Equality in the Age of Human Capital

Club Troppo (Don Arthur): Equality in the Age of Human Capital (HT: Economist's View)

Three quarters of America’s wealth is invested in its people, writes Gary Becker. He argues that while physical capital is still matters, human capital now matters more. Where once a nation’s wealth lay in the fertility of its soil, today it lies in the knowledge, skills and health of its population. The increasing interest in human capital has had a profound impact on the politics of egalitarianism. How do you redistribute wealth if it isn’t something people have but is part of who they are?

This article raises some very interesting questions. For instance:

...These research findings on early childhood create a dilemma for egalitarians. On the one hand, the research suggests that publicly funded investments in early childhood could significantly improve the well being of children from disadvantaged families. But on the other hand, they seem to be stigmatising less educated adults — particularly those who are unable to work and depend on welfare benefits. The poor are portrayed as underdeveloped human beings — ignorant, lethargic and unable to control their impulses. Worse still, their parenting practices have been identified as an important cause of intergenerational disadvantage.

This has a familiar ring to it. In the early 19th century Alexis de Tocqueville warned that England’s system of poor relief was cultivating a class of unproductive and disorderly citizens:

The number of illegitimate children and criminals grows rapidly and continuously, the indigent population is limitless, the spirit of foresight and of saving becomes more and more alien to the poor. While throughout the rest of the nation education spreads, morals improve, tastes become more refined, manners more polished — the indigent remains motionless, or rather he goes backwards. He could be described as reverting to barbarism. Amidst the marvels of civilisation, he seems to emulate savage man in his ideas and his inclinations (pdf).

It’s a fear that’s never really gone away. Recently, the Age’s Russell Skelton spoke with a group of Indigenous elders in Walgett about the effect of the Australian government’s baby bonus:

"My daughter has four kids and she cannot read or write," says a member of the group, who feels powerless as a parent. It will become a terrible circle, predicts another: "Kids who cannot read or write have babies that won’t be able to read or write. But nobody can tell them that. They don’t want to listen."

Some egalitarians worry that embracing the rhetoric of human capital means joining with conservatives to slander to disadvantaged. Social welfare initiatives become less about social justice and more about social control. Instead of focusing on the obligations of the rich, the human capitalists increasingly focus on the behaviour of the poor. ...

A lot of challenging issues here.

Comments

[VanSkaamper]

The self-destructive culture of dependence and ignorance has been documented so many times, in so many studies, that it's frustrating. Our egalitarian impulses often blind us to the unintended consequences of our policies.

The US has redistributed trillions of dollars in the Great Society(R), and yet poverty remains a recalcitrant problem that is just as big now as it was when LBJ had his defective epiphany. The reason is that we've supplied financial means without addressing the culture of poverty...and that's what's destroyed so many urban families, and created an inter-generational dependent class of dependent people don't have the basic knowledge or skills to advance themselves in our economy.

Why do we let it continue without reform? Probably because we're more obsessed with feeling good about ourselves for throwing money at a problem than we are with actually improving people's lives. We don't seem to give a rat's backside about the unintended consequences that these policies actually produce in the lives of other human beings.

And the further problem is that our growing cultural relativism makes us (well, governments, really) even less likely to identify a need to redistribute things like common sense, a work ethic, and prosperity fostering values in the poor. This is a genuine tragedy, because it's those things that are really what we should be redistributing, that would be most beneficial, with cash and government cheese only being a means to that end, rather than an end in themselves.

[J. K. Gayle]

Michael,
Here are some interesting thoughts. However, do we notice how Don Arthur tries to hide his own fears, and his own rhetoric? Hmmm, what's he afraid of when saying things like this ("It’s a fear that’s never really gone away") and that ("Some egalitarians worry that embracing the rhetoric of human capital means joining with conservatives to slander to disadvantaged")? I think he's afraid to get at all of the complexities of the cycles of economic inequities. He'd rather reduce them to fears and to rhetoric than to delve into sexism and racism that reinforces perpetual poverty (relatively speaking) among American women and African Americans and native Americans and Hispanics.

[Michael W. Kruse]

Van

Robert Fogel writes about four religious awakenings in American history (we at the beginning of the fourth according to him) in The Fourth Great Awakening. Each awakening has been accompanied by a shift in how we understand economic egalitarianism.

After the second awakening (early 1800s) the focus was on equality of opportunity and eliminating barriers that prohibited people from getting a fair chance to succeed. With rise of the Robber Barons and large corporations in the late 1800s, egalitarianism began to shift toward equalizing outcomes; making sure everyone had at least and equal share in some minimal standard of material well-being. This has been the social gospel movement of the 20 Century. He would argue that we are now moving into an era where egalitarianism is measured more by “spiritual” capital (or human capital). This includes basic education, intuitive knowledge about how the culture and its institutions work, and mental/spiritual/physical resources to cope with adversity. All these ways of thinking about egalitarianism are still present. It is more a matter of emphasis.

I think what you are describing is the realization by many that insuring minimal material existence isn’t nearly enough. Furthermore, redistribution of human capital is far more difficult requiring people to be in relationship over extended periods of time. No government can achieve that but small communities of people like churches can.

[Michael W. Kruse]

I don't know that Arthur is being that dismissive of the impact of various type of discrimination. I think the problem is that if we waved a wand and discrimination disappeared today, you would still have unequal distribution of human capital. Discrimination may be one element that hinders adequate formation of human captial (and I believe it is) but what is postive action that will effectively redistribute human capital in a world without discrimination? How do we rectify the unequal distribution?

Ceasing discrimination does not equip the marginalized person for sound parenting our equip them to know how the economic game is played. I think that is Arthur's concern.

[VanSkaamper]

He'd rather reduce them to fears and to rhetoric than to delve into sexism and racism that reinforces perpetual poverty (relatively speaking) among American women and African Americans and native Americans and Hispanics.

So, what you're saying then is that poor white males (which make up a large percentage of America's poor), are the only ones who don't have a compelling excuse?

I think what you are describing is the realization by many that [e]nsuring minimal material existence isn’t nearly enough.

I'm saying more than that...I'm saying that ensuring minimal material existence without also repairing the loss of the cultural values that lead to prosperity has actually been damaging to the poor in America, particularly ethnic minorities who have had their family structures and traditional community support structures undermined or destroyed by a poorly considered, paternalistic state apparatus. Magnet's The Dream and the Nightmare is a good primer on this.

No government can achieve that but small communities of people like churches can.

Yes. There's been some interesting writing about how America's private institutions that used to take the lead in distributing human capital (I don't think redistribution is a good term for this, BTW...when my tax money goes to government program, I no longer have it. That's not the case with skills, values, wisdom, etc. Human capital is spread, it seems to me, not redistributed.) have been dwindling in both number and in their activities as state and federal programs push them out of the way and replace them with something far less effective.

[Michael W. Kruse]

"I'm saying more than that..."

I agree with your "more than that." :)

"I don't think redistribution is a good term..."

Excellent point.

What you are describing is related to the concept of subsidiarity breaks down. Broader and larger institutions, rather than playing a subsidariy role and restoring more localized institutions to health, take on the role of more localized institutions causing the local institutions to atrophy. The end of the road is totalitarianism of some varity.

[VanSkaamper]

The end of the road is totalitarianism of some variety.

All of them decidedly "icky", if I might...um...paraphrase Hayek...

But yes, that's the dark side of delegating our compassion and our charity to faceless state and federal bureaucracies...we build Big Brother, program by program, department by department. The result has been to foster dependency and dysfunction, rather than independence and productivity...exactly the opposite of the original rationale for these programs.

We lose both our freedom and our local, community-building institutions, which is something we should be opposing quite strongly, IMHO.

[Jim Moss]

What is being missed in this conversation is the sobering fact that a great deal of people in our culture just don't give a hoot about egalitarianism of any sort. It's all about me and what I can get for myself. Perhaps the biggest challenge is just getting our society as a whole to care about one another. This is, without a doubt, a task for the church and not for government.

[Michael W. Kruse]

AMEN!

[VanSkaamper]

Jim, I don't really think that angle is being missed at all. The point of the conversation, I think, it is that egalitarian goals are too often bastardized, perverted and destroyed by government policies that simply don't work...because they don't take human capital into account.

The problem isn't really that we don't care, it's that we're fools for letting egalitarianism get taken out of the purview of local faith communities and politicized and secularized into something that's actually damaging.

Our country is still the most generous in the world (by far) when it comes to private charitable giving. Supporting your point about the church, however, is that fact that it's the more highly churched portions of the country that are far more generous with their wealth than those that are not.