Posts Tagged ‘American Dream’

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Lines

Posted: 4 December 2017 in Uncategorized
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How bad have things gotten in the United States? It’s now up to Nitin Nohria [ht: ja], the dean of Harvard Business School, to sound the alarm that “class lines. . .have become far more distinct and visible in recent years.”

Nohria published his essay at the end of the same week that the U.S. Senate passed its version of the “Tax Cuts and Jobs Act,” which is nothing more than an enormous boon to large corporations and wealthy individuals under the guise of trickledown economics,  and Philip Aston, the United Nations monitor on extreme poverty and human rights, has embarked on a coast-to-coast tour to investigate the widespread existence of extreme poverty in the United States.

The inspiration for Nohria’s reference to class lines is Arlie Hochschild’s Strangers in Their Own Land (which we taught in the spring, as the final text of A Tale of Two Depressions). According to Hochschild, the U.S. class structure once resembled an orderly queue: the premise and promise of economic and social institutions were that, if you worked hard, you would achieve the American Dream.

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Notwithstanding the large number of exceptions (for racial and ethnic minorities, impoverished whites, women, and many others), it was a story Americans told about themselves and their country. And it held a kernel of truth: until the early-1970s, workers’ wages did keep pace with growing productivity and the wage share was relatively stable.

Now, of course, the American Dream lies in tatters. In response, the members of the white working-class in Hochschild’s account are resentful that others at the bottom—especially minorities and immigrants—have been allowed, with the help of the government, to cut ahead of them in the line.

Nohria goes in a different direction:

As I read Hochschild’s analysis, my thoughts turned to a different sort of resentment the white working class is feeling. Even as it stews over people cutting into its ever slower-moving line, it also envies another faster-moving queue: the special one reserved for people with means—the ones who travel business or first class. The affluent people in this line believe they have earned their preferred status through a meritocratic process that has assessed and rewarded their ambition and enterprise. This group becomes accustomed to its special privileges and comes to expect them everywhere, from legacy admissions to college for their children to special seating at sports events to VIP treatment at theme parks. It begins to believe that there should be a special line for innovators and pioneers who have sacrificed time with friends and family to achieve their personal best—those who want to reach for the top, to be number one. Yet even preferred status is not enough; those on any fast track can always see a still-faster track. If the first-class line is short, flying on a private aircraft from a terminal with no security lines is even faster.

The result is that

Now there are fewer and fewer opportunities for people in different lines to ever encounter each other in person. They go to different schools, shop at different stores, and rarely interact. Yet they are hyper-aware of each other due in part to the ubiquity of social media and television. You can gawk at the lives of the privileged on Instagram, tap into the resentment of the white working class on Brietbart [sic], and see the plight of the disenfranchised on Vice. This ready visibility has unleashed a range of emotions, including resentment, entitlement, envy, and despair—and it’s tearing America apart.

Neither Hochschild nor Nohria offers an analysis of why those class lines are moving further and further apart—there’s no mention of how more and more surplus is being captured and kept by the small group at the top. And Nohria’s proposed solution, to allow more underprivileged students into Harvard Business School and to expose all business students to “cases that describe the challenges of the working class and the impoverished,” is derisorily inadequate.

In my view, we don’t need yet another effort “to better understand those who may not be in the same line as us.” What we need instead is an open and frank discussion of how the existing economic and social institutions in the United States are predicated on creating and reproducing those class lines—and how a different set of institutions would erase the class lines that keep Americans apart.

Let’s see them teach that lesson at Harvard Business School.

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One of the most pernicious myths in the United States is that higher education successfully levels the playing field across students with different backgrounds and therefore reduces wealth inequality.

The reality is quite different—for the population as a whole and, especially, for racial and ethnic minorities.

As is clear from the chart above, the share of wealth owned by the top 1 percent has risen dramatically since the mid-1970s, rising from 22.9 percent in 1976 to 38.6 percent in 2014. Meanwhile, the share owned by the bottom 90 percent has declined, falling from 34.2 percent to 27 percent. And that of the bottom 50 percent? It has remained virtually unchanged at a negligible amount, falling from 0.9 percent to zero.

During that same period, according to the U.S. Census Bureau (pdf), the proportion of Americans aged 25 to 29 with a bachelor’s degree or higher rose from 24 percent to 36 percent. (For the entire population 25 and older, the percentage with that level of education rose from 15 to 33.)

So, no, higher education has not leveled the playing field or reduced wealth inequality. In fact, it seems, quite the opposite appears to be the case.

And that’s true, too, for racial and ethnic disparities in wealth. As William R. Emmons and Lowell R. Ricketts (pdf) of the Federal Reserve Bank of St. Louis have concluded,

Despite generations of generally rising college-graduation rates, higher education’s promise of significantly reducing income and wealth disparities across all races and ethnicities remains largely unfulfilled. . .rather than promoting economic equality across all races and ethnicities, higher education unintentionally has become an engine for growing disparities.

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Thus, for example, median Hispanic and black wealth levels decline relative to similarly educated whites as education increases until the very top. Moreover, only about 7 percent of black families and 5 percent of Hispanic families have postgraduate degrees, and wealth disparities remain large even there.

Darrick Hamilton and William A. Darity, Jr. (pdf), who participated in the same symposium, go even further. According to them, the United States has a fundamental problem in discussing wealth disparities according to race and ethnicity:

Much of the framing around wealth disparity, including the use of alternative financial service products, focuses on the poor financial choices and decisionmaking on the part of largely Black, Latino, and poor borrowers, which is often tied to a culture of poverty thesis regarding an undervaluing and low acquisition of education.

Thus, while they agree that a college degree is positively associated with wealth within racial and ethnic groups, it is still the case that it does little to address the massive wealth gap across such groups.

And yet the myth persists. American elites and policymakers still to choose to emphasize the economic returns to education as the panacea to address socially established wealth disparities and structural barriers of racial and ethnic economic inclusion.

The question is, why?

According to Hamilton and Darity, such a view

follows from a neoliberal perspective, where the free market, as long as individual agents are properly incentivized, is supposed to be the solution to all our problems, economic or otherwise. The transcendence of Barack Obama becomes the ideal symbolism and spokesperson of this political perspective. His ascendency becomes an allegory of hard work, merit, efficiency, social mobility, freedom and fairness, individual agency, and personal responsibility. The neoliberal ideology is not limited to race. It more generally places the onus on individual actions, and more broadly leads to deficiency narratives for low achievement, but this is especially the case when considering race and other stigmatized workers. Perhaps the greatest rhetorical victory of this paradigm is convincing the masses that implicit in unfettered markets is the “American Dream”—the hope that, even if your lot in life is subpar, with patience and individual hard work, you can turn your proverbial “rags into riches.”

And so the myth of college and the American Dream is perpetuated, while the unequal distribution of wealth—across the entire population, and especially with respect to ethnic and racial minorities—which has been growing for decades, continues unabated.

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Young Americans are caught between two contradictory messages. On one hand, they’re told to go to college, to maintain pace with new technologies and job requirements. On the other hand, they’re told to “get out”—because, for most, a college education is simply unaffordable.

The American Dream, for them, looks more and more like “the sunken place.”

The Institute for Higher Education Policy [ht: mfa] is the latest group to document the unaffordability of a college education. While students from the highest income quintile (from families earning around $160 thousand or more) can afford most of the more than 2,000 colleges studied, low- and moderate-income students (bringing in around $69 thousand or less) can only afford to attend a tiny percentage of those colleges.

The Institute bases its conclusion on an “affordability benchmark” (the so-called Rule of 10, the idea that 10-year savings plus part-time earnings should cover the entire cost of a four-year degree) compared to the net price of a college education (equal to the cost of attendance minus grant aid). They then illustrate their findings with ten student profiles: five dependent students representing a different income quintile, and possessing attributes based on national averages for students in their quintile (Sonja, Hakim, Ava, Sergio, and Maria), and five independent students characterizing the diverse array of personal and family circumstances among independent students (Anthony, Traval, Aneesa, Jon Sook, and Mohammed).

As readers can see from the figure at the top of the post, while the student from the highest income bracket could afford to attend 90 percent of colleges in the sample, the low- and moderate-income students with fewer financial resources could only afford 1 to 5 percent of colleges.

Colleges were most dramatically unaffordable for students near the bottom of the income distribution, including all five of the independent students. Out of more than 2,000 colleges, nearly half (48 percent) were affordable for only the wealthiest student (with a family income over $160,000) and more than one-third (35 percent) were affordable only for that student and the next wealthiest (with a family income over $100,000).

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Not only do working-class students face financial barriers in attempting to enroll in most colleges, which they can only afford by burying themselves and their families under mountains of debt. They’re also far less likely to complete their students, often because working long hours to finance their education gets in the way of their studies (not to mention all the other activities traditionally associated with being in college).

As the authors of the report conclude,

This inability for low-earners to afford an education or improve their station erodes belief in a nation founded on the rejection of entrenched social stratification.

The only question for the nation is, will this educational horror film have a happy ending?