[modified from the original source (pdf)]
We’ve been learning a great deal about the conditions and consequences of the obscene levels of inequality in the United States—now, in the past, and it seems for the foreseeable future.
Right now, inequality is escalating within public higher education, especially in research universities that are chasing both tuition revenues and rankings. Thus, the editorial board of the Badger Herald, the student newspaper at the University of Wisconsin, found it necessary to criticize the lifting of the out-of-state student enrollment cap because it betrays the Wisconsin Idea and is making the university both “richer and whiter.”
Instead of increasing enrollment by targeting low-income and underrepresented Wisconsin students, UW now joins the ranks of public institutions that are happy with increasing the — already substantial — socioeconomic divide on campus. Making UW a bougie playground for the greater Chicagoland area is not the way to keep Wisconsin a world-class institution.
The Wisconsin students are right.* As recent research by Ozan Jaquette, Bradley R. Curs, and Julie R. Posselt confirms, public research universities are increasingly relying on tuition increases to fund their activities.** Thus, they are admitting more nonresident students—both for their out-of-state tuition payments and to raise the universities’ academic profile—and, as a result, the proportion of historically underrepresented students and especially of low-income students is declining. Moreover,
The shift towards nonresident students suggests that public research universities have increased the value they place on students who pay high tuition and have high test scores. This shift is indicative of a deeper change in organizational values, away from the public good emphasis on access and towards the self-interested emphases of academic profile and revenue generation. As scholars, campus leaders, or policymakers, we must ask ourselves, whether these are the values we want our flagship public institutions to promote?
We also need to look at the way inequality played out in American history, and make the appropriate connections to the present and future. In a recent paper, Suresh Naidu and Noam Yuchtman examine the situation of labor markets during the first Gilded Age. Their argument, in a nutshell, is that labor markets in the late-nineteenth and early-twentieth centuries are as close as we have seen in U.S. history to the unregulated labor market that is presumed and celebrated within neoclassical economics. But, the authors explain, those Gilded-Age labor markets were characterized by high levels of conflict—between labor movements and employer organizations (over wages and, when workers went on strike, replacement workers or scabs)—which, in turn, called on increased levels of judicial intervention as well as domestic policing and military intervention, generally on the side of the employers.***
And the implications for the United States, in the second Gilded Age:
Looking around today, it is obvious that inequality and conflict over the distribution of wealth and income remain salient a century after the first Gilded Age. History is never a perfect guide, but the late 19th century suggests that even as markets play a greater role in allocating labour, legal and political institutions will continue to shape bargaining power between firms and workers, and thus the division of rents within the firm. What remains to be determined – and battled over – is which institutions are empowered to act, and whose interests they will represent. Regardless, latent labour market conflict seems likely to be a prominent feature of our new Gilded Age.
Finally, what can we way about inequality looking forward? According to Robert Shiller, it “could become a nightmare in the decades ahead.”
The reason for this dire prognosis is that the structures that create high levels of inequality in the first place serve as barriers to policies that might actually lessen the amount of inequality. According to Angus Deaton, “Those who are doing well will organize to protect what they have, including in ways that benefit them at the expense of the majority.” Historically, the only exceptions in capitalist democracies emerge in times of war, “because war mobilization changed beliefs about tax fairness.”
And contra Robert Solow (“We are not good at large-scale redistribution of income”), capitalist societies have consistently shown to be very good at large-scale redistribution of income toward the top—just not particularly interested in moving in the opposite direction, in redistributing income to those at the bottom.
In fact, neither Shiller nor the nine other economists who contributed to a recent project on long-term forecasting “expressed optimism that inequality would be corrected in the future, and none of us ventured that any major economic policy was likely to counteract recent trends.”****
Shiller uses Satyajit Ray’s 1973 movie “Distant Thunder”—about the Bengal famine of 1942-43, when millions died, almost all from the lower classes—to illustrate our current dilemma. There was plenty of food in the Bengal Province of British India to keep everyone alive but “the food was not shared adequately.”*****
Systems of privilege and entitlement permitted hoarding of food by people of status whose lives went on much as usual, except that they had to brush off starving beggars and would occasionally see dead bodies on the street.
It’s clear that, today, there are plenty of goods—food, clothing, and shelter—to go around but they’re not being shared equally. Not by a long shot. The problem is, existing “systems of privilege and entitlement” permit the accumulation of wealth on one end and misery on the end—just as they did during the first Gilded Age and, unless things change, will continue to do so for the foreseeable future.
Meanwhile, the lives of people of status go on much as usual, in their “bougie playground”—except they have to brush off the contemporary equivalent of starving beggars and occasionally see the analogy today of dead bodies on the street.
*It should perhaps come as no surprise that a prominent mainstream economist, Rebecca Blank, Chancellor of the University of Wisconsin-Madison since 2013, is the one who sought (and won) an end to the cap on out-of-state and international students.
**As Stephanie Saul reports,
According to the College Board, the average cost of attending a four-year public university, including room and board, increased from $11,655 in 2000 to $19,548 in 2015, in inflation-adjusted dollars. In the City University of New York system, tuition at four-year colleges is now $6,330, having increased by $300 each year since 2011, when it was $4,830. . .
“What Sanders figured out — it’s not the $65,000 cost of attendance at some of our pricier privates driving the debt bubble, but rather the disinvestment and privatization of public higher ed,” said Barmak Nassirian, the director of federal relations and policy analysis for the American Association of State Colleges and Universities.
***This is one of the examples I use in my graduate-level course on the Political Economy of War and Peace—that the United States has its own history of intrastate wars (which, like many such wars in recent times, have been class wars) and that, as the authors explain, “military and law enforcement institutions of the United States, in particular the Army, the National Guard, and the FBI, can trace their origins to the federal troops, state militias, and private Pinkertons deployed in 19th century labor conflicts.”
****The key point Shiller does not address is the role mainstream economics has played both in creating the current levels of inequality and in creating barriers to imagining and enacting policies and strategies for doing away with the grotesque levels of inequality we are witnessing today.
*****Amartya Sen famously argued that democracy prevents famines. That may be true. But it doesn’t prevent hunger or the other economic and social catastrophes that stem from the high levels of inequality we’ve witnessed during the first and second Gilded Ages in the United States.
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