Liveblogging the Cuban Missile Crisis: Telegram From the Embassy in the Soviet Union to the Department of State: Hoisted from the Non-Internet of 52 Years Ago
Morning Must-Read: Carter Price: Miscalculating the Wealth of the Rich Reveals Unintended Biases

Monday Dianne Furchgott-Roth, MIchael Strain, and James Pethokoukis Inequality-of-Opportunity Smackdown

Every time I try to get out, they pull me back in. This Monday internet space is supposed to be for:

  1. Self-improvement, correcting errors that I have made and raising to the front of consciousness smart alternatives to my views that my previous visualization of the Cosmic All had not given proper weight; and

  2. In the process, maybe giving the spotlight to smart people who are not widely enough read.

But things keep happening.

Today we have Dianne Furchgott-Roth and James Pethokoukis, Dianne Furchgott-Roth, and Michael Strain. They really do have to decide to what degree they are going to try to maintain a toehold in the reality-based community, or simply give themselves over to total 100% hackdom:

Dianne Furchgott-Roth seems to think that Janet Yellen has given only one speech this year:

Dianne Furchgott-Roth: 5 Reasons Janet Yellen Shouldn't Focus on Income Inequality: "It would have been far better for those on the bottom of the economic heap if Yellen had spoken about how to increase economic growth...

Does Furchgott-Roth think Yellen's monetary policies are the right ones or the wrong ones to "increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates"?

She doesn't seem to have a view.

At all.

What does Furchgott-Roth think? Apparently, that a more equal post-Great Depression America would have had fewer wars:

Yellen said.... "The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression.” No matter that the decades following the Great Depression saw World War II, the Korean War and the Vietnam War, all of which used valuable resources and killed hundreds of thousands of Americans...

Yellen at the start of her speech says that she is going to discuss:

four sources of economic opportunity in America--think of them as "building blocks" for the gains in income and wealth that most Americans hope are within reach of those who strive for them... resources available for children... affordable higher education... [opportunities for] business ownership and inheritances...

Does Furchgott-Roth have anything to say about these?

No. What does she say?


Since 1970, income inequality has increased for a number of reasons that should not concern Janet Yellen.... Women moved into the workforce in record numbers in the 1980s.... The size of households has changed since 1980.... The Tax Reform Act of 1986 resulted in a movement of income away from corporate tax returns and on to individual income tax returns.... Many analyses of income inequality use income before taxes are subtracted and transfers are added.... People move around the income distribution during their life cycle.... Income inequality is only a problem if people cannot move up. By some measures, America is the most unequal of modern industrial countries, but it is a magnet to millions...


Cuba or Russia with their more egalitarian societies are not attractive...

Does Dianne Furchgott-Roth know anything about inequality of result or inequality of opportunity in Cuba or Russia? Her belief that Russia is a "egalitarian society" suggests not.

Nor has Furchgott-Roth, apparently, read James Heckman:

Yellen suggests ways of increasing upward mobility, such as more preschool education (even though the effects of Head Start are unrecognizable by 5th grade)...

Not so!

After that, James Pethokoukis is a weak-tea amuse bouche:

James Pethokoukis: Did Fed boss Janet Yellen make a huge mistake by talking about inequality?: "That’s the question raised in a new Washington Post column by AEI economist Mike Strain...

...Or as the click-friendly headline puts it: ‘Janet Yellen is in danger of becoming a partisan hack’.... He doesn’t much like how Yellen, first, presented an incomplete analysis of how middle-class incomes have been doing the past three decades, and, second, came close to advocating expanded preschool funding, a contentious issue both politically and economically. Strain....

If Yellen continues to sound like a left-leaning politician, the political pressure on the Fed will mount, and the ability of the Fed to operate independent of politics will be threatened. If those threats are realized, everyone loses...

Strain is correct.

Also, left-liberals/progressives underestimate just how deep and wide Fed hostility is on the right.... Getting involved in the pre-kindergarten debate--an issue likely to be a big one in 2016--isn’t going to help the Fed’s reputation with GOPers, conservatives, and libertarians...

Let's look at how Janet Yellen "gets involved in the pre-kindergarten debate":

Janet Yellen: Perspectives on Inequality and Opportunity from the Survey of Consumer Finances: "Resources Available for Children: For households with children...

family resources can pay for things that research shows enhance future earnings and other economic outcomes--homes in safer neighborhoods with good schools, for example, better nutrition and health care, early childhood education, intervention for learning disabilities, travel and other potentially enriching experiences.19 Affluent families have significant resources for things that give children economic advantages as adults, and the SCF data I have cited indicate that many other households have very little to spare for this purpose. These disparities extend to other household characteristics associated with better economic outcomes for offspring, such as homeownership rates, educational attainment of parents, and a stable family structure.20 

According to the SCF, the gap in wealth between families with children at the bottom and the top of the distribution has been growing steadily over the past 24 years, but that pace has accelerated recently. Figure 8 shows that the median wealth for families with children in the lower half of the wealth distribution fell from $13,000 in 2007 to $8,000 in 2013, after adjusting for inflation, a loss of 40 percent.21 These wealth levels look small alongside the much higher wealth of the next 45 percent of households with children. But these families also saw their median wealth fall dramatically--by one-third in real terms--from $344,000 in 2007 to $229,000 in 2013. The top 5 percent of families with children saw their median wealth fall only 9 percent, from $3.5 million in 2007 to $3.2 million in 2013, after inflation.

For families below the top, public funding plays an important role in providing resources to children that influence future levels of income and wealth. Such funding has the potential to help equalize these resources and the opportunities they confer.

Social safety-net spending is an important form of public funding that helps offset disparities in family resources for children. Spending for income security programs since 1989 and until recently was fairly stable, ranging between 1.2 and 1.7 percent of gross domestic product (GDP), with higher levels in this range related to recessions. However, such spending rose to 2.4 percent of GDP in 2009 and 3 percent in 2010.22 Researchers estimate that the increase in the poverty rate because of the recession would have been much larger without the effects of income security programs.23 

Public funding of education is another way that governments can help offset the advantages some households have in resources available for children. One of the most consequential examples is early childhood education. Research shows that children from lower-income households who get good-quality pre-Kindergarten education are more likely to graduate from high school and attend college as well as hold a job and have higher earnings, and they are less likely to be incarcerated or receive public assistance.24 Figure 9 shows that access to quality early childhood education has improved since the 1990s, but it remains limited--41 percent of children were enrolled in state or federally supported programs in 2013. Gains in enrollment have stalled since 2010, as has growth in funding, in both cases because of budget cuts related to the Great Recession. These cuts have reduced per-pupil spending in state-funded programs by 12 percent after inflation, and access to such programs, most of which are limited to lower-income families, varies considerably from state to state and within states, since local funding is often important.25 In 2010, the United States ranked 28th out of 38 advanced countries in the share of four-year-olds enrolled in public or private early childhood education.26 

Similarly, the quality and the funding levels of public education at the primary and secondary levels vary widely, and this unevenness limits public education's equalizing effect. The United States is one of the few advanced economies in which public education spending is often lower for students in lower-income households than for students in higher-income households.27 Some countries strive for more or less equal funding, and others actually require higher funding in schools serving students from lower-income families, expressly for the purpose of reducing inequality in resources for children.

A major reason the United States is different is that we are one of the few advanced nations that funds primary and secondary public education mainly through subnational taxation. Half of U.S. public school funding comes from local property taxes, a much higher share than in other advanced countries, and thus the inequalities in housing wealth and income I have described enhance the ability of more-affluent school districts to spend more on public schools. Some states have acted to equalize spending to some extent in recent years, but there is still significant variation among and within states. Even after adjusting for regional differences in costs and student needs, there is wide variation in public school funding in the United States.28 

Spending is not the only determinant of outcomes in public education. Research shows that higher-quality teachers raise the educational attainment and the future earnings of students.29 Better-quality teachers can help equalize some of the disadvantages in opportunity faced by students from lower-income households, but here, too, there are forces that work against raising teacher quality for these students. Research shows that, for a variety of reasons, including inequality in teacher pay, the best teachers tend to migrate to and concentrate in schools in higher-income areas.30 Even within districts and in individual schools, where teacher pay is often uniform based on experience, factors beyond pay tend to lead more experienced and better-performing teachers to migrate to schools and to classrooms with more-advantaged students.31 

  1. See, for example, Janet Currie and Douglas Almond (2011), "Human Capital Development before Age Five," ch. 15 in David Card and Orley Ashenfelter, eds., Handbook of Labor Economics, vol. 4 (Holland: Elsevier), pp. 1315-1486. Return to text

  2. Homeownership by parents is strongly associated with economic success for children; see Thomas P. Boehm and Alan M. Schlottmann (1999), "Does Home Ownership by Parents Have an Economic Impact on Their Children? Leaving the Board" Journal of Housing Economics, vol. 8 (September), pp. 217-32. Ninety-seven percent of top-earning families with children own a home, compared with fewer than half of the bottom 50 percent of families with children; educational attainment of parents is strongly predictive of outcomes for children that determine earnings. See Ayana Douglas-Hall and Michelle Chau (2007), "Parents' Low Education Leads to Low Income, Despite Full-Time Employment Leaving the Board" (New York: National Center for Children in Poverty, Columbia University, November). A considerable body of literature establishes the correlation between educational attainment of parents and their children. Other research has identified that this relationship is causal; see, for example, Philip Oreopoulos, Marianne E. Page, and Ann Huff Stevens (2006), "The Intergenerational Effects of Compulsory Schooling," Journal of Labor Economics, vol. 24 (October), pp. 729-60. Eighty-six percent of top-earning households in the SCF with children are headed by a college graduate, compared with 12 percent in the bottom half of households with children; children raised by a single parent earn less as adults. See Mary Ann Powell and Toby L. Parcel (1997), "Effects of Family Structure on the Earnings Attainment Process: Differences by Gender," Journal of Marriage and Family, vol. 59 (May), pp. 419-33. Only 4 percent of top-earning households with children are headed by unmarried parents, compared with 47 percent for the lower half of households with children. Return to text

  3. Distributional statistics for families with children are based on a sorting of only families with children. Return to text

  4. Congressional Budget Office historic budget data. Income security programs include UI, SSI, SNAP EITC, and other family support and nutrition programs. Return to text

  5. See Jeffrey P. Thompson and Timothy M. Smeeding (2013), "Inequality and Poverty in the United States: The Aftermath of the Great Recession (PDF)," Finance and Economics Discussion Series 2013-51 (Washington: Board of Governors of the Federal Reserve System, July). Return to text

  6. See James J. Heckman, Seong Hyeok Moon, Rodrigo Pinto, Peter A. Savelyev, and Adam Yavitz (2010), "The Rate of Return to the HighScope Perry Preschool Program," Journal of Public Economics, vol. 94 (1-2), pp. 114-28; and Clive R. Belfield, Milagros Nores, Steve Barnett, and Lawrence Schweinhart (2006), "The High/Scope Perry Preschool Program: Cost-Benefit Analysis Using Data from the Age-40 Followup," Journal of Human Resources, vol. 41 (Winter), pp. 162-90. Return to text

  7. The share of four-year-olds in state-funded pre-K programs increased from 14 percent in 2002 to 27 percent in 2010 but has been 28 percent since. Head Start enrollments have been fairly steady since 2005. Forty-one percent of four-year-olds were enrolled in federally funded Head Start or state-funded pre-K education programs in 2013. See National Institute for Early Education Research (2013), The State of Preschool 2013: State Preschool Yearbook (PDF) Leaving the Board (New Brunswick, N.J.: Rutgers Graduate School of Education). For analysis of Head Start enrollment by age, see the Annie E. Casey Foundation KIDS COUNT Data Center Leaving the Board. Return to text

  8. See Organisation for Economic Co-operation and Development (2013), "How Do Early Childhood Education and Care (ECEC) Policies, Systems and Quality Vary across OECD Countries? (PDF) Leaving the Board" Education Indicators in Focus Series 11 (Paris: OECD, February). Return to text

  9. See Organisation for Economic Co-operation and Development (2013), Education at a Glance 2013: OECD Indicators (PDF) Leaving the Board (Paris: OECD). Return to text

  10. See Education Week (2014), Quality Counts 2014: District Disruption and Revival Leaving the Board (Bethesda, Md.: Editorial Projects in Education, January). Return to text

  11. See Eric A. Hanushek (2011), "The Economic Value of Higher Teacher Quality," Economics of Education Review, vol. 30 (June), pp. 466-79; or, for estimates of the future earnings students gain by having a better teacher, see Raj Chetty, John N. Friedman, and Jonah E. Rockoff, "The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood," Leaving the Board unpublished paper, Harvard University. Return to text

  12. See Eric Isenberg, Jeffrey Max, Philip Gleason, Liz Potamites, Robert Santillano, Heinrich Hock, and Michael Hansen (2013), Access to Effective Teaching for Disadvantaged Students (PDF) Leaving the Board, report NCEE 2014-4001, prepared for the Institute of Education Sciences (Washington: U.S. Department of Education, Institute of Education Sciences, National Center for Education Evaluation and Regional Assistance); and Kati Haycock and Eric A. Hanushek (2010), "An Effective Teacher in Every Classroom: A Lofty Goal, But How to Do It? (PDF)" Leaving the Board Education Next, vol. 10 (Summer), pp. 46-52. Return to text

  13. Better and more-experienced teachers tend to move to better-resourced schools, including those with more active outside funding, or those with more-advantaged students, such as magnet schools. Even within schools, more experienced and higher performing teachers are more likely to teach Advanced Placement classes which tend to serve more advantaged students. The result is that lower income and lower achieving students are more likely to be taught by less experienced and lower performing teachers. See Charles Clotfelter, Helen Ladd, Jacob Vigdor, and Justin Wheeler (2007), "High Poverty Schools and the Distribution of Teachers and Principals," North Carolina Law Review, vol. 85 (2), pp. 1345-79; Charles Clotfelter, Helen Ladd, and Jacob Vigdor (2005), "Who Teaches Whom? Race and the Distribution of Novice Teachers," Economics of Education Review, vol. 24 (August), pp. 377-92; and Hamilton Lankford, Susanna Loeb, and James Wyckoff (2002), "Teacher Sorting and the Plight of Urban Schools: A Descriptive Analysis," Education Evaluation and Policy Analysis, vol. 37 (Spring), pp. 37-62.

That's it.

What I and everybody else in the economics community outside of Washington DC see as a fair-minded review of the issues surrounding how parental resources impact opportunity, James Pethokoukis (and Michael Strain) see as "sounding like a left-leaning politician opining about hot-button political issues". The facts, apparently, have such a liberal (and Democratic!) bias that if one makes a fair-minded summary of them one is automatically "in danger of becoming a [Democratic] partisan hack".

More amusing is Michael Strain's close:

Michael Strain: Janet Yellen Is in Danger of Becoming a Partisan Hack: "Benedict XVI... gave a speech... which he quoted an unfavorable remark about Islam uttered by a 14th-century Byzantine emperor.  Street protests erupted across the Muslim world.... There are things a theologian and cardinal can say that a pope shouldn’t.... Janet Yellen... still must learn that part of the loneliness of the throne is often not lending voice to thought.

Let's unpack this: Michael Strain apparently thinks that:

  1. As in the case of Benedict XVI, so in this case Janet Yellen should not say true things,
  2. Because, as in the case of Benedict XVI, her wider audience contains faith-maddened jihadis and talibanis,
  3. Who will, as in the case of Benedict XVI, respond with violence and uproar.

That's quite an indictment of today's American conservatives, libertarians, and GOPers.

And back up a step: What Benedict XVI did was to quote, with apparent approval, Manuel II Paelaiologos's declaration that whatever teachings Mohamed brought that were not borrowed from Christianity and Judaism were evil and inhuman:

[Manuel] addresses his interlocutor with a startling brusqueness, a brusqueness that we find unacceptable, on the central question about the relationship between religion and violence in general, saying:

Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached...

The only gap Benedict opens between his views and those of Manuel is that Manuel did not sugarcoat his statement: "startling brusqueness... that we find unacceptable..."

But I cannot believe that even Michael Strain wants to commit himself to what his analogy tells us--that:

(4) Janet Yellen's remarks about early childhood education are the equivalent of telling the libertarians, conservatives, and GOPers that everything they say that is new is evil and inhumane.