’t struggling academically.

What is particularly interesting about this study is that it focused upon the perceived distance between the bottom and the middle of the income distribution—not the distance between the bottom and the top. The idea is that what they call “lower tail” inequality is a more relevant measure, because—although the top may realistically seem to be out of reach—making it to the middle would seem to be a more manageable goal.

The authors suggest interventions: mentoring programs that connect youth with successful adults, programs focused on establishing high expectations and pathways to graduation, or early-childhood parenting programs to build self-esteem and engender positive behaviors. Although such interventions might help ameliorate the problem, it’s hard to escape the conclusion that the effects would be modest, at best.

In fact, this study is one more “data point” in a picture that increasingly points to an inescapable conclusion: the level of inequality in America today is unsustainable and extremely detrimental, not just to the prospects of poor children, but to the nation as a whole.

We are in the midst of an election season that has unleashed a furious and troubling display of social dysfunction, in-your-face bigotry and populist anger. It’s hard not to attribute a significant part of that to economic realities that pit low-wage workers against each other and against a perceived plutocracy that has “rigged the system.”

Social scientists tell us that stable democracies are characterized by distributional equity, and the existence of a large and relatively secure middle class. Economists tell us that economic growth requires robust demand, generated by consumers with discretionary dollars to spend in the market, and a well-educated workforce.

When large numbers of people working 40 hours a week cannot earn enough to cover basic living expenses, when children don’t believe education offers them a path out of subsistence, democracy and the economy both suffer.

It’s past time to revisit some of the economic “facts” we think we know.

 

 

 

 

 

 

 

36 thoughts on “Economic Despair

  1. In 1982 (yes, I know that was a long time ago but…) I lived in Las Vegas; enrolled in Sociology and Psychology courses at Clark County Community College, paid all tuition, bought all textbooks and supplies. Then my husband decided he wanted a divorce, no jobs to be had at that time so I was forced to move back to Indianapolis. Fortunately; CCCC gladly refunded all I had paid them when I dropped the courses.

    Got settled into the old homestead here and went to IUPUI to enroll in the same two courses. The tuition for one course totaled more than I had paid for two courses, all textbooks and supplies in Las Vegas. It appears to me that income level and ability to seek higher education has much to do with which state you live in. The two courses I attempted to enroll in could have helped me find employment in the social service field I was interested in.

    “We are in the midst of an election season that has unleashed a furious and troubling display of social dysfunction, in-your-face bigotry and populist anger. It’s hard not to attribute a significant part of that to economic realities that pit low-wage workers against each other and against a perceived plutocracy that has “rigged the system.”

    I copied and pasted the above paragraph from today’s blog for a reason, I am glad I can intelligently work into my comments. I had to stop watching “Good Morning America” this morning due to the seemingly unending films of the arm-waving, angry, screaming face of Trump and the near riots at his rally.

    “More and more, I am reminded of that old adage that “it ain’t what you don’t know that hurts you, it’s what you know that just ain’t so.”

    This second copy and paste also fits into the near riots and why I had to turn away; what Trump’s supporters think they know “…just ain’t so.” What I think I KNOW is that at least part of these “protesters” are Trump’s paid goons to keep his face in the news constantly. Can I get an Amen…or who wants to give me a viable argument against it? Trump’s billions have convinced his uneducated and well paid-for goon squads who are loyal to his racist, bigoted, sexist views which, in turn, gives permission for the followers to support and physically act on them. His level of wealth has blinded them; they believe every word spewed from his lips to be gospel; his money has brought him frighteningly close to buying the White House. None of his views support bettering the living conditions of middle-class, low-income, poverty level Americans who are willing to physically support him with violence which he condones. Nor do they encourage his followers to seek an education, hoping to better their own living conditions.

    Money may afford the opportunity for an education but; it obviously does not automatically provide intelligence to the rich guy in the forefront of today’s GOP.

  2. I’ve been watching Jane Mayer on Book TV. Next up in my reading cycle will be “Dark Money”. I wonder how long it will take for those who have worked so long and so hard to bring about the current state of affairs to realize that this is not good for anyone, themselves included.

  3. JoAnn,

    “Trump’s billions have convinced his uneducated and well paid-for goon squads who are loyal to his racist, bigoted, sexist views which, in turn, gives permission for the followers to support and physically act on them.”

    What is happening now in the U.S. happened in Germany in the 30’s. The industrialists, like the Koch Brothers et al, thought they could control Hitler and his troops. But they were wrong. Just like here in the U.S. now with Trump. They can’t control him. He has control of the vicious troops within the Tea Party that the Koch Brothers and George Bush & Sons, TOGETHER, created for their “slow motion coup.”

    So now they are “screwed.” Trump has taken over their show.

    Do we expect the ACLU to stop him, or even better the Southern Poverty Law Center?

  4. Over the weekend, I saw the dashing young SMART prime minister of Canada on TV. He speaks with a calm clarity of purpose, kindness, willingness to learn from those about him. It gives me some hope that our more stable cousins to the north have started to recover from their flirtation with the dark side. Maybe we can do it too. I hope so. What is going on now in our presidential election is getting very scary. The “Brown Shirts” rally in Chicago was stunning. We have no time to waste.

  5. Peggy,

    “I wonder how long it will take for those who have worked so long and so hard to bring about the current state of affairs to realize that this is not good for anyone, themselves included.

    They never will change. They’re up to their necks in guilt. A “mass suicide” would be our best and last hope.

  6. Marv; I am not anti ACLU or SPLC, neither do I agree with all of the stands they take. I do, however, sign petitions on issues we mutually support. They are not always wrong;-)

    My best friend from 1953 at Tech High School is a long-time political activist in the San Francisco area. She recently, much to my surprise knowing she is totally anti-Trump, took issue with the accusations that Trump can be compared to Hitler. Her reason was that, while she has seen many films of his speeches, not knowing German language she didn’t know what he said so shouldn’t take that stand. I had to respond; a few years ago there was a made-for-TV movie about the Third Reich starring that incredible actor Anthony Hopkins as Hitler. His portrayal was frightening in its reality and made more frightening because he repeated Hitler’s rants in English. Yes; Trump can be compared to Hitler, not only his mannerisms at the podium but what he stands for, the empty promises he makes and the fear he instills in his devoted followers if they don’t vote for him. Those who deny the comparison have no idea who and what they are supporting and – if he wins the presidency – they will not understand how or why they have lost so many of their rights. I would say they get what they deserve but…we millions of innocent Americans who do comprehend Trump and his followers will be the first victims of his 21st Century version of the Holocaust.

  7. I believe that I’ve said before that each generation has no greater responsibility than to educate their successors. It’s as important as bearing them.

    But making education available isn’t enough. They first of all have to be brought up to want and be able to learn.

    Being brought up has both cultural and parental implications.

    Let’s pretend the you are a poor urban black kid with a mom on welfare and you are considering your future. The question that culture is built from is how do others like me behave? What do I observe from like people?

    For many the developing answer to that is what I see are people whose survival depends on predatory behavior. People who can’t earn what they want and need so have to conspire to somehow take it.

    Conservatives claim all of this to be true but comes because of welfare. That if survival was harder people would see a culture of people working harder and smarter and collaborating rather than predating.

    They only answer to that is whiskey tango foxtrot?

    The only adult response to the situation is how do we change it?

    There was a time when a moderate high school education provided significant prospects for not only survival but stability. A modest for most but achievable comfort of having enough.

    The question is can one learn enough in today’s world in 12 years to enter into the job market with enough momentum to successfully achieve a family level of economic certainty?

    What makes that even less likely is that technology has led us to a world where achieving that means that you not only have to compete well with your neighbors for those opportunities but everyone else in the world. And in some places achieving moderate economic success is much easier than here.

    We have for instance built a civilization that demands that a necessary tool to independent living is a car. In many countries a bicycle will do. In some a pair of shoes do the trick.

    So public education has to bring people to being able to compete with workers worldwide for jobs that will pay for family acceptable risk comfort here.

    At a time when conservatism is leading us away from solutions the necessary ingredient for success is business industry government collaboration.

    Reality is that all boats rise and fall together while conservatism is teaching naval warfare. Sink all ships not yours.

    It has no chance of achieving even a stable world not to mention a better one.

  8. JoAnn,

    I’m not anti-ACLU or SPLC. You’re right they have both done some good things. All of which have been in the Courts. However, In order to raise funds, both organizations have put themselves out that they were fighting the Far Right when they knew or should have known they were INCOMPETENT to do so.

    Let me give you a good example of why I have my bias. About eight years ago, the President of the National ACLU was speaking at the Unitarian Church I belonged to in Saint Augustine which is about a 30-minute drive from Jacksonville. She was explaining that the ACLU had been “outflanked” by the Far Right, consequently they were hiring a CORPORATE HEADHUNTER to find someone who could handle the job. Do I need to say more?

  9. I have several questions for you, Ms, Kennedy.

    1. You lament the unequal distribution of income so prevalent in America today. To what extent is the American system of higher education complicit in this? Does your unholy alliance with the money center banks that has sold a generation into student loan debt slavery share any of the blame in your pollyannaish worldview, or is it all the fault of our evil, Republicrat corporate overlords?

    2. You lament the political vitriol present in this year’s economic cycle. What do you expect? Should people being screwed by a system you are part of just lay down and enjoy it? If not, what do you prefer to political vitriol? Revolution? Insurrection? History presents those as viable alternatives, and it’s really hard to keep up with you big thinkers and what you have in mind for us serfs.

    I have an advanced degree. I’m relatively smart. I am as financially secure as anyone in America can be, although I can’t help believing that there are a Castro and Che out there who will eventually blame me for everything as they take everything I’ve earned while playing by the official rules of the day. Once that’s done, they’ll compel me to watch the execution of my loved ones before they turn the gun on me. At one time that would have been absurd. Now, not so much.

    From where I sit, Ms. Kennedy, you are part of the problem. You certainly offer no solutions in your screed except vote, be nice, get an education. Yawn. That isn’t working and you know it. I suspect you’re interest is where it is for most of your ilk. You want to keep the barbarians at bay. You haven’t looked. They’re at the gate. A little political vitriol is the least of our problems.

  10. @ Peggy – I started reading Dark Money a couple weeks ago. The introduction alone is full of statistics that are enlightening. Sure wish all Republicans would read it so they could learn who they are really backing and how their own economic well-being has been marginalized by the uber wealthy

  11. When the Germans invaded Poland in the late 30’s, their tanks were met with the Polish cavalry still riding on horseback.

    All I’ve been trying to say, for the past few months, is that the situation in the U.S. is about the same. Maybe worse. There is absolute NO organized defense at the present time against the TEA PARTY MOVEMENT which is now under the control of Donald Trump.

    Please prove me wrong.

  12. ” She was explaining that the ACLU had been “outflanked” by the Far Right, consequently they were hiring a CORPORATE HEADHUNTER to find someone who could handle the job. Do I need to say more?”

    “The enemy of my enemy is my friend!” If a Corporate Headhunter were willing to take they job; wouldn’t they be the Far Right enemy of the ACLU enemy standing in their way? Did I say that right?

  13. Oops; that last comment was for Marv, of course.

    The comments regarding German tanks met by Polish cavalry reminded me of a line from “Butch Cassidy And The Sundance Kid”; “…never take a knife to a gunfight…” Butch had an option; the Polish military had no option. They were also fighting apathy within the Polish military, their own government and their countrymen. A David vs. Goliath battle which David sadly lost and the rest as they say…is history.

  14. JoAnn,

    “The enemy of my enemy is my friend!” If a Corporate Headhunter were willing to take that job; wouldn’t they be the Far Right enemy of the ACLU enemy standing in their way? Did I say that right?

    I apologize. I didn’t make it clear enough.

    The “corporate headhunter” wasn’t the person who would fill the position. The ACLU was using a firm who fills CORPORATE POSITIONS to find a person who will ultimately be taking on CORPORATE POWER. That’s not the “enemy of my enemy.” That’s more like “hiring the enemy.”

  15. Marv; thanks for the clarification. So; that situation also didn’t fit the adage, “Keep your friends close and your enemies closer.”

  16. In a prior post, I said, ” There is absolute NO organized defense at the present time against the TEA PARTY MOVEMENT which is now under the control of Donald Trump.”

    The tragic result because of the misperception that there has been a defense is an accompanying miscalculation as to the strength and power of the Tea Party Movement.

    JoAnn, the Southern Poverty Law Center has never confronted the Far Right. I believe it was 1990 or 1991 when Morris Dees was a guest on the Tony Brown Talk Show syndicated around the country on PBS. The show originated out of Chicago. The talking went on and on between Brown and Dees. Tony Brown then asked the important question: “Morris, what about the system, I mean the racial system? Dees answer was “I don’t get into all of that.” (One interpretation of that comment would be: “I won’t have $200 million in the bank if I did something like that”). The last I time I talked with the Southern Poverty Law Center a few years ago, Dees’s top assistant denied there was even a racial system.

    Can you understand why people think I’m crazy? Why wouldn’t they when the whole country is being taken both from the right and the left.

  17. Marv, I believe that we still have a one last time offer from our founders to preserve non violently their gift to us.

    The freedom of democracy to determine who governs.

    If we give it away it will awfully hard to get it back again.

  18. Kalle,

    “You want to keep the Barbarians at bay……They’re at the gate. A little political vitriol is the least of our problems.”

    I agree with you that we’ve got a host of problems. But I believe, like most of us on the Blog, that the biggest one right now is MR. VITRIOL who, I suggest, you are grossly underrating.

  19. Kalle, you are entitled to your opinions and certainly to freedom of speech. I hope that you are capable of using your words to defend your opinions.

    My experience is that none of us can defend our emotions so let’s concentrate on opinions for now.

    Tell us specifically which words from Sheila you think are part of what high priority national problem instead of an attempt at solving a high priority national problem?

    Please.

  20. Pete,

    “If we give it away it will be awfully hard to get it back again.”

    Like you have been saying all along. We can’t afford to give democracy away.

    America isn’t the Germany of the 20’s and 30’s. History wasn’t in their favor. The Weimar Republic was in its infancy. And the Jewish community was less than 1% of the population.

    Although we’re far from perfect, we have enough American history and common sense in our favor, to withstand this asinine assault from the Far Right.

  21. Marv, your comments about the Polish Calvary reminded me of my youth (I grew up around a lot of Polish people). That comment was mentioned around one of family members and his response was simple, “hey at least we tried! the rest of Europe just rolled over for that bastard!” And I think people are finally trying to stop Trump but they too are out gunned. The question is whether or not we are willing to help them or are we going to stand on the sideline at watch.

  22. T Lentych,

    “……are we willing to help them or are we going to stand on the sideline at watch.”

    Our only chance is to re-organize. We’re dealing with a FUNDAMENTAL change in American politics. TECHNICALchanges within old organizations which in the past have had some success will not work.

    MoveOn is a prime example. It failed earlier with an attempted boycott of Trump and now it has come up with a new strategy that is bound to fail. They have made no FUNDAMENTAL change in an architectonic way. They can’t change any more than the Southern Poverty Law Center, the Anti-Defamation League or the N.A.A.C.P. can change.

    As they have shown during the past few months, the above three organizations haven’t tried to do anything They can’t. At least, the Polish cavalry wasn’t FROZEN.

  23. I am not sure where you folks get your information, but I know two bus loads of Tea Party participants and not one of them is supporting Trump.

  24. In the 60s when students reached military age as now, Employment Security agents were knowledgeable about employers in their cities, including universities, colleges, seminaries, institutes who wanted to remain in a place also complying with EOE regulations and allowing employees to take courses while working. Meanwhile, the agents kept files of test results, high school transcripts, employer and parental recommendations about budgeting and money-handling skills. Then they would send registered job applicants on temporary assignments while they waited permanent [90-day] status with legitimate SSA:IRS books. Religious integration also was employers’ goals for their public education missions, reconciliation of congregation members, parish members with their neighbors’ families. The first permanent offers for some were in international sites where Catholics were recruiting others ‘back to normal’ so they could return ‘home’ or go on professionally! Those years were the ones of their changing missals to Latin and local languages, when the seminary owners were invited to speak and send pulpit candidates for reunited Protestant hierarchies with those all divided again by international wars for land control. So graduates just given the vote in federal elections, given independence from parental restrictions and clerical, young women were ‘threefer’ eligible for jobs after babysitting for all those in their cities’ neighborhoods, nurseries, summer schools! Evangelism is not a church. Neither is Christianity a school of thought, education, medicine, art and architecture, political science, economics, especially with anti-social needs for formal education on 1491 to present uninterrupted history of humans in an uninterrupted ‘revolution’ count every day still. No one flies off ‘Indiana’ as we orbit the orbiting sun. Where are the crossroads going to go with topsoil losses into the locally rising and ebbing waters between homes and schools for adults who provide nursery rooms for students, not classrooms or keys to drug cabinets as staff members yet. Nor are there real estate zones for employees with no speaking parts in publicity films and photographs for the USA ‘brand names’ not mentally ‘branded’ tenants in the government properties districts as flagged for their owners’ standards and measures of steam, water, solids, weathering with esteem for their academic leaders all.

  25. Ken,

    “I am not sure where you folks get your information, but I know two bus loads of Tea Party participants and not one of them is supporting Trump.”

    Your bus loads then must be supporting Cruz, but more than likely he isn’t going to make it. Where do you think they’re going to go? To Hillary or Bernie?

  26. Ken, to me Trump is a very good representative of the Boehner/McConnell GOP of the last eight years. Like them he wants to shutdown Congress, compromise SCOTUS and hog tie the chief executive until at least he has all of the reigns personally. Then the rape will begin.

    The problem that the GOP has with him is not ideological at all, it’s that he’s not wholly owned like Rubio and Cruz.

    That’s a problem to the owners of the GOP.

  27. In the late 70’s I read a book on economic theory that reasoned from various studies that there was a $ threshold below which the poor would not be motivated to do work. The original theory being that any amount of compensation would be sufficient to motivate people to do work. Sadly I can’t find the name of the book, but it fits in with what you are saying today.

    Young people in school today who live in impoverished areas can see how their older siblings and friends are doing in the economy they graduate into and can see that school isn’t helping.

  28. Girl cousin, thanks for sharing the above Guardian article. And, yes, the article does go beneath the surface in offering an insight into Trump’s following of blue-collar, middle-class voters. Despite the media’s interpretation, I’m not convinced these particular voters are especially racist; however, I’m sure a large number of these voters are one paycheck from bankruptcy, from collecting unemployment checks, from applying for food stamps, from losing their job benefits of group health insurance. I daresay that most of Trump’s loyal followers know at least one family member and/or at least, one person in their neighborhood who’s lost a good job w/benefits after the employer moved/relocated to outside the US. Frankly, I hurt for these people.

  29. “I daresay that most of Trump’s loyal followers know at least one family member and/or at least, one person in their neighborhood who’s lost a good job w/benefits after the employer moved/relocated to outside the US.”

    BSH; that comment is true of Trump followers, also followers of every other Republican presidential nominee candidate. True of Hillary supporters and, being a Bernie supporter, it is also true of many of us. It is true of people who are unaware of the political battles in this country, people who do not vote. It is true because this is the general condition of most Americans today…aware of their own plight and/or the plight of family and friends whose economic condition is precarious to say the least.

    Racism and bigotry in their many forms gives them an “excuse” to act out; they need someone to blame for their declining condition and Trump is their primary cheerleader.

  30. JoAnn,

    “Racism and bigotry in their many forms gives them an “excuse” to act out, they need someone to blame for their declining condition and Trump is their cheerleader”

    Ditto. Ditto.

  31. It is simply wrong to allow people to drop out of school without at least the minimum level of education required to obtain adequate legal employment. That said, I am shocked and dismayed that even the well educated don’t recognize that they live in an oligarchy where elections are held to make people think their vote matters. Trumps ‘poorly educated’ followers only know that they (like the majority of voters) want a balanced budget…immigration reform…and gun purchase loopholes closed. Congress has chosen to ignored the voters and that is the underlying cause of the turmoil…last time there was this much rancor among the populace…they threw a tea party in Boston

  32. JoAnn: Good to see you mention CCCC in Las Vegas. I became the CFO at CCCC in 1981. The college grew dramatically though the 80’s and 90’s, until the bust in 2007. The college now has 3 major campuses of 8,000 students plus, and over 25 regional centers. Student enrollment is now approaching 40,000; and per credit tuition is at $88. This cost is a third of that at IUPUI and 50% lower than Ivy Tech. 60% of its faculty is full-time, over 60% have their doctorates, and the student/ faculty ratio is a low 24:1. Terrific statistics for a two year academic institution. It is also now known as The College of Southern Nevada, and is the largest institution of higher education in Nevada. They are also still student centered. I enjoy this daily blog, and always appreciate your comments. Cheers.

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