Friday, December 20, 2013

a note on wealth inequality

Income inequality is complicated enough-- in terms of measurement, etc.-- where inferences about inequity are risky (ignoring the strength of tastes and preferences about [true] inequality). But inferences about the inequity of wealth inequality are even more difficult.

Here's a way to illustrate one factor:  Imagine that half of the population makes $40,000 (the A's) and the other half (the B's) makes $80,000 per year. (First, note that you'd have significant income inequality but no poverty!) Assume that half of each group spends everything they earn (without building significant equity) and the other half spends 90% annually. The resulting wealth distribution would be interesting...

Half of the A's and half of the B's would have no wealth. Half of the A's would have significant wealth. (Assuming a 5% real interest rate, they'd have about $500,000 after 40 years.) Half of the B's would double the wealth of the wealthy A's and be millionaires. You'd get tremendous wealth inequality with relatively little wealth inequity.

Wednesday, December 18, 2013

inequality? confusion...

The author of the video conflates income and wealth-- a big no-no. More important: He confuses "ideal system" with "ideal outcome"-- implicitly discounts decisions, as if individuals are largely powerless within the system.

Along those lines: This makes (a lot more) sense if Dave Ramsey is right that most people are broke-- not because of what they earn but what they spend/save. (See also: who owns your home if you have a big mortgage?)
Another angle: to the extent that (govt) Social Security provides an implied (albeit lousy, jacked-up) nest egg, this should be included in "wealth".

Tuesday, December 17, 2013

on income inequality...

There are at least three points to make here.

The first is statistical. A simple income inequality measure is, at best, incomplete. Are we talking about individuals or households? (See: the attached link.) How do we deal with other income (e.g., capital gains)? Are we talking about pre or post-tax and/or transfers? In other words, what are we trying to measure? 

The P&S study goes a step further and follows the trends over time. That's somewhat interesting, but most people are more interested in how a poor person in 2002 is faring ten years later. For example, the most extreme possibility, from their data, would be that every person in the lowest quintile in 2002 happened to be in the highest quintile by 2012-- and had been replaced by other people (e.g., new graduates from high school and college or those who have fallen on tough times). By construction, their data tell us *nothing* about the dynamics in the system. 
As an economist and a teacher, this is a topic I cover frequently-- and often is a surprise for students. It's not brain surgery, but many of them had never considered these points. Unfortunately, the more useful data are much more difficult to garner. You need to follow people for ten years, instead of taking a quick snapshot once every ten years.
The second is a matter of preferences. On the spectrum of such things, people will differ in how much they care about dynamics vs. statics; long-run vs. short-run; poverty vs. inequality. My preferences have a greater concern for the former in each pair, but many people are more concerned about the latter.

As an economist, I don't spend much time working on people's preferences. But, still, it's interesting-- and something to know and maybe try to measure. I've done some informal work-- and there's a mature literature-- on these topics. 

For example, what if you offered people this scenario: drop all of the (inflation-adjusted) incomes above-- those making more than $40,000 to 190 * the square root of their current income; and those making less than 40% by 5%. This would greatly reduce income inequality, but increase poverty and reduce standards of living across the board. Some people would immediately think this is outrageous; others would happily and quickly take the deal (in the name of improved equality); others would wrestle with it before deciding.

Third, in any case, now what? Well, we can start by thanking President Bush and President Obama (check out the P&S study on "the recovery"!). But aside from snarkiness and wishful thinking about President Bush/Obama and his Keynesian/interventionist/regime-uncertainty-enhancing Congresses.

If we want to deal with poverty and/or inequality, do we start with fundamental K-12 school reform-- the policy that has the most direct impact on the skills of lower/higher income people? 

Do we address or at least acknowledge the deterioration of family structure/stability that have devastated children and crushed the household income inequality numbers? (See: the attached link. Just looking at the statistic: what happens to the numbers when a lower-middle class family divorces or fails to marry? Hey, we've had a bunch of that over the past 40 years. Another reason why concerned people need to read Murray's Coming Apart.) 

Do we want more transfer of income and wealth? Well, at the least, we should be looking at post-transfer and post-tax income distribution numbers to inform that discussion. And so on.

Hope that's helpful...

Solomonic dog disaster dilemma (or is it a tornadic canine conundrum?)

I'm not an animal person, but this topic/article is really interesting. It reminds me of "the abortion debate" in that one's (often unspoken) starting assumptions determine the conclusion. But this actually seems more complicated...

Is a dog (strictly) "property" or a living being that has rights of some sort/extent? To what extent are the dog's preferences relevant? To what extent are we aiming for "what's best for the dog" (independent of what either "owner" thinks)-- and then the means might even justify the ends? To what extent do we want the govt to (try to) deliver justice-- and to what extent do we want God or karma to sort things out? And so on.

Maybe we can invoke Solomon here: just threaten to cut the dog in half. (Given the moral character of the parties involved, this strategy may or may not retain the necessary element of surprise-- to be successful.)

Wednesday, December 4, 2013

“The Other America” Is “Coming Apart”

This (shorter) version appeared in papers throughout Indiana last year. The longer, more academic version appeared recently in the Acton Institute's journal, Markets and Morality.

Published 50 years ago, Michael Harrington’s The Other America provided a sweeping description of poverty in the United States. His book is given credit for awakening the nation to the plight of the poor and forwarding the idea that the federal government should become heavily involved in trying to help. It is routinely hailed as one of the most influential books of the 20th century.

Even so, the author embraces facile policy prescriptions: welfare, minimum wage, and government job training. The book is socially conservative in its worldview, overtly hostile to multiculturalism (especially to African-Americans), and condescending toward the poor. His paternalistic outlook encouraged policymakers and bureaucrats to control the lives of the poor.

Harrington briefly references what were then relatively mild troubles with family structure among the poor: “There are more homes without a father, there are less marriages, more early pregnancy…As a result of this, to take but one consequence of the fact, hundreds of thousands, and perhaps millions, of children in the other America never know stability and ‘normal’ affection.”

Family structure has deteriorated markedly over the past 50 years, especially among the poor and lower-middle class. What would Harrington say today? At least in part, we can look to Charles Murray’s recent book, Coming Apart, for the answer. Like Harrington, Murray approaches the subject from economic and sociological angles, brings relevant data to the table, and is unafraid to tackle sensitive topics.

In Losing Ground—the book on welfare from the 1980s—Murray described how welfare changed the “rules of the game” for the poor, encouraging them to make decisions that were detrimental in the long-term. The book was highly controversial. But within a decade, it had become conventional wisdom—and welfare programs were overhauled in 1996. In Losing Ground, Murray focused on African-Americans, given limits in the data, and received spurious criticisms for his approach. In Coming Apart, he avoids this problem by focusing on whites only.

Looking back on poverty before the War on Poverty began, Murray notes that measured poverty had fallen dramatically over the previous 15 years—from 41% to 20%. “Poverty had been dropping so rapidly for so many years that Americans thought things were going well…95% of the respondents [to a Gallup poll] said they were working class or middle class…America didn’t have classes, or, to the extent that it did, [we acted] as if we didn’t.” So, Murray engages Harrington’s thesis, but largely rejects it for the 1960s.

But one might say that Murray is applying Harrington’s thesis to today. Murray believes that American culture, society, and economy have evolved into three wildly different classes, with vast and growing differences between the lowest and highest classes. Movement between the classes is still available, but less prevalent.

Murray compares and contrasts the top 20% and the bottom 30% over the past 40 years. “The other America” has reduced their labor force participation and employment—and measured “disability” has increased markedly. They have much less emphasis on marriage; they are more likely to remain single and to get divorced. As a result, there is a large and growing proportion of “non-marital births” and relatively few children raised in two-parent homes.

The academic literature on children who are born and raised in these settings is sobering and unsurprising. Moreover, the effects are intergenerational: parents often pass along their success or failure to their children. Murray warns that the implosion of marriage and two-parent families “calls into question the viability of white working-class communities as a place for socializing the next generation.”

Murray bemoans our loss of community and believes this is especially devastating for those who struggle with a lack of non-material resources. He is pessimistic about the future, but holds out hope that an awakening can occur. He also overlooks the strongest reason for optimism. By generalizing the two groups under study, he largely ignores the solid members of both the top 20% and the bottom 30%. And he omits the vast middle half of the population: plenty of good, hard-working folk, the bread-and-butter of American society.

Harrington’s book is a “classic”. But Murray’s book is a must-read if one is in poverty, inequality, and American society. For those who understand the limits of public policy, the importance of community, the sanctity of the individual, and the dignity of the human person, one can hope that many in “the other America” will find a way to escape dysfunction—and that a solid middle class will carry the day.

review of Steven Guthrie's "Creator Spirit"

I really enjoyed Steven Guthrie's Creator Spirit: the Holy Spirit and the Art of Becoming Human. Guthrie looks to improve our "pneumatology"-- our theology of the Spirit. In this, I'm reminded of C.S. Lewis' quip that we're all theologians; the question is whether we're good or bad theologians.

In terms of bad theology, God-- the Father, the Son, and the Holy Spirit-- suffer(s) from various distortions. (A related problem is that people are reductionistic toward the Trinity, resulting in some of these errors, among others.) God the Father is imagined to be unjust or without omnipotence because of "the problem of suffering". God the Son is reduced to a great moral teacher or a nice guy.  God the Holy Spirit is invoked for ill gains in some circles, but typically suffers from inattention (hey, couldn't we just drop Him from the Trinity?) or reductionism (imagining Him as a vague force).  

I've often been struck by the article in front of Holy Spirit's "name"-- and how it leads to the unfortunate inference that He is an It. The word "the" implies a title or description (as with God the Father and God the Son), so it's accurate enough. But given our limited understanding of the Holy Spirit, the article can feed the misperception. Perhaps we should use "God the Holy Spirit" to avoid this?

A word on the title. It's a bit unsatisfying in that it narrows the scope of the work. Yes, Guthrie discusses the Creator role of the Spirit. Moreover, the book focuses on creativity and the role of the Spirit in our humanity, particularly within art. And I'm not sure I can come up with a better title, so perhaps it would be better not to quibble!

Fortunately, the subtitle is more helpful. It makes the art/spirit/Spirit connection explicit and it brings in a vital theme for Guthrie-- the Holy Spirit's role in allowing us to become more (truly) human.

On the human spirit, the Holy Spirit, creativity, and art, Guthrie discusses the universal principle of "God's provision and our participation" as it applies to art. In most things, outcomes are some function of God's provision and our participation: God always provides, but we are typically called to participate. This is an amazing and powerful concept. My favorite verse on this? Ephesians 2:8-9 says we are not saved to do good works, but Ephesians 2:10 says we are saved to do good works, which were prepared in advance (from the time of Creation) for us to do!

What's true in general is certainly and obviously true within art. Guthrie is interested in various theories about the extent of our participation in artistic endeavors-- the primary purpose of his book. On one extreme, God is out of the picture and art is a purely human creation. On the other extreme, God does all of the inspiring and the human is merely a vessel by which God's artistry is expressed.

In terms of bibliology, one sees a similar debate between Muslims who believe that Muhammad was a passive recipient and transmitter of the Koran-- whereas Christians recognize that the Bible is "inspired by God" but influenced by the particular attributes and experiences of the authors. As such, we see physician references from Luke; we understand Revelation in light of John's exile on Patmos; we read Matthew as a Jewish-focused gospel; we recognize context in Paul's letters; and so on.

The very framework of Guthrie's book is a survey of philosophers and artists who have different ideas on the way in which art is received and developed. He ranges from Coltrane to Monk; from Kandinsky to Kandera; from Tolstoy to (Ann) Tyler; from Plato to Athanasius. In this, the book is somewhere between cool (especially if you're into his examples) and provocative.

Beyond art, God the Holy Spirit plays a huge part in Biblical history and the plan of "salvation". First, in Creation, He animates the dust of the ground. A cool observation: "God draws very near-- much nearer, and in a much more intimate posture, than the moment of life-giving famously portrayed by Michelangelo on the ceiling of the Sistine Chapel." (35; add to DC). 

Second, in Christ, He "incarnates". He works to conceive/animate and then empower Christ, making Himself available to Christ in His ministry as a human on Earth-- and ultimately, in His resurrection. "In Jesus, the eternal word of God is made flesh by the power of the Spirit." (42) Here, we see the Spirit's provision and Jesus' participation-- done perfectly.

Third, in us, He hopes to "re-humanize". He is the means by which we can become more human in our life on Earth (John 5:30, 15:5). Biblically, "salvation" is more than "getting saved". Again, God has Ephesians 2:10 in mind for us-- to participate within God's provision; to train up disciple-makers; to be workers in the field; and so on. The biblical term for salvation implies a wholeness and an abundant life (Jn 10:10) that extends far beyond a moment of salvation. As such, for the Christian, at least biblically speaking, being "spiritual" is Spirit-ual. "The work of the Spirit is to bring dust to life and fill it with glory-- in other words, to make us truly human, the image bearers of God." (42)

A great quote on this (153): "The work of God's Spirit is to restore sight: to allow human beings to see truly, no longer blinded by ideology and priestcraft. The work of the Spirit is to restore speech: to allow human beings to speak truly and creatively, no longer passive conduits for the Muse or the Big Other. The work of the Spirit is to restore freedom: to empower human beings to not only receive creation but also to become givers who add to the world."

As such, "discernment is not a matter of divining those rare instances when God shows up. Instead, it means learning to recognize, as Moltmann writes, 'that in everything God is waiting for us'." (158) As Dallas Willard puts it, God can only bless you where you're at. This is a key concept-- for understanding a personal and intimate God who wants to empower us to do great things for His Kingdom.

Let me close with two other ways in which we have a limited view of art and God. First, from Guthrie: "The eternal plan and purpose of God was to bring about a differentiated community...If our churches have often done a poor job at [this], perhaps it is in part because they resemble only the unity, and not the diversity, of our triune God." (164) Second, art is both an event and a lifestyle. Often we reduce prayer, worship, economics, study, etc. to "events" rather than seeing them as both. Art is the same. Art is something you do-- and art is a way of life.

As we ponder our pneumatology and our "art-ology", Guthrie is helpful in knocking out heresies and other unlikelihoods. But Guthrie is quite comfortable with the mystery of both the Holy Spirit and His influence on art. I really liked his reference to a line in a Madeleine L'Engle poem (she, of Wrinkle in Time fame): "Had Mary been filled with reason, there'd have been no room for the child." Our faith is reasonable, but reason must have its limits in things as immense, complex, mysterious, and as ineffable as God, love, and art.