Equality of opportunity vs. equality of outcomes

Campaign season started, and it is way too long if you think about it. At any rate, the discussion of how the GOP is for equality of opportunities, not outcomes, is already in the air. Sen. Marco Rubio has already suggested that.

If we assume that social mobility is a proxy for equality of opportunity and take some measure of inequality, say a Gini, as a proxy of equality of outcomes, one might get a sense of their relation. The figure below is from the book The Spirit Level and shows the data for a few countries.

Social mobility is measured as the correlation of income between different generations. As it turns, it seems that there might be a negative relation between inequality of outcomes, which is high in the US and the UK, with equality of opportunity (social mobility), which is low in those same countries.

Note that this is a limited set of countries, and that social mobility is not exactly equality of opportunity. But this is indicative that equality of opportunity might also lead to equality of outcomes. My guess is that many GOP candidates that pay leap service to the idea of equality (of opportunity) would not like this kind of result.

PS: Graph below is more comprehensive.

Source is  available here.

Paul Krugman on The Economics of The Welfare State

By Paul Krugman

Social expenditure comprises cash benefits, direct in kind provision of goods and services, and tax breaks with social purposes. Benefits may be targeted at low Income households, the elderly, disabled, sick, unemployed, or young persons. To be considered “social”, programmes have to involve either redistribution of resources across households or compulsory participation.

See rest here.

Tim Koechlin on Soaring US Inequality and Why It Matters

By Tim Koechlin

The United States is, by every reasonable measure, the most unequal of the world’s rich countries. And this is not new development. Evidence of extreme and rising economic inequality in the US is quite overwhelming. In 1979, the top 1% earned about 9% of all income; in 2013, they earned 24%. The incomes of the top 0.1% have grown even faster. More than half of all economic growth since 1976 has ended up in the pockets of the top 1%. Meanwhile, the incomes of the shrinking middle class have stagnated, and the incomes of those with a high school education or less have fallen substantially. The purchasing power of the minimum wage has fallen by about 15% since 1979. One in five kids lives in poverty. 

Read rest here

Obama's Minimum Wage Hike Excludes Thousands and Fails to Look at Roots of Income Inequality

David Cay Johnston:

It's important that we restore the minimum wage. We're not talking about raising it. We're talking about restoring it. Back in the mid '60s, it was almost $11 an hour. And education is certainly very important and too much neglected in this country. We put huge barriers to bright but poor and middle-class children getting first-rate educations, especially at college. But we have much more fundamental problems than that. Many of these problems involve things like government rules that hardly anybody knows about that take money from the many and redistribute it to the few, the use of tax dollars to build factories, office buildings, and shopping malls, the rules that allow multinational corporations--not domestic, not mom-and-pop corporations, but multinational corporations-- to actually profit off their corporate income taxes by delaying payment of them for 30, 40, 50 years and having you and I let them deposit that money with the government to collect interest while the value of the tax they owe erodes.

Poverty, Cognition, and Human Potential: Another Crack in The 'Bell Curve' Myth

New research published in Science on how poverty affects mental capacities, in many respects, supports Maslow's pyramid of needs theory, namely, less demands for basic needs opens the mind to higher-order cogitation and creativity. Economic deprivation imposes such a massive cognitive load that little brain bandwidth is left over to maximize human potential.

In a series of experiments run by researchers at Princeton, Harvard, and the University of Warwick, low-income people who were primed to think about financial problems performed poorly on a series of cognition tests, saddled with a mental load that was the equivalent of losing an entire night’s sleep. Put another way, the condition of poverty imposed a mental burden akin to losing 13 IQ points, or comparable to the cognitive difference that’s been observed between chronic alcoholics and normal adults. 

The finding further undercuts the theory that poor people, through inherent weakness, are responsible for their own poverty – or that they ought to be able to lift themselves out of it with enough effort. This research suggests that the reality of poverty actually makes it harder to execute fundamental life skills. Being poor means, as the authors write, “coping with not just a shortfall of money, but also with a concurrent shortfall of cognitive resources.”

Read rest here.

A Freedom Budget for All Americans: Recapturing the Promise of the Civil Rights Movement in the Struggle for Economic Justice Today

New Book by Paul Le Blanc and Michael D. Yates from the Monthly Review Press

While the Civil Rights Movement is remembered for efforts to end segregation and secure the rights of African Americans, the larger economic vision that animated much of the movement is often overlooked today. That vision sought economic justice for every person in the United States, regardless of race. It favored production for social use instead of profit; social ownership; and democratic control over major economic decisions. The document that best captured this vision was the Freedom Budget for All Americans: Budgeting Our Resources, 1966-1975, To Achieve Freedom from Want published by the A. Philip Randolph Institute and endorsed by a virtual ‘who’s who’ of U.S. left liberalism and radicalism.

See rest here

Esping-Anderson's Welfare-State Typology, Social Stratification, and Unintended Consequences

Debates on the welfare state have centered on the degrees to which certain policy measures ensue reductions in poverty and inequality. Contrary to popular belief, however, welfare state institutions have empirically shown to be less than ideal. Using Esping-Anderson’s Welfare-Type Typology, we examine the degree to which welfare states have shaped social stratification, with special attention to the role of gender as a social location affecting social welfare outcomes. We also assess what other social forces are crucial, particularly regarding the nature of gender relations.

The ‘liberal’ welfare-state is constituted by a high degree of ‘commodification,' in which basic access to material necessities are determined by the extent to which an individual participates in the labor market and is rewarded by labor-market outcomes.  The ideology is that a high degree of state interference in the market economy, such that various human needs, like access to health care, are socialized, not only causes price distortions that lead to economic downturns, but undermines the effectiveness of the economy to achieve allocational equity and efficiency. The favored means of providing state-supported services to the body-politic are by way of means-tested entitlements.

The empirical evidence suggests that irrespective of policy intention, classicism is induced.  Social stratification is marked by the manifestation of a desperate minority forced to rely on minimal forms of public assistance, which inadvertently undermines their bargaining power in the labor market, making inequality, and thus poverty, a self-fulfilling prophesy (Korpi & Palme, 1998; Orloff 1993). This is specifically exemplified by countries like the United States, a liberal welfare-state, which offers meager assistance for women to escape the confines of patriarchy within the household (Stier & Lewin-Epstien, 2001). The net effect is a ‘two-tier’ welfare system, in which social assistance programs serve a predominantly female clientele (Orloff, 1993, 1998).

The social-democratic ‘encompassing’ welfare-regime is marked by universal social insurance schemes to the economically active population. The philosophical underpinning is that rights of citizenship preclude basic access to state provided assistance programs, to ensure a modicum of security and protection from the uncertainty and insecurity that stem from the vagaries of the capitalist marketplace. According to empirical evidence social democracies, like that of Sweden, ensure poverty traps are greatly eviscerated (Korpi & Palme, 1998).

It is prudent, however, not to let the optimism cloud one’s judgement. Social democracies, like that of Sweden, despite curbing poverty, in other matters enhance social stratification. Given the likelihood of women to not be continuously employed over the course of the life cycle, due to the effects of motherhood and the discriminatory effects of patriarchy within the household, this has implications for the types of jobs women are likely of receiving (Orloff, 1993, Rubin & Lewin-Epstein, 2001).  In Sweden, for example, women are relegated to employments in the public-sector, by which they receive less earnings and have less organized forms of collective bargaining with the state than men in the private sector; “this has the gendered the debate over public versus private provision of welfare services” (Orloff, 1993).

The corporatist model of the welfare state is centered on the tenet that the state should maintain a high level of occupational segmentation and socioeconomic differentiation. The eligibility for welfare-services is dependent on the specific category of employment in the private sector. To some degree, poverty is alleviated to those who have the opportunity to be employed in an industry deemed 'worthy' of social protection. The outcome, however, is a reproduction of social inequality along socioeconomic distinctions among different categories of citizens (Korpi & Palme, 1998).

Furthermore, the under the corporatist model the state supports a traditional division of labor between the genders, both normatively and institutionally. The state expects a reproduction of the so-called ‘traditional’ family, with the male breadwinner the sole provider for all family members. The state may intervene when the family succumbs to economic precariousness, but the overwhelming perceivance is that women should be relegated to the responsibilities of house-holding, fostering social outcomes that make women dependents on the family, and thus on males, for sustenance (Rubin & Lewin-Epstein, 2001).

Concerning social forces, other than the welfare-state itself, that shape social stratification, it is pertinent to take note of the empirical evidence that women, especially mothers, suffer reduced earnings when they seek gainful employment (Budig & England, 2001). The implication is that women, especially mothers, will have less bargaining power within household to escape the confines of patriarchy. In this sense, not only is social stratification reproduced in the public sphere, but is also maximized in the private sphere. In the household women become socially dependent on their spouses, which, in turn, induces women who are financially dependent on their spouses to succumb to unequal domestic responsibilities.

By way of conclusion, it is necessary to emphasize that although the intended effect of welfare-state institutions is inherently egalitarian, the inconsistencies make such optimism a bit suspect. It is important to be contextual, institutionally specific, and historically contingent in making assessments on whether welfare-states achieve desired goals, and it is requisite that one pay close attention to how entrenched cultural characteristics and social perceptions adversely shape the character of social organization.

References:

Esping-Anderson, G. 1999. Social Foundation of Post-industrial Society. Oxford: University Press.

Orloff, A. 1996. "Gender in the Welfare State." Annual Review of Sociology 22:51-78.

Orloff, A. 1993. “Gender and the social rights of citizenship: The comparative analysis of gender relations and welfare states.” American Sociological Review 58: 303-328.

Stier, H., Lewin-Epstein, N. & Braun, M. 2001. “Welfare Regimes, Family-Supportive Policies, and Women's Employment Along the Life-Course.” American Journal of Sociology 106: 1731-1760.

Inequality and mobility

The so-called Great Gatsby diagram that Alan Krueger presented recently shows that there is a positive correlation between inequality and lack of social mobility. The graph below shows a full version.

Note that the only African and the four Latin American countries are on the higher end of the graph, while the four Nordic and the three British off-shoots in the sample are at the other end of the Gatsby curve. The US uncomfortably close to the higher end of the curve. No particular observation. Graph does all the job. The source for the graph is Miles Corak here.