Brink Lindsey – Bleeding Heart Libertarians http://bleedingheartlibertarians.com Free Markets and Social Justice Wed, 15 Nov 2017 17:16:21 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.3 http://bleedingheartlibertarians.com/wp-content/uploads/2016/09/cropped-site-icon-BHL-32x32.png Brink Lindsey – Bleeding Heart Libertarians http://bleedingheartlibertarians.com 32 32 22756168 Why Living on the Dole Is Bad for You http://bleedingheartlibertarians.com/2014/06/why-living-on-the-dole-is-bad-for-you/ http://bleedingheartlibertarians.com/2014/06/why-living-on-the-dole-is-bad-for-you/#comments Fri, 27 Jun 2014 13:00:56 +0000 http://bleedingheartlibertarians.com/?p=8129 In a post last week, Jessica Flanigan takes me to task for my opposition to a universal basic income. Because I worry that a UBI would further encourage mass idleness,...

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In a post last week, Jessica Flanigan takes me to task for my opposition to a universal basic income. Because I worry that a UBI would further encourage mass idleness, a serious and worsening social blight among the less educated and less skilled, I favor instead social policies that promote engagement in the work force – in particular, through wage subsidies for low-skill work. Flanigan says this makes me a paternalist.

There are serious reasons for favoring a UBI, and I applaud Flanigan for raising important issues. But I don’t think the paternalism charge really gets us anywhere. After all, the purpose of both a UBI and wage subsidies is to help people who are failing to support themselves adequately. In one sense, then, both policies are paternalistic, since in both cases the state is assuming a paternal role of providing for dependents. Viewed from another angle, though, neither policy is properly considered paternalistic. Paternalism, after all, is about reducing people’s choices for their own good. But either a UBI or wage subsidies would expand the choices of their intended beneficiaries relative to what they would be in the absence of any government provision at all.

Nevertheless, it is true that the choices of UBI recipients are less constrained than those of workers who receive wage subsidies. With a UBI, you get a check every month no matter what, whereas to benefit from wage subsidies you have to get a job.

The great virtue of a UBI is its directness and simplicity: people need help, so just give them money. Don’t worry about providing food stamps, public housing, job training, etc. – instead just cut a check and let people figure out for themselves how best to use the money. As the cleanest social policy option, the UBI sets an appropriate benchmark for judging any alternative form of assistance. Supporters of any program of specific government-provided benefits – including wage subsidies – need to be able to show that such in-kind aid helps its beneficiaries more than simply writing checks for the equivalent amount of money.

I think a good case can be made that a UBI would be more helpful to the disadvantaged than the patchwork of frequently intrusive, infantilizing, bureaucratic, and wasteful means-tested programs that presently constitutes the American social safety net. So if I could wave a magic wand and replace the policy status quo with a UBI, I would do so. That said, my reading of the available evidence convinces me that a social policy that channels benefits through work and thereby encourages paid employment has important advantages over a UBI in helping the disadvantaged to live full, happy, productive, and rewarding lives.

What evidence? Let’s start with the well-established finding that unemployment has major negative effects on well-being, including both mental and physical health. And the effects are remarkably persistent. A study using German panel data examined changes in reported life satisfaction after marriage, divorce, birth of a child, death of a spouse, layoff, and unemployment. All had predictable effects in the short term, but for five of the six the effect generally wore off with time: the joy of having a new baby subsided, while the pain of a loved one’s death gradually faded. The exception was unemployment: even after five years, the researchers found little evidence of adaptation.

Evidence even more directly on point comes from the experience of welfare reform – specifically, the imposition of work requirements on recipients of public assistance. Interestingly, studies of the economic consequences of reform showed little or no change in recipients’ material well-being. But a pair of studies found a positive impact on single mothers’ happiness as a result of moving off welfare and finding work.

Flanigan is certainly correct that it’s possible to have an enjoyable and satisfying life without working for pay. Employment’s psychic benefits come from engaging us in challenges to overcome, encouraging us to develop and realize our inborn talents, and involving us in projects and purposes larger than ourselves. But we can obtain these benefits just as well through hobbies, volunteer work, and family life. And indeed, there is a real tension between the demands of a job and these other pathways to happiness, as all of us who struggle for that elusive work-life balance can attest.

So you might think that not having to work would free people to spend more time on these other, potentially more rewarding activities. But life doesn’t seem to work that way. Consider the most recent results from the American Time Use Survey, compiled annually by the Bureau of Labor Statistics. In 2013, employed men averaged 6.43 hours a day on work and related activities (like commuting). So how did men without jobs fill up all that free time? Well, compared to employed men they spent 19 extra minutes a day on housework, 11 more minutes on socializing, 9 more minutes on exercise and recreation, 8 more minutes on childcare, and 6 more minutes on organizational, civic, and religious activities. The really dramatic differences in time use, though, came in two areas: jobless men spent an extra hour sleeping (for a total of 9.25 hours a day!) and two extra hours watching TV (4.05 hours a day!). The evidence is quite clear: people who don’t work can’t be counted on to fill that void with other forms of productive, engaged, goal-oriented activity.

Yes, there are plenty of happy students and stay-at-home parents, and retirement apparently improves well-being. You don’t need a paycheck to thrive. But for most working-age people, paid employment is the most reliable path to commitment, engagement, and a sense of purpose. For most people, joblessness means not only a lack of income, but also lack of status, lack of identity, and lack of direction. It is the path, not to nonpecuniary forms of fulfillment, but to anomie and despair.

Over the past few decades, there has been a steady deterioration in American men’s commitment to work. For so-called prime-age males aged 25-54, the labor force participation rate has fallen from 96 percent in 1970 to 88 percent today. This drop-off in participation is concentrated among the less educated and less skilled. Among all adult men in 2010, the labor force participation rate for college grads was 81 percent – compared to 71 percent for high school grads, and only 59 percent for high school dropouts.

What is going on? The emergence of the postindustrial information economy is reducing relative demand for, and the relative wages of, less skilled workers. Meanwhile, eligibility for the dole has expanded (especially disability insurance) while the cultural stigma against idleness has faded. This pincer movement is squeezing less skilled men out of the work force.

And in turn, the reduced availability of “marriageable” (i.e., gainfully employed) men is contributing to family breakdown at the bottom of the socioeconomic scale. In 2011, 87 percent of kids who have a parent with a college degree lived with both of their parents – compared to only 53 percent of kids of high school grads, and 47 percent of the kids of high school dropouts. Unstable single-parent families can then be expected to produce another generation of unmarriageable less skilled men, thus perpetuating a vicious circle.

The rise of mass joblessness among the less skilled is a catastrophe, plain and simple. Work and family, the two great cornerstones of life satisfaction, are both under assault, and declining commitment to one is feeding declining commitment to the other.

Under these circumstances, a UBI cannot be recommended as sound social policy. The great challenge at present is to arrest and reverse the slide of less skilled Americans into a permanent underclass – even as automation and globalization continue to marginalize the role and value of low-skill work. But as the celebrated negative income tax experiments of the late 1960s and early 1970s made clear, unconditional income support reduces labor supply. Perhaps not dramatically, but still the impact is going in the wrong direction. By contrast, wage subsidies in the form of graduated payments to employers of low-skill workers can increase the attractiveness of work and boost labor force participation.

It’s entirely possible that the continued progress of automation will eventually make paid employment the exception rather than the rule. We must hope that by then we are up to facing what Keynes called man’s “permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which compound interest and science will have won for him, to live wisely and agreeably and well.”

But we’re not ready yet. We cannot maintain our current living standards without a high degree of labor participation, and against that backdrop mass joblessness is a recipe for dysfunction and misery. We may someday enjoy a post-work society of productive, creative leisure, but maintaining and expanding the underclass aren’t the way to get there.

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Edmund Phelps, Mass Flourishing, and Bleeding Heart Libertarianism http://bleedingheartlibertarians.com/2013/11/edmund-phelps-mass-flourishing-and-bleeding-heart-libertarianism/ http://bleedingheartlibertarians.com/2013/11/edmund-phelps-mass-flourishing-and-bleeding-heart-libertarianism/#comments Tue, 12 Nov 2013 19:40:46 +0000 http://bleedingheartlibertarians.com/?p=6880 Thanks so much to the BHL crew for allowing me to stop by for a visit. I wanted to share some thoughts about Mass Flourishing, the new book out by...

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k10058Thanks so much to the BHL crew for allowing me to stop by for a visit. I wanted to share some thoughts about Mass Flourishing, the new book out by the economist Edmund Phelps. Here is a summary by the author.

Phelps is best known in the economics profession for his work in macroeconomics, particularly his development (along with Milton Friedman) of the concept of the natural rate of unemployment in the 1960s. It was in recognition of that work that he was awarded the Nobel Prize in 2006.

In more recent decades, though, Phelps has turned his attention to broader subjects that should be of special interest to BHL readers. In the 1990s he focused on the problem of declining incentives to work among low-skill workers and the resulting blights of long-term joblessness, social exclusion, and intergenerational poverty. Addressing the problem head-on, Phelps has championed a system of graduated wage subsidies to encourage greater labor market participation and raise incomes at the low end of the socioeconomic scale. Over the past decade, his central preoccupation has been economic dynamism – the “creative destruction” unleashed by entrepreneurial innovation. In particular, he has explored the contrast between what he sees as the relative dynamism of American-style capitalism and the relative sclerosis of continental European “corporatism”.

To an extent perhaps unmatched by any contemporary economist, Phelps thus embodies the distinctive BHL concern with both “free markets and social justice.” Indeed, the BHL intellectual project has sometimes been described as the effort to bring together the best of Hayek and Rawls. And for his part, Phelps regularly acknowledges his debt to both thinkers and weaves their insights into his own analysis.

Those debts are in clear evidence in Mass Flourishing. The book is wide-ranging and highly eclectic: in just two pages (pp. 280-281) you’ll find references to Cervantes, Shakespeare, Hume, Voltaire, Jefferson, Keats, William Earnest Henley, William James, Walt Whitman, Abraham Maslow, Rawls, Nietzsche, and Lady Gaga! Its main ambitions, though, are twofold. First, to argue that the “modern economy” – i.e., one characterized by a high degree of entrepreneurial innovation – succeeds better than any rival social system yet devised in promoting both individual flourishing and social justice. And second, to construct a historical narrative in which the “modern economy” experienced its heyday in the late 19th and early 20th centuries but has been in general retreat since the 1960s, giving way to “corporatism” and the recrudescence of “traditional” values.

In this post I’ll focus on Phelps’ first argument. As to the historical narrative, I’ll just say for now that I’m unpersuaded – although Phelps does put forward lines of evidence that have me reassessing some of my priors. I hope before long to address that part of the book in a different forum – so stay tuned.

Phelps’ argument for dynamism turns away from purely material concerns and puts central emphasis instead on the psychic benefits of modern economic life. Or, to put the matter another way, Phelps argues that the modern economy bestows its greatest benefits on us, not as consumers, but as producers and workers.

Specifically, Phelps adopts a conception of human flourishing rooted in Aristotle by way of Dewey, Maslow, and Rawls: flourishing consists of self-realization – in other words, the development of talents and capacities – through solving problems and meeting and overcoming challenges. The signal virtue of the dynamic modern economy, in Phelps’ view, is the way in which its relentless creative destruction turns creative problem-solving into a mass pursuit – and thus transforms the world of work into the most accessible arena for self-realization ever devised.

“The distinctive experiences of the modern economy,” Phelps writes, “come from its distinctive activity of creating, developing, marketing, and testing new ideas. In many occupations, though not all, the experience of work is transformed from the sameness, or stasis, typical in the traditional economies to the change, challenge, and originality found in the modern economy.” (p. 57)

Phelps notes the fundamental similarity between entrepreneurial innovation and artistic and intellectual creativity. Indeed, he argues that they spring from the same cultural source: the distinctive ethos of self-discovery and personal development that first began to take shape in 15th-century western Europe and that Phelps labels “modernism” or “vitalism.” Here’s Phelps on the interaction between economic and cultural dynamism:

The earliest expressions of the modern, very clearly in music and philosophy, appear to anticipate and perhaps to kindle the spirit without which modern economies would have been impossible; these precocious breakthroughs in the arts and philosophy are harbingers of the modern economies to come. Nevertheless, the extraordinary waves of artistic innovation in the 19th century and the first half of the 20th are reflections and commentary on the new dimensions of life wrought by the modern economy. (pp. 75-76)

Of course the great irony is that the emergence of the modern capitalist economy in the 19th century was greeted with overwhelming hostility from artists and intellectuals, who saw in bourgeois “philistinism” the very antithesis of their own sensibility. Some of the blame for this misunderstanding, as Phelps duly notes, lies with the materialistic focus of economists, who generally have regarded all work as disutility and production as a cost whose only justification is consumption. That theoretical apparatus delivers real and important insights: one of the great advantages of the economic way of thinking is to see through the “lump of labor” fallacy according to which people need to consume in order to give workers something to do. But it also tends to obscure the psychic benefits of capitalism.

It’s hardly surprising that I deeply sympathize with Phelps’ efforts to highlight those psychic benefits. After all, I wrote one book about how capitalist mass affluence has triggered a mass quest for self-realization, and another one about how the increasing complexity of modern economic life spurs the development of our cognitive capabilities. And here is a much earlier article of mine that makes a very similar argument to the one Phelps advances.

I would caution, though, not to go too far in ascribing the rise of mass flourishing to the specific variant of highly innovative capitalism that Phelps and I happen to favor. As Phelps observes, economies can grow rich and highly advanced without much in the way of homegrown innovation – they need only succeed in adopting innovations pioneered abroad. And, as I read the evidence, any rich complex economy – even one in which entrepreneurial creative destruction is fairly feeble – will afford wide opportunities for personal growth through engaging and challenging work.

That said, I’m certainly inclined to believe that greater exposure to competition, which is what primarily distinguishes a more entrepreneurial capitalism from its corporatist cousins, also invigorates the workplace in ways that conduce to individual flourishing. As the economist J. R. Hicks once noted, “The best of all monopoly profits is a quiet life.” However seemingly desirable, the peace and quiet made possible by the absence or muting of competitive pressures weaken the connection between effort and reward – and thus the motivation to stretch one’s capacities. Just anecdotally, think of the workers you’ve encountered at the post office or your cable company: not a lot of passionate striving for excellence in evidence. More seriously, Phelps cites research he conducted with Icelandic economist Gylfi Zoega which finds that job satisfaction is positively correlated with more dynamic economic institutions. (On the other hand, it should be noted that other research shows higher job satisfaction in state-owned enterprises than in privately owned firms.)

Phelps argues that a dynamic capitalist economy is a good economy because it most effectively promotes the good life for its members. In addition, Phelps adopts a Rawlsian analytical framework to contend that a dynamic capitalist economy is also a just economy. (Interesting side note: Phelps’ intellectual debt to Rawls began with a personal relationship, as the two shared adjoining offices at the Center for Advanced Study in the Behavioral Sciences at Stanford in 1969-70 while Rawls was completing A Theory of Justice. They remained friendly over the years that followed.)

The social model that Phelps seeks to justify is a species of BHL “market democracy” or “neoclassical liberalism”: it combines a lightly regulated, highly dynamic market order with a state-provided social safety net (the centerpiece of which is a system of graduated wage subsidies designed to reduce unemployment and lift wages for the least advantaged workers). The inevitable economic inequalities that will arise under such a social model are consistent with the Rawlsian difference principle as Phelps understands it: the higher growth made possible by dynamism maximizes living standards at the bottom, both directly through higher market incomes and lower costs of living and indirectly through supplying the tax revenues that fund wage subsidies.

But Phelps goes beyond a consideration of merely pecuniary rewards and applies the difference principle to the more broadly conceived well-being of self-realization and flourishing:

The present book, after comparing the main alternatives, sees reasons to believe that a modern economy … is tailor-made to produce the flourishing and personal growth that are at the core of the good life…. With that evidence in hand, a member of a thoroughly modern society, placed in Rawls’ original position and assuming that he might be among the least advantaged, would have good reason to decide that the modern-capitalist economy, if justly-functioning and well-functioning, was the right choice to make. (p. 301)

Phelps recognizes that there are other conceptions of the good life besides his own, and thus that a life of creativity and active development of talents is not for everybody. People should be free to pursue other paths, he argues, but the path of dynamism must not be blocked as a consequence:

Justice requires tolerance of other lifestyles and thinking, but it does not require those who would pursue the good life to engage in self-denial or to surrender to those styles. Justice does not allow the traditions of the others to so constrict the modern economy as to block the expression of its dynamism in innovative activity and thus modern life. (p. 305)

It’s impossible to capture all the twists and turns in Phelps’ argument here, but I hope I’ve succeeded in conveying at least the basic thrust of his thinking. For those previously unaware of his work, I encourage you to dive in and explore. Anyone interested in the synthesis of free markets and social justice will find this eminent thinker’s distinctive version of that synthesis both illuminating and thought-provoking.

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Human Capitalism’s Inconvenient Implications http://bleedingheartlibertarians.com/2012/10/human-capitalisms-inconvenient-implications/ http://bleedingheartlibertarians.com/2012/10/human-capitalisms-inconvenient-implications/#comments Tue, 09 Oct 2012 14:30:36 +0000 http://bleedingheartlibertarians.com/?p=4253 The argument I make in Human Capitalism (see this prior post for a quick summary) raises uncomfortable questions across the ideological spectrum – and the corresponding philosophical spectrum as well....

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The argument I make in Human Capitalism (see this prior post for a quick summary) raises uncomfortable questions across the ideological spectrum – and the corresponding philosophical spectrum as well. I’ll start by reviewing how my analysis confounds some of the prevailing assumptions of both libertarians and progressives, then I’ll turn to a broader challenge for liberalism, whether classical or high.

Since I’m a libertarian, let me pick on my own side first. I’ll identify a couple of implications of my book that are likely to make my confreres nervous.

Inequality matters. Libertarians typically feel like they’re on the defensive when the subject of inequality comes up, and they tend to react by minimizing its importance. Growth and opportunity are what we should care about, not equal outcomes. Indeed, inequality is a corollary of freedom: people with different abilities and preferences will naturally diverge in terms of socioeconomic achievement.

Of course BHL types, with their explicit commitment to social justice, should have no problem with the proposition that inequality matters – or, more precisely, certain kinds of inequality can matter under certain circumstances. Yes, the very concept of social justice gives most libertarians heartburn – and, I’ll admit, it’s not a turn of phrase that comes trippingly off my tongue. But if you’re any kind of contractarian, and I am, you recognize that a society’s policies and institutions should be judged on how well they work for everybody. So if one group in society is thriving while the rest lack vital opportunities or are failing to take advantage of those that are available, it makes sense to sit up, take notice, and look carefully at whether current policies and institutions need to be altered.

The ability to exercise personal responsibility isn’t something we’re born with. The idea of personal responsibility is central to the libertarian social vision: people should be free to make their own choices, and they should bear the consequences of choices. Yet nobody is born with the capacities necessary for reasoned choice: those capacities develop during childhood – i.e., during a time when no one believes we are fully responsible for our actions. So if the experiences of childhood have a big influence over how well we are able to make choices, and those experiences are totally outside our control, isn’t it a big problem when the conditions under which some people develop are flatly inconsistent with the robust personal responsibility we want to impute to them in adulthood?

This is just another way of saying that childhood doesn’t fit well into libertarians’ rights-based framework. Most libertarians will insist that our rights, properly understood, are all negative, and that positive rights don’t make any sense because they necessarily impinge on other people’s negative rights. But what about children? Unless you bite the bullet and argue that children are basically the personal property of their parents (which some libertarians have done – ugh), you have to concede that children have positive rights to care and nurture. How far do those rights extend? Are the concepts of child abuse and child neglect invariant or do their contents vary with changing social conditions? And what are the proper remedies when parents fail to care properly for their children?

Okay, time to pivot and make life difficult for my progressive friends.

Blaming capitalism for rising class-based inequality amounts to shooting the messengers. Progressives typically see the rise of class-based income inequality as a failure of free markets. Workers aren’t getting their fair share anymore; the wealthy are absconding with too much of the joint social product. But what exactly is the market failure? Labor markets are pretty good approximations of the textbook version of perfect competition: lots of suppliers, lots of customers. How then are the prices being generated by those markets systematically flawed? And what has changed in labor markets during recent decades to make them less competitive and less efficient? Please don’t say that inequality of bargaining power (now no longer compensated for to the same degree as in the past by powerful private-sector labor unions) is a market failure. Individual, non-unionized managers and professionals are able to strike sweet deals with huge corporations every day. Lack of collective bargaining is not a market failure.

Indeed, capitalism is currently operating exactly as we want it to. The world is getting more complicated, and the market is therefore signaling to everyone that more cognitive skills are needed. Because the supply of human capital isn’t keeping up with demand, the market is upping the returns to human capital and thereby encouraging people to develop their capacities and hone their skills by providing them with a strong economic incentive to do so. Contrast this reality with the old Marxist vision in which capitalism’s vitality depended on a huge, unskilled, and ever-more-miserably-oppressed proletariat.

The unequal incomes now being awarded in the marketplace are not the problem. Rather, they are signals of the underlying problem. In other words, the problem isn’t that workers are being underpaid; the problem is that workers’ labor is worth so little to others. By criticizing the market signals of wages as somehow unfair, progressives are just shooting the messengers and diverting attention away from the real problem.

Cultural explanations of socioeconomic underachievement do not constitute “blaming the victim.” When I argue that working-class family structure and parenting styles are important factors behind the human capital slowdown and rising inequality, many progressives will instinctively recoil. And I understand why: it’s easy to phrase that argument in a way that sounds like I’m saying that workers’ disappointments in the marketplace are their own fault. But honest, I’m not!

The way I see it, the distinctive working-class culture evolved as a perfectly appropriate adaptation to economic realities. If the economy requires large numbers of people to engage in low-skill work, why would communities of those people develop a culture that stresses the acquisition of skills they will never be called on to use? And if economic realities have since shifted, that’s nobody’s fault. You absorb your culture in large part from the family and community you were born into, and nobody gets to pick those.

Let me conclude by noting the tension between my policy prescriptions and the ideal of liberal neutrality prized by classical and high liberals alike. Liberalism is not supposed to privilege one “thick” conception of the good life at the expense of others; rather, it is supposed to provide a neutral framework in which rival visions of the good life can coexist peacefully. Yet in my book I talk explicitly about using policy to change culture – in particular, to promote a culture more favorable to human capital development. Aren’t I taking sides? Does that mean I’m being illiberal?

I think I finesse the tension satisfactorily. I do see promise in early childhood intervention, which effectively amounts to greater exposure to elite cognitive culture at the expense of family and community influences. But this is something the families involved would have to choose. And yes, compulsory schooling can be characterized fairly as a kind of forced acculturation. But I advocate greater control by parents over choosing their kids’ schools.

Yet even if I do finesse the tension, I don’t make it go away. In my view liberal neutrality is an ideal that can only be pushed so far; carried to extremes it can end up being self-defeating, as in excessive toleration of intolerance. I don’t see how the state can avoid expressing some cultural preferences. Biology classes in public schools (or even voucher-supported private schools) privilege science over creationism; government-subsidized healthcare privileges medicine over Christian Science. And no, minarchy doesn’t eliminate these conflicts either: national defense chooses against pacifism, and police and courts choose against a culture of feuding.

Since philosophy is emphatically not my comparative advantage, I throw this one out to the experts. If liberal neutrality does have limits, where are they and how do you know them when you see them?

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Human Capitalism http://bleedingheartlibertarians.com/2012/10/human-capitalism/ http://bleedingheartlibertarians.com/2012/10/human-capitalism/#comments Mon, 08 Oct 2012 13:00:09 +0000 http://bleedingheartlibertarians.com/?p=4249 Thanks to the folks at Bleeding Heart Libertarians for inviting me to blog here about my new e-book Human Capitalism: How Economic Growth Has Made Us Smarter – and More...

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Thanks to the folks at Bleeding Heart Libertarians for inviting me to blog here about my new e-book Human Capitalism: How Economic Growth Has Made Us Smarter – and More Unequal (Princeton University Press). This is a work of empirical analysis, not political philosophy, but I think it raises some pretty interesting philosophical questions. In this blog post I’ll lay out the basic argument of the book, and then in a follow-up post I’ll flag some of the implications for both free markets and social justice. With any luck I’ll motivate one or more BHL regulars to weigh in.

In an earlier book called The Age of Abundance, I examined the transformative cultural changes unleashed by the advent of mass affluence. Here I look at the other side of the coin: the transformative cultural changes that have made mass affluence possible.

My central thesis is that economic development has stimulated and depended on cognitive development. The richer and more advanced a country’s economy grows, the more complex that economy becomes: more and more knowledge and know-how are distributed throughout the system, and the division of labor grows ever more specialized and intricate. This ongoing growth of social complexity has imposed increasingly heavy mental demands on us, causing us to invest heavily in “human capital” and stretch our cognitive abilities far beyond the prevailing norms of times past. In this way, capitalism has morphed into “human capitalism” – a social system in which achievement and status hinge largely on possessing the right knowledge and skills.

The bottom line: economic growth has made us smarter. We can see this in the dramatic rise in education levels. Back in 1900 only about 6 percent of young Americans graduated high school, compared to 75 percent today. Back in 1950, only 8 percent of young Americans completed college, compared to 32 percent today. We can also see it in the “Flynn effect”: the remarkable rise in raw IQ scores over time. And we can see it in the transformation of how we work. Back in 1900 almost 80 percent of working Americans were farmers, manual laborers, or domestic servants; today, some 60 percent work in white-collar office jobs. Back then, managers and professionals – i.e., the most cognitively demanding occupations that dominate the socioeconomic elite – comprised only 10 percent of the workforce; today, they account for 35 percent.

When I say we’re getting smarter, what I really mean is we are becoming more fluent in highly abstract ways of thinking. Abstraction is the master strategy for coping with complexity: broad categories and general rules are the mental shortcuts we use to keep information overload at bay. In the intellectual realm this is obvious enough in the rise of mass literacy and numeracy and the increasing importance of abstract “book learning.” But we also employ abstraction to interact successfully with far more people than we could ever know personally: we jump in and out of the thin identities of countless abstract roles (driver, pedestrian, customer, employee, etc.) and expect people on the other side of the interaction to know their parts as well. And we use abstraction to guide us through the dizzying barrage of personal choices that confront us: every day on countless different margins, we trade off the interests of an abstractly imagined future self against the concrete impulses and desires of the moment.

So far, so good – but alas there’s more to the story. I argue that this same dynamic is behind the big rise in class-based inequality over the past generation. At the heart of the matter is a chicken-and-egg relationship between socioeconomic class and cognitive culture. If the skills we now call human capital (whose common denominator I identify as fluency with abstraction) represent a cultural adaptation to social complexity, it makes sense that the groups most exposed to modern complexity will show the highest degree of adaptation.

Which is exactly what we see. Although Americans generally don’t like admitting that class is a real phenomenon and that real social as well as economic differences between classes exist, it is and they do. The elite occupations that require analytical sophistication, strong people skills, high motivation, and meticulous planning will generally be filled by the people most flush with those skills, which they will hone even further over the course of their working lives. These elite workers will naturally tend to pass those skills along to their children – through their own parenting in the home, and through the influence of the communities in which they congregate. Working-class occupations, by contrast, don’t require much fluency with abstraction, and they will tend to be filled with people who are less adept at coping with complexity. These workers will in turn create families and communities in which fluency with abstraction does not figure prominently. Thus do the requirements of the workplace ultimately translate into strong cultural differences along class lines. There is a rich sociological literature documenting these differences that I review in the book.

Okay, you might say, cultural differences between classes exist. But that’s nothing new, so why did class-based inequality decline over much of the twentieth century only to start re-emerging in recent decades? I’ll offer here a very simple explanation in lieu of the much more involved account in the book. Once upon a time, when the world was much simpler, there were more people with the requisite skills to handle elite occupations than the number of elite slots. Many of those scarce slots were rationed on a decidedly non-meritocratic basis: basically, they went to white men with the right surnames from “good” families. (Happily, the economy was dynamic and entrepreneurial enough to allow a certain number of talented people with the “wrong” demographics to push their way into the elite as well.)

But then the world got more complicated. And as it did, the racist and sexist restrictions that maintained the elite as a preserve dominated by male WASP’s became increasingly dysfunctional – and, gradually, they withered and died. This period –the middle decades of the twentieth century – was one of declining class differences, as the descendants of the Great Migration from the turn of the century now found the paths of upward mobility more open than ever before.

But the world kept getting more complicated. In response, the elite buckled down and focused more intensively than ever before on preparing their kids for an increasingly competitive world – hence the rise of what we now lampoon as “helicopter parenting.” But the rest of society, for complicated reasons I describe in the book, veered off in the opposite direction: a dramatic rise in single motherhood and divorce led to a family and community environment for developing human capital that is arguably much less favorable than before.

In this era, class differences have grown and sharpened. Consequently, the market price of highly skilled workers has been bid up and the result has been a rise in income inequality (not the only reason for that rise, but a big one). Coming from the right family is once again greatly important for socioeconomic success. But the reasons have changed: from family-based advantages rooted in “who you know” to ones based on “what you know.” Thus our current predicament: the meritocratic class society.

I conclude the book with policy prescriptions for how to revive broad-based human capital development – and, with it, greater opportunities for upward mobility for all those who didn’t win the parent lottery. My policy proposals are an eclectic mix, and while I think they all push in the right direction, one stands out in my mind as a potential game changer: structural reform of K-12 education to allow more competition among schools for students. Public schools are supposed to help realize the promise of equal (or, realistically, sufficient) opportunity by imparting to all, regardless of background, the knowledge and skills they need to thrive in life. At present, though, rather than mitigating class-based differences in the home and community, America’s public schools merely perpetuate them. Elite kids start school with big advantages in cognitive skills, and those advantages continue to widen during the primary and secondary school years. Unless that can change, the sharp disparity between human capital have’s and have-not’s will be with us as long as fluency with abstraction remains important for socioeconomic achievement.

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Koch vs. Cato — A Guest Post by Brink Lindsey http://bleedingheartlibertarians.com/2012/03/koch-vs-cato-a-guest-post-by-brink-lindsey/ http://bleedingheartlibertarians.com/2012/03/koch-vs-cato-a-guest-post-by-brink-lindsey/#comments Thu, 08 Mar 2012 14:00:11 +0000 http://bleedingheartlibertarians.com/?p=2286 I’m grateful to the folks at Bleeding Heart Libertarians for affording me space on their site to comment on the dispute between the Koch brothers and the Cato Institute. I’m...

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I’m grateful to the folks at Bleeding Heart Libertarians for affording me space on their site to comment on the dispute between the Koch brothers and the Cato Institute. I’m a big fan of the site, for reasons easy to guess: I was a bleeding heart libertarian before BHLs were cool. And before saying another word, let me make clear that the thoughts to follow are strictly my own and do not in any way represent some official position of this blog.

It’s no secret that I’ve had strong differences over the years with some of my former colleagues at Cato. In some cases I’ve maintained positions that I now believe were wrong: it took the long occupations of Afghanistan and Iraq to disillusion the hawk out of me. On other fronts, I continue to hold views that are minority positions among Cato’s ranks.

But the existence of those differences in no way detracts from my admiration for Cato or my belief that it is an important force for good in American political life. Although many, perhaps most Americans have a libertarian streak of some kind that runs through their thinking, principled support of limited government across the domains of economics, personal life, civil liberties, and foreign affairs sadly remains a rarity. For 35 years and counting, the Cato Institute has been keeping the flame alive and ensuring that a principled libertarian perspective has a prominent place in the national policy debate. All of us who regard ourselves as libertarians, as well as all who have had their thinking challenged and sharpened by exposure to libertarian ideas, owe a debt of gratitude to Cato for this service.

Accordingly, I am deeply troubled by the Koch brothers’ recent lawsuit, which I regard as a threat to Cato’s ability to continue the fine and important work it has been doing for so many years. As to the merits of the case, I will say only that there is a serious dispute about the proper interpretation of the long dormant and distinctly curious shareholders’ agreement. When the Kochs argue that they are merely upholding the rule of law, they are therefore begging the question. Both sides claim the rule of law is on their side – which is why the case is now in court.

As to why the Kochs are now seeking to take over Cato, I have had no contact with them or their representatives and am therefore not in a position to know for sure. But the evidence available to date points in a deeply disturbing direction. First, there are the changes in the composition of Cato’s board of directors that have come as a result of the Kochs’ assertion of their shareholder rights. Specifically, deeply committed libertarians and generous financial backers of Cato have been removed in favor of Koch operatives whose commitment to libertarian ideas is, well, less than clear. Furthermore, there are reports of a meeting between David Koch and Cato Chairman Bob Levy in which Koch apparently called for Cato to serve as a resource for the Kochs’ political activism – a role completely inconsistent with Cato’s longstanding mission as a nonpartisan research institute.

But in the end, the Kochs’ plans for Cato are beside the point. Regardless of their intentions, the Kochs cannot take over Cato without destroying it. The mere act of converting Cato into a legally Koch-controlled entity – through a highly public and hotly contested legal proceeding, no less – would change Cato’s fundamental character in a way that would fatally compromise its hard-earned reputation for intellectual independence. Jonathan Adler, in one of the first public commentaries on this dispute, made precisely this point and in my view it is decisive. The fact that several Cato scholars and staffers have already either stated or strongly signaled that they would not be able to continue working for Cato after a Koch takeover further confirms that Cato in its present form would not survive a Koch victory in the courts.

Let me now respond a bit to a decidedly different take on this controversy by my good friend, former Cato colleague, and fellow “liberaltarian” Will Wilkinson. Will and I were on the same side in some of the intra-Cato disagreements I alluded to at the beginning of this post, and both of us ultimately left Cato for greener pastures elsewhere. In light of this history, it’s not terribly surprising that Will lacks enthusiasm for Cato’s cause in the current dispute – although, in the end, he does express the hope that Cato prevails. I’d like to take a moment to explain why, unlike Will, I come down much more squarely in Cato’s corner.

First, I want to address some of the substance of Will’s analysis. Specifically, he makes the plausible-sounding point that other institutions, namely the Mercatus Center and the Institute for Humane Studies, have strong ties to the Kochs and nonetheless do good work and are clearly libertarian-oriented. True enough, but neither as far as I know has the same kind of shareholders’ agreement that Cato does, and thus neither is legally owned and controlled by the Kochs as Cato would be if the Kochs prevailed in this dispute. Indeed, Mercatus is associated with George Mason University and its director is appointed by the Provost of GMU; its independence from any particular donor is thus institutionally secured. As to IHS, its academic mission is so far removed from partisan politics that legitimate concerns that it is being made to serve some partisan agenda really can’t arise. Cato’s situation is thus clearly distinguishable from that of these other organizations.

Will is on even weaker ground when he tries to minimize the significance of the recent Koch-engineered changes to Cato’s board. Yes, it’s true that David Koch has generously donated to Cato and served on its board for years, but there is all the difference in the world between the presence of one individual on the board and legal ownership of the institute by him and his brother. The fact that other new board members have had some connection to Cato in the past – one used to be married to a Cato senior fellow, another once spoke at a Cato event – doesn’t make their appointment to the Cato board any less jarring. Barney Frank and Dick Cheney have spoken at Cato events, too – would Will think that their appointment to the board was also no big deal?

I’ll close by addressing a larger question that I think lurks behind Will’s inability to see much at stake in the current dispute: why stand with Cato if the dominant brand of libertarianism there isn’t your own?

That dominant brand features strong intellectual commitments to natural rights theory, minarchism, and Austrian economics – commitments that neither Will nor I share. But nevertheless, Cato has provided a home for many scholars over the years who depart in various respects from the prevailing viewpoint – including Will and me!

And Cato has been open, not only to people of varying intellectual perspectives, but people from widely differing backgrounds. Personally, I owe my career in public policy to Cato’s faith that a recovering lawyer could reinvent himself as a policy wonk. And while Will, a former art student, held other public policy jobs prior to coming to Cato, there is no doubt that his own thinking and writing developed considerably because of the time he spent at Cato. And the number of people who follow his writing was boosted greatly by the platform Cato provided him.

I think our stories illustrate why Cato is special and why it deserves a stout defense. It is simply unique in Washington for the opportunities it affords to smart libertarian thinkers and writers of all kinds to develop their talents and reach a larger audience. Preserving Cato’s independence is essential to ensuring that bright young libertarians to come continue to enjoy the same opportunities Will and I had. Which is why I am proud to voice my support for Cato now as it faces this grave threat to its future independence.

P.S. Since I wrote the above, Will has come out with another long post. It starts with a lot of uninformed speculation about the Kochs’ possible motives and then transitions to an extended elaboration of his differences with Cato. I don’t think he says anything that causes me to change what I’ve already written, or that I feel I need to respond to, so I’ll just stick with what I’ve got.

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