Inequality by Design

Cracking the Bell Curve Myth

Claude S. Fischer, Michael Hout, Martín Sánchez Jankowski, Samuel R. Lucas, Ann Swidler, Kim Voss

• Publisher: Princeton University Press
• Year: 2020
• ISBN:
  9780691221502
• Topic: Social Sciences
• Subtopic: Social Science Research & Methodology
• Index: Social Sciences

As debate rages over the widening and destructive gap between the rich and the rest of Americans, Claude Fischer and his colleagues present a comprehensive new treatment of inequality in America. They challenge arguments that expanding inequality is the natural, perhaps necessary, accompaniment of economic growth. They refute the claims of the incendiary bestseller The Bell Curve (1994) through a clear, rigorous re-analysis of the very data its authors, Richard Herrnstein and Charles Murray, used to contend that inherited differences in intelligence explain inequality. Inequality by Design offers a powerful alternative explanation, stressing that economic fortune depends more on social circumstances than on IQ, which is itself a product of society. More critical yet, patterns of inequality must be explained by looking beyond the attributes of individuals to the structure of society. Social policies set the "rules of the game" within which individual abilities and efforts matter. And recent policies have, on the whole, widened the gap between the rich and the rest of Americans since the 1970s.
Not only does the wealth of individuals' parents shape their chances for a good life, so do national policies ranging from labor laws to investments in education to tax deductions. The authors explore the ways that America--the most economically unequal society in the industrialized world--unevenly distributes rewards through regulation of the market, taxes, and government spending. It attacks the myth that inequality fosters economic growth, that reducing economic inequality requires enormous welfare expenditures, and that there is little we can do to alter the extent of inequality. It also attacks the injurious myth of innate racial inequality, presenting powerful evidence that racial differences in achievement are the consequences, not the causes, of social inequality. By refusing to blame inequality on an unchangeable human nature and an inexorable market--an excuse that leads to resignation and passivity-- Inequality by Design shows how we can advance policies that widen opportunity for all.

CHAPTER 1

Why Inequality?

AS WE WRITE, Americans are engaged in a great debate about the inequalities that increasingly divide us. For over twenty years, the economic gaps have widened. As the American Catholic Bishops stated in late 1995, “the U.S. economy sometimes seems to be leading to three nations living side by side, one growing more prosperous and powerful, one squeezed by stagnant incomes and rising economic pressures and one left behind in increasing poverty, dependency and hopelessness.”¹ Being prosperous may mean owning a vacation home, purchasing private security services, and having whatever medical care one wants; being squeezed may mean having one modest but heavily mortgaged house, depending on 911 when danger lurks, and delaying medical care because of the expense of copayments; and being left behind may mean barely scraping together each month’s rent, relying on oneself for physical safety, and awaiting emergency aid at an overcrowded public clinic. Most Americans in the middle know how fragile their position is. One missed mortgage payment or one chronic injury might be enough to push them into the class that has been left behind.

Few deny that inequality has widened.² The debate is over whether anything can be done about it, over whether anything should be done about it. Some voices call for an activist government to sustain the middle class and uplift the poor. Other voices, the ones that hold sway as we write, argue that government ought to do less, not more. They argue for balanced budgets, lower taxes, fewer domestic programs, minimal welfare, and less regulation. These moves, they contend, would energize the economy and in that way help the middle class. They would also help the poor, economically and otherwise. Speaker of the House Newt Gingrich in 1995 said of people on welfare: “The government took away something more important than . . . money. They took away their initiative, . . . their freedom, . . . their morality, their drive, their pride. I want to help them get that back.”³ As to the increasing inequality of our time, some advocates of circumscribed government say it cannot be changed, because inequality is natural; some say it ought not be changed, because inequality drives our economy. At a deeper level, then, the debate is about how to understand inequality—what explains its origin, what explains its growth. That is where we shall engage the debate.

The arguments over policy emerged from almost a quarter century of economic turmoil and disappointment. Middle-class Americans saw the era of seemingly ever-expanding affluence for themselves and ever-expanding opportunities for their children come to an abrupt end in 1973. The cars inching forward in the gasoline lines of the mid-1970s foreshadowed the next twenty years of middle-class experience. Wages stagnated, prices rose, husbands worked longer hours, and even wives who preferred to stay at home felt pressed to find jobs. The horizons for their children seemed to shrink as the opportunities for upward economic mobility contracted.⁴ What was going on? What could be done about it?

In the early 1980s, one explanation dominated public discussion and public policy: The cause of the middle-class crisis was government, and its solution was less government. Regulations, taxes, programs for the poor, preferences for minorities, spending on schools—indeed, the very size of government—had wrecked the economy by wasting money and stunting initiative, by rewarding the sluggards and penalizing the talented. The answer was to get government “off the backs” of those who generate economic growth. “Unleash the market” and the result would be a “rising tide that will lift all boats, yachts and rowboats alike.”

This explanation for the economic doldrums won enough public support to be enacted. Less regulation, less domestic spending, and more tax cuts for the wealthy followed. By the 1990s, however, the crisis of the middle class had not eased; it had just become more complicated. Figure 1.1 shows the trends in family incomes, adjusted for changes in prices, from 1959 to 1989 (the trends continued into the 1990s). The richest families had soared to new heights of income, the poorest families had sunk after 1970, and the middle-income families had gained slightly. But this slight gain was bitterly misleading. The middle class managed to sustain modest income growth only by mothers taking jobs and fathers working longer hours. Also, the slight gain could not make up for growing economic insecurity and parents’ anxiety that key elements of the “American Dream”—college education, a stable job, and an affordable home—were slipping beyond the grasp of their children. And so the phrase “the disappearing middle class” began to be heard.

Another puzzle now called for explanation: The 1980s had been a boom decade; overall wealth had grown. But average Americans were working harder to stay even. Why had the gaps between the rich and the middle and between the middle and the poor widened? How do we understand such inequality?

1.1. Changes in Household Incomes, 1959–1989, by Income Class (Note: Household incomes are adjusted by dividing income per family member by the square root of the household size. Source: Karoly and Burtless, “Demographic Change, Rising Earnings Inequality,” table 2)

An answer emerged in the public debate, forwarded for the most part by the same voices that had offered the earlier explanation: Inequality is a “natural,” almost inevitable, result of an unfettered market. It is the necessary by-product of unleashing talent. The skilled soar and the unskilled sink. Eventually, however, all will gain from the greater efficiency of the free market. The reason such wider benefits have yet to be delivered is that the market has not been freed up enough; we need still less government and then the wealth will flow to middle- and lower-income Americans. Sharp inequality among the classes, these voices suggested, is the necessary trade-off for economic growth.

The strongest recent statement that inequality is the natural result of a free market came in The Bell Curve: Intelligence and Class Structure in American Life, published in 1994. Richard Herrnstein and Charles Murray argued that intelligence largely determined how well people did in life. The rich were rich mostly because they were smart, the poor were poor mostly because they were dumb, and middle Americans were middling mostly because they were of middling intelligence. This had long been so but was becoming even more so as new and inescapable economic forces such as global trade and technological development made intelligence more important than ever before. In a more open economy, people rose or sank to the levels largely fixed by their intelligence. Moreover, because intelligence is essentially innate, this expanding inequality cannot be stopped. It might be slowed by government meddling, but only by also doing injustice to the talented and damaging the national economy. Inequality is in these ways “natural,” inevitable, and probably desirable.

The Bell Curve also provided an explanation for another troubling aspect of inequality in America—its strong connection to race and ethnicity. Black families, for example, are half as likely to be wealthy and twice as likely to be poor as white families. The questions of how to understand racial disparities and what to do about them have anguished the nation for decades. Now, there was a new answer (actually, a very old answer renewed): Blacks—and Latinos, too—were by nature not as intelligent as whites; that is why they did less well economically, and that is why little can or should be done about racial inequality.

Yet decades of social science research, and further research we will present here, refute the claim that inequality is natural and increasing inequality is fated. Individual intelligence does not satisfactorily explain who ends up in which class; nor does it explain why people in different classes have such disparate standards of living. Instead, what better explains inequality is this: First, individuals’ social milieux—family, neighborhood, school, community—provide or withhold the means for attaining higher class positions in American society, in part by providing people with marketable skills. Much of what those milieux have to offer is, in turn, shaped by social policy. For example, the quality of health care that families provide and the quality of education that schools impart are strongly affected by government action. Second, social policy significantly influences the rewards individuals receive for having attained their positions in society. Circumstances—such as how much money professional or manual workers earn, how much tax they pay, whether their child care or housing is subsidized—determine professionals’ versus manual workers’ standards of living. In turn, these circumstances are completely or partly determined by government. We do not have to suffer such inequalities to sustain or expand our national standard of living.⁵ Thus, inequality is not the natural and inevitable consequence of intelligence operating in a free market; in substantial measure it is and will always be the socially constructed and changeable consequence of Americans’ political choices.

Our contribution to the debate over growing inequality is to clarify how and why inequality arises and persists. We initiate our argument by first challenging the explanation in The Bell Curve, the idea that inequality is natural and fated. Then, we go on to show how social environment and conscious policy mold inequality in America.

If the growing inequality in America is not the inevitable result of free markets operating on natural intelligence, but the aftermath of circumstances that can be altered, then different policy implications follow from those outlined in The Bell Curve. We do not have to fatalistically let inequalities mount; we do not have to accept them as the Faustian trade for growth; and we do not have to accept heartlessness as the companion of social analysis. Instead, we can anticipate greater equality of opportunity and equality of outcome and also greater economic growth.

EXPLAINING INEQUALITY

Why do some Americans have a lot more than others? Perhaps, inequality follows inevitably from human nature. Some people are born with more talent than others; the first succeed while the others fail in life’s competition. Many people accept this explanation, but it will not suffice. Inequality is not fated by nature, nor even by the “invisible hand” of the market; it is a social construction, a result of our historical acts. Americans have created the extent and type of inequality we have, and Americans maintain it.

To answer the question of what explains inequality in America, we must divide it in two. First, who gets ahead and who falls behind in the competition for success? Second, what determines how much people get for being ahead or behind? To see more clearly that the two questions are different, think of a ladder that represents the ranking of affluence in a society. Question one asks why this person rather than that person ended up on a higher or lower rung. Question two asks why some societies have tall and narrowing ladders—ladders that have huge distances between top and bottom rungs and that taper off at the top so that there is room for only a few people—while other societies have short and broad ladders—ladders with little distance between top and bottom and with lots of room for many people all the way to the top.

(Another metaphor is the footrace: One question is who wins and who loses; another question is what are the rules and rewards of the race. Some races are winner-take-all; some award prizes to only the first few finishers; others award prizes to many finishers, even to all participants. To understand the race, we need to understand the rules and rewards.)

The answer to the question of who ends up where is that people’s social environments largely influence what rung of the ladder they end up on.⁶ The advantages and disadvantages that people inherit from their parents, the resources that their friends can share with them, the quantity and quality of their schooling, and even the historical era into which they are born boost some up and hold others down. The children of professors, our own children, have substantial head starts over children of, say, factory workers. Young men who graduated from high school in the booming 1950s had greater opportunities than the ones who graduated during the Depression. Context matters tremendously.

The answer to the question of why societies vary in their structure of rewards is more political. In significant measure, societies choose the height and breadth of their “ladders.” By loosening markets or regulating them, by providing services to all citizens or rationing them according to income, by subsidizing some groups more than others, societies, through their politics, build their ladders. To be sure, historical and external constraints deny full freedom of action, but a substantial freedom of action remains (see, especially, chapters 5 and 6). In a democracy, this means that the inequality Americans have is, in significant measure, the historical result of policy choices Americans—or, at least, Americans’ representatives—have made. In the United States, the result is a society that is distinctively unequal. Our ladder is, by the standards of affluent democracies and even by the standards of recent American history, unusually extended and narrow—and becoming more so.

To see how policies shape the structure of rewards (i.e., the equality of outcomes), consider these examples: Laws provide the ground rules for the marketplace—rules covering incorporation, patents, wages, working conditions, unionization, security transactions, taxes, and so on. Some laws widen differences in income and earnings among people in the market; others narrow differences. Also, many government programs affect inequality more directly through, for example, tax deductions, food stamps, social security, Medicare, and corporate subsidies. Later in this book, we will look closely at the various initiatives Americans have taken, or chosen not to take, that shape inequality.

To see how policies also affect which particular individuals get to the top and which fall to the bottom of our ladder (i.e., the equality of opportunity), consider these examples: The amount of schooling young Americans receive heavily determines the jobs they get and the income they make. In turn, educational policies—what sorts of schools are provided, the way school resources are distributed (usually according to the community...

Table of contents

• Cover
• Title Page
• Copyright Page
• Dedication
• Epigraph
• Contents
• Figures and Tables
• Preface
• Chapter 1: Why Inequality?
• Chapter 2: Understanding “Intelligence”
• Chapter 3: But Is It Intelligence?
• Chapter 4: Who Wins? Who Loses?
• Chapter 5: The Rewards of the Game: Systems of Inequality
• Chapter 6: How Unequal? America’s Invisible Policy Choices
• Chapter 7: Enriching Intelligence: More Policy Choices
• Chapter 8: Race, Ethnicity, and Intelligence
• Chapter 9: Confronting Inequality in America: The Power of Public Investment
• Appendix 1 Summary of The Bell Curve
• Appendix 2 Statistical Analysis for Chapter 4
• Notes
• References
• Index