Lynn Parramore — The Corporate Plan to Groom U.S. Kids for Servitude by Wiping Out Public Schools

Training first-world children for a third-world life.

Must-read. Colonizing the home country.

It's a recipe for revolt — or imposition of a totalitarian state to preclude it, which is already well in progress.

The flying the ointment may be representative democracy, where the dispossessed majority, facing no hope, elect a "populist" government. That could go many ways., especially is resentment is elevated.

INET
The Corporate Plan to Groom U.S. Kids for Servitude by Wiping Out Public Schools

Lynn Parramore

ht Yves Smith at Naked Capitalism

Some links

Hat tip Lambert Strether at Naked Capitalism.

Bruce Boghosian runs the numbers and shows that without redistribution of wealth, the rich get richer and everyone else gets poorer…

Using a mathematical model devised to mimic a simplified version of the free market, he and colleagues are finding that, without redistribution, wealth becomes increasingly more concentrated, and inequality grows until almost all assets are held by an extremely small percent of people.

“Our work refutes the idea that free markets, by virtually leaving people up to their own devices, will be fair,” he said. “Our model, which is able to explain the form of the actual wealth distribution with remarkable accuracy, also shows that free markets cannot be stable without redistribution mechanisms. The reality is precisely the opposite of what so-called ‘market fundamentalists’ would have us believe.”...

Inevitably, some people ask Boghosian about the political implications of his research, but he tries to stay focused on the math. Still, when pressed, he said intervention is necessary.
“If the natural mechanisms of a market economy are such that what seems fair isn’t, and leads to concentration of wealth in the absence of intervention,” he said, “if that’s true, then by the same ethical calculus that outlaws pyramid schemes and justifies consumer protection laws, we need to protect people from the natural inclinations of free-market economics.”

Worth reading in full.

Tufts Now
The Mathematics of Inequality 

Taylor McNeil

Being poor results in a downward spiral. Good reason to adopt a job guarantee that matches individuals to work.

The Atlantic
The Barriers Stopping Poor People From Moving to Better Jobs

Alana Semuels

This article focuses on the decline of research, which is important, but it is only one of the issues involving the push to "save money" in education.

The Atlantic
The Decline of the Midwest's Public Universities Threatens to Wreck Its Most Vibrant Economies

Jon Marcus

Chris Dillow — The Social Mobility Lie

Class again. It affects everything.

Stumbling and Mumbling

The Social Mobility Lie

Chris Dillow | Investors Chronicle

Laura Tyson and Anu Madgavkar — The Great Income Stagnation

Stagnating or falling real incomes do not just act as a brake on consumption demand and GDP growth; they also fuel social and political discontent, as citizens lose confidence in existing economic structures.

Project Syndicate
The Great Income Stagnation
Laura Tyson, former chair of the US President's Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley, a senior adviser at the Rock Creek Group, and a member of the World Economic Forum Global Agenda Council on Gender Parity, and Anu Madgavkar is a McKinsey Global Institute partner.

Chris Dillow — Immigration as social mobility

Another provocative post by Chris Dillow and another reason that I continually emphasize that political economy that is not based on the global economy is not only bollox but biased (racist, if you prefer.) For one thing, it ignores and even denies the issues arising from primitive accumulation, which was, contra Locke, principally by force. Liberalism for me but not for you.

Stumbling and Mumbling
Immigration as social mobility
Chris Dillow | Investors Chronicle

Markus Schuller — Capitalism Corrupts the Inclusive Market Mechanism

Good essay.

In the early 1980s, when Margret Thatcher and Ronald Reagan began to increase the competitiveness of their economies for the upcoming globalization on the basis of the theories of the Chicago School, their reforms were labeled as liberalisation, deregulation and privatisation. The claim was that this trinity would strengthen the individual in their societies and the competitiveness of their economies. The “victory” of capitalism over communism in 1989 reinforced the reform agenda. The interpretation of capitalism that dominated this agenda however shows a lack of congruence with an inclusive market mechanism.…

Neoliberalism is getting its comuppance own to overreach.

OECD Insights
Capitalism Corrupts the Inclusive Market Mechanism

Markus Schuller, founder of Panthera Solutions
ht Mark Thoma at Economist's View

Jared Bernstein — Opportunity, Inequality, Public Opinion, and Power

Class power on the table, along with rents.

Why does it matter that we as a nation understand this causal linkage [between economic inequality and lack of social mobility]? The answer has to do with both policy and power. One way of summarizing the fundamental problem of narrowly distributed growth is that those whose incomes are asset-driven hold disproportionate political power relative to those whose incomes depend on paychecks.

Thus, anti-inequality measures that threaten the top 1%–that attempt to reduce their economic “rents”—like collective bargaining, higher minimum wages, trade policy that protects workers’ rights and wages, full employment, robust safety nets, progressive taxation, are attacked as counterproductive to growth and jobs. 

That leaves us stuck in a cul-de-sac: we can’t increase opportunity because we can’t decrease inequality....

Bingo!

Unfortunately, I fear there are more Baltimores in our future.

Jared Bernstein | On the Economy

Opportunity, Inequality, Public Opinion, and Power
Jared Bernstein

Chris Dillow — The heritability red herring

Contra the old conservative argument that merit is heritable and therefore a meritocracy is chiefly hereditary.

Stumbling and Mumbling
The heritability red herring
Chris Dillow | Investors Chronicle

Rob Wile — Parents Across The Developed World Say Their Kids Are Screwed

Parents in developed markets overwhelmingly believe their children will be worse off financially than they were, according to a recent chart from Citi.  

France is the gloomiest by a wide margin, with 90% of adults saying their children will face greater hardships than they did. Israel and Australia were the least pessimistic. In the U.S., 62% said their children's fortunes will have deteriorated.

Business Insider
Parents Across The Developed World Say Their Kids Are Screwed
Rob Wile

Political flashpoint.

Timothy Noah — Sorry conservatives — America’s mobility problem is real

Some conservatives, though, have lately determined to challenge the evidence on social mobility and reassert that the U.S. really is an example for the world when it comes to racing up the income scale. Writing in the April 14 New York Times, Mark R. Rank, professor of social welfare at Washington University, claims to have evidence that “casts serious doubt on the notion of a rigid class structure in the United States based upon income.” Mark J. Perry of the right-leaning American Enterprise Institutereports, based on Rank’s piece and something that the conservative economist Thomas Sowell wrote 14 years ago, that “there is dynamic movement up and down the income quintiles throughout most Americans’ lifetimes.” And Benjamin Domenech, publisher of The Federalist and a senior fellow at the Heartland Institute, writes in The Wall Street Journal’s new “Think Tank” blog that “U.S. economic mobility is very good.” (Full disclosure: I contribute to the same blog.)

So, does the U.S. have lots of social mobility, or very little? Alas, the conservative revisionists have it wrong. Social mobility in the U.S. is stagnant, and has been for some time....

The only meaningful way to measure mobility, economists tend to agree, is to look at intergenerational changes. You take a snapshot of where a person fits in the income distribution and then you compare it to where that person’s parents, at a comparable stage in life, fit in the income distribution of their era. Such intergenerational mobility is what an impoverished immigrant means when she says she’d like to see her children live a better life. She doesn’t mean merely that she wishes they make more money. They probably will! She means that she wishes they occupy a higher station—that instead of being a shopkeeper, for instance, they become doctors or lawyers.

Intergenerational mobility is the metric by which the United States lags most comparable nations. This is a relatively recent discovery. Previously, economists believed that mobility in the U.S. was fairly robust...

Although the discovery of America’s low mobility, compared to similar countries, is relatively new, it turns out that mobility’s been low for some time. A January study by Harvard economist Raj Chetty found that people who entered the workforce in the 1970s had about as much chance of moving up as people entering the workforce today. There was more mobility for people entering the workforce in the 1950s, and a lot more for people entering the workforce at the turn of the 20th century.

MSNBC
Sorry conservatives — America’s mobility problem is real
Timothy Noah

Matthew O'Brien — Why Is the American Dream Dead in the South?

Atlantic Business
Why Is the American Dream Dead in the South?
Matthew O'Brien

Joel Kotkin — Neither Party Dealing With More-Rigid Class Structure

Diminished prospects – what some describe as the “new normal” – now confront a vast proportion of the population, with wages falling not only for noncollege graduates but also for those with four-year degrees. Overall, median incomes for Americans fell 7 percent in the decade following 2000 and are not expected to recover, according to some economic models, until 2021.

This decline has infected the national mood. Today, more middle- and working-class Americans predict that their children will not do better than they have done.Overall, almost one-third of the public, according to Pew, consider themselves “lower” class, as opposed the middle class, up from barely one-quarter who thought so in 2008.

It’s not surprising, then, that the vast majority of Americans believe the president’s economic policy has been a dismal failure, at least for the middle and working classes. Federal Reserve monetary policy, in particular, appeared to favor the interests of the wealthy over those of the middle, yeoman class. “Quantitative easing,” notes one former high-level official, essentially constituted a “too big to fail” windfall for the largest Wall Street firms, and did little for anyone else. Faith in the economy, despite the soaring stock market and increased price of assets, has remained weak. Americans by a 2-1 margin rate the economy negatively.

These realities helped spark both the Tea Party and the Occupy movements and underpin the support for such disparate figures as Sarah Palin and Elizabeth Warren. At the same time, outrage at our current economy has undermined public esteem for almost every institution of power – from government and large corporations to banks and Wall Street – to the lowest point ever recorded.

New Geography

Neither Party Dealing With More-Rigid Class Structure

Joel Kotkin | Executive Editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register

Chris Dillow — The Social Mobility Chimera

David Cameron says "there's not as much social mobility as there needs to be." I wonder why he believes this, because some of the apparently plausible reasons don't bear inspection...

Stumbling and Mumbling
The Social Mobility Chimera
Chris Dillow | Investors Chronicle (UK)

Social mobility encourages the notion of meritocracy over heredity in bestowing privilege, but it doesn't address social inequality or the bias of the particular system of merit. Increasing social mobility is not necessarily a solution to the social dysfunction of widespread poverty and extreme inequality. Horatio Alger proves nothing.

Steve Randy Waldman — Mobility is no answer to dispersion

The cost and shame of downward mobility dramatically outmatches the potential benefit of upward mobility. If that sounds abstruse and theoretical, it shouldn’t. For example, I don’t think you can understand the United States response to the financial crisis without taking into account the genuine sympathy of policymakers and other influencers for the plight of people within their social communities who faced banishment to dramatically lower stations under theoretically superior policy alternatives. A functional polity values rising fortunes across the wealth spectrum, but it fears and resists falling fortunes much more strenuously. I would go so far as to claim this is a universal social fact, a characteristic of all polities that endure. Capitalism is always crony capitalism — and socialism tends towards crony socialism! — not because of corrupt bad actors but because human lifestyles are sticky-downward. Large social divergences can in practice be remedied smoothly only by convergence upward from the bottom. The wise course is to prevent extreme divergence from emerging in the first place. Once it has, the only way out is to hope for growth, and to direct the fruits of growth towards the bottom of the distribution.

Interfluidity
Mobility is no answer to dispersion
Steve Randy Waldman

The nitty gritty of the dilemma of the conservative principle that some are better than other and meritocracy is the optimal ordering principle and the liberal principle that all are created equal and deserve equal standing involving no privilege and equal opportunity to succeed.

Joel Kotkin — California’s New Feudalism Benefits A Few At The Expense Of The Multitude

As late as the 80s, California was democratic in a fundamental sense, a place for outsiders and, increasingly, immigrants—roughly 60 percent of the population was considered middle class. Now, instead of a land of opportunity, California has become increasingly feudal. According to recent census estimates, the state suffers some of the highest levels of inequality in the country. By some estimates, the state’s level of inequality compares with that of such global models as the Dominican Republic, Gambia, and the Republic of the Congo.

At the same time, the Golden State now suffers the highest level of poverty in the country—23.5 percent compared to 16 percent nationally—worse than long-term hard luck cases like Mississippi. It is also now home to roughly one-third of the nation’s welfare recipients, almost three times its proportion of the nation’s population.

This is concerning in that California has tended to be prophetic of developing cultural change in the United States. The state is now becoming divided into have and have-not's on a scale not seen prior to WWII and the rise of the middle class....

Some of these trends can be found nationwide, but they have become pronounced and are metastasizing more quickly in the Golden State. As late as the 80s, the state was about as egalitarian as the rest of the country. Now, for the first time in decades, the middle class is a minority, according to the Public Policy Institute of California.

New Geography
California’s New Feudalism Benefits A Few At The Expense Of The Multitude
Joel Kotkin | professor of urban development, currently a fellow at Chapman University in Orange, CA and the Legatum Institute, a London-based think tank

What is particularly interesting is that this is happening in a predominantly liberal state the power structure of which is solidly under Democratic control. Those thinking that a national win by "liberal" Democrats will change things for the better should read this article and rethink their position.

America has a serious structural problem arising from many contributing factors. Without recognizing the problem and addressing it comprehensively, the future for most Americans looks bleak.

There is no man on a white horse on the horizon.

While it is true that Joel Kotkin is affiliated with the political right, his analysis in this post is not overly biased in my view.

Miles Corak — Income Inequality, Equality of Opportunity, and Intergenerational Mobility

The summer issue of the Journal of Economic Perspectives will feature a collection of articles on inequality and the top 1%, some of which are now being circulated by the authors.

The paper by Tony Atkinson and his coauthors, “The top 1 percent in international and historical perspective,” is available in this post, and Greg Mankiw has posted a copy of his paper, “Defending the One Percent“, on his blog.

My contribution to the collection is based on the notion that the inequality literature has paid little attention to the intergenerational consequences of increasing top income shares, and it can be read as a counterpoint to Mankiw’s piece, or at least to his claim that inequality of opportunity is not a reason to worry about the top 1%.

Here is the close to final draft: Income Inequality, Equality of Opportunity, and Intergenerational Mobility. But if you just want a quick read, an excerpt from the conclusion follows. Either way, feedback is—as always—welcomed.

Economics for Public Policy
Income Inequality, Equality of Opportunity, and Intergenerational Mobility
Miles Corak | Professor of Public and International Affairs, University of Ottawa
(h/t Paul Krugman at The Conscience of a Liberal)

“Laws and government may be considered in every case as a combination of the rich to oppress the poor and preserve for themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence”
—Adam Smith, Lectures On Jurisprudence, 1762-3; iv, 21-2, p. 208

This is what democracy is supposed to correct according to the myth. However, reading the Founding Fathers leads to the opposite viewpoint, which is why the US and other "liberal democracies" are actually republics. The result for the most part has been continuation of inequality due to the power and class structure. While some conventional economists are finally willing to talk about inequality, almost none of them are willing yet to talk about power.

The trifecta of social mobility, equality of opportunity and meritocracy

...if social positions were allocated at random we'd have social mobility and equality of opportunity but not meritocracy. If there were different chances of success, we'd have social mobility but not equality of opportunity and maybe meritocracy or not depending upon how jobs were allocated. And if jobs were allocated by merit, and merit were 100% heritable, we'd have meritocracy but not social mobility.

Read it at Stumbling and Mumbling
Is Equal Opportunity Feasible?

by Chris Dillow | Investors Chronicle (UK)

American Dream or American Nightmare?

“The American Dream is in trouble right now,” Dr David Madland, director of the American Worker Project at the Center for American Progress think-tank, told AFP. “It is becoming harder and harder to achieve than it once was.”

“There is a perception among a lot of folks that the game is rigged, and there is a widespread view that those at the top have figured out a way that benefits only them,” Madland said.

Read it at Raw Story
Is the American Dream still achievable in 2012?

by Agence France-Presse