This article has me thinking about income inequality again, so I am going to take a break from writing about Kythera to talk politics. It’s less fun, I know, but this issue is bugging me a lot lately.
Basically, the takeaway is that as more people have less and a few people have more, the inequality/lack of opportunity created will have an effect of make the economy actively grow less as a whole.
I think a factor that is worth adding to this discussion shows up in some of the statistics on happiness.
In the Q&A for this lecture on happiness by Daniel Kahneman, the following point was made when talking about a survey on happiness:
I think the most interesting result that we found in the Gallup survey is a number, which we absolutely did not expect to find. We found that with respect to the happiness of the experiencing self, when we looked at how feelings, vary with income. And it turns out that, below an income of 60,000 dollars a year, for Americans — and that’s a very large sample of Americans, like 600,000, so it’s a large representative sample — below an income of 60,000 dollars a year, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve rarely seen lines so flat. Clearly, what is happening is money does not buy you experiential happiness, but lack of money certainly buys you misery, and we can measure that misery very, very clearly.
So, what happens if we add the principle that money might not buy happiness, but lack of money buys misery to the brew of income inequality and lack of opportunity that has come about in this country?
An unequal society effectively becomes a less happy society than a society with more even distribution of wealth and opportunity. This in turn means that there is likely to be less wealth generation across as unhappy people seem less likely to be effective entrepreneurs/workers/ect.
Another issue I keep thinking about is that an unequal society is also an anti-entrepreneurial society, because an ever smaller percentage of people are the only people able to afford to take economic risks. This limits growth for the entire country, especially given the weakness of our safety nets.
It becomes even worse given the issue of student debt and rising tuition. Unless a student comes from a privileged background, chances are that they are now taking a good deal of debt to get through school. Each dollar of that debt and the interest it accrues is a dollar not spent by these newly educated people in their early to mid-twenties that should be starting to attempt to develop new ideas, businesses, families, and the like.
The only people who benefit from the system being the way it is now are the University Presidents, the Football coaches, and the lending banks. Everyone else loses, especially the students and the educators.
To be an entrepreneur requires someone to be able to take risks. With a healthcare system that only works effectively for the wealthy, a pathetic safety net for the unemployed, and the inability to get rid of student debt, the result is that income inequality means that large portions of our up and coming generations will be effectively not taking risks unless they are stupidly optimistic. If you cannot afford to invest in an idea and lose, then you cannot take that risk.
As a digression, this also makes the entire university education system less effective. Younger students
(and often their parents) now regularly are expressing the attitude that if they pay the exorbitant amount the university charges then they should by default get credit (often specified as As) in their classes.
And, you know, I find it harder and harder to argue with them on this point. Some of these students are basically giving up years of income in debt money to get that piece of paper that says they went to college so that they have a base chance of getting a half decent job. And if they take loans and fail out, then the economic equation is a devastating one for them.
This is not at all how it should be. Education *should* be a right, not a commodity. Especially in a country that regularly claims to be the best in the world.
In a world where students weren’t paying out the nose to be in my classroom, I would find it very easy morally to roll back decades of grade inflation. Average work and just showing up to class could be a C again, rather than a B+/A-. That is how it should be. But I cannot help but think that in the current system the students who just expect their A’s may just have a point. Who am I to destroy economic futures over a silly thing like the history of the Roman Empire? I’ll continue to grade the students I have like I always have, because that is my job, and free As are also not a recipe for people to learn anything, but the economic argument adds a rather depressing element to general education classes.
And this is especially sad because I truly believe that the courses in things like history, philosophy, religion, language, culture, literature, art, and gender (that is, those that seem to suffer the most from this issue and to be the most maligned in certain parts of the media) are among the most potentially important classes for teaching people how to effectively understand the world around them. A world full of STEM specialists is all well and good, but if we do not teach people evaluate evidence and to understand how humans function and have functioned then that same world of STEM students seems to me to be a quite dangerous thing to produce. Classes focusing on human behavior are a truly vital element in general education for everyone, especially when the destructive capability of our technology has reached such spectacular levels.
But general ed classes that are treated by students as a check-box to mark off and a waste of money that is only important because it might keep someone from a productive future don’t help. If anything they make it worse as the economics seem purposely tailored to create resentment towards non-major education.
Due to the idiotic prices the universities and colleges ask people to pay, it is hard to see how we can morally justify *not* being factories for getting people jobs. But being a job-getter factory is a failure of the moral imperative to actually do a good job educating. This makes for a pretty crippling catch 22. The only acceptable answer I see is to quit allowing this absurd inflation of the cost of college, but I do not see that happening as it would require a rejection of the corporate model of university education and a re-implementation of large scale government funding of education.
Add to the whole mess the fact that many of the teachers are not being paid in line with the tuition increases that have happened and it becomes quite clear again that no one wins with the system we have now for higher education. Well, except for the aforementioned football coaches and the like, of course.
If you take all this together you get a truly nasty vicious cycle that leads towards a truly unhappy, under-educated, and prospect-less society where the only people who have real options for getting their lives started in their 20s are those who are lucky enough to both have a degree and to not be burdened with massive amounts of debt.
But that is enough cynical depression for a day, I’ll get pack to posting pictures of a pretty Greek island soon enough, I expect.