Social democracy and equal opportunity

 

My critique of Tyler Cowen’s post arguing the unimportance of social mobility has started off, or maybe merged into, of those old-fashioned blog firestorms we used to have back in the day, now also reticulated through Twitter – a few links here, here and here. But rather than criticise Cowen further, I thought I would try to work through the bigger issues involved from a social democratic perspective[1].  In particular, as discussed in comments here, should social democrats favor policies to enhance social mobility, or does mobility between generations make inequality even worse, for example by justifying what appears as meritocracy?

 

 

It’s helpful to start with some facts, and the big one is that inequality of opportunity and inequality of incomes (or, more generally) outcomes are strongly positively correlated. The US and UK are notable as being highly unequal societies in both respects. More precisely, as would be expected on the basis of even momentary thinking about the ways in which parents try to help their children, highly unequal outcomes in one generation are negatively correlated with intergenerational mobility in the next. 

 

That brute fact kills off one of the central ideas put forward by lots of ‘Third Way’ advocates among former social democrats, namely that it’s fine to have the highly unequal outcomes produced by free-market liberalism if you can get a modest amount of extra growth in aggregate, since governments can use education and similar policies to ensure that everyone has a fair chance at the big prizes.  If a highly unequal society allows parents to give their children an unbeatable headstart, then the idea that we can offset greater inequality of outcomes by more efforts to promote equality of opportunity becomes problematic at best.

 

Matt Cavanagh in Against Equality of Opportunity takes the dilemma seriously and argues for the abandonment of equal opportunity on the basis that it is inconsistent with a market society.  That’s pretty much the actual position of most Third Way supporters[2] though not too many are willing to say so.

 

Moreover, the factual basis for the claim that free-market liberalism actually produces higher growth is weak, though the evidence isn’t as clear-cut as for the relationship between unequal outcomes and unequal opportunities.  The time-series evidence goes the other way – the strongest period of economic growth for the US and other (then) leading countries was during the post-1945 ‘Great Compression’.  The comparison is even sharper now that we’ve had a few years of highly unequal austerity.

 

So, the Third Way position appears unsustainable in every way. On the other hand, as long as you accept some role for markets, or even just for individual choice, different people will experience different outcomes in life. It seems obviously sensible, for example, to allow people a choice between working hard in paid employment, and buying goods and services in the market, or spending more time at home, providing directly for themselves and their families[3]. And, if people are allowed to take real risks, some will turn out relatively well and others relatively badly.

 

There is no reason, however, why freedom of choice, even within a generation, requires the grotesque inequalities produced by market liberalism. In fact, by punishing any choices that don’t produce a high income, market liberalism reduces the range of effective choices. Tyler Cowen makes this point, using the examples of the US and Europe, here (his point 4, though of course it’s not intended this way).

 

Once we have unequal outcomes in one generation, there will be a tendency to transmit them to the next. But if the distribution of income within a given generation is reasonably equal, there is lots of scope for government action to give everyone in the next generation access to the same broad set of choices and opportunities. 

 

The most obvious measures relate to wealth and education. Taxes on inheritance and capital gains can discourage the transfer of large accumulations of wealth from one generation to the next. As regards education, the crucial element is centralised funding, with a commitment to offset, rather than reinforce, inequalities in starting points. That is, schools in poor communities should get more resources rather than less, to offset both the poorer starting position of the students and the greater opportunities of schools in wealthy areas to secure support of various kinds for parents.

 

 How does this relate to concerns about meritocracy? The more that differences in outcomes reflect different choices from a given set of opportunities, rather than differential success in climbing a well-defined hierarchical ladder, the less this seems to me to be a concern. 

 

As always, I’m hoping for comments to point out (preferably in a non-snarky fashion) weaknesses in my argument and to help me clarify my thoughts. So, go to it.

 

 

 

 

 

 

fn1. I’m not going to attempt a definition of social democracy. But I’m thinking about a policy view that would take the best elements of the Keynesian/welfare state polities that was developed in the decades after 1945 and extend it to cover a much wider range of people and concerns than those of the developed-country male-earner households who were taken as the model participants in those polities.

 

fn2. The term is pretty much dead, along with the idea that the Third Way would transcend the divide between social democrats and free marketeers, rather than just split the difference as many times as the opinion polls appeared to require. But the political tendency it represents is very much alive, as shown by the general capitulation to the zombie economics of austerity.

 

fn3. This glosses over all sorts of problems, from involuntary unemployment to the distribution of work and consumption within households. But however these problems are resolved, the choice I’ve described will remain important.

43 thoughts on “Social democracy and equal opportunity

  1. It should go without saying that, FWIW, I generally endorse Pr Q’s comprehensive critique of economic liberalism. Particularly his ruthless neo-classical analysis of the depredations of financial marketeers, mineral oligarchs and the cult of rock star CEOs.

    Failing financial institutions should have been nationalised. Banks should be closely regulated and their risky investments should be excluded from any guarantees, vendor emptor. Exotic derivative trading should be out-lawed. Off-shore tax havens should be used for naval gunnery practice.

    Although I stay to the Right of him on the utilitarian effects of state support for religious schools. As a Durkheimian-Dawinian social democrat I believe communitarian objectives can over-ride egalitarian ones. See Robert Putnam American Grace on the critical role religious education plays in the accumulation of social capital.

    Obviously I argue his general support of (what I call) ethnic liberalism undermines national social democracy. Although I can imagine a world in which social democracy is globalised this state of affairs is generations off at the current rate of cultural evolution. Therefore, for the time being, national social democracy is the only kind of social democracy going.

  2. @PeterM

    That is interesting. I’d always thought that the post WW2 low inequality was because people who had asked others to risk (and lose) their lives couldn’t in good conscience pay themselves a fortune. And that the subsequent rise in inequality occurred as the memory of WW2 faded.

    But the idea that the extreme disruption leads to growth (and more equality?) seems to fit with the experience of Germany and Japan after WW2, and maybe China after the cultural revolution?

  3. Both Peter M and John Brookes are partially right.

    The Great Compression (egalitarian effusion of the Keysnian period replacing polarised concentration of Robber Barons and Roaring Twenties) came about due to both destructive Revolution and constructive Reformation.

    The destructive Revolution was the decomposition of the old bourgeois aristocracy in the aftermath of WWI and the Great Depression. The constructive Reformation came about due to the consolidation of national social-democracy as part of the WWII war “land fit for heroes” political settlement.

    Ethnic solidarity was a critical to the establishment and effective management of both the warfare and welfare state. Both depend on equally shared communal sacrifice for like-minded somewhat familiar citizens.

    More generally, equality of opportunity and equity in outcomes requires a fair amount of underlying (“basal”) uniformity in the population. Its vital that there be relatively small standard deviations in key attributes of the gene pool so that genetic regression to the mean can counteract the polarising effects of assortative mating.

    Cultural uniformity is so obviously the antagonist of cultural diversity that it is embarrassing to point it out.

  4. Jack Strocchi writes “I believe communitarian objectives can over-ride egalitarian ones.”

    This is a contradiction in terms. To be communitarian is to be egalitarian. I do not see how any form of communitarianism, properly construed, can be other than highly egalitarian. Inequality is the diametric opposite of community.

    Communitarianism which sees the norm of community as being an ethnic/cultural monoculture is misguided to say the least.

    The position I support – secularism, empiricism, democracy, egalitarianism – is perfectly consistent with ethnic-cultural diversity in a community. It is true that some extreme and harmful behaviours, including some harmful cultural legacies will be (rightly) proscribed by the majority of citizens of such a society. In all cases, truly harmful cultural legacies will be found to be of the nature of authoritarian power (often backed by superstition and ignorance) of a few in that culture over the many in that culture.

  5. JQ, what your analysis seems to leave out, and what troubles me, is the following politically incorrect observation, which I fully recognise as antithetical to any kind of social-democratic values.

    There are some traits (like IQ, but also traits like personableness and other harder to measure traits) which have, speaking generally,
    a) a high heritability
    b) a high, ?causal association with various corollaries of “success”

    Given that people (on average) tend to have kids with people quite a lot like themselves, it would be unsurprising if, over several generations (particularly if mobility *has* been relatively strong during those periods) differences in averages in different socioeconomic populations emerged for such traits (ie a kind of sorting occurs).

    And nor can we discount that such differences would account for *part of* what gets appears to be lack of mobility (and is in fact not lack of ability to move, it’s just lack of movement).

    Note I’m not denying the (unfair) role of inherited social and material privilege or underprivilege. Nor do I deny the need for actively progressive / redistributive policies to minimise the role of privilege (eg I favour an inheritance tax, subject only to addressing inevitable loopholes that will be sought out) or an obligation to spend extra resources providing opportunity and seeking out merit / talent in less privileged places (averages are only averages after all).

    My concern though is that by failing to acknowledge the plausibility of some inherent differences in people and groups, we entrench the *mutual* alienation of different socioeconomic groups.

    So for instance, I (and others) were alienated by our three years at the local public school (among the best performers according to measures like NAPLAN, very high ICSEA, homes with books and computers at home, tertiary-educated two-income households, almost no ethnic diversity etc) that spent a year teaching the A B Cs (one letter a week) to kids who for the most part, owing to the advantaged backgrounds etc etc, learnt them at preschool or on their parents’ knees a year or two earlier. That’s what comprehensive education means, right? The same curriculum there as in a remote community with English as a second language and no public library or household books? (and this is just one example).

    So, being alienated, we go private (or selective) despite a social, financial, philosophical and ethical commitment to comprehensive education (in theory) because it isn’t meeting our kids’ needs. Knowing full well that our actions further entrenching difference, distinctions in privilege etc between those who can and do, and those who can’t and don’t.

    And this must play out in many different arenas – not just schooling – although schooling is an easy one to exemplify as it’s an obvious area where inherited privilege plays out – and the difference between theory and practice of social democratic principles plays out.

    And before anyone mentions Finland, please note they confess to a relatively homogenous society (and kids) as a starting point, and high local autonomy for schools.

  6. I went to Kent St Senior High School, a reasonable government school in the early 70’s. Its intake area included South Perth, which was comfortably middle class, as well as working class areas.

    In my year we had one guy whose dad was a dentist, and another whose dad was head of the WA department of agriculture.

    These days, there is no way that any head of a state government department would send their kids to Kent St. They might just consider sending them to a government school which drew its students only from high ses areas (Shenton College and Rossmoyne spring to mind). Ditto for dentists.

    So we have a self fulfilling prophecy, where government schools are perceived as bad, so they lose kids who would likely be higher achievers, so they get worse.

    Income inequality allows this to happen.

  7. Jack @22
    I think Australia stands as a counter-example to your ethnic liberalism argument. Immigration has been high for the whole post-war period, and in the last 20 years the relative skill level of immigrants has risen. So I can’t see how this could explain the observed _changes_ in inequality.

  8. “Matt Cavanagh in Against Equality of Opportunity takes the dilemma seriously and argues for the abandonment of equal opportunity on the basis that it is inconsistent with a market society. ”

    I don’t understand Matt Cavanagh’s ‘position’ because:
    1. A ‘market society’ is something that exists in theoretical models of economies where the institutional environment consists of ‘a price system’ (ie a competitive private ownership economy wth complete markets). In all models of this type familiar to me, each individual has ‘equal opportunity’ in the sense that the minimum wealth condition in these models assures that each individual is endowed with sufficient wealth to have ‘freedom of choice’.
    2. On empirical grounds, we know that markets are not only imperfectly competitive but markets are incomplete. There are no empirical examples of pure market economies. (The point has been made numerous times by the owner of this blog site. I see no need to repeat it in historical and geographical detail.) Indeed, having an institute of policy research is a reminder that the assumption about the institutional environment in the models referred to in 1 is empirically not fulfilled for otherwise there would be no need for policy research.

    3. In direct contradiction to Matt Cavanagh, I conclude that any policy which aims to take the moral content of the idea of a ‘market society’ seriously will have to take the notion of ‘equal opportunity’ seriously.

  9. @Mandarina
    Any argument that social stratification is caused by genetic stratification – a cream rising mechanism – has to contend with a few brute facts.
    1) Genetic predispositions like “intelligence”, speed, fertility, height, muscle power, etc are normally distributed in the population; they follow a bell curve.
    2) The distribution of income and wealth in our society looks nothing like a bell curve (It looks like a black-body energy distribution with a power law tail).
    3) Therefore, wealth and income are not distributed according to genetic predisposition. QED.

  10. That’s a bad argument.

    Suppose for a second that high-paid jobs were available to people with, say, blue eyes (not as far-fetched as it sounds; look at the way pale-skinned actresses are prized in Bollywood, for instance).

    Are blue eyes normally distributed?

    No. It’s a binary variable and maybe 1/3 of the Anglo-Celts have ’em.

  11. First my compliment to JQ on a well written piece on an important topic. While appreciating the desire for constructive feedback, I think there is no credible counter-argument to what JQ says. The work of people like Picketty and Saez in the USA shows that, even ignoring immigration effects, inequality has been rising for the the locals in the USA. There are a lot of poor white people in some US states, notably in the south and in the “rustbelt”.

    In my view, the evidence in favor of JQ’s thesis, and against the counter arguments, is so strong that the counter arguments are not credible. They are arguements often made in bad faith. I think the possibility should be acknowledged that there are some on the extreme right in this debate who not only don’t value equality, but actually value inequality. They WANT a world where there are poor to do their bidding. They just don’t want to admit it too directly, hence the sophistry in arguments about “efficiency” via deregulation. There is no such efficiency – only a justification for an exploitable underclass. Ironically, I think there are some among the poor who support this status quo, deluding themselves that one day they may be on top, and the ones doing the exploiting. In this regard myths like”the American dream” are powerful enablers.

  12. @James Haughton

    Hi James,
    My point is about whether there are elements of social motion (which I understand is what we may be measuring, as a proxy for mobility) that are attributable to heritable things other than material and social privilege.

    To test that, one could check if
    a) siblings, or people from backgrounds similar in privilege experience different social movement to each other and those differences correlate with other heritable factors (height, IQ etc) despite identical social and material privilege. My inexpert understanding is that numerous studies do in fact find such links.

    b) Whether groups of people from advantaged or disadvantaged backgrounds show statistically significant differences in those traits (contentious subject, but also not without empirically supportive evidence).

    The hypothesis makes no prediction about the nature of the correlation (other than that there will be one) or the shape of the curve. As we are using totally different types of scales (centimetres, quotients, dollars etc), and more importantly, as I am not denying the role of inherited privilege (along with all kinds of other factors, including some random ones) in social / financial outcomes, it would make no sense to attempt such a prediction other than through regression analysis.

    unQED, I think.

    BTW what I’m interested in here is questioning whether even in conditions of maximal social mobility, we would not find some intractable, residual lack of intergenerational movement – owing to inherited factors unrelated to material and social privilege. An obvious – and I think unproblematic – example of this would be inherited mental or physical ill-health that limits education and workforce participation. It seems feasible to me that there is (potentially) a similar role for inherited fitness for the particular educational, social and economic conditions that are associated with upward motion today.

  13. Mandarina, there’s nothing wrong with not having knowledge of a topic, but if you’re going to push your opinion it’s a bad thing. Your inexpert understanding in this case on (a) and (b) are dead wrong. I would suggest to anyone here who has been making claims about genetically inherited meritocracy that they should go read “The Mismeasure of Man” by Stephen Jay Gould.

    Dan, the problem with your blue-eyes example is that there are no such binary on-off traits advanced as dimensions of “merit” that I’ve ever heard. It’s always “intelligence” (not that we know what that is), or “emotional intelligence” or other, even fuzzier concepts, all of which seem to be things that if they were measurable at all would be ranked on a scale and distributed on a bell curve as James Haughton pointed out.

    For some reason the “merit” dimensions rarely mention ruthlessness or dishonesty, even though a high proportion of large fortunes are founded through crime. In Canada most of the largest multi-generation fortunes derive originally from rum-running during US prohibition, basically the business partners of the Al Capones. In terms of help or harm to society it could readily be argued that far from a meritocracy, to the extent that radical social mobility exists it owes more to anti-meritocracy: Those who harm society most, the most damaging and predatory, the thugs, cheats and swindlers, rise to the top. One might say that in a tautological sort of way this is “merit”; they rose to the top, therefore they are “fit” in some Darwinian sense. But that doesn’t mean it does society any good to enable them; to the contrary, it would be better to change the social environment such that the destructive are not “fit” within it.
    Which brings us back to equality of opportunity. Meritocracy is not a standalone concept. Society is not a state of nature, and “merit” can only exist within some social context. The best stab we seem able to take at measuring a simpler concept like intelligence is the IQ test, a bogus and discredited exercise only still used for anything because nobody thinking seriously about it has any idea how to measure it at all, or even really define it. How then are we going to figure out “merit” except to conclude that anyone with success must have it? So for instance, Stalin must have been an exceptionally meritorious fellow.
    Unless we’re really sure we know exactly what kind of “merit” our society encourages and are really sure that is something we actually want to encourage, we’re probably better off shaping society to give as many people as possible the chance to do something with their particular “merits”.

  14. Purple library guy,
    You seem to be confusing my *question* about how things *are* with an *opinion* about how things *should be*.

    Also, assuming equivalence of “inherited traits” and “merit”. I don’t.

    As for Gould’s, his expertise is somewhat less relevant than, say, Steven Pinker’s _The Blank Slate_ . But really I’d prefer peer-reviewed meta-analysis.

    I’ll try to speak more slowly next time.

  15. Purple library guy,

    I apologise for sounding/being narky above. I was frustrated at being read as agreeing with the status quo and “pushing an opinion” to support it.

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