Friday, April 25, 2014

It's all superstructure!

So, I'm plowing my way through Piketty's masterpiece Capital in the 21st Century--halfway through! I really love this book [all 700 pages], because I'm learning so much. I also want some credibility for why I'm such an acolyte of his. Not just some poser who collects books for his bookshelf to impress onlookers; someone who doesn't actually read them (although a certain Swede accused me of doing just that in grad school...and he wasn't completely wrong). So far, it's not a disappointment. And certainly proves my nerd qualities that I'm reading this in my free/unemployed time.

Piketty's thesis has certainly generated a great deal of press and popularity in this country since it's rushed publication. The book apparently reached the NYT bestseller list and sold out on Amazon. The leftist blogosphere and intellectual mags are having collective orgasms around it. As soon as I get through more of it, I'll post of my own review. Yet, since the book has titillated the collective penis tip of the Left in the US, half-thinking pseudo-intellectuals on the Right are trying to put the giant wet blanket on our hot nerdy love affair. And I want to get on that bandwagon before it fully pulls away.

Ross Douthat tried to do that this past Sunday. Confession: Every time I start to read his column, I 1) gird my loins; 2) take a deep breath; and 3) preemptively roll my eyes upwards; all to prevent a really exaggerated response. [The fact that all of the regular columnists at the NYT besides Krugman and Blow, maybe Collins and Nocera too, should go is just accepted fact now. Blow it up!] But I didn't know Douthat's scribbles would inspire me to link Piketty's popularity to another interesting piece of scholarship that's making the online rounds at the same time.

Thank gosh Douthat realizes he's not qualified to talk about the actual economics in Piketty's book. Most people on the Right would not be so humble (if only they did so for Climate Change and Evolution as well; Krugman points out that no one on the intellectual Right have really contradicted Piketty's thesis). Instead, Douthat retorts, by arguing Piketty can't be right about growing inequality leading to revolution because we haven't see any yet. Despite large amounts of wealth being concentrated in the top 1%, with the wealth convergence experienced in the immediate postwar years, there's no massive movement of support for the Left in developed countries. Instead, people are voting for the far-Right fringe parties (Front National, UKIP, and, yes, he does go there...the Tea Party!). Why? 

"For now, even as the rich have gotten much, much richer, the 99 percent have shared in growing prosperity in real, measurable ways." [He cites another stupid article from a Forbes (scarebleu!) columnist criticizing not Piketty's thesis {which he gets wrong} but another article coauthored with Saez]. 

So like every other conservative critics of Piketty, Forbes, Douthat and others continue to defend the trickle-down theory of economic growth. What Douthat doesn't know is that votes for the Far-Right don't come from the unemployed and poor masses; they're not the ones deluded. They come from middle to upper-middle class professionals who tune into the "news". They're upset about immigrants and their kids living at home. They come from areas where there aren't a lot of immigrants. The poor, the working class, and those suffering from slow wage growth still vote for the Left--either here or Western Europe. They just can't get through and win.

But what if Douthat is right? What if we're headed to a second Belle Époque, where there will be huge levels of inequality, and national shares of capital and income are concentrated in fewer and fewer hands and no one cares? Maybe the general public thinks that these horrid levels of inequality are legitimate. Piketty acknowledges that this is a possibility: 

"Indeed, whether such extreme inequality is or is not sustainable depends not only on the effective of the repressive apparatus, but also, and perhaps primarily, on the effectiveness of the apparatus of justification. If inequalities are seen as justified, say because they seem to be a consequence of a choice by the rich to work harder or more efficiently than the poor, or because preventing the rich from earning more would inevitably harm the worst off members of society, then it is perfectly possible for the concentration of income to set new historical records." [264]

So we may have false consciousness. And the recent work of two American political scientists may confirm that. Martin Gilens and Benjamin Page test four established theories in the literature about which actors are most responsible for legislation Congress products. Like Piketty, they assemble a unique and awesome dataset of voters, lobbyists' and organizations' preferences and how they align with the legislation produced. They find that the average voter has extremely little impact on laws passed. Instead business elites and business interest groups have an extremely strong influence on legislation. If what the average citizen wants conflicts with what organized business groups want, the average citizen, the median voter, loses.

Their study has legitimately received a lot of attention, particularly by what passes as leftist media outlets. However, there are two cautionary notes that the authors raise that are not getting enough attention in the blurb-focused media. First, they find that the preferences of elites (the top 90th percentile in income) correlate with the preferences of the median voter (at the 50th percentile). Perhaps unsurprisingly, businesses interest groups' preferences and the average American do not. 

Second, and more importantly, their data do not show that the average American is not getting what she wants. They fairly often get what they want, so long as it coincides with what business groups want. And their study can only include the items that got onto the legislative agenda; not the ones that don't (immigration may be an example). Furthermore, their study doesn't show how elites actually shape the public's preferences.

So, both Piketty and Gilens and Page can't quite answer what Douthat is claiming yet--that the middle class isn't rebelling because they're more interested in social or cultural breakdown than economic despair, or think that these levels of inequality and the policies that support them are unfair. If high levels of inequality and income concentration and policies that favor elites and business interests are perceived as a legitimate, then there's no problem for democracy in American--yet, economic conditions will continue to suck.The recent opposition to the FCC's recently proposed rules destroying net neutrality could be a could test case. Let's not even get into the stupid and evil merger of Comcast-Time Warner.

Why don't the masses rebel? Maybe it is because America is that strange place where libertarianism and "economic liberty" arguments are widely shared across the American public, preventing policies of income redistribution. [This assumes that this is what must be done to tone down inequality.] That "American Dream" argument. Maybe it's the usual go-to standard-bearer factor--racism. The brouhaha over Cliven Bundy seems to support that view. But at least we now have to look into the ideological factors that sustain these policies and institutions now. And figure out how to change the ideological climate again. We know that there's more inequality, and how it came about thanks to Piketty. We know how much business interests and some elites control Congress. We now need to know how to change the ideological climate to promote mass political action.

More on Piketty to come!

Thursday, April 10, 2014

Book Review: "The Son Also Rises"--the anti-Piketty.

On occasion, I'll put up a book review. There are books I'm reading that pique my interest and then drive me either to huzzahs or harrumphes. I go so far as to order these books and plow through them as some nerd's form of "pleasure." But sometimes they raise such cackles inside of me that I need to scream them out into the blogosphere. I came across one of them lately.

A few Sundays ago an article appeared in that (slightly trashy) Sunday Review section of the New York Times by Gregory Clark, professor of economics at UC-Davis. In it, Clark described some amazing data. I was so intrigued by the data, and love economic history so much, that I just wanted to know more about his data and explanation. A few days later, The Son Also Rises, arrived from Amazon with that new book smell that you get when you take a whiff of its pages. As I plowed through all the correlations and figures, I began to detest its smell.

His central argument is that a more equal society, as a product of better social mobility, in our or future lifetimes from now is a pipe dream. Going back into history, to the Norman invasion in England, for example, and across many countries (US, Japan, China, Chile, England, India, Korea and Sweden), we see that the same families and kin groups, indicated by "surname," have occupied the top rungs of the social status ladder for centuries and have not moved, contrary to our statistical expectations. We would expect that all families would regress (or progress) to the mean in terms of social status and income. They don't. The richest families with the highest status remain at that position for centuries, with some rare exceptions. Despite all the efforts by governments to engineer more social mobility (not sure governments are always doing that when reducing social inequality, but anyway), their projects have failed, even in extreme cases like Communist China.

I was really impressed by the data Clark gathered. Based on an analysis of surnames from many ancient and far-flung sources that must have been difficult to collect and scour, Clark found that prominent families disproportionately attended Cambridge and Oxford (again, contrary to statistical expectations, not common sense). The descendants of the Swedish nobility disproportionately occupy slots at national universities. The descendants of samurai and Kazoku are disproportionately represented in many elite professions in Japan. In the US, the same family names from some of the usual suspected ethnic groups are overrepresented among the "elite profession" of doctors--Jews, South Asian Indians from the Brahmin class, Japanese with special surnames, and blacks from Africa. Not surprising, Native Americans and African American blacks are underrepresented in that profession.

The fancy new data held my attention for a while, especially how global in scope it was. But I was dying in suspense to get to the explanation. Boy, was I disappointed when I found out it was BIOLOGY...or genetics. Uh oh, Professor Clark! Sure you want to go down that road???

He does. After trying to impress you with all of his data, he puts forward a "law of social mobility." Now, just like when you see a utopian philosopher walking down the street wanting to chat, you better run from a social scientist who calls any hypothesis of his a "law." This law is so oversimplified it boggles the mind how this got through peer review at Princeton UP. Basically, a family's income in one generation is determined by the "family's underlying social competence" and some random component. What is "social competence?" Well, it's a latent variable that "cannot be directly observed." This social competence is reflected in a family's earnings, wealth, occupation, education, residence, health, and longevity. But there's something more "underlying" all of this. None of these factors have any independent effect of their own. That's just their phenotype; not genotype. [Body starts quivering.]

That's when Clark's argument turns scary. Because all this underlying social status doesn't change across time, doesn't regress to the mean as expected, a family's status must be inherited! By inheritance, Clark might be saying it was all accident of birth. But the genetic metaphor slips into earnestness a little too easily. He does argue that there's some genotype that is reproducing the qualities necessary to stay at the top of the social ladder. Clark finds that almost all of a child's status is determined by the status of the parent. The correlation between a child's status and its parents is close to 1, especially among people at the top 1%. Clark is careful to constantly say "inherited" rather than genetic. In fact he writes, "This does not imply that the social genotype is actually derived from genetics, just that it behaves in a way that mimics genetic transmission of characteristics (p. 282, fn. 9)." Is it genetics then? Again, Clark is very cautious in his language, but you get an overwhelming sense that he thinks it is. After citing Galton's study on the relationship between parents' heights and their children's, how a Danish child's income is strongly correlated with its parents' wealth, and the issue of assortive mating (whereby people of a high status seek to marry others like them), there is a strong impression that Clark thinks high social status is more than just inherited, it's also genetic. And let's just forget about the approving nods given to the "work" of "sociologist" Charles Murray, which only adds evidence to the indictment of Clark as a social darwinist.

To his credit, maybe by inheritance Clark just means accident of birth, and there's text to support that interpretation. Therefore, at best, he's guilt of taking a metaphor too far, which can mislead the reader. At worse, he really does believe that a family's social competence, whatever that is, is in our genes. But Clark quickly, harshly, and over broadly dismisses any of the typical structural variables most political scientists and sociologists would use to explain the persistence of a society's social structure.

He sweeps away, often with one big arrogant swoosh, alternative explanations for no good reason and without citations. When trying to explain why children in Jewish families persist in having high social status while blacks do not, all we need to do is invoke his model of inherited social competence, "there is no need to invoke racial discrimination, social networks, or ethnic capital to explain such effects." Earlier, he writes, when referring to the possibility that ethnic capital, the ability of ethnic social networks to help strengthen and maintain a particular group's social status, Clark writes, "There is little to no evidence for these hypothesized community benefits to individuals. The descendants of Japanese immigrants to the United States, as noted, are a group of high average status. Yet, this is a small, dispersed community that has integrated strongly into white American society through intermarriage. With the simple model of a slowly changing underlying social competence of families, we can explain all the above results without having to invoke racial barriers, ethnic capital, or the importance of social connections (p. 124)." In effect, Clark is saying "My simplistic theoretical model explains it all very simply; why bother with messy things like racism, generations of discrimination and social exclusion, persistent grinding poverty, geographic limitations and economic dislocation over decades."

This is an absurd thesis. First, just because your theoretical model predicts social status better than others does not make it an accurate or truthful model. All models are only representations of reality, not reality itself. So, it could be just a  magician's/social scientist's trick that his model fits the data. Anyone can construct a model that explains the data without providing a valid theoretical explanation. It's also called confusing correlation for causation.

Second, it would be nice to see just what this "latent variable" of "social competence" is and how it works "in the flesh" sort of speak. Clark's dismissal of social institutions is completely without merit. Social status, BY DEFINITION, is socially constructed. High incomes, wealth, education, professional success can only happen because society is set up for those things to be rewarded. In this case its capitalism. If high status is genetic, I would love to see how these families perform in the wild (across generations) or on Survivor. Just because people who inherited wealth and high social status stayed that way doesn't mean that social and political institutions had NOTHING to do with it. Many political scientists and historians know for example that in order to produce democratic institutions and extend mass suffrage in most Western European countries at the turn of the 20th century, great bargains had to be struck between the working class and bourgeoisie. These bargains kept most of the status elite groups had in place--for a century and a half. It wouldn't be surprising to me that elites have always found ways throughout history to maintain their high social status, EVEN in Communist China. A wealth of social and political research should not just be dismissed out of hand (especially when the author presents no review of the existing literature explaining social mobility or the absence thereof).

Finally, Clark's policy prescriptions are pretty patronizing. He does conclude that if the social status of some groups will remain high or low (forget about how they got there) for a long time, then the best we can do is make life a little better for them, so long as it doesn't impede the "free market" too much. This can come in the form of poverty relief and public education. But, he would argue, let's not fool ourselves. The poor will stay poor (whichever groups they are in a particular country), and the rich will remain rich because, well, their parents were! Whether you invest in Baby Mozart or Head Start programs, it doesn't really matter. You can't marginally improve your chances of rising or prevent yourself from falling down the social ladder. You and your kin are going to stay at the place on the economic ladder for generations.

What I find problematic about this is that we shouldn't make the giant leap from the supposed lack of social mobility to policy prescriptions and conclude that if the latter doesn't help the former we're all screwed to live in a terribly unequal society. Instead, let's focus on social and economic inequality, its causes, and how it changed across time, groups, and generations as well as countries. These public programs that were enacted aren't there to address social mobility per se. Actually, very few social programs advertise that as their goal. Medicare and Medicaid in the US, Social Security, pensions in Europe, wage bargaining institutions, etc. exist in the advanced capitalist democracies to address the problems of social and economic inequalities that, perhaps!, these "underlying social competencies" produce. That's where the real story lies.

And that's why I'm so eager to get to Piketty's book, "Capital in the Twenty-First Century." It's also rich with data, like Clark's. It also has a simple theory, about how income inequality grows or contracts across groups and time. It's also about the power of inherited wealth. But the model is steeped in empirical evidence. It's not some abstract picture mounted on top of data and with the messy factors of history, politics and economics swept away from underneath. And correlations are not confused for causation. After this sour (and sorrowful) piece of scholarship, I can't wait to get to the sweetness of Piketty.