Divided: The Perils of Growing Inequality by David Cay Johnston (2014) (read in 2017)
Published by marco on
Disclaimer: these are notes I took while reading this book. They include citations I found interesting or enlightening or particularly well-written. In some cases, I’ve pointed out which of these applies to which citation; in others, I have not. Any benefit you gain from reading these notes is purely incidental to the purpose they serve of reminding me what I once read. Please see Wikipedia for a summary if I’ve failed to provide one sufficient for your purposes. If my notes serve to trigger an interest in this book, then I’m happy for you.
This book is a collection of essays and studies on many different facets and types of inequality: Income. Education, Health-Care, Debt and Poverty, Policy and Family. The title and sub-headings listed prior say it all, actually: this book is about the root of America’s problem—Inequality. And not just income inequality, but wealth, opportunity, all of which add up to a purportedly democratic system that looks exactly like feudalism. You can read the essays in any order, but I read the book front to back. The book was published in 2014 and only one essay/study includes data from as recently as 2013. The others stretch back over decades, pinpointing the point when the U.S. left its path to turn the screws on its own populace. These essays show not only the problems we face, they show how we got here and what we need to do to get out of it. Spoiler alert: I bet we don’t take any of their advice. Recommended.
From the introduction by the author:
“The resulting growth at the top has become so concentrated that between 2009, when the Great Recession ended, and 2012 just 16,000 households collected 31 percent of all the increased income in all of America with its 315 million people. That money went to the 1 percent of the 1 percent. The top 1 percent enjoyed 94.8 percent of all the increased income, with the small remainder going to the rest of the top 10 percent.”
From Inequality and Democracy by Barack Obama
“And ever since, there’s been a raging debate over the best way to restore growth and prosperity, restore balance, restore fairness.”
Well, it certainly wasn’t by punishing a single one of these people. Obama loves to talk like a bystander.
“As infuriating as it was for all of us, we rescued our major banks from collapse, not only because a full-blown financial meltdown would have sent us into a second depression, but because we need a strong, healthy financial sector in this country.”
There’s that helpless bystander again.
“This is the law that we passed. We are in the process of implementing it now. All of this is being put in place as we speak. Now, unless you’re a financial institution whose business model is built on breaking the law, cheating consumers, and making risky bets that could damage the entire economy, you should have nothing to fear from these new rules.”
He’s such a liar.
“It will require greater responsibility from home owners not to take out mortgages they can’t afford. They need to remember that if something seems too good to be true, it probably is.”
So patronizing. You mean, like a President who says he can fix everything?
“This broader obligation can take many forms. At a time when the cost of hiring workers in China is rising rapidly, it should mean more CEOs deciding that it’s time to bring jobs back to the United States—not just because it’s good for business, but because it’s good for the country that made their business and their personal success possible.”
His whole approach to policy is to try to guilt creatures without conscience rather than passing laws to constrain them. He hopes they play nice, based on no historical supporting evidence.
“Our success has never just been about survival of the fittest. It’s about building a nation where we’re all better off. We pull together. We pitch in. We do our part. We believe that hard work will pay off, that responsibility will be rewarded, and that our children will inherit a nation where those values live.”
Is he talking about the Amish?
“Today’s appliances are better made and last longer,…”
I’m not convinced that that’s true.
From How Gains at the Top Injure the Middle Class by Robert H. Frank.
“The median size of a newly constructed house in the United States was 1,600 square feet in 1980. By 2001, it was more than 2,100 square feet. Meanwhile, commutes were getting longer and roads more congested, savings rates were plummeting, personal bankruptcy filings were climbing to an all-time high, and there was at least a widespread perception of a sharp decline in employment security and autonomy.”
From Wage Theft by Kim Bobo.
“Take the case of those whose jobs involve working in trenches—working in manholes or any confined space below ground level. Between 1985 and 1995, 522 workers in the United States were killed in trench-related mishaps, only 60 of whom worked for union shops. The other 462 were employed by nonunionized firms.”
But what percentage?
From Home Depot’s CEO-Size Tip by Barbara Ehrenreich.
“Home Depot sales clerks get about $8 to $10 an hour for lifting heavy objects and running around the floor all day; the CEO gets a total of almost $300 million for sinking the stock. We’re not talking about a rational system of rewards—just random acts of kindness, vast sums of money alighting when and where they will, generally in the outstretched hands of those who already have far too much.”
From Why Do So Many Jobs Pay So Badly? by Christopher Jencks.
“The net result of all these changes is that while the economy grew dramatically between 1973 and 2004, most of the benefits went to those who needed them least: affluent, college-educated couples.”
“which means that Americans are less likely to endorse policies for reducing wage inequality that involve government “meddling” in the marketplace.”
Should note that this is ill-informed. Meddling happens all the time, but to the benefit of the already-rich.
From In The Heart of Our Economy and Our Lives by Beth Shulman.
“Put another way, jobs that require no education and training beyond high school except on-the-job training will account for 57 percent of the job growth between 2000 and 2010. Only 27 percent of U.S. jobs will require a bachelor’s degree or above. (Emphasis added.)”
And yet Obama sold college as the only solution. Who was he addressing? Not most of America.
“Educating and caring for young children pays low wages. Of the over 3 million child-care workers, including family child-care providers, more than 80 percent earn less than $8.50 an hour. One-third of the workers earn less than $5.75 an hour. The 1.2 million teacher’s assistants do no better. And these occupations are expected to grow in the next ten years by over 400,000. This workforce—98 percent of whom are female—has a higher concentration of jobs that are paid below the official poverty line than almost any other occupation in the United States. These jobs are clearly important and the workers skilled and educated; indeed, these workers are better educated than the general population. Almost a third of the child-care workers and teacher’s aides have a college or advanced degree, and 44 percent have some college. But because of the low pay, there is a 30–40 percent average annual turnover rate in the industry that hurts the quality of care provided to our children.”
“The noise is deafening. The floors are slippery with chicken grease. The smell of chicken blood fills the air. Workers standing in pools of water, hang, slice, split, pull, and cut chickens at breakneck speeds of ninety-one birds per minute. Standing close together in their hair nets, gloves, coats, and boots, they wield knives in temperatures ranging from freezing to 120 degrees. The plant runs twenty-four hours a day, working three continuous shifts. Workers are on the line six days a week, sometimes seven. These are the jobs that put chicken on our tables.”
“Poultry production employs more workers than any other segment of the meat industry, growing from 19,000 workers in 1947 to today’s 200,000 workers. Although an essential job, poultry-processing workers suffer poor wages (75 percent earn less than $8.50 an hour), minimal benefits, and harrowing working conditions. Their counterparts in the meat and fish industries face the same harsh conditions.”
“Three-fourths of the retail jobs pay less than $8.50 an hour. Compounding the low pay is the frequency of part-time schedules. Thirty-eight percent of retail employees work part-time. As a result, nearly two-thirds of the non-managerial workers earn less than $12,500 per year. (Emphasis added.)”
“Yet a majority of the 1.5 million receptionists earn less than $8.50 an hour. The number of jobs in this field is expected to increase by over 400,000 in the next five years.”
From Household Wealth Inequality by Edward N. Wolff.
“In 1998, the top 1 percent of families as ranked by financial wealth owned 47 percent of the total (in contrast to 38 percent of total net worth). The top quintile, or fifth, accounted for 91 percent of total financial wealth, and the second quintile accounted for nearly all the remainder. The bottom 60 percent of Americans had virtually no financial wealth. (Emphasis added.)”
From Graduates vs. Oligarchs by Paul Krugman.
“Put it this way: having much of the wealth your state creates go to people who are in effect absentee landlords, whose income therefore shows up in another state’s statistics, doesn’t mean that you have an equal distribution of income. Out of state shouldn’t mean out of mind. Look, I understand that some people find the notion that we’ve become an oligarchy—with all that implies about class relations—disturbing. But that’s the way it is.”
From Achievement Gap by the Editorial Projects of the Education Research Center.
“It is most often used to describe the troubling performance gaps between African American and Hispanic students, at the lower end of the performance scale, and their non-Hispanic white peers, and the similar academic disparity between students from low-income families and those who are better off.”
So what’s the answer? Try harder? Careful with the argument that the only way to change things is by winning a rigged game.
From Back to School by Mike Rose.
“How well are we preparing students from a broad sweep of backgrounds for life after high school, and how adequate are the programs we have in place to remedy the failures of K–12 education? How robust is our belief in the ability of the common person, and what opportunities do we provide to realize that ability? Given the nature of Western capitalism, what mechanisms are there to compensate for boom-and-bust economic cycles, for “creative destruction,” for globalization? Do we have an adequate social safety net, and how effective are we at providing people a second chance? How open and welcoming are our core institutions—such as postsecondary education—and how adaptable?”
“Breaking the numbers out by race the author writes of “a national tragedy,” that “Black and White children grow up in entirely different economic worlds.” “Living up to our values,” the writer suggests, “requires policymakers . . . to focus on increasing upward relative mobility from the bottom.””
“The Economist, not as fiscally conservative as National Review but in the same free-market ballpark, put it even more strongly in another recent cover story. The writers say that the real danger to the American economy is chronic, ingrained joblessness that is related to our social and economic structure: tens of millions of young, marginally educated people who drift in and out of low-paying, dead-end jobs and older low-skilled displaced workers, unable to find employment as industries transform and jobs disappear. This situation places a huge and, if left alone, intractable drag on the economy.”
“What is especially worthy of scrutiny is the role right-wing economic ideology is playing in these policy deliberations—and as the economy improves, the Right’s beliefs will still be a potent force in public policy. Antigovernment, anti–welfare state, antitax, this ideology forcefully undercuts broadscale public responses to hardship. Such responses are tarred as a “redistribution of wealth,” moving money, as Rep. Paul Ryan puts it, from the “makers” to the “takers.” Decisions are made on a ledger sheet profoundly bounded by simplistic assumptions about economics and opportunity and naive, often bigoted, beliefs about people who need help. (Emphasis added.)”
“I’ve been working with one group of students who begin classes at 7:00 A.M., then work, participate in student government, go to the library to study, and leave in the evening—usually by public transportation—to homes that are anything but stable (thus the refuge of the library). One young man is currently homeless, sleeping in his inoperable car parked at a friend’s family’s house. He’s at school every day by 6:00 A.M. to clean up and get his day in order. Of course there are people at their school who are drifting, drawing what resources they can, sometimes deluding themselves, sometimes consciously gaming the system. Allow me to note that the students I’m mentoring can point them out in a heartbeat—because they are not the norm. Furthermore, and it’s a sign of the times that I even have to write this, such behaviors appear across the socioeconomic landscape. The deplorable thing is the degree to which moral and character flaws are disproportionately attributed to poor people. But if you are able to penetrate the ideological fog and actually enter other people’s lives, you’ll witness a quite different and much more complex human reality.”
“The Right’s stories present a world stripped of the physical and moral insult of poverty. Characters move upward, driven by self-reliance, optimism, faith, responsibility. Though there might be an occasional reference to teachers or employers who were impressed with the candidate’s qualities, the explanations for the candidate’s achievements rest pretty much within his or her individual spirit.”
From Educational Quality and Equality by Linda Darling-Hammond.
“Those who are undereducated can no longer access the labor market. While the United States must fill many of its high-tech jobs with individuals educated overseas, a growing share of its own citizens are unemployable and relegated to the welfare or prison systems. The nation can ill afford to maintain the structural inequalities in access to knowledge and resources that produce persistent and profound barriers to educational opportunity for large numbers of its students.”
“Recent analyses of data prepared for school finance cases in Alabama, California, Massachusetts, New Jersey, New York, Louisiana, South Carolina, and Texas have found that on every tangible measure—from qualified teachers and class sizes to textbooks, computers, facilities, and curriculum offerings—schools serving large numbers of students of color have significantly fewer resources than schools serving mostly white students”
“[…] these compounded inequalities explain much of the achievement gap that has often been attributed to genetic differences in intelligence or child-rearing practices or a “culture of poverty,” rather than to the distribution of opportunity itself.”
From Inequality Kills by Stephen Bezruchka.
“Creating awareness and understanding of the basic problems constraining our achievement of better health will be a major challenge. Americans as a people simply have not been good at evaluating information in a critical manner. A very successful ploy of advertisers is the endless repetition of simple statements that stick in people’s minds. That process of “manufacturing consent” has been used widely in political spheres as well; a few years ago the widely repeated slogan “Iraq Has Weapons of Mass Destruction” had the public enraged, supporting the invasion of Iraq despite any evidence to support the accusation.”
From Jailed for Being in Debt by Chris Serres and Glenn Howatt.
“The debts—often five or six years old—are purchased from companies like cell-phone providers and credit-card issuers, and cost a few cents on the dollar. Using automated dialing equipment and teams of lawyers, the debt-buyer firms try to collect the debt, plus interest and fees. A firm aims to collect at least twice what it paid for the debt to cover costs. Anything beyond that is profit.”
Why are creditors allowed to us public forces to collect debts? Why are they even allowed to re-awaken old, long-forgotten, long-dead debts? What societal function does this serve? What does it even mean to “have the money”? What if that money is earmarked for other, more-pressing needs than paying off a ten-year–old debt? (As is very likely the case.)
“Few debtors realize they can land in jail simply for ignoring debt-collection legal matters. Debtors also may not recognize the names of companies seeking to collect old debts. Some people are contacted by three or four firms as delinquent debts are bought and sold multiple times after the original creditor writes off the account.”
““It’s arbitrary,” he conceded. “The bigger question is: Should you be allowed to get an order from a court for someone to be arrested because they owe money? You’ve got to remember there are people who have the money but just won’t pay a single penny.” If friends or family post a debtor’s bail, they can expect to kiss the money goodbye, because it often ends up with creditors, who routinely ask judges for the bail payment.”
From Georgia’s Hunger Games by Neil deMause.
“federal rules that, regardless of who’s in the White House, give states the leeway to use the 1996 law’s requirement for “work activities” to slam the door in the face of their neediest. This has created a land that welfare forgot, where a collection of private charities struggle to fill the resulting holes.”
Bill Clinton’s legacy.
“Kelda O’Neal, a young grandmother currently caring for an extended family of fifteen in her DeKalb County home, had a similar experience. “They treat you like you’re in a jail facility,” she said. O’Neal received benefits until her husband, a truck driver, applied for disability after suffering a mental breakdown following the murder of his daughter. He was told he would have to first attend sixty to ninety days of a state work program. When he missed one appointment, the state not only rejected him, but ended her $133 in monthly benefits as well.”
Man, have I got it good.
From Living Down to Expectations by Stephen Pimpare.
“I have no mercy or compassion in me for a society that will crush people, and then penalize them for not being able to stand up under the weight. —Malcolm X”
From How Economics is Biased Toward the Rich by Moshe Adler.
“Pope Leo XIII was moved enough by the prevailing economic disparity that in 1891 he issued an encyclical letter, Rerum Novarum [Of New Things], which was devoted to “The Condition of the Working Classes,” and in which he wrote: “The whole process of production as well as trade in every kind of goods has been brought almost entirely under the power of a few, so that a very few rich and exceedingly rich men have laid a yoke almost of slavery on the unnumbered masses of non-owning workers.””
“The economist Abba Lerner (1903–82) noted that Bentham was just applying the first principle of statistics: when it is not known that things that appear the same are really different, the best we can do is to assume that they are the same. This is why, with gambling dice, we assign the probability of 1/6 to each face of a die.”
“Unlike Bentham or Lerner, Pareto did not concern himself with the question of how likely it was that redistribution would hurt the rich more than it would help the poor. For him this theoretical possibility, no matter how remote, was reason enough to reject the level of equality as a yardstick of economic efficiency. And based solely on this theoretical possibility, the entire economics profession removed the distribution of resources from its definition of economic efficiency and replaced it with Pareto’s own definition.”
“According to him, an allocation of resources is efficient if it cannot be changed in a way that will make at least one person better off without making anybody else worse off. This definition is indifferent to the distribution of society’s resources. Today we call this Pareto efficiency, but economists usually omit the name Pareto. They equate efficiency with Pareto efficiency, ignoring the existence of competing definitions, including that of Utilitarian efficiency.”
From Don’t Drink the Kool-Aid by Robert Kuttner.
“The stock-market bubble of the late 1990s induced investors to put vast resources into enterprises that never paid back a nickel of return; they only lined the pockets of insiders. If the government squandered money on this scale, conservatives and conservative investment bankers would be up in arms. But they’re not, of course. When the government wastes hundreds of dollars, they tell us it’s an outrage; when the market wastes trillions of dollars, it’s a lamentable glitch. This is not economics. This is ideology, pure and simple. (Emphasis added.)”
“We could have had a brand of globalization in which the ability to sell products to the United States depended on meeting certain social minimums, involving wages, organizing rights, environmental standards, treatment of children, and so on. But because that was not the globalization that corporate America sought, it is not what has evolved.”
From Social Security Reduces Inequality—Efficiently, Effectively, and Fairly by Nancy Altman and Eric Kingson.
“One change we believe should be made is increasing the maximum amount of wages on which Social Security’s contributions are assessed. Contributions are assessed only on the wages that are insured against loss.”
“Other streams of revenue that could eliminate Social Security’s projected shortfall while addressing income inequality would be a modest tax on annual incomes above $1 million, or a modest tax on financial speculation.”
“The case for expanding Social Security is strong. It is more efficient, secure, universal, and fair in its distribution than any private-sector counterpart is or could ever be, no matter how structured. The reason? Wage insurance works best when all workers are covered under the same plan and the coverage starts at the beginning of their working lives. The only entity that can mandate this kind of universal program is the federal government and it has.”
It’s the same for Medicare.
From Arguments For and Against Income Inequality by Thomas L. Hungerford.
“But by far the largest contributor to increasing income inequality, regardless of how inequality is measured, is changes in income from capital gains and dividends. Policies that further concentrate capital ownership at or near the top of the income distribution will thus increase income inequality.”
From Inequality of Hazard by Frank Ackerman and Lisa Heinzerling.
“The economists who originally came up with the idea of pollution trading, more than thirty years ago, would not have been surprised to learn that the California trading program created heavily polluted “hot spots.” In fact, they thought something like this might happen, and embraced the idea. In their naive optimism, they thought that local variation in pollution levels would be associated with freedom of choice, not with inequality of power and income.”
“This kind of logic was made infamous in a 1991 memo circulated by Lawrence Summers (who later became Treasury secretary and later still president of Harvard University) when he was the chief economist at the World Bank. Discussing the migration of “dirty industries” to developing countries, Summers’s memo explained: The measurements of the costs of health-impairing pollution depend on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health-impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest-wage country is impeccable and we should face up to that.”
Obama’s go-to economics advisor: what a monster. Unless he was kidding? I don’t think he was kidding…
“After this memo became public, Brazil’s then–secretary of the environment Jose Lutzenburger wrote to Summers: “Your reasoning is perfectly logical but totally insane. . . . Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in.””
From A Different Kind of Epidemic by Ernest Drucker.
“The very large scale of incarceration in America defines its great public health significance, with tens of millions affected. The magnitude of our prison system has effectively made this country the world champion of incarceration. Today, the United States has the highest rate of imprisonment of any nation in the world—possibly the highest rate in the history of any nation. By comparison, European countries average less than one-fifth of the American rate, and many average only one-tenth of it. The U.S. rate of incarceration is the highest in the world—about 750 per 100,000—a rate more than seven times that of European Union countries and greater than that of Russia or South Africa. (Emphasis added.)”
“But many of the sentencing policies that first built and filled these prisons continue unabated (fourteen states increased prison populations in 2010), with the focus of law enforcement increasingly shifting to lower-level offenses (e.g., marijuana arrests are up 5,000 percent in the last decade).”
“Clear argues that massive levels of arrest and imprisonment concentrated in certain communities damage the social bonds that sustain life, especially for poor communities. By corroding or destroying this most common basis of social capital, mass incarceration sets up a perverse relationship: punishment leads to increased crime, as it replaces the moral mechanisms of family and community. These are the forces that normally function to assert social control, over young males especially, by the use of noncoercive means involving family and community. Furthermore, because so much money is diverted to incarceration, other public services that might play a role in keeping down crime in these communities are defunded in favor of funding to build and maintain more prisons. Programs including health care, job training, retirement benefits, housing, and community development have all suffered a loss of public revenues, even as funding allocated for mass incarceration has grown exponentially. All these are worsened by the economic downturn that began in 2008 and which further restricts ex-prisoners’ options.”
“Individuals who enter prison and become a case in the criminal-justice system today have a 50 percent or more chance of remaining under the system’s control for life with recurrent arrests and periods of incarceration.”
“Like the story of global warming and climate change, this epidemic of mass imprisonment includes many “inconvenient truths”—critical realities we do not care to know about—such as its sheer size, huge social disparities, and monumental costs. But unlike climate change, the scale and consequences of mass incarceration derive from relatively recent events and a deliberate set of public policies that continue to be defended as being in the public interest.”
From Prison’s Dilemma by Glenn C. Loury.
“Put it all together and look at what we have wrought. We have established what looks to the entire world like a racial caste system that leaves millions stigmatized as pariahs, living either behind bars or in conditions of concentrated crime and poverty that breed still more criminality. Why are we doing this?”
“I am not saying that a criminal has no agency in his behavior. Rather, I am arguing that the larger society is implicated in a criminal’s choices because we have acquiesced to social arrangements that work to our benefit and to his detriment—that shape his consciousness and his sense of identity in a way that the choices he makes (and that we must condemn) are nevertheless compelling to him.”
From Race, Gender, Family Structure, and Poverty by Peter Edleman.
“Between 1970 and 2009, the percentage of families headed by women with children under eighteen doubled—from 12.7 percent to 25.4 percent. For African American families the numbers rose from 37.1 percent in 1971 (the first year the statistics were broken down by race) to 52.7 percent in 2009. Most of these increases occurred during the 1970s. Reflecting these changes—and coupled with the increase in low-wage jobs and consequent difficulty for a single mother to support her family—the proportion of poor children under eighteen who lived in female-headed families rose from 24.1 percent in 1959 to 55 percent in 2010.”
“One reason why so many African American women are coping on their own in raising their children is what the criminal-justice system does to the men of the community, especially in the inner city. The massive and unnecessary imprisonment of African American men is preventing two-parent families from forming and destroying others on a large scale. (Emphasis added.)”
“The solutions are not simple. The aim is to postpone childbearing until the partners marry or establish a long-term commitment to each other and have a realistic economic approach to making it work. Hackneyed slogans, shibboleths, or bumper-sticker simplicities will not suffice: improved educational and employment opportunities are critical, as are criminal-justice reform and strategies to build healthy neighborhoods. But programs at the community level that stress postponing parenthood and that support responsible parenthood should it still occur are essential as well, although, granted, messages about the wisdom of delaying parenthood are more likely to be heeded in a world in which there are viable escape routes out of poverty.”
From Employed Parents Who Can’t Make a Living by Lisa Dodson.
“On this day, the five men and two women started examining an idea that reemerged in employer conversations over the years that followed. They raised the notion that if you pay people wages that guarantee they can’t really “keep things organized at home” and then, because of that, the flow of work is disrupted, well, is that only the employee’s problem? (Emphasis added.) Or is it just built into this labor market? And if it is wired into America’s jobs, as Ellen, a middle-aged white woman, asked the others, “do we have any responsibility for what happens to them?” Over the course of hundreds of interviews and discussions this question was often at the center.”
“Today, one in four U.S. workers earns less than $9 an hour—about $19,000 per year; 39 percent of the nation’s children live in low-income households. (Emphasis added.)”
“Essentially, this is the argument that other nations use to invest public funding in families raising children and guarantee a minimum family income. So there is a defensible set of arguments—albeit not a winning one in the United States, but a compelling one—that we ought to pay people a decent income because it takes care of our people, serves productivity, and upholds the nation as a whole.”
“This idea of work was almost always explained to me personally, not as a philosophical stand. Middle-income people would describe relationships with others at work whose earnings were so low that if you decided to think about it, you knew there was no way they could support a family. (Emphasis added.) Managers, business owners, and other professionals told me about getting to know certain people who seemed to be doing everything they possibly could, but that wasn’t enough. And so all kinds of personal and family troubles would mount up, spill over, and eventually turn up at work. I heard about how when you hire, supervise, or even just work next to working-poor people—and, like it or not, get close to them—the harms they live with can start leaking into your world too.”