Wednesday, December 4, 2013

"We need neighborhood organizations that can provide a social safety net for the children who need it, like the Catholic Church used to do a few decades ago" - HBR.

 
Article link: http://blogs.hbr.org/2013/12/the-popes-war-on-capitalism-and-why-rich-kids-stay-rich/?utm_source=Socialflow&utm_medium=Tweet&utm_campaign=Socialflow

by Kaisa Snellman  |   3:44 PM December 3, 2013

“How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”

Pope Francis made headlines last week when he took a few sharp jabs at modern capitalism and free market economic policies in his first “apostolic exhortation”—the rough equivalent of a new CEO’s formal unveiling of his or her vision and corporate strategy.

His thoughts on economic policy were not based on faith alone. He hinted at available evidence, or lack thereof, and left many of his conservative supporters squirming:

“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.”
Such a firm political stance against right-leaning free-market economic policies, and the specific reference to “trickle-down” economics, suggests that the papal finger is pointing at the United States and Europe, and an economic theory most closely associated with Ronald Reagan and Margaret Thatcher.

His slam against free-market capitalism is historical and bold, and, according to some commentators, overdue. Occupy Wall Street brought discussion of income inequality into the mainstream, but when the movement fizzled so did much of the public debate. Yet, as economists Emmanuel Saez and Thomas Piketty show, income inequality in the United States has only continued to grow — and is now nearly as bad as it was just before the Great Depression nearly 100 years ago.  Last year, the wealthiest top 10 percent took home more than half of the total income in the country.
I applaud the Pope for his efforts to put inequality back on the agenda — but I wonder if he is introducing a political divide when one is not needed.

The most important message in Pope Francis’ manifesto is not his view about economic theory and the data that supports it — although he pulls no punches there — but the ethic and ideology that underlie that theory and the free-market economies built on it.  It is a message about equality of opportunity — a nuance that most commentators have missed.

“Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.”

Equality of opportunity is something everyone cares about, regardless of political stripes. Although Americans are generally not troubled by income disparities, most people care a lot about social mobility: whether kids from different backgrounds get onto the ladder at similar places and, given talent and effort, are equally likely to climb it.  The American mindset is built on the belief that anything is possible, and that it is up to each individual to claw their way up on the income ladder. If Steve Jobs did it, you can do it, too.

Historically, America has coupled greater inequality of income with greater social mobility. But social mobility has stagnated.  Today, about two-thirds of children raised in the richest fifth of families stay in the top two-fifths.  And despite the belief that America is a classless society, two-fifths of children born into the poorest fifth of families remain at the bottom of the income ladder as adults.

The mobility statistics are searing but the future looks even grimmer when we look at equality of opportunities among children. For the last two years, my collaborators and I have been studying growing class gaps in various precursors of life success. And the findings are alarming. The children of college-educated parents and those of less-educated parents are raised in very different ways and are launched on very different trajectories in life.

Not more than a few decades ago, college-educated parents and high school-educated parents spent roughly the same amount of time with their kids.  Today, middle class parents not only spend four times as much time playing Scrabble and reading books compared with working class parents, they also invest more money in their kids.

Sociologists Neeraj Kaushal, Katherine Magnuson, and Jane Waldfogel show that over the last four decades, middle class parents have increased their spending on enrichment activities, such as music lessons, summer camps, and travel, while working class families have struggled to keep up.  In the 1970s, high-income families spent about $2,700 more per year on child enrichment than did low-income families. Today, the gap has nearly tripled to $7,500.

As a result, children from middle class and working class families have sharply diverged on factors that prepare them for future. Children with wealthy, educated parents are more likely to engage in activities that broaden their outlook, deepen their social connections, and teach them important teamwork and leadership skills. They are more likely to participate in the school band or the debate team or to join the high school swim team. They are more than twice as likely to be elected as club presidents or team captains. They are also more likely to go to church and do volunteer work.
In contrast, working class kids have become less trusting of other people are more disconnected from major social institutions of life, such as family, school, church, and the community. These trends coincide with growing class gaps in math and reading tests, college admission, and college graduation.

Today’s young people are not going to show up in standard mobility studies for a long time but the fact that working class youth are increasingly more disconnected from social institutions suggests that mobility is poised to plunge dramatically. In other words, we have every reason to be worried.
The Pope points the finger at free-market capitalism and “a lifestyle which excludes others” and calls for more compassion:

“Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.”

But equality of opportunity is not just a matter of individual kindness or compassion — although it can never hurt to have more of either. We need to make it a collective responsibility and come up with an agenda that addresses the problem. We need policies and programs that benefit the working class, such as earned-income tax credits or early childhood education programs.

Working class parents don’t just need “compassion” for their plight. They need stable jobs that pay enough, so that they can spend less time worrying about paying the rent and more time playing with their children. We need neighborhood organizations that can provide a social safety net for the children who need it, like the Catholic Church used to do a few decades ago.

To achieve this, liberals and conservatives will have to work together. Instead of alienating the conservatives and declaring a war against capitalism, the Pope could use his position to bridge the political chasm.

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80-Kaisa-Snellman

Kaisa Snellman is Assistant Professor of Organisational Behaviour at INSEAD, where she teaches Power and Politics in the MBA program and Organisational Theory in the PhD program.

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